<PAGE>
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. 20
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 22
QUANTITATIVE GROUP OF FUNDS
(Exact Name of Registrant as Specified in Charter)
55 Old Bedford Road
Li
ncoln, 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
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It is proposed that this filing will become effective:
[_] immediately upon filing pursuant to paragraph (b)
[X] on August 1, 1999 pursuant to paragraph (b)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] 60 days aft
er filing pursuant to paragraph (a)(i)
[_] on (date) pursuant to paragraph (a) of Rule 485
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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, 1999 was filed on
May 14, 1999.
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QUANTITATIVE QUANTITATIVE
GROUP OF FUNDS
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QUANTITATIVE GROUP OF FUNDS
55 Old Bedford Road
Lincoln, Massachusetts 01773 PROSPECTUS
800-331-1244 August 1, 1999
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TABLE OF CONTENTS
Page
Fund Summary 2
Summary of Fees and Expenses 3
Financial Highlights 5
Investment Policies and Related Risks 7
Management of the Funds 9
How to Invest 11
How to Make Exchanges 14
How to Redeem 14
Calculation of Net Asset Value 16
Dividends, Distributions, and Taxation 16
Other Information 17
Financial Highlights 18
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.
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QUANTITATIVE QUANTITATIVE
GROUP OF FUNDS
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FUND SUMMARY
INVESTMENT SUMMARY
U.S. Equity Funds
Investment Objective
Quantitative Small Cap Fund ("Small Cap Fund") seeks maximum long-term capital
appreciation.
Quantitative Mid Cap Fund ("Mid Cap Fund") seeks long-term growth of capital.
Quantitative Growth and Income Fund ("Growth and Income Fund") seeks long-term
growth of capital and income.
Principal Investment Strategies
Under normal market conditions, each fund invests at least 65% of its total
assets in common stocks. The Small Cap Fund will invest at least 65% of its
assets in stocks of small-sized companies, generally with less than $1.5 billion
in market capitalization. The Mid Cap Fund will invest at least 65% of its
assets in stocks of mid-sized companies, generally between $1 billion and $5
billion in market capitalization and the Growth and Income Fund mainly buys
stocks of large companies, generally greater than $5 billion in market
capitalization, that are currently paying dividends. Each of the funds' advisors
employs a "quantitative" investment approach to selecting investments.
Investment advisors using this approach to investing rely on computer model and
financial databases to assist in the stock selection process.
PRINCIPAL RISKS
The main risks that could adversely affect the value of one of the U.S. equity
fund's shares and the total return on your investment include:
-- The risk that the stock price of one or more of the companies in a
fund's portfolio will fall, or will fail to appreciate as anticipated
by the fund's advisor. Many factors can adversely affect a stock's
performance. This risk is greater for smaller companies that are the
primary investment vehicles for the Small Cap Fund, which tend to be
more vulnerable to adverse developments.
-- The risk that movements in the securities markets will adversely
affect the price of a fund's investments, regardless of how well the
companies in which a fund invests perform.
You can lose money by investing in the funds. The funds may not achieve their
goals, and none of the individual funds are intended as complete investment
programs. An investment in a fund is NOT a deposit in a bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
International Funds
Investment Objective
Quantitative International Equity Fund ("International Equity Fund") seeks
long-term capital growth and income.
Quantitative Emerging Markets Fund ("Emerging Markets Fund") seeks long-term
growth of capital.
Quantitative Foreign Value Fund ("Foreign Value Fund") seeks long-term capital
growth and income.
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QUANTITATIVE QUANTITATIVE
GROUP OF FUNDS
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Principal Investment Strategies
Under normal market conditions the International Equity Fund and the Foreign
Value Fund invest at least 65% of their assets in common stocks of issuers that
have their principal activities in foreign markets and may invest a portion of
their assets in emerging markets. The Foreign Value Fund invests mainly in value
stocks that the fund's advisor believes are currently undervalued compared to
their true worth. The Emerging Markets Fund invests at least 65% of its assets
in common stocks of issuers that have their principal activities in emerging
markets. Each of the funds' advisors employs a "quantitative" investment
approach to selecting investments. Investment advisors using this approach to
investing rely on computer model and financial databases to assist in the stock
selection process.
PRINCIPAL RISKS
The main risks that could adversely affect the value of one of the international
funds' shares and the total return on your investment include the same risks as
the U.S. equity funds and in addition:
-- Foreign markets, particularly emerging markets, can be more volatile
than the U.S. market due to increased risks of adverse issuer,
political, regulatory, market or economic developments and can perform
differently than the U.S. market. Emerging markets can be subject to
greater social, economic, regulatory and political uncertainties and
can be extremely volatile. An investment in the Emerging Markets Fund
should be regarded as speculative and is subject to special risks that
should be considered carefully by potential investors.
You can lose money by investing in the funds. The funds may not achieve their
goals, and none of the individual funds are intended as complete investment
programs. An investment in a fund is NOT a deposit in a bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
PERFORMANCE
The following bar charts and tables indicate some of the risks of investing in
the funds by showing changes in the funds' performance over time. The tables
also compare the funds' performance to a broad measure of market performance
that reflects the type of securities in which the funds invest. Of course, past
performance does not necessarily indicate how the funds will perform in the
future. Because the chart and table reflect calendar year performance, the
numbers will differ from those in the "Financial Highlights" table later in the
Prospectus and in the funds' shareholder reports, which are based on the funds'
fiscal year end of March 31.
The bar charts show changes in the annual total returns of the funds' Ordinary
Shares for the past ten years, or a shorter period of time if a fund has not
been in existence for ten years. There is no bar chart for the Foreign Value
Fund because it began operations during 1998 and does not have a full calendar
year of performance. Returns in the bar charts do not reflect the 1% deferred
sales charge applicable to the Ordinary Shares of all the funds except for
purchases in the Mid Cap Fund after August 1, 1996 not through reinvestment of
dividends on shares purchased before such date, which are not subject to a
deferred sales charge. The sales charge, if reflected,
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3
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QUANTITATIVE QUANTITATIVE
GROUP OF FUNDS
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would reduce the returns of the funds. Returns for Institutional Shares will
differ from the Ordinary Share returns due to differences in expenses between
the classes. The average annual total return tables following the bar charts
reflect the deferred sales charge for all funds but the Mid Cap Fund. The
average annual total return tables compare the funds to indexes that invest in
comparable types of stocks. Unlike the funds, the indexes are not actively
managed. Investment returns for the indexes assume the reinvestment of dividends
paid on stocks comprising the indexes.
Quantitative Small Cap Fund
[CHART HERE]
The calendar year-to-date return of the Ordinary Shares of the fund as of
6/30/99 is -0.25%.
Best Quarter: Q4 1998: 18.88%
Worst Quarter: Q3 1998: -20.08%
Average Annual Total Returns
for the periods ended December 31, 1998
1 Year 5 Years Inception
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Ordinary Shares -0.63% 13.09% 19.10% (8/3/92)
Russell 2000 Index -2.55% 11.87% 14.44% (8/3/92)
Institutional Shares 1.01% 13.87% 16.40% (1/6/93)
Russell 2000 Index -2.55% 11.87% 13.12% (1/6/93)
The Russell 2000 Index is comprised of the bottom two-thirds of the largest
3,000 publicly traded companies in the United States. It is widely recognized as
representative of the general market for small company stocks.
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4
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QUANTITATIVE QUANTITATIVE
GROUP OF FUNDS
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Quantitative Mid Cap Fund
[CHART HERE]
The calendar year-to-date return of the Ordinary Shares of the fund as of
6/30/99 is 10.79%.
Best Quarter: Q4 1998: 20.78%
Worst Quarter: Q3 1998: -16.41%
Average Annual Total Returns
for the periods ended December 31, 1998
1 Year Inception
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Ordinary Shares 12.71% 25.28% (3/21/95)
S&P 400 Index 19.11% 24.75% (3/21/95)
Institutional Shares 12.92% 24.96% (4/17/95)
S&P 400 Index 19.11% 24.46% (4/17/95)
The S&P 400 Index is comprised of stocks outside the large capitalization bias
of the S&P 500, which are chosen by Standard & Poor's for their size and
industry characteristics. It is widely recognized as representative of the
general market for stocks with medium capitalizations.
Quantitative Growth and Income Fund
[CHART HERE]
The calendar year-to-date return of the Ordinary Shares of the fund as of
6/30/99 is 2.33%.
Best Quarter: Q4 1998: 23.07%
Worst Quarter: Q3 1990: -12.91%
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QUANTITATIVE QUANTITATIVE
GROUP OF FUNDS
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Average Annual Total Returns
for the periods ended December 31, 1998
1 Year 5 Years 10 Years Inception
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Ordinary Shares 28.24% 21.77% 18.65% 17.24% (5/9/85)
S&P 500 Index 28.58% 24.06% 19.21% 18.44% (5/9/85)
Institutional Shares 30.18% 22.61% -- 18.62% (3/25/91)
S&P 500 Index 28.58% 24.06% 19.21% 19.68% (3/25/91)
The S&P 500 Index is comprised of stocks chosen by Standard & Poors for their
size and industry characteristics. It is widely recognized as representative of
the general market for stocks in the United States.
Quantitative International Equity Fund
[CHART HERE]
The calendar year-to-date return of the Ordinary Shares of the fund as of
6/30/99 is -1.56%.
Best Quarter: Q4 1998: 18.71%
Worst Quarter: Q3 1990: -24.17%
Average Annual Total Returns
for the periods ended December 31, 1998
1 Year 5 Years 10 Years Inception
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Ordinary Shares 10.19% 5.19% 3.15% 3.77% (7/31/87)
EAFE Index 19.99% 9.19% 5.54% 7.29% (7/31/87)
Institutional Shares 11.85% -- -- 3.29% (8/25/94)
EAFE Index 19.99% 9.19% 5.54% 8.59% (8/25/94)
The Morgan Stanley Capital International Europe, Australasia, and Far East
("EAFE") Index is comprised of stocks located in countries other than the United
States. It is widely recognized as representative of the general market for
developed foreign markets.
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6
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QUANTITATIVE QUANTITATIVE
GROUP OF FUNDS
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Quantitative Emerging Markets Fund
[CHART HERE]
The calendar year-to-date return of the Ordinary Shares of the fund as of
6/30/99 is 35.86%.
Best Quarter: Q2 1995: 9.94%
Worst Quarter: Q3 1998: -17.54%
Average Annual Total Returns
for the periods ended December 31, 1998
1 Year Inception
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Ordinary Shares -22.42% -10.81% (10/3/94)
EMF Index -23.22% -12.03% (10/3/94)
Institutional Shares -21.28% -11.30% (4/2/96)
EMF Index -23.22% -13.28% (4/2/96)
The Morgan Stanley Capital International Emerging Markets Free ("EMF") Index is
comprised of stocks located in countries other than the United States. It is
widely recognized as representative of the general market for emerging markets.
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7
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QUANTITATIVE QUANTITATIVE
GROUP OF FUNDS
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SUMMARY OF FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the funds.
Shareholder Fees (fees paid directly from your investment)
Ordinary Institutional
Shares Shares
Maximum Deferred Sales Charge (Load) Imposed on Purchases
(as a percentage of redemption proceeds) (Mid Cap Fund) None(1) None
Maximum Deferred Sales Charge (Load) Imposed on Purchases
(as a percentage of redemption proceeds) (all other funds) 1.00% None
- --------
(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, nor through
reinvestment of dividends on shares purchased before such date.
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
<TABLE>
<CAPTION>
Small Cap Mid Cap Growth and International Emerging Markets Foreign
Fund Fund Income Fund Equity Fund Fund Value Fund
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ordinary Shares
Management Fee 1.00% 1.00% .75% 1.00% .80% 1.00%
Distribution and Service (12b-1) Fees .50% .25% .50% .50% .50% .25%
Other Expenses* .44% .62% .42% .61% 1.28% 1.02%
Total Annual Fund Operating Expenses 1.94% 1.87% 1.67% 2.11% 2.58% 2.27%
Institutional Shares
Management Fee 1.00% 1.00% .75% 1.00% .80% 1.00%
Distribution and Service (12b-1) Fees None None None None None
None
Other Expenses* .44% .62% .42% .61% 1.28% 1.02%
Total Annual Fund Operating Expenses 1.44% 1.62% 1.17% 1.61% 2.08% 2.02%
</TABLE>
* The funds have an expense offset arrangement that reduces their custodian
fee based upon the amount of cash maintained by the funds with the
custodians. "Other expenses" in the table do not take into account these
expense reductions, and are therefore higher than the actual expenses of
the funds. The Manager has contractually agreed to limit the total
operating expenses of the Small Cap, 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 Emerging Markets
Funds to 2.25% of its average net assets, without giving effect to custody
credits, if applicable. Expenses eligible for reimbursement under all
applicable expense limitations do not include interest, taxes, brokerage
commissions or extraordinary expenses, and for the International Equity
Fund, international custody fees. As a result, total expenses may be higher
than the expense limitation applicable for a fund. The Distributor
voluntarily waived 12b-1 fees for the Mid Cap Fund for most of the fiscal
year ending 1999, and the Transfer Agent voluntarily waived fees for the
Foreign Value Fund for the fiscal period ending 1999. The agreement to
voluntarily waive the above mentioned fees is subject to periodic review,
and there is no guarantee that the Manager will continue to limit expenses
of these Funds and that the Distributor and Transfer Agent will continue
their respective fee waivers in the future. Expenses of the Mid Cap Fund,
the Emerging Markets Fund, and the Foreign Value Fund in the table do not
reflect the effects of these voluntary limitations. If the voluntary
limitations were included, the total Fundsexpenses, net of custody credits,
would have been as follows: Mid Cap Fund Ordinary -Shares: 1.65%,Mid
Emerging Markets Fund Ordinary Shares: 2.24%, Emerging Markets Fund
Institutional Shares: 1.74%, Foreign Value Fund Ordinary Shares: 1.90%, and
Foreign Value Fund Institutional Expenses eligible for reimbursement under
all applicable expense limitations do notinclude interest, taxes,
brokerageShares: 1.70%. 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.
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8
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QUANTITATIVE QUANTITATIVE
GROUP OF FUNDS
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This Example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Cap Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
<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 $300 $719 $1163 $2399 $147 $456 $787 $1724
Mid Cap Fund $190 $588 $1111 $2190 $165 $511 $881 $1922
Growth and Income Fund $273 $637 $1025 $2115 $119 $372 $644 $1420
International Equity Fund $317 $770 $1249 $2574 $164 $508 $876 $1911
Emerging Markets Fund $364 $910 $1483 $3042 $213 $658 $1129 $2431
Foreign Value Fund $333 $818 $1329 $2736 $205 $633 $1087 $2348
</TABLE>
This example assumes that you do not redeem your shares at the end of the
period:
<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 $197 $609 $1047 $2264 $147 $456 $787 $1724
Mid Cap Fund $190 $588 $1011 $2190 $165 $511 $881 $1922
Growth and Income Fund $170 $526 $ 907 $1976 $119 $372 $644 $1420
International Equity Fund $214 $661 $1134 $2441 $164 $508 $876 $1911
Emerging Markets Fund $261 $802 $1370 $2915 $211 $652 $1119 $2410
Foreign Value Fund $230 $709 $1215 $2605 $205 $633 $1087 $2348
</TABLE>
This Example does not reflect sales charges on reinvested
dividends. If the sales charges were included, your costs would be higher.
9
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INVESTMENT POLICIES AND RELATED RISKS
What are the funds' principal investment strategies and related risks?
U.S. Equity Funds
Quantitative Small Cap Fund
Quantitative Mid Cap Fund
Quantitative Growth and Income Fund
Under normal market conditions each fund invests at least 65% of its total
assets in common stocks. The Small Cap Fund invests at least 65% of its assets
in stocks of small-sized companies, generally with less than $1.5 billion in
market capitalization. The Mid Cap Fund invests at least 65% of its assets in
stocks of mid-sized companies, generally between $1 billion and $5 billion in
market capitalization. The Growth and Income Fund mainly buys stocks of large
companies, generally greater than $5 billion in market capitalization that are
currently paying dividends.
International Funds
Quantitative International Equity Fund
Under normal market conditions the International Equity Fund invests at least
65% of its assets in common stocks of issuers that have their principal
activities in foreign markets. The fund's investments will be diversified among
securities of companies located in nine or more foreign countries. This
diversification should enablehelp the fundto take advantage of differences
between economic trends and the performance of the securities markets in various
countries. The diversification also may reduce the effect of events in any one
country on the fund's performance.
Quantitative Emerging Markets Fund
Under normal market conditions the Emerging Markets Fund invests at least 65% of
its assets in common stocks of issuers that are located in emerging markets. The
fund generally will be invested in issuers 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 emerging markets of the world will be used to
define the eligible universe of potential markets for investment.
Quantitative Foreign Value Fund
Under normal market conditions the Foreign Value Fund invests at least 65% of
its assets in common stocks of issuers that have their principal activities in
foreign markets. The fund mainly invests in value stocks that the fund's advisor
believes are currently undervalued compared to their true worth. Generally, the
Foreign Value Fund invests in Western Europe, Australia, and the larger capital
markets in the Far East; however, the fund may also invest without limit in
issuers in emerging markets.
All Funds
The funds currently operate under a "manager of managers" system. The manager
selects advisors to execute the day-to-day investment strategy of the funds and
monitors the advisor's performance. Each of the funds' advisors employs a
"quantitative" investment approach to selecting investments. Investment advisors
using this approach to investing rely on computer model and financial databases
to assist in the stock selection process. Proprietary computer models are
capable of rapidly ranking a large universe of eligible investments using an
array of traditional factors applied in financial analysis, such as cash flow,
earnings growth, and price to earnings ratios, as well as other non-traditional
factors. With the benefit of these rankings, a fund's advisor constructs a
portfolio of securities consistent with each individual fund's investment
objectives. A description of the risks associated with each fund's main
investment strategies follows.
Related Risks
COMMON STOCKS. Common stocks represent ownership interests in companies. The
value of a company's stock may fall as a result of factors directly relating to
that company, such as decisions made by its management or lower demand for the
company's products or services. A stock's value may also fall because of factors
affecting multiple companies in a number of different industries, such as
increases in production costs. The value of a company's stock may also be
affected by changes in financial market conditions that are relatively unrelated
to the company or its industry, such as changes in interest rates or currency
exchange rates. In addition, a company's stock generally pays dividends only
after the company makes required payments to holders of its bonds and other
debt. For this reason, the value of the stock will usually react more strongly
than the bonds and other debt to actual or perceived changes in the company's
financial condition or prospects.
GROWTH STOCKS. Each fund may invest in stocks of companies its advisor believes
have earnings that are likely to grow faster than the economy as a whole. These
growth stocks typically trade at higher multiples of current earnings than other
stocks. Therefore, the values of growth stocks may be more sensitive to changes
in current or expected earnings than the values of other stocks. If the fund's
advisor's assessment of the prospects for the company's earnings growth is
wrong, or if its judgment about how other investors will value the company's
earnings growth is wrong, then the price of the company's stock may fall or not
approach the value that the fund's advisor has placed on it.
10
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VALUE STOCKS. Each fund may also invest in companies that are not expected to
experience significant earnings growth, but whose stock the fund's advisor
believes is undervalued compared to its true worth. These companies may have
experienced adverse business developments or may be subject to special risks
that have caused their stocks to be out of favor. If the fund's advisor's
assessment of a company's prospects is wrong, or if other investors do not
eventually recognize the value of the company, then the price of the company's
stock may fall or may not approach the value that the fund's advisor has placed
on it.
SMALLER COMPANIES. Each of the Small Cap Fund and the Mid Cap Fund invests a
substantial portion of its assets in small and medium-sized companies, including
companies with market capitalization of less than $5 billion. These companies
are more likely than larger companies to have limited product lines, markets or
financial resources, or to depend on a small, inexperienced management group.
Stocks of these companies may trade less frequently and in limited volume, and
their prices may fluctuate more than stocks of other companies. Stocks of these
companies may therefore be more vulnerable to adverse developments than those of
larger companies. There are no minimum market capitalizations for companies
whose securities a fund may purchase.
FOREIGN INVESTMENTS. The International Funds may invest without limit in
securities of foreign issuers. Foreign investments involve certain special
risks, including:
- -- Unfavorable changes in currency exchange rates: Foreign investments are
normally issued and traded in foreign currencies. As a result, their values
may be affected by changes in the exchange rates between particular foreign
currencies and the U.S.
dollar.
- -- Political and economic developments: Foreign investments may be subject to
the risks of seizure by a foreign government, imposition of restrictions on
the exchange or transport of foreign currency, and tax increases.
- -- Unreliable or untimely information: There may be less information publicly
available about a foreign company than about most U.S. companies, and
foreign companies are usually not subject to accounting, auditing and
financial reporting standards and practices comparable to those in the
United States.
- -- Limited legal recourse: Legal remedies for investors such as the funds may
be more limited than those available in the United States.
- -- Limited markets: Certain foreign investments may be less liquid (harder to
buy and sell) and more volatile than domestic investments, which means the
funds may at times be unable to sell these investments at desirable prices.
For the same reason, the funds may at times find it difficult to value
their foreign investments.
- -- Trading practices: Brokerage commissions and other fees are generally
higher for foreign investments than for domestic investments. The
procedures and rules for settling foreign transactions may also involve
delays in payment, delivery or recovery of money or investments.
- -- Lower yield: Common stocks of foreign companies have historically offered
lower dividends than comparable U.S. companies. Foreign withholding taxes
may further reduce the amount of income available to distribute to
shareholders of the fund. The funds' yields are therefore expected to be
lower than yields of most funds that invest mainly in common stocks of U.S.
companies. Certain of these risks may also apply to some extent to
U.S.-traded investments that are denominated in foreign currencies,
investments in U.S. companies that are traded in foreign markets, or to
investments in U.S. companies that have significant foreign operations.
- -- Emerging markets: Investing in emerging markets involves risks in addition
to and greater than those generally associated with investing in more
developed foreign markets. The extent of foreign development, political
stability, market depth, infrastructure and capitalization and regulatory
oversight are generally less than in more developed markets. Emerging
market economies can be subject to greater social, economic, regulatory and
political uncertainties. All of these factors generally make emerging
market securities more volatile and potentially less liquid than securities
issued in more developed markets.
OTHER INVESTMENTS. In addition to the main investment strategies described
above, each fund may also make other types of investments, such as investments
in preferred stocks, convertible securities, fixed-income securities, ADRs,
derivatives, or repurchase agreements and may also implement other strategies
including selling securities short, and therefore may be subject to other risks,
as described in the fund's Statement of Additional Information ("SAI").
ALTERNATIVE STRATEGIES. At times each fund's advisor may judge that market
conditions make pursuing the fund's investment strategies inconsistent with the
best interests of its shareholders. Each fund's advisor may then temporarily use
alternative strategies that are mainly designed to limit the fund's losses.
Although each fund's advisor has the flexibility to use these strategies, it may
choose not to for a variety of reasons, even in very volatile market conditions.
These strategies may cause the fund to miss out on investment opportunities, and
may prevent the fund from achieving its objective.
11
<PAGE>
CHANGES IN POLICIES. The Trustees may change each fund's objective, investment
strategies and other policies without shareholder approval, except as otherwise
indicated.
MANAGEMENT OF THE FUNDS
Under Massachusetts law, the management of the funds' business and affairs is
the ultimate responsibility of the Board of Trustees of the funds.
The Manager and the Advisors
The funds are managed by Quantitative Advisors, Inc., 55 Old Bedford Road,
Lincoln, MA 01773 (the "Manager"), which handles the funds' business affairs.
The Manager may, subject to the approval of the Trustees, choose the investments
of the funds itself or, subject to the approval by the Trustees, select
subadvisors (the "Advisors") to handle the day-to-day investments of the funds.
The Manager currently employs Advisors to make the investment decisions and
portfolio transactions for all of the funds and supervises the Advisors'
investment programs.
Day-to-day responsibility for investing the funds' assets currently is provided
by the Advisors described below. The funds have received an exemptive order from
the SEC that permits the Manager, subject to certain conditions, to enter into
or amend an advisory contract without obtaining shareholder approval. With
Trustee approval, the Manager may employ a new advisor for a fund, change the
terms of the advisory contracts, or enter into new advisory contracts with the
advisors. The Manager retains ultimate responsibility to oversee the Advisors
and to recommend their hiring, termination, and replacement. Shareholders of a
fund continue to have the right to terminate the advisory contract applicable to
that Fund at any time by a vote of the majority of the outstanding voting
securities of the fund. Shareholders will be notified of any advisor changes or
other material amendments to an advisory contract that occur under these
arrangements.
Quantitative Small Cap Fund
Quantitative Mid Cap Fund
Columbia Partners, LLC., Investment Management, 1775 Pennsylvania Ave., NW,
Washington, DC 20006 ("Columbia Partners") serves as Advisor to the Small Cap
Fund and the Mid Cap Fund. The firm presently has over $1 billion in assets
under management for individual, 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 financial officer of Riggs Investment Management
Corporation, where he worked from 1989 to 1995.
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 continuously 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. 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 Management from 1995
to 1996 and the President and Managing Director of BRS Capital Management from
1987-1995.1987 to 1995.
Quantitative International Equity Fund
Quantitative Emerging Markets Fund
Independence International Associates, Inc., 53 State Street, Boston, MA 02109,
formerly Boston International Advisors, Inc. ("Independence International"),
serves as Advisor to the International Equity Fund and the Emerging Markets
Fund. The firm presently has over $2 billion in assets under management in
international portfolios of pension and endowment funds, among others. Norman H.
Meltz and Dennis Fogerty manage both the International Equity Fund and Emerging
Markets Fund. Mr. Meltz has 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
Associates, Inc., a Delaware corporation.
Quantitative Foreign Value Fund
Polaris Capital Management, Inc., 125 Summer Street, Boston, MA 02110
("Polaris") serves as Advisor to the Foreign Value Fund. The firm presently has
over $50 million in assets under management for institutional clients and
wealthy individuals. The Foreign Value Fund is managed by Bernard R. Horn, Jr.
Prior to founding Polaris in 1995, Mr. Horn worked as a portfolio manager at
Horn & Company, Freedom Capital Management Corporation, and MDT Advisers, Inc.
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Management and Advisory Fees
As compensation for services rendered, the funds pay, and did pay for fiscal
year 1999, 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 applicable. The Manager waived its fees as
necessary consistent with the expense limitations discussed below.
The Manager is contractually obligated 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 ("Distributor"), 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 average net asset value for any fiscal
year. Fund expenses subject to this limitation are exclusive of brokerage,
interest, taxes and extraordinary expenses, and are calculated gross of custody
credits, if applicable. Extraordinary expenses include, but are not limited to,
the higher incremental costs of custody associated with foreign securities,
litigation and indemnification expenses. 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 Distributor, and in some cases the Manager, may make ongoing
payments to brokerage firms, financial institutions (including banks) and others
that facilitate the administration and servicing of shareholder accounts.
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 reimbursement
from the fund if the fund's total operating expenses fall below that limit prior
to the end of the funds' fiscal year. The Manager voluntarily has agreed to
waive fees or assume certain operating expenses of the Emerging Markets Funds in
order to reduce the total expenses of the fund to no more than 2.25% of the
fund's average net asset value. Expenses eligible for reimbursement do not
include interest, taxes, brokerage commissions, or extraordinary expenses, and
expenses are calculated gross of custody credits, if applicable. Extraordinary
expenses include, but are not limited to, the higher incremental costs of
custody associated with foreign securities, 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.
The funds have received an exemptive order from the SEC that permits the
Manager, subject to certain conditions, to enter into or amend an Advisory
Contract without obtaining shareholder approval. With Trustee approval, the
Manager may employ a new Advisor for a fund, change the terms of the Advisory
Contracts, or enter into new Advisory Contracts with the Advisors. The Manager
retains ultimate responsibility to oversee the Advisors and to recommend their
hiring, termination, and replacement. Shareholders of a fund continue to have
the right to terminate the Advisory Contract applicable to that fund at any time
by a vote of the majority of the outstanding voting securities of the fund.
Shareholders will be notified of any Advisor changes or other material
amendments to an Advisory Contract that occurs under these arrangements.
HOW TO INVEST
Classes of Shares
The funds offer two classes of shares: Ordinary Shares and Institutional Shares.
Ordinary Shares are available to all purchasers and are subject to a 12b-1 fee
and in some cases a deferred sales charge as set forth below:
Deferred 12b-1
Fund Sales Charge Fee
- ---------------------- ------------ -------
Small Cap 1.00% 0.50%
Mid Cap 0.00% 0.25%
Growth & Income 1.00% 0.50%
International Equity 1.00% 0.50%
Emerging Markets 1.00% 0.50%
Foreign Value 1.00% 0.25%
Institutional Shares are available to limited classes of purchasers and are
offered on a no-load basis. See How to Redeem Payment of Redemption Amount on
page 15. Both classes of shares represent interests in the same
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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, which
is described below.
Distributor and Distribution Plan
U.S. Boston Capital Corporation ("Distributor") is the principal distributor of
the funds' shares.
The funds have adopted a distribution plan under Rule 12b-1 ofto pay for the
marketing of fund shares and for services provided to shareholders of the funds'
Ordinary Shares. These annual distribution and service fees are 0.50% of average
net assets for Ordinary Shares of the Small Cap Fund, Growth and Income Fund,
International Equity Fund, and Emerging Markets Fund and 0.25% of the average
netasset valueassets of Ordinary Shares of the Mid Cap Fund and the Foreign
Value Fund, and are paid out of the assets of these classes. Over time, these
fees will increase the cost of your shares and may cost you more than paying
other types of sales charges. The fee is not directly tied to the Distributor's
expenses. If expenses exceed the Distributor's fees, the funds are not required
to reimburse the Distributor for excess expenses; if the Distributor's fees
exceed the expenses of distribution, the Distributor may realize a profit.
Ordinary Shares
The minimum initial investment is generally $2,500. However, you may make a
minimum investment of $1,000 if you:
- -- participate in the funds' Automatic Investment Plan;
- -- open a Uniform Gifts/Transfers to Minors account; or
- -- open an Individual Retirement Account ("IRA") or an account under similar
plan established under the Employee Retirement Income Security Act of 1974,
or for any pension, profit sharing or other employee benefit plan or
participant therein, whether or not the plan is qualified under Section 401
of the Internal Revenue Code, including any plan established under the
Self-Employed Individuals Tax Retirement Act of 1962 (HR-10).
The funds or the Distributor, at their discretion, may waive these minimums.
You may make subsequent purchases in any amount, although the funds or the
Distributor, at their discretion, reserve the right to impose a minimum at any
time.
Institutional Shares
Institutional Shares of a fund generally are available in minimum investments of
$1,000,000 or more. You may only purchase Institutional Shares, subject to the
$1,000,000 minimum, if you fall under one of the following classes of investors:
(i) benefit plans with at least $10,000,000 in plan assets and 200 participants,
that either have a separate trustee vested with investment discretion and
certain limitations on the ability of plan beneficiaries to access their plan
investments without incurring adverse tax consequences or which allow their
participants to select among one or more investment options, including the
Fund;fund; (ii) banks and insurance companies purchasing shares for their own
account; (iii) a bank, trust company, credit union, savings institution or other
depository institution, its trust departments or common trust funds purchasing
for non-discretionary customers or accounts; (iv) certain fee paid registered
investment advisors not affiliated with the Manager or Distributor purchasing on
behalf of their clients; and (v) investors who hold Institutional Shares
purchasing for existing Institutional Share accounts.
Clients of certain securities dealers not affiliated with the Distributor
offering programs in which the client pays a separate fee to an advisor
providing financial management or consulting services, including WRAP fee
programs may purchase Institutional Shares subject to a minimum initial
investment of $250,000 in the aggregate at the investment management level
and/or $100,000 at the individual client level. 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 to clients of such securities
dealers or financial advisors.
The following classes of investors may also purchase Institutional Shares and
are not subject to the minimum initial investment requirement:
(i) any state, county, city, or any instrumentality, department, authority, or
agency of these entities or any trust, pension, profit-sharing or other benefit
plan for the benefit of the employees of these entities which is prohibited by
applicable investment laws from paying a sales charge or commission when it
purchases shares of any registered investment management company; and (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
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agreement or the spouse or child of such employee. To qualify for the purchase
of Institutional Shares, Fund Employees and other persons listed in section (ii)
must provide Quantitative Institutional Services, the funds' Transfer Agent,
with a letter stating that the purchase is for their own investment purposes
only and that the shares will not be resold except to the funds.
Institutional Shares are not subject to any sales charges, including fees
pursuant to the funds' 12b-1 Plan. Investments in Institutional Shares require a
special Account Application. Please call 1-800-331-1244 for an Application.
Making an Initial Investment
You may purchase shares of each class of a fund at the per share net asset value
of shares of such class next determined after your purchase order is received by
the fund. Orders received prior to the close of regular trading on the New York
Stock Exchange ("NYSE") (ordinarily 4:00 p.m., Eastern Standard 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 16. 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.
You must provide the fund with a completed Account Application for all initial
investments. If you wish to have telephone exchange or telephone redemption
privileges for your account, you must elect these options on the Account
Application. You should carefully review the Application and particularly
consider the discussion in this Prospectus regarding the funds' policies on
exchanges of fund shares and processing of redemption requests. Some accounts,
including IRA accounts, require a special Account Application. See Investment
Through Tax Deferred Retirement Plans on page 14. For further information,
including assistance in completing an Account Application, call the funds'
toll-free number 1-800-331-1244. Shares may not be purchased by facsimile
request or by electronic mail.
Investments by Check
You may purchase shares of the funds by sending a check payable to Quantitative
Group of Funds specifying 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
If you buy shares with a check that does not clear, your account may be subject
to extra charges to cover collection costs.
Automatic Investment Plan
You 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. You must also authorize an automatic withdrawal
of at least $100 per fund from your checking, NOW or similar account each month
to purchase shares of a fund. You may cancel the Plan at any time, but your
request must be received five business days before the next automatic withdrawal
(generally the 20th of each month) to become effective for that withdrawal.
Requests received fewer than five business days before a scheduled withdrawal
will take effect with the next scheduled withdrawal. The funds or the Transfer
Agent may terminate the Automatic Investment Plan at any time.
Investments by Wire
If you wish to buy shares by wire, please contact the Transfer Agent at
1-800-331-1244 or your dealer or broker for wire instructions. For new accounts,
you must provide a completed Account Application before, or at the time of,
payment. To ensure that a wire is credited to the proper account, please specify
your name, the name(s) of the fund(s) and class of shares in which you are
investing, and your account number. 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 were
received by the dealer or broker prior to the close of regular trading on the
New York Stock Exchange ("NYSE") (ordinarily 4:00 p.m., Eastern Standard time)
and are transmitted to and received by the Distributor prior to its close of
business that day.
Exchange of Securities for Shares of the Fund
At the discretion of the Manager and relevant Advisors, you may purchase shares
of a fund 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.
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Subsequent Investments
If you are buying additional shares in an existing account, you should identify
the fund and your account number. If you do not specify the fund, we will return
your check to you. If you wish to make additional investments in more than one
fund, you should provide your account numbers and identify the amount to be
invested in each fund. You may pay for all purchases with a single check.
Investments through Tax-Deferred Retirement Plans
Retirement plans offer you 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
Pension Plans (SEP-IRAs), and 403(b) Accounts for employees of tax exempt
institutions (including schools, hospitals and charitable organizations) require
a special Account Application. Please call 1-800-331-1244 for assistance. State
Street Bank and Trust Company acts as custodian for the funds' tax-deferred
accounts. Custodial accounts are subject to specific fees. You may open other
types of tax-deferred accounts, including accounts established by a Plan Sponsor
under Section 401(k) of the Internal Revenue Code for employee benefit plans,
using the attached Account Application.
HOW TO MAKE EXCHANGES
You can exchange all or a portion of your shares between funds within the same
class, subject to the applicable minimum. You may not exchange from one class of
shares to another class of shares of the same or a different fund. There is no
fee for exchanges. However, if you exchange shares of a fund subject to the
deferred sales charge for the no-load Ordinary Shares of the Mid Cap Fund, you
will be assessed the deferred sales charge upon redemption from the fund group.
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. You should be aware that exchanges may produce a gain or loss, as
the case may be, for tax purposes.
You can make exchanges in writing or by telephone, if applicable. Exchanges must
be made between accounts that have the same name, address and tax identification
number. Exchanges will be made at the per share net asset value of shares of
such class next determined after the exchange request is received in good order
by the fund. If exchanging by telephone, you must call prior to the close of
regular trading on the NYSE (ordinarily 4:00 p.m., Eastern Standard time). We
will only honor a telephone exchange if you have elected the telephone exchange
option on your Account Application. Shares may not be exchanged by facsimile
request or by electronic mail.
HOW TO REDEEM
You can directly redeem shares of a fund by written request, by telephone and by
automatic withdrawal. Redemptions will be made at the per share net asset value
of such shares next determined after the redemption request is received in good
order by the fund. The Transfer Agent will accept redemption requests only on
days the NYSE is open. We will not accept requests for redemption that are
subject to any special conditions or which specify a future or past effective
date, except for certain notices of redemptions exceeding $250,000 (see Payment
of Redemption Amount on page 15).
Written Request for Redemption
You can redeem all or any portion of your shares by submitting a written request
for redemption signed by each registered owner of the shares 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 you redeem more than $10,000, or request 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, your signature must be signature guaranteed. The use
of signature guarantees is designed to protect both you 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, national securities exchanges, registered securities
associations, clearing agencies and savings associations. A notary public cannot
provide a signature guarantee. Shares may not be redeemed by facsimile request
or by electronic mail. Requests should be sent to:
Quantitative Group of Funds
Attention: Transfer Agent
55 Old Bedford Road
Lincoln, Massachusetts 01773
Telephone Redemption
If you have elected the telephone redemption option on your Account Application,
you can redeem your shares by calling the Transfer Agent at 1-800-331-1244
provided that you have not changed your address of record within the last thirty
days. You must make your redemption request prior to the close of regular
trading on the NYSE (ordinarily 4:00 p.m.,
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Eastern Standard time). Once you make a telephone redemption request, you may
not cancel it. 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 exchange
or redemption instructions received by telephone reasonably believed to be
genuine. The funds employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. It is the funds' policy to require some
form of personal identification prior to acting upon instructions received by
telephone, to provide written confirmation of all transactions effected by
telephone, and to mail the proceeds of telephone redemptions only to the
redeeming shareholder's address of record.
Automatic Withdrawal Plan
If you have a minimum of $10,000 in your account, you may request withdrawal of
a specified dollar amount (a minimum of $100) on either a monthly or quarterly
basis. You may establish an Automatic Withdrawal Plan by completing the
Automatic Withdrawal Form, which is available by calling 1-800-331-1244. You may
stop your Automatic Withdrawal Plan at any time. Additionally, the funds or the
Transfer Agent may choose to stop offering the Automatic Withdrawal Plan.
Redemption through Brokers
You may sell shares back to the funds through selected dealers or brokers. You
should contact your securities broker or dealer for appropriate instructions and
for information concerning any transaction or service fee that may be imposed by
the dealer or broker. Redemption requests received by the Distributor from
dealers or brokers will receive that evening's closing price if the requests are
received by the dealer or broker from its customer prior to 4:00 p.m., Eastern
Standard time, and are transmitted to and received by the Distributor prior to
its close of business that day.
Payment of Redemption Amount
The funds will generally send redemption proceeds, less a deferred sales charge
of 1% for Ordinary Shares where applicable, 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 rightnot to honorhold the redemption requestcheck untilthe
monies have been collected by the fund from the customers' bank.
Except as noted below, a deferred sales charge amounting to 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 you transfer your shares from an account maintained with the fund that is
subject to the deferred sales charge to an account 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 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 14). 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
imposed by the fund; (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) redemptions of shares held in omnibus
accounts maintained by no transaction fee ("NTF") programs of certain
broker-dealers pursuant to a written agreement between the broker-dealer and the
fund, the Manager and/or the Distributor. However, the deferred sales charge
will be imposed on redemptions of shares maintained by NTF programs held for
fewer than 31 calendar days. In addition, the deferred sales charge will not be
imposed on redemptions of Ordinary Shares made by Fund Employees and related
persons qualified to purchase Institutional Shares.
Redemptions in Excess of $250,000
The funds have reserved the right to pay redemption proceeds by a distribution
in-kind of portfolio securities (rather than cash). In the event that a fund
makes an in-kind distribution, you could incur the brokerage and transaction
charges when converting the securities to cash. The funds do not expect to make
in-kind distributions, and if they do, the funds will pay, during any 90-day day
period, your redemption proceeds in cash up to either $250,000 or 1% of the
fund's net assets, whichever is less.
The funds will pay all of your redemption proceeds in cash if you provide the
funds with at least 30 days' notice before you plan to redeem. You 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.
You may make the instruction by telephone if you have telephone redemption
privileges; otherwise, your request must be in writing with all signatures
guaranteed. If you make a request and subsequently cancel it, subsequent
redemption requests may not all be paid in cash unless the subsequent request is
at least 90 days after the date of the prior canceled redemption request.
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CALCULATION OF NET ASSET VALUE
Net asset value ("NAV") for one fund share is the value of that share's portion
of all of the net assets in the fund. NAV 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. A fund calculates its NAV by adding the value of
the fund's investments, cash, and other assets, subtracting its liabilities, and
then dividing the result by the number of shares outstanding.
The funds' assets are valued primarily on the basis of market quotations. 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 using current exchange
rates. If a fund holds securities listed primarily on a foreign exchange that
trades on days that the fund is not open for business, the value of your shares
may change on days when you cannot buy or sell shares.
Securities and assets, including any restricted securities, will be valued at
their fair value Trustees.following procedures approved by the Trustees for
which market prices are not readily available.
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. Normally, distributions are made once a year in December.
Unless you elect otherwise, all distributions will be automatically reinvested
in additional shares of the fund you own. You may also elect to have dividends,
capital gains, or both paid in cash. All distributions, whether received in
shares or cash, are taxable and must be reported by you on Federal income tax
returns.
Taxation
The following discussion is very general. You are urged to consult your tax
adviser regarding the effect that an investment in the funds may have on your
particular tax situation.
Taxability of Distributions.
You will normally have to pay federal income taxes, and any state or local
taxes, on the distributions you receive from the funds, whether you take the
distributions in cash or reinvest them in additional shares. Distributions
designated as capital gain dividends are taxable as long-term capital gains. 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 dividends
received deduction for corporate shareholders. Other distributions are generally
taxable as ordinary income. The fund expects that the majority of its
distributions will be designated as capital gains, however the proportion of
such distributions may vary. Some dividends paid in January may be taxable as if
they had been paid the previous December.
The Form 1099 that is mailed to you every January details your distributions and
how they are treated for federal taxpurposes.
purposes. Fund distributions will reduce the fund's net asset value per share.
Therefore, if you buy shares shortly before the record date of a distribution,
you may pay the full price for the shares and then effectively receive a portion
of the purchase price back as a taxable distribution.
If you are neither a citizen nor a resident of the U.S., the funds will withhold
U.S. federal income tax at the rate of 30% on taxable dividends and other
payments that are subject to such withholding. You may be able to arrange for a
lower withholding rate under an applicable tax treaty if you supply the
appropriate documentation required by the funds. The funds are also required in
certain circumstances to apply backup withholding at the rate of 31% on taxable
dividends and redemption proceeds paid to any shareholder (including a
shareholder who is neither a citizen nor a resident of the U.S.) who does not
furnish to the fund certain information and certifications or who is otherwise
subject to backup withholding. Backup withholding will not, however, be applied
to payments that have been subject to 30% withholding. Prospective investors
should read the funds' Account Application for additional information regarding
backup withholding of federal income tax.
Taxability of Transactions.
When you redeem, sell or exchange shares, it is generally considered a taxable
event for you. Depending on the purchase price and the sale price of the shares
you redeem, sell or exchange, you may have a gain or a loss on the transaction.
You are responsible for any tax liabilities generated by your transaction.
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Further information relating to tax consequences is contained in the Statement
of Additional Information. Fund distributions also may be subject to state,
local and foreign taxes.
OTHER INFORMATION
Year 2000 Issues
The funds could be adversely affected if the computer systems used by the
thefunds' Advisors or Manager and the funds' other service providers do not
properly process and calculatecompanies in which the funds investdo not properly
process date-related information relating to the end of this century and the
beginning of the next. While year 2000-related computer problems could have a
negative effect on a fund, both in its operations and in its investments, the
funds' advisors and manager are working to avoid such problems and to obtain
assurances from service providers that they are taking similar steps. No
assurances, though, can be provided that the fund will not be adversely impacted
by these matters. Additionally, companies in which the funds invest may be
negatively affected by year 2000 issues and foreign companies may be more likely
to be affected than domestic companies.
Provision of Annual and Semi-annual Reports
To avoid sending duplicate copies of materials to households, only one copy of
the funds' annual and semi-annual report will be mailed to shareholders having
the same residential address on the fund's records. However, any shareholder may
contact the funds (see back cover for address and phone number) to request that
copies of these reports be sent personally to that shareholder free of charge.
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FINANCIAL HIGHLIGHTS
The following per share financial information for the Small Cap Fund, Mid Cap
Fund, Growth and Income Fund, International Equity Fund, Emerging Markets Fund
and Foreign Value Fund has been audited by PricewaterhouseCoopers LLP
independent accountants, whose report thereon is incorporated by reference in
the Statement of Additional Information. This condensed financial information
should be read in conjunction with the related financial statements and notes
thereto as incorporated by reference in the Statement of Additional Information.
You can learn more about the funds in the following documents:
For more information about the Quantitative Group of Funds, the funds' Statement
of Additional Information (SAI) and annual and semi-annual reports to
shareholders include additional information about the funds. The SAI, and the
auditor's report and financial statements included in the funds' most recent
annual report to shareholders, are incorporated by reference into this
prospectus, which means they are part of this prospectus for legal purposes.
The funds' annual report discusses the market conditions and investment
strategies that significantly affected each funds' performance during its last
fiscal year. You may get free copies of these materials, request other
information about the funds, or make shareholder inquiries, by contacting your
financial advisor or the Quantitative Group of Fund's web site,
www.quantfunds.com, or by calling toll-free at 1-800-331-1244.
Investment Company Act file 811-3790
20
<PAGE>
You may review and copy information about the funds, including their SAI, at the
Securities and Exchange Commission's public reference room in Washington, D.C.
You may call the Commission at 1-800-SEC-0330 for information about the
operation of the public reference room. You may also access reports and other
information about the funds on the Commission's Internet site at
http://www.sec.gov. You may get copies of this information, with payment of a
duplication fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may need to refer to the funds' file number.
21
<PAGE>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Income from
Investment Operations (e) Distributions
----------------------------------------------------------- ---------------------------
Net Asset Net Realized Dividends Dividends
Value at Net and Unrealized Total from from Net in excess of
Beginning Investment Gain (Loss) Investment Investment Net Investment
of Period Income (a) on Securities Operations Income Income
Small Cap
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ordinary Shares
Year Ended March 31, 1995 $ 15.33 (0.20) 1.67 1.47 --- ---
Year Ended March 31, 1996 $ 15.81 (0.21) 5.54 5.33 --- ---
Year Ended March 31, 1997 $ 18.91 0.16 (f) 0.77 0.93 --- ---
Year Ended March 31, 1998 $ 15.04 (0.23) 5.60 5.37 (0.16) ---
Year Ended March 31, 1999 $ 17.80 (0.15) (3.05) (3.20) --- ---
Institutional Shares
Year Ended March 31, 1995 $ 15.46 (0.13) 1.71 1.58 --- ---
Year Ended March 31, 1996 $ 16.05 (0.12) 5.63 5.51 --- ---
Year Ended March 31, 1997 $ 19.33 0.08 (f) 0.94 1.02 --- ---
Year Ended March 31, 1998 $ 15.55 (0.15) 5.79 5.64 (0.34) ---
Year Ended March 31, 1999 $ 18.40 (0.08) (3.15) (3.23) --- ---
Mid Cap
Ordinary Shares
Oct. 3, 1994** to March 31, 1995 $ 10.00 0.05 0.07 0.12 --- ---
Year Ended March 31, 1996 $ 10.12 0.06 3.27 3.33 (0.01) ---
Year Ended March 31, 1997 $ 13.20 0.09 2.29 2.38 (0.14) ---
Year Ended March 31, 1998 $ 13.44 (0.08) 6.06 5.98 --- ---
Year Ended March 31, 1999 $ 16.05 (0.11) (0.09) (0.20) --- ---
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Income from
Investment Operations (e) Distributions
----------------------------------------------------------- ---------------------------
Net Asset Net Realized Dividends Dividends
Value at Net and Unrealized Total from from Net in excess of
Beginning Investment Gain (Loss) Investment Investment Net Investment
of Period Income (a) on Securities Operations Income Income
Small Cap
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional Shares
April 17, 1995** to March 31, 1996 $ 10.27 0.10 3.09 3.19 (0.02) ---
Year Ended March 31, 1997 $ 13.20 0.11 2.27 2.38 (0.03) ---
Year Ended March 31, 1998 $ 13.55 (0.06) 6.12 6.06 --- ---
Year Ended March 31, 1999 $ 16.24 (0.10) (0.10) (0.20) --- ---
Growth and Income
Ordinary Shares
Year Ended March 31, 1995 $ 13.85 0.14 1.44 1.58 (0.18) ---
Year Ended March 31, 1996 $ 13.72 0.12 2.89 3.01 (0.13) ---
Year Ended March 31, 1997 $ 14.57 0.08 2.53 2.61 (0.10) ---
Year Ended March 31, 1998 $ 15.22 0.00 7.61 7.61 (0.05) ---
Year Ended March 31, 1999 $ 20.85 (0.08) 2.82 2.74 --- ---
Institutional Shares
Year Ended March 31, 1995 $ 13.86 0.21 1.44 1.65 (0.23) ---
Year Ended March 31, 1996 $ 13.72 0.20 2.89 3.09 (0.20) ---
Year Ended March 31, 1997 $ 14.58 0.15 2.55 2.70 (0.18) ---
Year Ended March 31, 1998 $ 15.24 0.10 7.60 7.70 (0.17) ---
Year Ended March 31, 1999 $ 20.84 0.03 2.83 2.86 --- ---
<CAPTION>
-------------------------------------------------------------------------------------
Distributions Distributions Net Assets
from in excess of Net Asset End of
Realized Realized Total Value End Total Period
Capital Gains Capital Gains Distributions of Period Return (c) (000's)
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Small Cap
Ordinary Shares
Year Ended March 31, 1995 (0.99) --- (0.99) $ 15.81 10.24 % $ 53,920
Year Ended March 31, 1996 (2.23) --- (2.23) $ 18.91 34.25 % $ 71,618
Year Ended March 31, 1997 (4.80) --- (4.80) $ 15.04 1.72 % $ 57,135
Year Ended March 31, 1998 (2.45) (g) --- (2.61) $ 17.80 37.79 % $ 66,876
Year Ended March 31, 1999 --- --- --- $ 14.60 (17.98)% $ 47,605
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
Distributions Distributions Net Assets
from in excess of Net Asset End of
Realized Realized Total Value End Total Period
Capital Gains Capital Gains Distributions of Period Return (c) (000's)
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional Shares
Year Ended March 31, 1995 (0.99) --- (0.99) $ 16.05 10.88 % $ 47,044
Year Ended March 31, 1996 (2.23) --- (2.23) $ 19.33 34.89 % $ 42,803
Year Ended March 31, 1997 (4.80) --- (4.80) $ 15.55 2.21 % $ 9,207
Year Ended March 31, 1998 (2.45) (g) --- (2.79) $ 18.40 38.44 % $ 6,286
Year Ended March 31, 1999 --- --- --- $ 15.17 (17.55)% $ 4,680
Mid Cap
Ordinary Shares
Oct. 3, 1994** to March 31, 1995 --- --- --- $ 10.12 1.20 % $ 420
Year Ended March 31, 1996 (0.24) --- (0.25) $ 13.20 33.01 % $ 6,025
Year Ended March 31, 1997 (2.00) --- (2.14) $ 13.44 17.47 % $ 8,733
Year Ended March 31, 1998 (3.37) --- (3.37) $ 16.05 46.76 % $ 15,484
Year Ended March 31, 1999 (0.39) --- (0.39) $ 15.46 (1.08)% $ 12,617
Institutional Shares
April 17, 1995** to March 31, 1996 (0.24) --- (0.26) $ 13.20 31.12 % $ 4,621
Year Ended March 31, 1997 (2.00) --- (2.03) $ 13.55 17.51 % $ 361
Year Ended March 31, 1998 (3.37) --- (3.37) $ 16.24 47.01 % $ 823
Year Ended March 31, 1999 (0.39) --- (0.39) $ 15.65 (1.07)% $ 557
Growth and Income
Ordinary Shares
Year Ended March 31, 1995 (1.56) --- (1.72) $ 13.72 12.71 % $ 37,048
Year Ended March 31, 1996 (2.03) --- (2.16) $ 14.57 22.17 % $ 41,353
Year Ended March 31, 1997 (1.86) --- (1.96) $ 15.22 17.97 % $ 43,266
Year Ended March 31, 1998 (1.93) --- (1.98) $ 20.85 51.52 % $ 66,397
Year Ended March 31, 1999 (2.33) --- (2.33) $ 21.26 13.67 % $ 70,874
Institutional Shares
Year Ended March 31, 1995 (1.56) --- (1.79) $ 13.72 13.29 % $ 1,975
Year Ended March 31, 1996 (2.03) --- (2.23) $ 14.58 22.75 % $ 1,888
Year Ended March 31, 1997 (1.86) --- (2.04) $ 15.24 18.62 % $ 1,532
Year Ended March 31, 1998 (1.93) --- (2.10) $ 20.84 52.18 % $ 3,724
Year Ended March 31, 1999 (2.33) --- (2.33) $ 21.37 14.27 % $ 4,607
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Ratios and Supplemental Data
---------------------------------------------------------------------
Ratio of Ratio of Ratio of Net
Operating Operating Investment
Expenses Expenses Income (Loss)
to Average Net of to Average Portfolio
Net Assets Custody Net Assets Turnover
Credits
to Average
Net Assets(d)
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Small Cap
Ordinary Shares
Year Ended March 31, 1995 1.84 % 1.84 % (1.31)% 320.00 %
Year Ended March 31, 1996 1.97 % 1.88 % (1.17)% 324.00 %
Year Ended March 31, 1997 1.97 % 1.90 % 0.90 % (l) 393.00 %
Year Ended March 31, 1998 1.90 % 1.89 % (1.33)% 135.00 %
Year Ended March 31, 1999 1.94 % 1.94 % (0.99)% 113.00 %
Institutional Shares
Year Ended March 31, 1995 1.36 % 1.36 % (0.62)% 320.00 %
Year Ended March 31, 1996 1.47 % 1.38 % (0.67)% 324.00 %
Year Ended March 31, 1997 1.47 % 1.40 % 0.41 % (l) 393.00 %
Year Ended March 31, 1998 1.41 % 1.40 % (0.66)% 135.00 %
Year Ended March 31, 1999 1.44 % 1.44 % (0.49)% 113.00 %
Mid Cap
Ordinary Shares
Oct. 3, 1994** to March 31, 1995 --- % --- % 1.50 % 0.00 %
Year Ended March 31, 1996 2.34 % 1.92 % 0.48 % 181.00 %
Year Ended March 31, 1997 1.19 % 1.11 % 0.62 % 162.00 %
Year Ended March 31, 1998 1.57 % 1.57 % (0.52)% 128.00 %
Year Ended March 31, 1999 1.65 % 1.65 % (0.72)% 168.00 %
Institutional Shares
April 17, 1995** to March 31, 1996 2.02 % (b) 1.66 % 0.67 % 181.00 %
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Ratios and Supplemental Data
---------------------------------------------------------------------
Ratio of Ratio of Ratio of Net
Operating Operating Investment
Expenses Expenses Income (Loss)
to Average Net of to Average Portfolio
Net Assets Custody Net Assets Turnover
Credits
to Average
Net Assets(d)
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year Ended March 31, 1997 1.44 % 1.27 % 0.77 % 162.00 %
Year Ended March 31, 1998 1.40 % 1.40 % (0.35)% 128.00 %
Year Ended March 31, 1999 1.62 % 1.62 % (0.69)% 168.00 %
Growth and Income
Ordinary Shares
Year Ended March 31, 1995 1.69 % 1.60 % 1.01 % 121.00 %
Year Ended March 31, 1996 1.73 % 1.64 % 0.61 % 152.00 %
Year Ended March 31, 1997 1.73 % 1.70 % 0.50 % 96.00 %
Year Ended March 31, 1998 1.69 % 1.65 % (0.01)% 72.00 %
Year Ended March 31, 1999 1.67 % 1.62 % (0.36)% 97.00 %
Institutional Shares
Year Ended March 31, 1995 1.23 % 1.23 % 1.48 % 121.00 %
Year Ended March 31, 1996 1.24 % 1.15 % 1.31 % 152.00 %
Year Ended March 31, 1997 1.24 % 1.21 % 0.99 % 96.00 %
Year Ended March 31, 1998 1.19 % 1.14 % 0.50 % 72.00 %
Year Ended March 31, 1999 1.17 % 1.12 % 0.14 % 97.00 %
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS - Continued
(For a share outstanding throughout each period)
Income from
Investment Operations (e) Distributions
----------------------------------------------------------------------------------------
Net Asset Net Realized Dividends Dividends
Value at Net and Unrealized Total from from Net in excess of
Beginning Investment Gain (Loss) Investment Investment Net Investment
of Period Income (a) on Securities Operations Income Income
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
International Equity
Ordinary Shares
Year Ended March 31, 1995 $ 10.18 (0.03) 0.04 0.01 (0.13) ---
Year Ended March 31, 1996 $ 10.06 0.00 0.67 0.67 (0.03) ---
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS - Continued
(For a share outstanding throughout each period)
Income from
Investment Operations (e) Distributions
----------------------------------------------------------------------------------------
Net Asset Net Realized Dividends Dividends
Value at Net and Unrealized Total from from Net in excess of
Beginning Investment Gain (Loss) Investment Investment Net Investment
of Period Income (a) on Securities Operations Income Income
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Year Ended March 31, 1997 $ 10.70 0.01 0.40 0.41 (0.08) ---
Year Ended March 31, 1998 $ 11.03 0.07 1.30 1.37 (0.11) (0.06)
Year Ended March 31, 1999 $ 11.97 0.01 (0.58) (0.57) (0.02) (0.01)
Institutional Shares
August 25, 1994** to March 31, 1995 $ 11.00 0.01 (0.73) (0.72) (0.18) ---
Year Ended March 31, 1996 $ 10.10 0.04 0.66 0.70 (0.07) ---
Year Ended March 31, 1997 $ 10.73 0.06 0.41 0.47 (0.10) ---
Year Ended March 31, 1998 $ 11.10 0.14 1.28 1.42 (0.20) (0.11)
Year Ended March 31, 1999 $ 11.95 0.06 (0.58) (0.52) (0.03) (0.01)
Emerging Markets
Ordinary Shares
August 8, 1994** to March 31, 1995 $ 10.00 (0.05) (2.71) (2.76) --- ---
Year Ended March 31, 1996 $ 7.24 (0.07) 1.21 1.14 --- ---
Year Ended March 31, 1997 $ 8.38 (0.04) 0.90 0.86 --- ---
Year Ended March 31, 1998 $ 9.24 (0.04) (1.50) (1.54) --- ---
Year Ended March 31, 1999 $ 7.70 0.07 (1.11) (1.04) (0.07) (h) ---
Institutional Shares
April 2,1996** to March 31, 1997 $ 8.49 0.01 0.80 0.81 (0.03) ---
Year Ended March 31, 1998 $ 9.27 0.02 (1.53) (1.51) --- ---
Year Ended March 31, 1999 $ 7.76 0.09 (1.11) (1.02) (0.10) (h) ---
Foreign Value
Ordinary Shares
May 15, 1998** to March 31, 1999 $ 10.00 0.02 (1.64) (1.62) (0.01) (0.01)
Institutional Shares
December 18, 1998** to March 31, 1999 $ 8.43 0.06 (0.12) (0.06) --- ---
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
Distributions
-----------------------------------------------------------------------------
Distributions Distributions
excess of from Net Asset
Investment Realized Total Value End Total
Capital Gains Capital Gains Distributions of Period Return (c)
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
International Equity
Ordinary Shares
Year Ended March 31, 1995 --- --- (0.13) $ 10.06 0.07 %
Year Ended March 31, 1996 --- --- (0.03) $ 10.70 6.63 %
Year Ended March 31, 1997 --- --- (0.08) $ 11.03 3.82 %
Year Ended March 31, 1998 (0.21) (0.05) (0.43) $ 11.97 12.95 %
Year Ended March 31, 1999 --- --- (0.03) $ 11.37 (4.78)%
Institutional Shares
August 25, 1994** to March 31, 1995 --- --- (0.18) $ 10.10 (6.57)%
Year Ended March 31, 1996 --- --- (0.07) $ 10.73 6.95 %
Year Ended March 31, 1997 --- --- (0.10) $ 11.10 4.38 %
Year Ended March 31, 1998 (0.21) (0.05) (0.57) $ 11.95 13.50 %
Year Ended March 31, 1999 --- --- (0.04) $ 11.39 (4.34)%
Emerging Markets
Ordinary Shares
August 8, 1994** to March 31, 1995 --- --- --- $ 7.24 (27.60)%
Year Ended March 31, 1996 --- --- --- $ 8.38 15.75 %
Year Ended March 31, 1997 --- --- --- $ 9.24 10.26 %
Year Ended March 31, 1998 --- --- --- $ 7.70 (16.67)%
Year Ended March 31, 1999 --- --- (0.07) $ 6.59 (13.40)%
Institutional Shares
April 2,1996** to March 31, 1997 --- --- (0.03) $ 9.27 9.54 %
Year Ended March 31, 1998 --- --- --- $ 7.76 (16.29)%
Year Ended March 31, 1999 --- --- (0.10) $ 6.64 (12.93)%
Foreign Value
Ordinary Shares
May 15, 1998** to March 31, 1999 --- --- (0.02) $ 8.36 (16.16)%
Institutional Shares
December 18, 1998** to March 31, 1999 --- --- --- $ 8.37 (0.71)%
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Ratios and Supplemental Data
------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Net
Net Assets Operating Operating Investment
End of Expenses Expenses Income (Loss)
Period to Average Net of to Average Portfolio
(000's) Net Assets Custody Net Assets Turnover
Credits
to Average
Net Assets (d)
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
International Equity
Ordinary Shares
Year Ended March 31, 1995 $ 27,657 1.91 % 1.91 % (0.20) % 45.49 %
Year Ended March 31, 1996 $ 27,402 2.15 % 2.09 % (0.04) % 43.03 %
Year Ended March 31, 1997 $ 27,410 2.20 % 2.15 % 0.10 % 135.03 %
Year Ended March 31, 1998 $ 32,182 2.18 % 2.03 % 0.62 % 51.03 %
Year Ended March 31, 1999 $ 21,956 2.11 % 2.08 % 0.12 % 128.03 %
Institutional Shares
August 25, 1994** to March 31, 1995 $ 3,052 1.66 % (b) 1.56 % (b) 0.13 % (b) 45.49 % (b)
Year Ended March 31, 1996 $ 1,241 1.65 % 1.59 % 0.38 % 43.03 %
Year Ended March 31, 1997 $ 1,760 1.69 % 1.64 % 0.31 % 135.03 %
Year Ended March 31, 1998 $ 1,728 1.68 % 1.54 % 1.19 % 81.00 %
Year Ended March 31, 1999 $ 1,895 1.61 % 1.58 % 0.62 % 128.03 %
Emerging Markets
Ordinary Shares
August 8, 1994** to March 31, 1995 $ 4,259 2.54 % (b) 2.54 % (b) (1.03) % (b) 10.72 % (b)
Year Ended March 31, 1996 $ 7,736 2.74 % 2.59 % (0.84) % 9.03 %
Year Ended March 31, 1997 $ 10,052 2.68 % 2.56 % (0.47) % 9.07 %
Year Ended March 31, 1998 $ 9,241 2.69 % 2.57 % (0.43) % 52.02 %
Year Ended March 31, 1999 $ 8,442 2.32 % 2.24 % 1.03 % 49.00 %
Institutional Shares
April 2,1996** to March 31, 1997 $ 1,212 2.01 % (b) 1.59 % (b) 0.13 % (b) 8.00 % (b)
Year Ended March 31, 1998 $ 1,002 2.19 % 2.07 % 0.24 % 52.00 %
Year Ended March 31, 1999 $ 1,447 1.82 % 1.74 % 1.36 % 49.00 %
Foreign Value
Ordinary Shares
May 15, 1998** to March 31, 1999 $ 7,478 1.99 % (b) 1.90 % (b) 0.19 % (b) 22.00 % (b)
Institutional Shares
December 18, 1998** to March 31, 1999 $ 401 1.72 % (b) 1.70 % (b) 0.75 % (b) 22.00 % (b)
</TABLE>
29
<PAGE>
** 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
reduction of $0.01, $0.02 and $0.02 per share; expenses of the Small Cap
Institutional 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 Mid
Cap Ordinary Shares for the periods ended March 31, 1999, 1998, 1997, 1996
and 1995 reflect a reduction of $0.03, $0.07, $0.15, $0.23 and $0.76 per
share; expenses 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
periods 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 and 1995 reflect a reduction of
$---, $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, and 1995 reflect a reduction of $ ---, $0.02, $0.01 and
$0.01 per share; expenses of the Emerging Markets Ordinary Shares for the
periods ended March 31, 1999, 1997, 1996 and 1995 reflect a reduction of
30
<PAGE>
$0.02, $0.01, $0.01 and $0.02 per share; expenses of the Emerging Markets
Institutional Shares for the periods ended March 31, 1999 and 1997 reflects
a reduction of $0.02 and $0.02 per share; expenses of the Foreign Value
Ordinary Shares for the period ended March 31, 1999 reflect a reduction of
$0.01 per share, and expenses of the Foreign Value Institutional Shares for
the period ending March 31, 1999 reflect a reduction of $ 0.01 per share.
(b) Annualized
(c) Total Return does not include the one time deferred sales charge of 1% for
the Ordinary Shares. See Note 3 to the financial statements. 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) Expense ratios for the years ended March 31, 1999, 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 expenses of the Fund. This column shows the Funds' expense
ratios net of such credits,
(e) Per share numbers have been calculated using the average shares method.
(f) 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.
(g) Represents $ 2.42 per share of distributions from realized capital gains and
$ 0.03 per share of a return of capital.
(h) Represents $ 0.05 per share of distributions from net investment income and
$ 0.02 per share of a return of capital for Ordinary Shares and $0.07 per
share of distributions from net investment income and $ 0.03 per share of a
return of capital for Institutional Shares.
31
<PAGE>
QUANTITATIVE GROUP OF FUNDS
Statement of Additional Information
-----------------------------------
August 1, 1999
--------------
U.S. Equity Funds International Funds
- ----------------- -------------------
Quantitative Small Cap Fund Quantitative International Equity Fund
Quantitative Mid Cap Fund Quantitative Emerging Markets Fund
Quantitative Growth and Income Fund Quantitative Foreign Value Fund
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, 1999, and should be read in conjunction
with the Prospectus. This Statement incorporates by reference information from
the Trust's Annual Report dated March 31, 1999. Investors may obtain a free
copy of the Prospectus and/or the Annual Report by writing Quantitative Group of
Funds, 55 Old Bedford Road, Lincoln, MA 01773 or by calling 1-800-331-1244.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT POLICIES AND RELATED RISKS............................ 2
MANAGEMENT OF THE FUNDS.......................................... 2
PORTFOLIO TRANSACTIONS...........................................
11
HOW TO INVEST.................................................... 12
HOW TO MAKE EXCHANGES............................................ 14
HOW TO REDEEM.................................................... 14
</TABLE>
<PAGE>
<TABLE>
<S> <C>
CALCULATION OF NET ASSET VALUE................................... 15
DISTRIBUTIONS.................................................... 16
TAXATION......................................................... 16
OTHER INVESTMENT PRACTICES....................................... 24
INVESTMENT RESTRICTIONS OF THE FUNDS............................. 24
PERFORMANCE MEASURES............................................. 26
THE QUANTITATIVE GROUP........................................... 31
EXPERTS.......................................................... 31
</TABLE>
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Funds are series of an open-end, management investment company. The
Funds are nondiversified. The investment objectives and policies of the Funds
are summarized in the text of the Prospectus following the captions Fund Summary
and Investment Policies and Related Risks. 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
The Trustees are responsible for protecting the interests of
shareholders. The Trustees met periodically throughout the year to oversee the
Funds' activities, review contractual arrangements with companies that provide
services to the Funds and review the Funds' performance. The majority of the
trustees are otherwise not affiliated with the Funds.
<TABLE>
<CAPTION>
Position with Position with
Quantitative Distribution, U.S.
Corporation Manager,
Trustees and Officers Position Boston capital
- --------------------- with Fund Principal
Name, Address+ and Age Occupation** Corporation Advisors, Inc.
- ---------------------- ------------ ----------- -------------
<S> <C> <C> <C>
ROBERT M. ARMSTRONG Trustee Associate, Keystone None
None
Age: 59 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
None
Age: 42 (general contractors).
JOHN M. BULBROOK Trustee President, John M. Bulbrook None
None
Age: 58 Insurance Agency, Inc.
EDWARD E. BURROWS Trustee Independent consulting None
None
Age: 66 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
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Corporation (employee benefit
consultants and actuaries).
FREDERICK S. MARIUS President President, General Counsel President
Clerk,
Age: 35
Executive U.S. Boston Capital General Counsel General Vice President
Corporation
LEON OKUROWSKI* Trustee, Director and Vice President, Director
Director
Age: 57
U.S. Boston Capital Treasurer Vice President Director and Vice President,
Corporation Treasurer
WILLARD L. UMPHREY* Director President, Director and Director,
Chairman, Treasurer, U.S. and Treasurer
Age: 59
RON ZWANZIGER* Trustee Director, President, and
None
Age: 44 Chief Executive Officer,
Selfcare, Inc.
</TABLE>
+The mailing address of each of the officers and Trustees is 55 Old
Bedford Road, Lincoln, Massachusetts 01773.
*Messrs. Umphrey, Okurowski and Zwanziger 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, with the exception of Mr. Marius
who was employed by Putnam Investments, Inc. from 1992 to 1999 as in-house
counsel and who joined U.S. Boston Capital Corp. and Quantitative Advisors, Inc.
in 1999.
Each Trustee receives an annual fee of $4,000. For services rendered
during the fiscal year ended March 31, 1999, the Funds paid Trustees' fees
aggregating $28,000.
The following Compensation Table provides, in tabular form, the following
data:
<PAGE>
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, 1999
<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, 59
Edward A. Bond, Jr. $4,000 N/A N/A
$4,000
Trustee, 42
John M Bulbrook, $4,000 N/A N/A
$4,000
Trustee, 58
Edward E. Burrows, $4,000 N/A N/A
$4,000
Trustee, 66
Leon Okurowski, $4,000 N/A N/A
$4,000
Trustee, 57
Willard L. Umphrey, $4,000 N/A N/A
$4,000
Trustee, 59
Ron Zwanziger, $4,000 N/A N/A
$4,000
Trustee,
</TABLE>
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
<PAGE>
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 July 21, 1999, the officers and Trustees as a group owned in the aggregate
.90% of the outstanding Ordinary Shares of the Small Cap Fund, 12.17% of the
outstanding Institutional Shares of the Small Cap Fund, 0.23% of the outstanding
Ordinary Shares of the Mid Cap Fund, 51.17% of the outstanding Institutional
Shares of the Mid Cap Fund, 0.40% of the outstanding Ordinary Shares of the
Growth and Income Fund, 26.87% of the outstanding Institutional Shares of the
Growth and Income Fund, 0.40% of the outstanding Ordinary Shares of the
International Equity Fund, 1.7% of the outstanding Institutional Shares of the
International Equity Fund, 2.6% of the outstanding Ordinary Shares of the
Emerging Markets Fund, 1% of the outstanding Institutional Shares of the
Emerging Markets Fund, 5.10% of the outstanding Ordinary Shares of the Foreign
Value Fund, and 0% of the 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>
Charles Schwab & Co., Inc. 5.33%
101 Montgomery Street
San Francisco, CA 94104
Pershing Division of Donaldson, Lufkin & Jenrette 17.57%
P.O. Box 2052
Jersey City, NJ 07303
The John Dickson Home 14.35%
1701 Pennsylvania Avenue, N.W.
Washington, DC 20006
National Postal Forum 11.59%
3998 Fair Ridge Drive
Fairfax, VA 22033
U.S. Boston Corporation 10.61%
55 Old Bedford Road
Lincoln, MA 01773
Temple Preservation Foundation 7.77%
1773- 16th Street
Washington, DC 20009
</TABLE>
<PAGE>
<TABLE>
Name and Address % of Outstanding Institutional Shares
---------------- -------------------------------------
<S> <C>
The Henry and Annie Hurt Home for the Blind 6.60%
1701 Pennsylvania Ave, N.W.
Suite 1000
Washington, DC 20006
</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 11.05%
P.O. Box 200
Westboro, MA 01581
Mr. George H. Howell 6.38%
107 Dudley Road
Wayland, MA 01778
</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:
<TABLE>
<CAPTION>
Name and Address % of Outstanding Institutional Shares
---------------- -------------------------------------
<S> <C>
U.S. Boston Corporation 33.62%
55 Old Bedford Road
Lincoln, MA 01773
Mr. James E. and Ms. Sandra G. Jones 13.60%
9 Stone Creek Park
Owensboro, KY 42303
Ms. Lawrie Okurowski 10.44%
50 Musterfield Road
Concord, MA 01742
State Street Bank and Trust Custodian for 9.08%
Marsha W. Vaughan IRA
2122 Harpoon Drive
Stafford, VA 22554
State Street Bank and Trust Custodian for 7.78%
Marlys Bernal
2801 Baxley Hollow Ct.
Herndon, VA 20171
U.S. Boston Corporation PSRP A/C Leon Okurowski 7.10%
55 Old Bedford Road
Lincoln, MA 01773
</TABLE>
<PAGE>
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 54.21%
P.O. Box 200
Westboro, MA 01581
U.S. Boston Corporation 15.89%
55 Old Bedford Road
Lincoln, MA 01773
Charles Schwab & Co., Inc. 7.02%
101 Montgomery Street
San Francisco, CA 94104
</TABLE>
On the same date, the following person owned 5% or more of the then outstanding
Institutional Shares of the International Equity Fund:
<TABLE>
<CAPTION>
Name and Address % of Outstanding Institutional Shares
---------------- -------------------------------------
<S> <C>
Dover Instrument Corporation 89.82%
P. O. Box 200
Westboro, MA 01581
U.S. Boston Corp. 5.95%
55 Old Bedford Road
Lincoln, MA 01773
</TABLE>
On the same date, the following person owned 5% or more of the then outstanding
Institutional Shares of the Emerging Markets Fund:
<TABLE>
<CAPTION>
Name and Address % of Outstanding Institutional Shares
---------------- -------------------------------------
<S> <C>
Strafe & Co. 97.81%
P.O. Box 160
Westerville, OH 43086-0160
</TABLE>
On the same date, each of the following persons owned 5% or more of the then
outstanding Ordinary Shares of the Foreign Value Fund:
<TABLE>
<CAPTION>
Name and Address % of Outstanding Institutional Shares
---------------- -------------------------------------
<S> <C>
Dermatology Associates of Concord, Inc. Profit 6.13%
Sharing Retirement Plan
290 Baker Road
Concord, MA 01742
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Lowell Anesthesiology Service - PSRP 5.25%
60 East Street, Suite 1300
Metheun, MA 01844
</TABLE>
On the same date, each of the following persons owned 5% or more of the then
outstanding Institutional Shares of the Foreign Value Fund:
<TABLE>
<CAPTION>
Name and Address % of Outstanding Institutional Shares
---------------- -------------------------------------
<S> <C>
David Jaffin 83.58%
230 Park Avenue
New York, NY 10169
National Financial Services Corp. 16.37%
P.O. Box 3908
New York, NY 10008
</TABLE>
The Manager and Management Contract
- -----------------------------------
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 particular 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'
Distributor, 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 the Funds, individually and jointly with their spouses,
together own 100% of the Manager's outstanding voting securities. Messrs.
Umphrey and Okurowski also are affiliates of U.S. Boston Capital Corporation.
Under the terms of the management agreement, the Manager may, subject to
the approval of the Trustees, manage the Funds itself or, subject to the
approval by the Trustees, select subadvisors (the "Advisors") to manage certain
of the Funds. In the latter case, the Manager monitors the Advisors' investment
program and results, reviews brokerage matters, oversees compliance by the Funds
with various federal and state statutes and the Funds' own investment
objectives, policies, and restrictions and carries out the directives of the
Trustees. In each case, the Manager also provides the Funds with office space,
office equipment, and personnel necessary to operate and administer the Funds'
business, and provides general management and administrative services to the
Funds, including overall supervisory responsibility for the general management
and investment of the Funds' securities portfolios and for the provision of
services by third parties such as the Funds' custodian.
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.
<PAGE>
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 their 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.
The funds have received an exemptive order from the SEC that permits the
Manager, subject to certain conditions, to enter into or amend an Advisory
Contract without obtaining shareholder approval. With Trustee approval, the
Manager may employ a new Advisor for a fund, change the terms of the Advisory
Contracts, or enter into new Advisory Contracts with the Advisors. The Manager
retains ultimate responsibility to oversee the Advisers and to recommend their
hiring, termination, and replacement. Shareholders of a fund continue to have
the right to terminate the Advisory Contract applicable to that Fund at any time
by a vote of the majority of the outstanding voting securities of the fund.
Shareholders will be notified of any Advisor changes or other material
amendments to an Advisory Contract that occurs under these arrangements.
As compensation for services rendered, the Funds pay the Manager a monthly
fee at the annual rate of: 1.00% 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. For services rendered to the Small Cap Fund during the fiscal years ended
March 31, 1999, 1998, and 1997, the Manager received fees of $595,869,
$712,299, and $916,777, respectively. For services rendered to the Mid Cap Fund
during the fiscal years ended March 31, 1999, 1998, and 1997, the Manager
received fees of $148,620, $122,800, and $96,688, 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, 1999, 1998, and 1997, the
Manager received fees of $527,997, $425,583, and $334,461, respectively. For
services rendered to the International Equity Fund during the fiscal years ended
March 31, 1999, 1998, and 1997, the Manager received fees of $276,103, $311,008,
and $287,461, respectively. For services rendered to the Emerging Markets Fund
during the fiscal years ended March 31, 1999, 1998, and 1997, the Manager
received fees of $73,465, $86,261, and $77,271, respectively. For services
rendered to the Foreign Value Fund during the fiscal year ended March 31, 1999,
the Manager received fees of $50,130. 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
2.00% of such Fund's average net assets and such fees were also waived by the
Manager to the extent required to comply with its voluntary undertaking to
assume certain expenses of the Emerging Markets Fund in excess of 2.25%,
respectively, of such Funds' average net assets.
Advisory Contracts
- ------------------
Pursuant to an Advisory Contract with the Manager, the Advisor to a Fund
furnishes continuously an investment program for the Fund, makes investment
decisions on behalf of the Fund, places all orders for the purchase and sale of
portfolio investments for the Fund's account
<PAGE>
with brokers or dealers selected by such Advisor and may perform certain
limited, related administrative functions in connection therewith.
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 without 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.
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
Advisors 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 - 0.35% of the first $30 million and 0.50% of amounts in
excess of $30 million of average daily total net assets; and Emerging Markets
Fund - 0.40% of average daily total net assets.
For services rendered during the fiscal year ended March 31, 1999, 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%, Emerging Markets Fund - 0.40%, and Foreign Value Fund -
0.35%. For services rendered to the Small Cap Fund during the fiscal years ended
March 31, 1999, 1998, and 1997, the applicable Advisor received fees of
$297,934, $357,261, and $477,141, respectively. For services rendered to the
Mid Cap Fund during the fiscal years ended March 31, 1999, 1998, and 1997, the
applicable advisor received fees of $59,448, $49,266, and $48,678, respectively.
For services rendered to the Growth and Income Fund during the fiscal years
ended March 31, 1999, 1998, and 1997, the applicable Advisor received fees of
$226,254, $185,739, and 4148,785, respectively. For services rendered to the
International Equity Fund during the fiscal years ended March 31, 1999, 1998,
and 1997, the applicable Advisor received fees of $138,052, $155,972, and
$143,731, respectively. For services rendered to the Emerging Markets Fund
during the fiscal years ended March 31, 1999, 1998, and 1997, the applicable
Advisor received fees of $36,733, $43,257, and $38,636, respectively. For
services rendered to the Foreign Value Fund during the fiscal year ended March
31, 1999, the applicable Advisor received fees of $17,537.
Quantitative Small Cap Fund
Quantitative Mid Cap Fund
<PAGE>
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. The firm presently has over $1 billion in assets
under management for individual, 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 financial officer of Riggs Investment Management
Corporation, where he worked from 1989 to 1995. Terence Collins, Robert von
Pentz, Galway Capital Management, Landon Butler, Paul Kelley, John McKernan and
Glen Lester Fant III are control persons of Columbia Partners L.L. C.
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 continuously 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. 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 Management from 1995
to 1996 and the President and Managing Director of BRS Capital Management from
1987-1995. Marshall Carter, Savid Spina, Tenley Albright, David Gruber, I.
MacAllister Booth, John M. Kucharshi, James I. Cash Jr., Charles R. LaMantia,
Truman S. Casner, David Perini, Nader Darehshori, Dennis J. Picard, Arthur L.
Goldstein, and David Chapman Walsh are Directors of State Street Global Advisors
and are therefore considered control persons.
Quantitative International Equity Fund
Quantitative Emerging Markets Fund
Independence International Associates, Inc., 53 State Street, Boston, MA 02109,
formerly Boston International Advisors, Inc. ("Independence International"),
serves as Advisor to the International Equity Fund and the Emerging Markets
Fund. The firm presently has over $2 billion under management in international
portfolios of pension and endowment funds, among others. Norman H. Meltz and
Dennis Fogerty manage both the International Equity Fund and Emerging Markets
Fund. Mr. Meltz has 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 Associates, Inc., a
Delaware corporation. John Hancock Mutual Life Insurance and William Cameron
Fletcher are control persons of Independence International Associates, Inc.
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"). The firm presently has over $50 million under management for
institutional clients and wealthy individuals. The Foreign Value Fund is managed
by Bernard R. Horn, Jr. Prior to founding Polaris in 1995, Mr. Horn worked as a
portfolio manager at Horn & Company, Freedom Capital Management Corporation, and
MDT Advisers, Inc. Bernard R. Horn, Jr and Edward Wendell Jr. are both control
persons of Polaris Capital Management Inc.
<PAGE>
Distributor and Distribution Plan
- ---------------------------------
U.S. Boston Capital Corporation, 55 Old Bedford Road, Lincoln, MA 01773
("Distributor"), a Massachusetts corporation organized April 23, 1970, is a
broker-dealer registered under the Securities Exchange Act of 1934 and a member
of the National Association of Securities Dealers, Inc. The Distributor is an
affiliated person of the Funds' Manager by virtue of being under common
ownership with the Manager. 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 Agreement, 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.
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 fee is not directly tied to the
Distributor's expenses. If expenses exceed the Distributor's fees, the Funds are
not required to reimburse the Distributor for excess expenses; if the
Distributor's fees exceed the expenses of distribution, the Distributor may
realize a profit. 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 their respective 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, 1999, the aggregate fees (net of fees
waived), paid to the Distributor pursuant to the Plan totaled $789,740, 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 Foreign Value 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.
Custodian
- ----------
Investors Fiduciary Trust Company ("Custodian") is the custodian of each of
the Funds' securities and cash. The Custodian's responsibilities include
safekeeping and controlling the Funds' cash and securities, handling the receipt
and delivery of securities, determining income and collecting interest and
<PAGE>
dividends on the Funds' investments, maintaining books of original entry for
portfolio and fund accounting and other required books and accounts, and
calculating the daily net asset value of each class of shares of the Funds. The
Custodian does not determine the investment policies of the Funds or decide
which securities the Funds will buy or sell. The Funds may, however, invest in
securities of the Custodian and may deal with the Custodian as principal in
securities transactions. Custodial services are performed at the Custodian's
office at 801 Pennsylvania Ave., Kansas City, MO 64105.
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 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 orders and
funds from certain investors. 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 each 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
<PAGE>
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 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 for the
fiscal years ended March 31, 1997, March 31, 1998, and March 31, 1999 are as
follows:
<TABLE>
<CAPTION>
Fiscal Year Ended March 31,
Fund 1997 1998 1999
- ----------------------------------------------------------------
<S> <C> <C> <C>
Small Cap Fund $773,033 $272,199 $221,371
Mid Cap Fund 46,196 44,701 58,392
Growth and Income Fund 85,411 63,665 94,378
International Equity Fund 147,002 74,654 74,831
Emerging Markets Fund 19,551 39,223 35,435
Foreign Value Fund --__ -- 34,047
</TABLE>
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
<PAGE>
The procedures for purchasing shares are summarized in the Prospectus under
the caption How to Invest.
-------------
Investments through Brokers. The Distributor may 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 1.00% deferred sales
charge. The Distributor may also pay the dealer a service fee at an annual rate
of 0.25% of the average daily net asset value of Ordinary Shares in accounts
serviced by the dealer.
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.
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 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 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 your election, 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.
<PAGE>
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.
- -----------------------------
Accounts Offered by the Funds. The Funds offer tax-deferred accounts, for
-------------------------------
which State Street Bank and Trust Company acts as custodian, including:
Traditional Individual Retirement Accounts (IRAs)
Roth IRAs
Simplified Employee Pension Plans (SEP-IRAs)
403(b) Custodial Accounts
Agreements to establish these kinds of accounts and additional information
about them, including information about fees and charges, are available from the
Distributor. There are many detailed rules, including provisions of tax law,
governing each of theses kinds of accounts. Investors considering participation
in any of these plans should consult with their attorneys or tax advisers with
respect to the establishment and maintenance of any of these plans. The
following is some very general information about them.
IRAs. Investors may establish either regular IRA accounts, to which they
-----
may make contributions of up to $2000 annually (or 100% of their earned income
for the year, if less), or rollover IRAs, to which they may roll over or
transfer assets from another preexisting IRA of the same kind. They also may
establish conversion Roth IRAs (into which they may move assets from a
traditional IRA), if they satisfy certain requirements; individuals will be
subject to tax on the taxable amount moved from a traditional IRA to a Roth IRA
at the time of the conversion. SEP-IRAs are traditional IRA accounts
established pursuant to an employer-sponsored SEP plan; different contribution
limits apply to SEP-IRAs.
Contributions to a traditional IRA will be deductible if the individual for
whom the account is established is not an active participant in an employer-
sponsored plan; contributions may be deductible in whole or in part if the
individual is such a participant, depending on the individual's income.
Distributions from traditional IRAs are taxable as ordinary income.
Contributions to a Roth IRA are not deductible. However, withdraws may
<PAGE>
not be taxable if certain requirements are met. In either case, capital gains
and income earned on Fund shares held in an IRA are not taxable as long as they
are held in the IRA.
403(b)s. This kind of custodial account may be established by employees of
--------
certain educational and charitable organizations. A qualifying employee may
make an election to defer salary, which is then contributed to the 403(b)
account; these contributions held in a 403(b) account are not taxable as long
as they are held in the account. A 403(b) holder generally will have taxable
income only when he or she receives a distribution from the account;
distributions are taxable as ordinary income.
Other Retirement Plans. Fund shares also may be made available as an
-----------------------
investment under other tax-favored retirement plans, such as qualified pension
plans and qualified profit sharing plans, including 401(k) plans.
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.
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
<PAGE>
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. As set forth in the Prospectus, the Funds may also delay
payment of redemption proceeds from shares purchased by check until the check
clears, which may take seven business days or longer.
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, Emerging
Markets and Foreign Value Funds may invest in securities listed on foreign
exchanges which trade on days on which those Funds do not compute net asset
value (i.e., Saturdays and Exchange holidays) and the net asset value of shares
of those 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 or their delegate(s). 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.
<PAGE>
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.
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
<PAGE>
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 shareholders as long-term capital gains,
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 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.
<PAGE>
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.
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
<PAGE>
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 long-term or short-term, 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
<PAGE>
its shareholders. With respect to the Fund, gains from the sale of securities
generally will be treated as derived from U.S. sources and section 988 gains
will be treated as ordinary income derived from U.S. sources. The limitation on
the foreign tax credit is applied separately to foreign source passive income,
including foreign source passive income received from the Fund. The foreign tax
credit limitation rules do not apply to certain electing individual taxpayers
who have limited creditable foreign taxes and no foreign source income other
than passive investment-type income. The foreign tax credit is eliminated with
respect to foreign taxes withheld on dividends if the dividend paying shares or
the shares of 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, if a
fund fails to satisfy these holding period requirements, it cannot elect under
Section 853 to pass through to shareholders the ability to claim a deduction for
the related foreign taxes. The foreign tax credit may offset only 90% of the
revised alternative minimum tax imposed on corporations and individuals. If a
fund fails to satisfy their holding period requirement, it cannot elect under
section 853 to pass through to shareholders the ability to claim a deduction for
the related foreign taxes.
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 that 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
--------------------------
Convertible Securities. Each of the Funds may invest in convertible
----------------------
securities, such as convertible debentures, bonds and preferred stock, which
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 characteristics.
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 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 limitations
under the Investment Company Act.
<PAGE>
Derivatives. Each Fund may, but is not required to, engage in a variety of
-----------
transactions using "derivatives," such as futures, options, warrants and swaps.
Derivatives are financial instruments whose value depends upon, or is derived
from, the value of something else, such as one or more underlying investments,
indexes or currencies. Derivatives may be traded on organized exchanges, or in
individually negotiated transactions with other parties (these are known as
"over the counter"). Each Fund may use derivatives both for hedging and non-
hedging purposes. Although each Fund's advisor has the flexibility to use these
strategies, it may choose not to for a variety of reasons, even under very
volatile market conditions. Derivatives involve special risks and costs and may
result in losses to the Fund. The successful use of derivatives requires
sophisticated management and each Fund will depend on its Advisor's ability to
analyze and manage derivatives transactions. The prices of derivatives may move
in unexpected ways, especially in abnormal market conditions. Some derivatives
are "leveraged" and therefore may magnify or otherwise increase investment
losses to the Fund. A Fund's use of derivatives may also increase the amount of
taxes payable by shareholders. Other risks arise from the potential inability to
terminate or sell derivatives positions. A liquid secondary market may not
always exist for the Fund's derivatives positions at any time. In fact, many
over-the-counter instruments will not be liquid. Over-the-counter instruments
also involve the risk that the other party will not meet its obligations to a
Fund.
OPALS. The International Equity Fund, Emerging Markets Fund, and Foreign
-----
Value Fund may each invest in OPALS. OPALS represent an interest in a basket of
securities 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 Considerations - Foreign Securities in the Prospectus. 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
OPALS than other types of securities. However, the OPALS may generally be
exchanged with the issuer for the underlying securities, which may be more
readily tradable.
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
<PAGE>
Fund will seek to protect itself against a possible loss resulting from an
adverse change in the relationship between the U.S. dollar and the subject
foreign currency during the period between the date the security is purchased or
sold and the date on which payment is made or received.
Second, when 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 relevant Fund's Advisor.
<PAGE>
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 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. The value of fixed-
income securities may fluctuate inversely in relation to the direction of
interest rate changes.
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
<PAGE>
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
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, but are not required to, write
covered call options and index 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, but are not required to,
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,
but are not required to, 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
<PAGE>
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.
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.
Alternative Strategies. At times each fund's advisor may judge that market
- -----------------------
conditions make pursuing the fund's investment strategies inconsistent with the
best interests of its shareholders. Each fund's advisor may then temporarily use
alternative strategies that are mainly designed to limit the fund's losses.
These alternative strategies may include the purchase of debt, money market
investments and other investments not consistent with the investment strategies
of the fund. Although each fund's advisor has the flexibility to use these
strategies, it may choose not to for a variety of reasons, even in very volatile
market conditions. These strategies may cause the fund to miss out on
investment opportunities, and may prevent the fund from achieving its goal.
<PAGE>
Portfolio Turnover. A change in securities held by a Fund is known as
------------------
"portfolio turnover" and almost always involves the payment by the Fund of
brokerage commissions or dealer markups and other transaction costs on the sale
of securities as well as on the reinvestment of the proceeds in other
securities. High portfolio turnover involves correspondingly greater brokerage
commissions and other transaction costs, which will be borne directly by the
Fund and may affect taxes paid by shareholders to the extent short-term gains
are distributed. Portfolio turnover is not a limiting factor with respect to
investment decisions by any Fund.
The portfolio turnover rates for the Funds for their fiscal years 1998
(April 1, 1997 to March 31, 1998) and 1999 (April 1, 1998 to March 31, 1999)
were as follows:
<TABLE>
<CAPTION>
1998 1999
----- -----
<S> <C> <C>
Small Cap Fund 135% 113%
Mid Cap Fund 128% 168%
Growth and Income Fund 72% 97%
International Equity Fund 61% 128%
Emerging Markets Fund 52% 49%
Foreign Value Fund --% 22%
</TABLE>
There were no outstanding shares of the Foreign Value Fund during the 1998
fiscal year. The Foreign Value Fund commenced operations on May 18, 1998.
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.
<PAGE>
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;
(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; or
(13) invest more than 25% of the value of its total assets in any one
industry.
Although certain of these policies envision a Fund maintaining a position
in a stock index 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. The fund has no intention
<PAGE>
of purchasing or selling commodities or commodity contracts, except that the
funds may purchase and sell financial futures contracts and options.
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, 1999 March 31, 1999 March 31, 1999 Since Inception
<S> <C> <C> <C> <C>
Small Cap Fund
Ordinary Shares (18.80)% 10.99% __ 16.73% (8/3/92)
Institutional Shares (17.55)% 11.75% __ 14.05% (1/6/93)
Mid Cap Fund
Ordinary Shares (1.08)% __ __ 22.90% (3/21/95)
Institutional Shares (1.07)% __ __ 22.63% (4/17/95)
Growth and Income Fund
Ordinary Shares 12.53 % 22.61% 17.47% 16.84% (5/9/85)
Institutional Shares 14.27 % 23.47% __ 17.89% (3/25/91)
International Equity Fund
Ordinary Shares (5.73)% 3.36% 3.09% 3.53% (7/31/87)
Institutional Shares (4.34)% __ __ 2.74% (8/25/94)
Emerging Markets Fund
Ordinary Shares (14.27)% __ __ (8.16)% (10/3/94)
Institutional Shares (12.93)% __ __ (7.24)% (4/2/96)
Foreign Value Fund
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Ordinary Shares __ __ __ (16.99)% (5/18/98)
Institutional Shares __ __ __ (0.71)% (12/18/98)
</TABLE>
(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. Returns for the Quantitative Foreign Value Fund are for a
limited period of time and are not annualized.
(2) These results reflect the impact of a contractual 2.00% expense cap
applicable to the Quantitative Small Cap Fund, Quantitative Growth and
Income Fund, and Quantitative International Equity Fund (when applicable),
and a voluntary expense cap of 2.25% applicable to the 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, where applicable, 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 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
<PAGE>
return for the period. In calculating redeemable value, the deferred sales
charge is deducted from the ending redeemable value 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 as of December 31, 1998, the last calendar year end
preceding the Prospectus and this Statement of Additional Information, are set
forth in the Prospectus under the caption Performance.
------------
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 that monitor the performance of
mutual funds. 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 deferred sales charges are deducted from the
ending 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 deferred 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.
Independent statistical agencies measure the fund's investment performance and
publish comparative information showing how the fund, and other investment
companies, performed in specified time periods. Three agencies whose reports are
commonly used for such comparisons are set forth below. From time to time, the
fund may distribute these comparisons to its shareholders or to potential
investors. THE AGENCIES LISTED BELOW MEASURE PERFORMANCE BASED ON THEIR OWN
CRITERIA RATHER THAN ON THE STANDARDIZED PERFORMANCE MEASURES DESCRIBED IN THE
PRECEDING SECTION.
LIPPER ANALYTICAL SERVICES, INC. distributes mutual fund rankings monthly.
The rankings are based on total return performance calculated by Lipper,
generally reflecting changes in net asset value adjusted for reinvestment of
capital gains and income dividends. They do not reflect deduction of any sales
charges. Lipper rankings cover a variety of performance periods, including
year-to-date, 1-year, 5-year, and 10-year performance. Lipper classifies mutual
funds by investment objective and asset category.
<PAGE>
MORNINGSTAR, INC. distributes mutual fund ratings twice a month. The ratings
are divided into five groups: highest, above average, neutral, below
average and lowest. They represent a fund's historical risk/reward ratio
relative to other funds in its broad investment class as determined by
Morningstar, Inc. Morningstar ratings cover a variety of performance periods,
including 1-year, 3-year, 5-year, 10-year and overall performance. The
performance factor for the overall rating is a weighted-average assessment of
the fund's 1-year, 3-year, 5-year, and 10-year total return performance (if
available) reflecting deduction of expenses and sales charges. Performance is
adjusted using quantitative techniques to reflect the risk profile of the fund.
The ratings are derived from a purely quantitative system that does not utilize
the subjective criteria customarily employed by rating agencies such as Standard
& Poor's and Moody's Investor Service, Inc.
CDA/WIESENBERGER'S MANAGEMENT RESULTS publishes mutual fund rankings and is
distributed monthly. The rankings are based entirely on total return calculated
by Weisenberger for periods such as year-to-date, 1-year, 3-year, 5-year and 10-
year. Mutual funds are ranked in general categories (e.g., international bond,
international equity, municipal bond, and maximum capital gain). Weisenberger
rankings do not reflect deduction of sales charges or fees.
Independent publications may also evaluate the fund's performance. The fund may
from time to time refer to results published in various periodicals, including
Barrons, Financial World, Forbes, Fortune, Investor's Business Daily,
Kiplinger's Personal Finance Magazine, Money, U.S. News and World Report and The
Wall Street Journal.
Independent, unmanaged indexes, such as those listed below, may be used to
present a comparative benchmark of fund performance. The performance figures of
an index reflect changes in market prices, reinvestment of all dividend and
interest payments and, where applicable, deduction of foreign withholding taxes,
and do not take into account brokerage commissions or other costs. Because the
fund is a managed portfolio, the securities it owns will not match those in an
index. Securities in an index may change from time to time.
THE CONSUMER PRICE INDEX, prepared by the U.S. Bureau of Labor Statistics, is
a commonly used measure of the rate of inflation. The index shows the average
change in the cost of selected consumer goods and services and does not
represent a return on an investment vehicle.
THE DOW JONES INDUSTRIAL AVERAGE is an index of 30 common stocks frequently used
as a general measure of stock market performance.
THE DOW JONES UTILITIES AVERAGE is an index of 15 utility stocks frequently
used as a general measure of stock market performance.
CS FIRST BOSTON HIGH YIELD INDEX is a market-weighted index including publicly
traded bonds having a rating below BBB by Standard & Poor's and Baa by Moody's.
THE LEHMAN BROTHERS AGGREGATE BOND INDEX is an index composed of securities
from The Lehman Brothers Government/Corporate Bond Index, The Lehman Brothers
Mortgage-Backed Securities Index and The Lehman Brothers Asset-Backed Securities
Index and is frequently used as a broad market measure for fixed-income
securities.
THE LEHMAN BROTHERS ASSET-BACKED SECURITIES INDEX is an index composed of
credit card, auto, and home equity loans. Included in the index are pass-
through, bullet (noncallable), and controlled amortization structured debt
securities; no subordinated debt is included. All securities have an average
life of at least one year.
<PAGE>
THE LEHMAN BROTHERS CORPORATE BOND INDEX is an index of publicly issued,
fixed-rate, non-convertible investment-grade domestic corporate debt securities
frequently used as a general measure of the performance of fixed-income
securities.
THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX is an index of publicly
issued U.S. Treasury obligations, debt obligations of U.S. government agencies
(excluding mortgage-backed securities), fixed-rate, non-convertible, investment-
grade corporate debt securities and U.S. dollar-denominated, SEC-registered non-
convertible debt issued by foreign governmental entities or international
agencies used as a general measure of the performance of fixed-income
securities.
THE LEHMAN BROTHERS INTERMEDIATE TREASURY BOND INDEX is an index of publicly
issued U.S. Treasury obligations with maturities of up to ten years and is used
as a general gauge of the market for intermediate-term fixed-income securities.
THE LEHMAN BROTHERS LONG-TERM TREASURY BOND INDEX is an index of publicly
issued U.S. Treasury obligations (excluding flower bonds and foreign-targeted
issues) that are U.S. dollar-denominated and have maturities of 10 years or
greater.
THE LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX includes 15- and 30-year
fixed rate securities backed by mortgage pools of the Government National
Mortgage Association, Federal Home Loan Mortgage Corporation, and Federal
National Mortgage Association.
THE LEHMAN BROTHERS MUNICIPAL BOND INDEX is an index of approximately 20,000
investment-grade, fixed-rate tax-exempt bonds.
THE LEHMAN BROTHERS TREASURY BOND INDEX is an index of publicly issued U.S.
Treasury obligations (excluding flower bonds and foreign-targeted issues) that
are U.S. dollar denominated, have a minimum of one year to maturity, and are
issued in amounts over $100 million.
THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX is an index of
approximately 1,482 equity securities listed on the stock exchanges of the
United States, Europe, Canada, Australia, New Zealand and the Far East, with all
values expressed in U.S. dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS INDEX is an index of
approximately 1,100 securities representing 20 emerging markets, with all values
expressed in U.S. dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS FREE INDEX is an
index of approximately 1,003 securities available to non-domestic investors
representing 26 emerging markets, with all values expressed in U.S. dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX is an index of
approximately 1,045 equity securities issued by companies located in 18
countries and listed on the stock exchanges of Europe, Australia, and the Far
East. All values are expressed in U.S. dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE INDEX is an index of
approximately 627 equity securities issued by companies located in one of 13
European countries, with all values expressed in U.S. dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL PACIFIC INDEX is an index of
approximately 418 equity securities issued by companies located in 5 countries
and listed on the exchanges of Australia, New Zealand, Japan, Hong Kong,
Singapore/Malaysia. All values are expressed in U.S. dollars.
<PAGE>
THE NASDAQ INDUSTRIAL AVERAGE is an index of stocks traded in The Nasdaq Stock
Market, Inc. National Market System.
THE RUSSELL 1000 INDEX is composed of the 1,000 largest companies in the
Russell 3000 Index, representing approximately 89% of the Russell 3000 total
market capitalization. The Russell 3000 Index is composed of the 3,000 largest
U.S. companies ranked by total market capitalization, representing approximately
98% of the U.S. investable equity market.
THE RUSSELL 2000 INDEX is composed of the 2,000 smallest companies in the
Russell 3000 Index, representing approximately 11% of the Russell 3000 total
market capitalization.
THE RUSSELL 2000 GROWTH INDEX is composed of securities with greater-than-
average growth orientation within the Russell 2000 Index. Each security's growth
orientation is determined by a composite score of the security's price-to-book
ratio and forecasted growth rate. Growth stocks tend to have higher price-to-
book ratios and forecasted growth rates than value stocks. This index is
composed of approximately 1,310 companies from the Russell 2000 Index,
representing approximately 50% of the total market capitalization of the Russell
2000 Index.
THE RUSSELL MIDCAP INDEX is composed of the 800 smallest companies in the
Russell 1000 Index, representing approximately 35% of the Russell 1000 total
market capitalization.
THE RUSSELL MIDCAP GROWTH INDEX is composed of securities with greater-than-
average growth orientation within the Russell Midcap Index. Each security's
growth orientation is determined by a composite score of the security's price-
to-book ratio and forecasted growth rate. Growth stocks tend to have higher
price-to-book ratios and forecasted growth rates than value stocks. This index
is composed of approximately 450 companies from the Russell 1000 Growth Index,
representing 20% of the total market capitalization of the Russell 1000 Growth
Index.
THE SALOMON BROTHERS LONG-TERM HIGH-GRADE CORPORATE BOND INDEX is an index of
publicly traded corporate bonds having a rating of at least AA by Standard &
Poor's or Aa by Moody's and is frequently used as a general measure of the
performance of fixed-income securities.
THE SALOMON BROTHERS LONG-TERM TREASURY INDEX is an index of U.S. government
securities with maturities greater than 10 years.
THE SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX is an index that tracks the
performance of the government bond markets of Australia, Austria, Belgium
Canada, Denmark, France, Germany, Italy, Japan, Netherlands, Spain, Sweden,
United Kingdom and the United States. Country eligibility is determined by
market capitalization and investability criteria.
THE SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX (non $U.S.) is an index of
foreign government bonds calculated to provide a measure of performance in the
government bond markets outside of the United States.
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX is an index of common stocks
frequently used as a general measure of stock market performance.
STANDARD & POOR'S 40 UTILITIES INDEX is an index of 40 utility stocks.
STANDARD & POOR'S/BARRA VALUE INDEX is an index constructed by ranking the
securities in the Standard & Poor's 500 Composite Stock Price Index by price-to-
book ratio and including the securities with the lowest price-to-book ratios
that represent approximately half of the market capitalization of the Standard &
Poor's 500 Composite Stock Price Index.
<PAGE>
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 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.
EXPERTS
The audited financial statements as of March 31, 1999 incorporated by
reference in this Statement of Additional Information have been so included in
reliance upon the report of PricewaterhouseCoopers LLP, 160 Federal Street,
Boston, MA 02110, independent accountants, given on the authority of that firm
as experts in accounting and auditing.
<PAGE>
FORM N-1A PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
1a. Amended And Restated Agreement And Declaration Of Trust, Dated April 2,
1990--Exhibit 1
1b. Amendment 1, Dated July 18, 1993, To The Agreement And Declaration Of
Trust, Dated April 2, 1990 -- Exhibit 2
2a. Amended And Restated Bylaws, Dated April 2, 1990 -- Exhibit 3
2b. Amendment1, Dated July 19, 1993, To The Bylaws Dated April 2, 1990 --
Exhibit 4
3a. Portions Of Agreement And Declaration Of Trust Relating To Shareholders'
Rights -- Exhibit 5.
3b. Portions Of By-Laws Relating To Shareholders' Rights -- Exhibit 6
4a. Management Contract Between Quantitative Group Of Funds And Quantitative
Advisors,
Inc. Dated January 31, 1999 -- Exhibit 7
4b. Advisory Contract Between Quantitative Advisors, Inc. And Columbia
Partners, L.L.C, Dated January 31, 1999-Midcap Fund-- Exhibit 8
4c. Advisory Contract Between Quantitative Advisors, Inc. And Columbia
Partners, L.L.C, Dated January 31, 1999-Smallcap Fund -- Exhibit 9
4d. Advisory Contract Between Quantitative Advisors, Inc. And Independence
International Associates, Inc, Dated January 31, 1999-Emerging Markets
Fund--Exhibit 10
4e. Advisory Contract Between Quantitative Advisors, Inc. And Independence
International Associates, Inc, Dated January 31, 1999 International Equity
Fund -- Exhibit 11
4f. Advisory Contract Between Quantitative Advisors, Inc. And Polaris Capital
Management, Inc, Dated January 31, 1999 --Exhibit 12
4g. Advisory Contract Between Quantitative Advisors, Inc. And Foreign Value
Fund, State Street Bank and Trust, Dated January 31, 1999 Growth and Income
Fund --Exhibit 13 </R
>
5a. Distribution Agreement Dated May 6, 1994 --Exhibit 14
5b. Amendment To Distribution Agreement Dated April 8, 1994-- Exhibit 15
5c. Amendment To Distribution Agreement Dated May 15, 1994-- Exhibit 16
5d. Amendment To Distribution Agreement Dated May 18, 1998-- Exhibit 17
5e. Form Of Specimen Ordinary Share Selling Agreement (Fully Disclosed
Accounts) --Exhibit 18
5f. Form Of Specimen Ordinary And Institutional Share Selling Agreement (Fully
Disclosed Accounts) --Exhibit 19
6a. Custodian And Investment Accounting Agreement With Investors Fiduciary
Trust Company Dated January 18, 1998--Exhibit 20
6b. First Amendment To The Custodian And Investment Accounting Agreement With
Investors Fiduciary Trust Company Dated March 1, 1998 --Exhibit 21
7a. Transfer Agent And Service Agreement Dated October 31, 1989 -- Exhibit 22.
7b. Limited Agency Agreement For Transfer Agency Services -- Exhibit 23
8. Opinion And Consent Of Dechert Price & Rhoads -- Exhibit 24.
9. Distributi
on Plan Dated April 2, 1990 -- Exhibit 25.
10a. Form Of Specimen Ordinary And Institutional Share Service Agreement --
Exhibit 26.
<PAGE>
10b. Form Of Specimen Ordinary Share Service Agreement-Undisclosed --
Exhibit 27.
10b. Form Of Specimen Ordinary Share Service Agreement-Ntf -- Exhibit 28
11a. Financial Data Schedule For Ordinary Shares --Exhibit 29.
11b. Financial Data Schedule For Institutional Shares --Exhibit 30.
12a. Rule 18f-3 Plan Amendment 1-- Exhibit 31.
12b. Rule 18f-3 Plan Amendment 2-- Exhibit 32.
12c. Rule 18f-3 Plan Amendment 3-- Exhibit 33.
Item 24. Persons Controlled by or under Common Control with Registrant
None
Item 25. Indemnification
The information required by this item is Incorporated by reference
to Post-Effective Amendment No. 19 to the Registrant's Registration Statement.
Item 26. 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 (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.
<TABLE>
<CAPTION>
Name Business and other connections
- --------------------------------------- -----------------------------------
<S> <C>
Willard L. Umphrey: President/Treasurer/Clerk/Director, U.S. Boston Insurance Agency, Inc.;
Treasurer/Director, U.S. Boston 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, USB Corporation and U.S. Boston Asset
Clerk Management Corporation; Vice Presi
dent/Treasurer/Clerk/Director, Waterfront Parking
Director 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
Fred Marius Executive Vice President, Clerk, Quantitative Group of Funds; President,
President General Counsel, U.S. Boston Capital Corporation.
</TABLE>
<PAGE>
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.
Item 27. 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 O
kurowski Vice President Vice President, Treasurer
and Director and Trustee
Willard L. Umphrey Treasurer President, Chairman,
and Director and Trustee
Frederick S. Marius President, Executive Vice President, Clerk
General Counsel
</TABLE>
The principal business address of each person listed above is 55 Old Bedford
Road, Lincoln, Massachusetts 01773.
(c) Not applicable.
Item 28. 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, Quantitati
ve
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 State Street Bank and Trust Company is 2 International Place, Boston,
Massachusetts 02110; the address of Independence International Associates, Inc.
is 53 State Street, Boston, Massachusetts 02109, the address of Columbia
Partners, L.L.C., Investment Management is 1775 Pennsylvania Avenue, N.W.,
Washington, DC 20006; 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 29. Management Services
None.
Item 30. Undertakings
(a) Not applicable.
<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 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 30 day of July, 1999.
Quantitative Group of Funds
By /s/ Frederick S. Marius
------------------------
Frederick S. Marius,
Executive Vice 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.
/s/Robert M. Armstrong
- -----------------------------
Robert M. Armstrong Trustee July 30, 1999
/s/Edward A. Bond, Jr.
- -----------------------------
Edward A. Bond, Jr. Trustee July 30, 1
999
/s/ John M. Bulbrook
- -----------------------------
John M. Bulbrook Trustee July 30, 1999
/s/ Edward E. Burrows
- -----------------------------
Edward E. Burrows Trustee July 30, 1999
/s/ Leon Okurowski
- -----------------------------
Leon Okurowski Trustee July 30, 1999
/s/ Willard L. Umphrey
- -----------------------------
Willard L. Umphrey Trustee July 30, 1999
/s/ Ron Zwanziger
- -----------------------------
Ron Zwanziger Trustee July 30, 1999
<PAGE>
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No.20 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated May 17, 1999 relating to the financial
statements and financial highlights appearing in the March 31, 1999 Annual
Report to Shareholders of the Quantitative Group of Funds, which are also
incorporated by reference into the Registration. We also consent to the
reference to us under the headings "Financial Highlights" and "Independent
Accountants" in the Prospectus and under the heading "Experts" in the Statement
of Additional Information.
PricewaterhouseCoopers LLP
Boston, MA
July 30, 1999
<PAGE>
Exhibit Index
1a. Amended And Restated Agreement And Declaration Of Trust, Dated April 2,
1990--Exhibit 1
1b. Amendment 1, Dated July 18, 1993, To The Agreement And Declaration Of
Trust, Dated April 2, 1990 -- Exhibit 2
2a. Amended And Restated Bylaws, Dated April 2, 1990 -- Exhibit 3
2b. Amendment1, Dated July 19, 1993, To The Bylaws Dated April 2, 1990 --
Exhibit 4
3a. Portions Of Agreement And Declaration Of Trust Relating To Shareholders'
Rights -- Exhibit 5.
3b. Portions Of By-Laws Relating To Shareholders' Rights -- Exhibit 6
4a. Management Contract Between Quantitative Group Of Funds And Quantitative
Advisors, Inc. Dated January 31, 1999 -- Exhibit 7
4b. Advisory Contract Between Quantitative Advisors, Inc. And
Columbia
Partners, L.L.C, Dated January 31, 1999-Midcap Fund-- Exhibit 8
4c. Advisory Contract Between Quantitative Advisors, Inc. And Columbia
Partners, L.L.C, Dated January 31, 1999-Smallcap Fund -- Exhibit 9
4d. Advisory Contract Between Quantitative Advisors, Inc. And Independence
International Associates, Inc, Dated January 31, 1999-Emerging Markets
Fund--Exhibit 10
4e. Advisory Contract Between Quantitative Advisors, Inc. And Independence
International Associates, Inc, Dated January 31, 1999 International Equity
Fund -- Exhibit 11
4f. Advisory Contract Between Quantitative Advisors, Inc. And Polaris Capital
Management, Inc, Dated January 31, 1999 --Exhibit 12
4g. Advisory Contract Between Quantitative Advisors, Inc. And Foreign Value
Fund, State Street Bank and Trust, Dated January 31, 1999 Growth and Income
Fund --Exhibit 13
5a. Distribution Agreement Dated May 6, 1994 --Exhibit 14
5b. Amendment To Distribution Agreement Da
ted April 8, 1994-- Exhibit 15
5c. Amendment To Distribution Agreement Dated May 15, 1994-- Exhibit 16
5d. Amendment To Distribution Agreement Dated May 18, 1998-- Exhibit 17
5e. Form Of Specimen Ordinary Share Selling Agreement (Fully Disclosed
Accounts) --Exhibit 18
5f. Form Of Specimen Ordinary And Institutional Share Selling Agreement (Fully
Disclosed Accounts) --Exhibit 19
6a. Custodian And Investment Accounting Agreement With Investors Fiduciary
Trust Company Dated January 18, 1998--Exhibit 20
6b. First Amendment To The Custodian And Investment Accounting Agreement With
Investors Fiduciary Trust Company Dated March 1, 1998 --Exhibit 21
7a. Transfer Agent And Service Agreement Dated October 31, 1989 -- Exhibit 22.
7b. Limited Agency Agreement For Transfer Agency Services -- Exhibit 23
8. Opinion And Consent Of Dechert Price & Rhoads -- Exhibit 24.
9. Distribution Plan Dated April 2, 1990 -- Exhibit 25.
10a. Form Of Specimen Ordinary And Institutional Share Servic
e Agreement --
Exhibit 26.
<PAGE>
10b. Form Of Specimen Ordinary Share Service Agreement-Undisclosed --
Exhibit 27.
10b. Form Of Specimen Ordinary Share Service Agreement-Ntf -- Exhibit 28
11a. Financial Data Schedule For Ordinary Shares --Exhibit 29.
11b. Financial Data Schedule For Institutional Shares --Exhibit 30.
12a. Rule 18f-3 Plan Amendment 1-- Exhibit 31.
12b. Rule 18f-3 Plan Amendment 2-- Exhibit 32.
12c. Rule 18f-3 Plan Amendment 3-- Exhibit 33.
<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...... Investm
ent 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
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Item No. Registration Statement Caption Caption in Statement of Additional Information
- -------- --------------------------------------- ----------------------------------------------------------
<S> <C> <C>
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 Policies; Other Investment Practices;
Investments and Risks................ Investment Restrictions of the Funds
13. Management of the Registrant.......... Management of the Fun
ds
14. Control Persons and Principal Holders
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 Redeem;
Shares............................... 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
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.
2
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 53,194
<INVESTMENTS-AT-VALUE> 73,765
<RECEIVABLES> 24,263
<ASSETS-OTHER> 14
<OTHER-ITEMS-ASSETS> 1,523
<TOTAL-ASSETS> 99,765
<PAYABLE-FOR-SECURITIES> 24,153
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 132
<TOTAL-LIABILITIES> 132
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 46,779
<SHARES-COMMON-STOCK> 3,334
<SHARES-COMMON-PRIOR> 3,185
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,131
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 20,571
<NET-ASSETS> 75,481
<DIVIDEND-INCOME> 885
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,122
<NET-INVESTMENT-INCOME> (237)
<REALIZED-GAINS-CURRENT> 10,151
<APPREC-INCREASE-CURRENT> (1,023)
<NET-CHANGE-FROM-OPS> 5,361
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 7,029
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 360
<NUMBER-OF-SHARES-REDEEMED> (509)
<SHARES-REINVESTED> 298
<NET-CHANGE-IN-ASSETS> 5,361
<ACCUMULATED-NII-PRIOR> 7
<ACCUMULATED-GAINS-PRIOR> 8,864
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 528
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,154
<AVERAGE-NET-ASSETS> 66,393
<PER-SHARE-NAV-BEGIN> 20.85
<PER-SHARE-NII> (0.08)
<PER-SHARE-GAIN-APPREC> 2.82
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 2.33
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.26
<EXPENSE-RATIO> .017
<PAGE>
[ARTICLE] 6
[CIK] 0000722885
[NAME] QUANTITATIVE GROUP OF FUNDS
[SERIES]
[NUMBER] 4
[NAME] QUANTITATIVE INTERNATIONAL EQUITY FUND ORD SHS.
[MULTIPLIER] 1,000
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] MAR-31-1999
[PERIOD-END] MAR-31-1999
[INVESTMENTS-AT-COST] 20,986
[INVESTMENTS-AT-VALUE] 23,793
[RECEIVABLES] 1,021
[ASSETS-OTHER] 9
[OTHER-ITEMS-ASSETS] 2,642
[TOTAL-ASSETS] 27,464
[PAYABLE-FOR-SECURITIES] 2,367
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1,246
[TOTAL-LIABILITIES] 3,613
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 21,457
[SHARES-COMMON-STOCK] 1,931
[SHARES-COMMON-PRIOR] 2,608
[ACCUMULATED-NII-CURRENT] (27)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (384)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 2,805
[NET-ASSETS] 23,851
[DIVIDEND-INCOME] 566
[INTEREST-INCOME] 38
[OTHER-INCOME] 0
[EXPENSES-NET] 564
[NET-INVESTMENT-INCOME] 605
[REALIZED-GAINS-CURRENT] 51
[APPREC-INCREASE-CURRENT] (1,703)
[NET-CHANGE-FROM-OPS] (1,612)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 47
[DISTRIBUTIONS-OF-GAINS] 9
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 202
[NUMBER-OF-SHARES-REDEEMED] (964)
[SHARES-REINVESTED] 5
[NET-CHANGE-IN-ASSETS] (8,384)
[ACCUMULATED-NII-PRIOR] 204
[ACCUMULATED-GAINS-PRIOR] 221
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 276
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 671
[AVERAGE-NET-ASSETS] 25,767
[PER-SHARE-NAV-BEGIN] 11.97
[PER-SHARE-NII] 0.01
[PER-SHARE-GAIN-APPREC] (0.58)
[PER-SHARE-DIVIDEND] 0.03
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] .00
[PER-SHARE-NAV-END] 11.37
[EXPENSE-RATIO] .021
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000722885
<NAME> QUANTITATIVE GROUP OF FUNDS
<SERIES>
<NUMBER> 5
<NAME> QUANTITATIVE INTERNATIONAL EQUITY FUND INST. SHS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 20,986
<INVESTMENTS-AT-VALUE> 23,793
<RECEIVABLES> 1,021
<ASSETS-OTHER> 9
<OTHER-ITEMS-ASSETS> 2,642
<TOTAL-ASSETS> 27,464
<PAYABLE-FOR-SECURITIES> 2,367
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,246
<TOTAL-LIABILITIES> 3,613
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21,457
<SHARES-COMMON-STOCK> 166
<SHARES-COMMON-PRIOR> 145
<ACCUMULATED-NII-CURRENT> (27)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (384)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2805
<NET-ASSETS> 23,851
<DIVIDEND-INCOME> 566
<INTEREST-INCOME> 38
<OTHER-INCOME> 0
<EXPENSES-NET> 564
<NET-INVESTMENT-INCOME> 605
<REALIZED-GAINS-CURRENT> 51
<APPREC-INCREASE-CURRENT> (1,703)
<NET-CHANGE-FROM-OPS> (1,612)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5
<DISTRIBUTIONS-OF-GAINS> 1
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 21
<NUMBER-OF-SHARES-REDEEMED> (0)
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> (8,384)
<ACCUMULATED-NII-PRIOR> 204
<ACCUMULATED-GAINS-PRIOR> 221
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 276
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 671
<AVERAGE-NET-ASSETS> 1,828
<PER-SHARE-NAV-BEGIN> 11.95
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> (0.58)
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> .00
<PER-SHARE-NAV-END> 11.39
<EXPENSE-RATIO> .016
<PAGE>
[ARTICLE] 6
[CIK] 0000722885
[NAME] QUANTITATIVE GROUPS 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-31-1999
[PERIOD-END] MAR-31-1999
[INVESTMENTS-AT-COST] 53,194
[INVESTMENTS-AT-VALUE] 73,765
[RECEIVABLES] 24,263
[ASSETS-OTHER] 14
[OTHER-ITEMS-ASSETS] 1,523
[TOTAL-ASSETS] 99,765
[PAYABLE-FOR-SECURITIES] 24,153
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 132
[TOTAL-LIABILITIES] 132
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 46,779
[SHARES-COMMON-STOCK] 216
[SHARES-COMMON-PRIOR] 179
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 8,131
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 20,571
[NET-ASSETS] 75,481
[DIVIDEND-INCOME] 885
[INTEREST-INCOME] 0
[OTHER-INCOME] 0
[EXPENSES-NET] 1,122
[NET-INVESTMENT-INCOME] (237)
[REALIZED-GAINS-CURRENT] 10,151
[APPREC-INCREASE-CURRENT] (1,023)
[NET-CHANGE-FROM-OPS] 5,361
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 429
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 60
[NUMBER-OF-SHARES-REDEEMED] (36)
[SHARES-REINVESTED] 13
[NET-CHANGE-IN-ASSETS] 5,361
[ACCUMULATED-NII-PRIOR] 7
[ACCUMULATED-GAINS-PRIOR] 8,864
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 528
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1,154
[AVERAGE-NET-ASSETS] 4,043
[PER-SHARE-NAV-BEGIN] 20.84
[PER-SHARE-NII] 0.03
[PER-SHARE-GAIN-APPREC] 2.83
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] 2.33
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 21.37
[EXPENSE-RATIO] .012
<PAGE>
[ARTICLE] 6
[CIK] 0000722885
[NAME] QUANTITATIVE GROUP OF FUNDS
[SERIES]
[NUMBER] 7
[NAME] QUANTITATIVE SMALL CAP FUND ORD. SHS.
[MULTIPLIER] 1,000
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] MAR-31-1999
[PERIOD-END] MAR-31-1999
[INVESTMENTS-AT-COST] 45,267
[INVESTMENTS-AT-VALUE] 50,961
[RECEIVABLES] 1,693
[ASSETS-OTHER] 21
[OTHER-ITEMS-ASSETS] 381
[TOTAL-ASSETS] 53,056
[PAYABLE-FOR-SECURITIES] 645
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 126
[TOTAL-LIABILITIES] 771
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 52,378
[SHARES-COMMON-STOCK] 3,260
[SHARES-COMMON-PRIOR] 3,758
[ACCUMULATED-NII-CURRENT] 12
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (5,800)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 5,694
[NET-ASSETS] 52,285
[DIVIDEND-INCOME] 570
[INTEREST-INCOME] 61
[OTHER-INCOME] 1
[EXPENSES-NET] 1,132
[NET-INVESTMENT-INCOME] (563)
[REALIZED-GAINS-CURRENT] (5,509)
[APPREC-INCREASE-CURRENT] (6,573)
[NET-CHANGE-FROM-OPS] (12,644)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 321
[NUMBER-OF-SHARES-REDEEMED] (819)
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] (8,233)
[ACCUMULATED-NII-PRIOR] (915)
[ACCUMULATED-GAINS-PRIOR] 2,413
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 596
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1,132
[AVERAGE-NET-ASSETS] 54,340
[PER-SHARE-NAV-BEGIN] 17.80
[PER-SHARE-NII] (0.15)
[PER-SHARE-GAIN-APPREC] (3.05)
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 14.60
[EXPENSE-RATIO] .019
<PAGE>
[ARTICLE] 6
[CIK] 0000722885
[NAME] QUANTITATIVE GROUP OF FUNDS
[SERIES]
[NUMBER] 8
[NAME] QUANTITATIVE SMALL CAP FUND INST. SHS.
[MULTIPLIER] 1,000
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] MAR-31-1999
[PERIOD-END] MAR-31-1999
[INVESTMENTS-AT-COST] 45,267
[INVESTMENTS-AT-VALUE] 50,961
[RECEIVABLES] 1,693
[ASSETS-OTHER] 21
[OTHER-ITEMS-ASSETS] 381
[TOTAL-ASSETS] 53,056
[PAYABLE-FOR-SECURITIES] 645
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 126
[TOTAL-LIABILITIES] 771
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 52,378
[SHARES-COMMON-STOCK] 308
[SHARES-COMMON-PRIOR] 342
[ACCUMULATED-NII-CURRENT] 12
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (5,800)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 5,694
[NET-ASSETS] 52,285
[DIVIDEND-INCOME] 570
[INTEREST-INCOME] 61
[OTHER-INCOME] 1
[EXPENSES-NET] 1,132
[NET-INVESTMENT-INCOME] (563)
[REALIZED-GAINS-CURRENT] (5,509)
[APPREC-INCREASE-CURRENT] (6,573)
[NET-CHANGE-FROM-OPS] (12,644)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 165
[NUMBER-OF-SHARES-REDEEMED] (198)
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] (8,233)
[ACCUMULATED-NII-PRIOR] (915)
[ACCUMULATED-GAINS-PRIOR] 2,413
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 596
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1,132
[AVERAGE-NET-ASSETS] 5,231
[PER-SHARE-NAV-BEGIN] 18.40
[PER-SHARE-NII] (0.08)
[PER-SHARE-GAIN-APPREC] (3.15)
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 15.17
[EXPENSE-RATIO] .014
<PAGE>
[ARTICLE] 6
[CIK] 0000722885
[NAME] QUANTITATIVE GROUP OF FUNDS
[SERIES]
[NUMBER] 9
[NAME] QUANTITATIVE EMERGING MARKETS FUND ORD. SHS.
[MULTIPLIER] 1,000
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] MAR-31-1999
[PERIOD-END] MAR-31-1999
[INVESTMENTS-AT-COST] 9,725
[INVESTMENTS-AT-VALUE] 9,701
[RECEIVABLES] 42
[ASSETS-OTHER] 19
[OTHER-ITEMS-ASSETS] 61
[TOTAL-ASSETS] 9,936
[PAYABLE-FOR-SECURITIES] 25
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 21
[TOTAL-LIABILITIES] 46
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 12,557
[SHARES-COMMON-STOCK] 1,282
[SHARES-COMMON-PRIOR] 1,201
[ACCUMULATED-NII-CURRENT] (12)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (2,626)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (30)
[NET-ASSETS] 9,889
[DIVIDEND-INCOME] 286
[INTEREST-INCOME] 13
[OTHER-INCOME] 0
[EXPENSES-NET] 200
[NET-INVESTMENT-INCOME] 98
[REALIZED-GAINS-CURRENT] (154)
[APPREC-INCREASE-CURRENT] (1,311)
[NET-CHANGE-FROM-OPS] (1,367)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 63
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 237
[NUMBER-OF-SHARES-REDEEMED] (171)
[SHARES-REINVESTED] 15
[NET-CHANGE-IN-ASSETS] 1,126
[ACCUMULATED-NII-PRIOR] (39)
[ACCUMULATED-GAINS-PRIOR] (2,089)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 73
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 232
[AVERAGE-NET-ASSETS] 8,082
[PER-SHARE-NAV-BEGIN] 7.70
[PER-SHARE-NII] 0.07
[PER-SHARE-GAIN-APPREC] (1.11)
[PER-SHARE-DIVIDEND] 0.05
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.02
[PER-SHARE-NAV-END] 6.59
[EXPENSE-RATIO] .023
<PAGE>
[ARTICLE] 6
[CIK] 0000722885
[NAME] QUANTITATIVE GROUP OF FUNDS
[SERIES]
[NUMBER] 10
[NAME] QUANTITATIVE EMERGING MARKETS FUND INST. SHS.
[MULTIPLIER] 1,000
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] MAR-31-1999
[PERIOD-END] MAR-31-1999
[INVESTMENTS-AT-COST] 9,725
[INVESTMENTS-AT-VALUE] 9,701
[RECEIVABLES] 42
[ASSETS-OTHER] 19
[OTHER-ITEMS-ASSETS] 61
[TOTAL-ASSETS] 9,936
[PAYABLE-FOR-SECURITIES] 25
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 21
[TOTAL-LIABILITIES] 46
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 12,557
[SHARES-COMMON-STOCK] 218
[SHARES-COMMON-PRIOR] 129
[ACCUMULATED-NII-CURRENT] (12)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (2,626)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (30)
[NET-ASSETS] 9,889
[DIVIDEND-INCOME] 286
[INTEREST-INCOME] 13
[OTHER-INCOME] 0
[EXPENSES-NET] 200
[NET-INVESTMENT-INCOME] 98
[REALIZED-GAINS-CURRENT] (154)
[APPREC-INCREASE-CURRENT] (1,311)
[NET-CHANGE-FROM-OPS] (1,367)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 16
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 89
[NUMBER-OF-SHARES-REDEEMED] (0)
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 1126
[ACCUMULATED-NII-PRIOR] (39)
[ACCUMULATED-GAINS-PRIOR] (2,089)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 73
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 232
[AVERAGE-NET-ASSETS] 1,098
[PER-SHARE-NAV-BEGIN] 7.76
[PER-SHARE-NII] 0.09
[PER-SHARE-GAIN-APPREC] (1.64)
[PER-SHARE-DIVIDEND] 0.07
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.03
[PER-SHARE-NAV-END] 6.64
[EXPENSE-RATIO] .018
<PAGE>
[ARTICLE] 6
[CIK] 0000722885
[NAME] QUANTITATIVE GROUP OF FUNDS
[SERIES]
[NUMBER] 11
[NAME] QUANTITATIVE MID CAP FUND ORD. SHS.
[MULTIPLIER] 1,000
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] MAR-31-1999
[PERIOD-END] MAR-31-1999
[INVESTMENTS-AT-COST] 11,392
[INVESTMENTS-AT-VALUE] 13,270
[RECEIVABLES] 477
[ASSETS-OTHER] 3
[OTHER-ITEMS-ASSETS] 1
[TOTAL-ASSETS] 13,750
[PAYABLE-FOR-SECURITIES] 529
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 48
[TOTAL-LIABILITIES] 577
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 10,693
[SHARES-COMMON-STOCK] 816
[SHARES-COMMON-PRIOR] 965
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 603
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 1,878
[NET-ASSETS] 13,174
[DIVIDEND-INCOME] 116
[INTEREST-INCOME] 23
[OTHER-INCOME] 0
[EXPENSES-NET] 246
[NET-INVESTMENT-INCOME] (107)
[REALIZED-GAINS-CURRENT] 606
[APPREC-INCREASE-CURRENT] (1,098)
[NET-CHANGE-FROM-OPS] (599)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 352
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 130
[NUMBER-OF-SHARES-REDEEMED] (302)
[SHARES-REINVESTED] 23
[NET-CHANGE-IN-ASSETS] (2,158)
[ACCUMULATED-NII-PRIOR] (63)
[ACCUMULATED-GAINS-PRIOR] 2,420
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 149
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 276
[AVERAGE-NET-ASSETS] 14,037
[PER-SHARE-NAV-BEGIN] 16.05
[PER-SHARE-NII] (0.11)
[PER-SHARE-GAIN-APPREC] (0.09)
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] 0.39
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 15.46
[EXPENSE-RATIO] .017
<PAGE>
[ARTICLE] 6
[CIK] 0000722885
[NAME] QUANTITATIVE GROUP OF FUNDS
[SERIES]
[NUMBER] 12
[NAME] QUANTITATIVE MID CAP FUND INST. SHS.
[MULTIPLIER] 1,000
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] MAR-31-1999
[PERIOD-END] MAR-31-1999
[INVESTMENTS-AT-COST] 11,392
[INVESTMENTS-AT-VALUE] 13,270
[RECEIVABLES] 477
[ASSETS-OTHER] 3
[OTHER-ITEMS-ASSETS] 1
[TOTAL-ASSETS] 13,750
[PAYABLE-FOR-SECURITIES] 529
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 48
[TOTAL-LIABILITIES] 577
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 10,693
[SHARES-COMMON-STOCK] 36
[SHARES-COMMON-PRIOR] 51
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 603
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 1,878
[NET-ASSETS] 13,174
[DIVIDEND-INCOME] 116
[INTEREST-INCOME] 23
[OTHER-INCOME] 0
[EXPENSES-NET] 246
[NET-INVESTMENT-INCOME] (107)
[REALIZED-GAINS-CURRENT] 606
[APPREC-INCREASE-CURRENT] (1,098)
[NET-CHANGE-FROM-OPS] (599)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 24
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 24
[NUMBER-OF-SHARES-REDEEMED] (40)
[SHARES-REINVESTED] 1
[NET-CHANGE-IN-ASSETS] (2,158)
[ACCUMULATED-NII-PRIOR] (63)
[ACCUMULATED-GAINS-PRIOR] 2,420
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 149
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 276
[AVERAGE-NET-ASSETS] 882
[PER-SHARE-NAV-BEGIN] 16.24
[PER-SHARE-NII] (0.10)
[PER-SHARE-GAIN-APPREC] (0.10)
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] 0.39
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 15.65
[EXPENSE-RATIO] .016
<PAGE>
[ARTICLE] 6
[CIK] 0000722885
[NAME] QUANTITATIVE GROUP OF FUNDS
[SERIES]
[NUMBER] 15
[NAME] QUANTITATIVE FOREIGN VALUE FUND ORD SHS.
[MULTIPLIER] 1,000
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] MAR-31-1999
[PERIOD-END] MAR-31-1999
[INVESTMENTS-AT-COST] 7,879
[INVESTMENTS-AT-VALUE] 8,288
[RECEIVABLES] 301
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 1
[TOTAL-ASSETS] 7,879
[PAYABLE-FOR-SECURITIES] 391
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 18
[TOTAL-LIABILITIES] 409
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 7,478
[SHARES-COMMON-STOCK] 894
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] (18)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (289)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (549)
[NET-ASSETS] 7,879
[DIVIDEND-INCOME] 83
[INTEREST-INCOME] 22
[OTHER-INCOME] 0
[EXPENSES-NET] 96
[NET-INVESTMENT-INCOME] 10
[REALIZED-GAINS-CURRENT] (298)
[APPREC-INCREASE-CURRENT] (549)
[NET-CHANGE-FROM-OPS] (837)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 20
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 965
[NUMBER-OF-SHARES-REDEEMED] (73)
[SHARES-REINVESTED] 2
[NET-CHANGE-IN-ASSETS] 8,736
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 50
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 122
[AVERAGE-NET-ASSETS] 4,923
[PER-SHARE-NAV-BEGIN] 10.00
[PER-SHARE-NII] 0.02
[PER-SHARE-GAIN-APPREC] (1.64)
[PER-SHARE-DIVIDEND] 0.02
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 8.36
[EXPENSE-RATIO] .020
<PAGE>
[ARTICLE] 6
[CIK] 0000722885
[NAME] QUANTITATIVE GROUP OF FUNDS
[SERIES]
[NUMBER] 16
[NAME] QUANTITATIVE FOREIGN VALUE FUND INST. SHS
[MULTIPLIER] 1,000
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] MAR-31-1999
[PERIOD-END] MAR-31-1999
[INVESTMENTS-AT-COST] 7,879
[INVESTMENTS-AT-VALUE] 8,288
[RECEIVABLES] 301
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 1
[TOTAL-ASSETS] 7,879
[PAYABLE-FOR-SECURITIES] 391
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 18
[TOTAL-LIABILITIES] 409
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 7,478
[SHARES-COMMON-STOCK] 48
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] (18)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (289)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (549)
[NET-ASSETS] 7,879
[DIVIDEND-INCOME] 83
[INTEREST-INCOME] 22
[OTHER-INCOME] 0
[EXPENSES-NET] 96
[NET-INVESTMENT-INCOME] 10
[REALIZED-GAINS-CURRENT] (298)
[APPREC-INCREASE-CURRENT] (549)
[NET-CHANGE-FROM-OPS] (837)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 48
[NUMBER-OF-SHARES-REDEEMED] (0)
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 8,736
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 50
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 122
[AVERAGE-NET-ASSETS] 105
[PER-SHARE-NAV-BEGIN] 8.43
[PER-SHARE-NII] 0.06
[PER-SHARE-GAIN-APPREC] (0.12)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 8.37
[EXPENSE-RATIO] .017
</TABLE>
<PAGE>
EXHIBIT 1
U.S. BOSTON INVESTMENT COMPANY
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
(As amended through April 2, 1990)
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST made at Burlington,
Massachusetts, this second day of April, 1990, amending and restating the
AGREEMENT AND DECLARATION OF TRUST dated June 27, 1983, as heretofore amended,
by the Trustees hereunder and by the holders of shares of beneficial interest
issued hereunder as hereinafter provided.
WITNESSETH that
WHEREAS, this Trust has been formed to carry on the business of an
investment company; and
WHEREAS, the Trustees have agreed to manage all property coming into their
hands as trustees of a Massachusetts voluntary association with transferable
shares in accordance with the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets, which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the pro rata benefit of the holders from time
to time of Shares in this Trust as hereinafter set forth.
ARTICLE I
Name and Definitions
Name
- ----
Section 1. This Trust shall be known as "U.S. BostonInvestment Company",
and the Trustees shall conduct the business of the Trust under that 'name or any
other name as they may from time to time determine.
Definitions
- -----------
Section 2. Whenever used herein, unless otherwise required by the context
or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust established
by this Agreement and Declaration of Trust, as amended from time to time;
(b) "Trustees" refers to the Trustees of the Trust named herein or
elected in accordance with Article IV;
(c) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest in the Trust shall be divided
from time to time or, if more than one Series or Class of Shares is
authorized by the Trustees, the equal proportionate transferable units into
which each series or Class of Shares shall be divided from time to time;
<PAGE>
(d) "Shareholder" means a record owner of Shares;
(e) The 111940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time to time;
(f) The terms. "Affiliated Person", "Assignment", "Commission"!
"Interested Person". "Principal Underwriter" and "Majority Shareholder
Vote" (the 67% or 50% requirement of the third sentence of Section 2(a)(42)
of the 1940 Act, whichever may be applicable) shall have the meanings given
them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust as amended or restated from time to time;
(h) "Bylaws" shall mean the Bylaws of the Trust as amended from time
to time;
(i) "Series" or "Series of Shares" refers to the division of Shares
into two or more Series as provided in Article III, Section 1, hereof; and
(j) "Class" or "Class of Shares" refers to the division of Shares
representing any series into two or more Classes as provided in Article
III, Section 1, hereof.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to provide investors a managed investment
primarily in securities, debt instruments and stock index futures contracts and
Options thereon.
ARTICLE III
Shares
Division of Beneficial Interest
- -------------------------------
Section 1. The Shares of the Trust shall be issued in one or more Series
and one or more Classes of Shares of any such Series as the Trustees may,
without shareholder approval, authorize. Each Series shall be preferred over all
other series in respect of the assets allocated to that Series. The beneficial
interest in each Series shall at all times be divided into one or more Classes
of Shares, without par value, each Class having such preferences or special or
relative rights or privileges as the Trustees may determine. The number of
Shares authorized shall be unlimited. The Trustees may from time to time divide
or combine the Shares into a greater or lesser number without thereby changing
the proportionate beneficial interests in the Series.
Ownership of Shares
- -------------------
Section 2. The ownership of Shares shall be recorded on the books of the
Trust or a transfer or similar agent. No certificates certifying the ownership
of Shares shall be issued except as the Trustees may otherwise determine from
time to time. The Trustees may make such rules as they consider appropriate for
the issuance of Share certificates, the transfer of Shares and similar matters.
<PAGE>
The record books of the Trust as kept by the Trust or any transfer or similar
agent, as the case may be, shall be conclusive as to who are the shareholders of
each Series and as to the number of Shares of each Series held from time to time
by each shareholder.
Investment in the Trust
- -----------------------
Section 3. The Trustees shall accept investments in the Trust from such
persons and on such terms and for such consideration, which may consist of cash
or tangible or intangible property or a combination thereof, as they from time
to time authorize.
All consideration received by the Trust for the issue or sale of Shares of
each Series, together with all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation thereof
and any funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to the series of shares
with respect to which the same were received by the Trust for all purposes,
subject only to the rights of creditors, and shall be so handled upon the books
of account of the Trust and are herein referred to as "assets of" such Series.
No Preemptive Rights
- --------------------
Section 4. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust.
Status of Shares and Limitation of Personal Liability
- -----------------------------------------------------
Section 5. Shares shall be deemed to be personal property giving only the
rights provided in this instrument. Every Shareholder by virtue of having become
a Shareholder shall be held to have expressly assented and agreed to the terms
hereof and to have become a party hereto. The death of a Shareholder during the
continuance of the Trust shall not operate to terminate the same nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees but only to the
rights of said decedent under this Trust. ownership of Shares shall not entitle
the Shareholder to any title in or to the whole or any part of the Trust
property or right to call for a partition or division of the same or for an
accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor except
as specifically provided herein to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
ARTICLE IV
The Trustees
Election
- --------
Section 1. A Trustee may be elected either by the Trustees or by the
Shareholders. There shall be not less than three Trustees. The number of
Trustees shall be fixed by the Trustees. Each Trustee elected by the Trustees or
the Shareholders shall serve until he or she retires, resigns, is removed or
dies or until the next meeting of Shareholders called for the purpose of
electing Trustees and until the election and qualification of his or her
<PAGE>
successor. At any meeting called for the purpose, a Trustee may be removed by
vote of two-thirds of the outstanding shares.
Effect of Death, Resignation, etc. of a Trustee
- -----------------------------------------------
Section 2. The death, declination, resignation, retirement, removal or
incapacity of the Trustees, or any one of them, shall not operate to annul the
Trust or to revoke any existing agency created pursuant to the terms of this
Declaration of Trust.
Powers
- ------
Section 3. Subject to the provisions of this Declaration of Trust, the
business of the Trust shall be managed by the Trustees., and they shall have all
powers necessary or convenient to carry out that responsibility. Without
limiting the foregoing, the Trustees may adopt Bylaws not inconsistent with this
Declaration of Trust providing for the conduct of the business of the Trust and
may amend and repeal them to the extent that such Bylaws do not reserve that
right to the shareholders; they may from time to time in accordance with the
provisions of Article III, Section 1, hereof establish one or more Series to
which they may allocate such of the Trust property, subject to such liabilities
as they may deem appropriate; they may establish one or more Classes of Shares
representing interests in such Series as they may deem appropriate; they may
fill vacancies in or add to their number, and may elect and remove such officers
and appoint and terminate such agents as they consider appropriate; they may
appoint from their own number, and terminate, any one or more committees
consisting of two or more Trustees, including an executive committee which may,
when the Trustees are not in session, exercise some or all of the power and
authority of the Trustees as the Trustees may determine; they may employ one or
more custodians of the assets of the Trust and may authorize such custodians to
employ subcustodians and to deposit all or any part of such assets in a system
or systems for the central handling of securities, retain a transfer agent or a
Shareholder servicing agent, or both, provide for the distribution of Shares by
the Trust, through one or more principal underwriters or otherwise, set record
dates for the determination of Shareholders with respect to various matters, and
in general delegate such authority as they consider desirable to any officer of
the Trust, to any committee of the Trustees and to any agent or employee of the
Trust or to any such custodian or underwriter.
Without limiting the foregoing, the Trustees shall have power and
authority:
(a) To invest and reinvest cash, and to hold cash uninvested;
(b) To sell, exchange, lend, pledge, mortgage,hypothecate, write
options on and lease any or all of the assets of the Trust;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such power
and discretion with relation to securities or property as the Trustees
shall deem proper;
<PAGE>
(d) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in the
name of the Trustees or of the Trust or in the name of a custodian,
subcustodian or other depositary or a nominee or nominees or otherwise;
(f) To allocate assets, liabilities and expenses of the Trust to a
particular Series of Shares or to apportion the same among two or more
Series, provided that any liabilities or expenses incurred by a particular
Series of Shares shall be payable solely out of the assets of that Series.
(g) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security of which
is or was held in the Trust; to consent to any contract, lease, mortgage,
purchase or sale of property by such corporation or issuer, and to pay
calls or subscriptions with respect to any security held in the Trust;
(h) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit
any security with, or transfer any security to, any such committee,
depositary or trustee, and to delegate to them such power and authority
with relation to any security (whether or not so deposited or transferred)
as the Trustees shall deem proper, and to agree to pay, and to pay, such
portion of the expenses and compensation of such committee, depositary or
trustee as the Trustees shall deem proper;
(i) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including but not limited
to claims for taxes;
(j) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(k) To borrow funds;
(l) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and pledge
the Trust property or any part thereof to secure any of or all such
obligations;
(m) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including without limitation, insurance policies insuring the
assets of the Trust and payment of distributions and principal on its
portfolio investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers or managers,
principal underwriters, or independent contractors of the Trust
individually against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such
person as Shareholder, Trustee, officer, employee, agent, investment
adviser or manager, principal underwriter, or independent contractor,
including any action taken or omitted that may be determined to constitute
<PAGE>
negligence, whether or not the Trust would have the power to indemnify such
person against such liability; and
(n) To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension, profit-sharing,
share bonus, share purchase, savings, thrift and other retirement,
incentive and provisions, including the purchasing of life insurance and
annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents of
the Trust.
The Trustees shall not in any way be bound or limited by any present or
future law or custom in regard to investments by trustees. Except as otherwise
provided herein or from time to time in the Bylaws, any action to be taken by
the Trustees may be taken by a majority of the Trustees present at a meeting of
Trustees (a quorum being present), within or without Massachusetts, including
any meeting held by means of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other at the same time and participation by such means shall constitute
presence in person at a meeting, or by written consents of majority of the
Trustees then in office.
Payment of Expenses by Trust
- ----------------------------
Section 4. The Trustees are authorized to pay or to cause to be paid out
of the principal or income of the Trust, or partly out of principal and partly
out of income, as they deem fair, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in connection
with the management thereof, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the Trust's
officers/employees, investment adviser or manager, principal underwriter,
auditor, counsel, custodian, transfer agent, Shareholder servicing agent, and
such other agents or independent contractors and such other expenses and charges
as the Trustees may deem necessary or proper to incur, provided, however, that
all expenses, fees, charges, taxes and liabilities incurred or arising in
connection with a particular Series of Shares shall be payable solely out of the
assets of that Series.
Ownership of Assets of the Trust
- --------------------------------
Section 5. Title to all of the assets of each Series of Shares and of the
Trust shall at all times be considered as vested in the Trustees.
Advisory, Management and Distribution
- -------------------------------------
Section 6. Subject to a favorable Majority Shareholder Vote, the Trustees
may, at any time and from time to time, contract for exclusive or nonexclusive
advisory and/or management services with any corporation, trust, association or
other organization (the "Manager"); any such contract may permit the Manager to
contract with any corporation, trust, association or other organization to
provide advisory services to any series of Shares (the "Adviser"); every such
contract shall comply with such requirements and restrictions as may be set
forth in the Bylaws; and any such contract may contain such other terms
interpretive of or in addition to said requirements and restrictions as the
Trustees may determine, including, without limitation, authority to determine
from time to time what investments shall be purchased, held, sold or exchanged
and what portion, if any, of the assets of the Trust shall be held uninvited and
<PAGE>
to make changes in the Trust's investments. The Trustees may also, at any time
and from time to time, contract with the Manager or any other corporation,
trust, association or other organization, appointing it exclusive or
nonexclusive distributor or principal underwriter for the Shares, every such
contract to comply with such requirements and restrictions as may be set forth
in the Bylaws; and any such contract may contain such other terms interpretive
of or in addition to said requirements and restrictions as the Trustees may
determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager, adviser,
principal underwriter or distributor or agent of or for any corporation, trust,
association, or other organization, or of or for any parent or affiliate of any
organization, with which an advisory or management contract, or principal
underwriter's or distributor's contract, or transfer, Shareholder servicing or
other agency contract may have been or may hereafter be made, or that any such
organization, or any parent or affiliate thereof, is a Shareholder or has an
interest in the Trust, or that
(ii) any corporation, trust, association or other organization with
which an advisory or management contract or principal underwriter's or
distributor's contract, or transfer, Shareholder servicing or other agency
contract may have been or may hereafter be made also has an advisory or
management contract, or principal underwriter's or distributor's contract, or
transfer, Shareholder servicing or other agency contract with one or more other
corporations, trusts, associations, or other organizations, or has other
business or interests shall not affect the validity of any such contract or
disqualify any Shareholder, Trustee or officer of the Trust from voting upon or
executing the same or create any liability or accountability to the Trust or its
Shareholders.
ARTICLE V
Shareholders' Voting Powers and Meetings
Voting Powers
- -------------
Section 1. The Shareholders shall have power to vote only (i) for the
election of Trustees as provided in Article IV, Section 1, (ii) for the removal
of Trustees as provided in Article IV, Section 1, (iii) with respect to any
Manager as provided in Article IV, Section 6, (iv) with respect to any
termination of this Trust to the extent and as provided in Article IX, Section
4, (v) with respect to any amendment of this Declaration of Trust to the extent
and as provided in Article IX, Section 7, (vi) to the same extent as the
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders,
and (vii) with respect to such additional matters relating to the Trust as may
be required by this Declaration of Trust, the Bylaws or any registration of the
Trust with the Commission (or any successor agency) or any state, or as the
Trustees may consider necessary or desirable. Each whole Share shall be entitled
to one vote as to any matter on which it is entitled to vote and each fractional
Share shall be entitled to a proportionate fractional vote. Notwithstanding any
other provision of this Declaration of Trust, on any matter submitted to a vote
of Shareholders, all Shares of the Trust then entitled to
<PAGE>
vote shall be voted by individual Series, except (1) when required by the 1940
Act or any Rules or Orders hereunder, Shares shall be voted in the aggregate and
not by individual Series; and (2) when the Trustees have determined that the
matter affects only the interests of one or more Series, then only Shareholders
of such Series shall be entitled to vote thereon. There shall be no cumulative
voting in the election of Trustees. Shares may be voted in person or by proxy. A
proxy with respect to Shares held in the name of two or more persons shall be
valid if executed by any one of them unless at or prior to exercise of the proxy
the Trust receives a specific written notice to the contrary from any one of
them. A proxy purporting to be executed by or on behalf of a Shareholder shall
be deemed valid unless challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required by law, this Declaration of Trust or the Bylaws to be taken by
Shareholders.
Voting Power and Meetings.
- --------------------------
Section 2. Meetings of any or all Series or Classes of Shares may be
called by the Trustees from time to time for the purpose of taking action upon
any matter requiring the vote or authority of the Shareholders of such Series or
Class as herein provided or upon any other matter deemed by the Trustees to be
necessary or desirable. Written notice of any meeting of Shareholders shall be
given or caused by mailing such notice at least seven days before such
meeting,postage prepaid, stating the time, place and purpose of the meeting, to
each Shareholder entitled to vote at such meeting at the Shareholder's address
as it appears on the records of the Trust. If the Trustees shall fail to call or
give notice of any meeting of Shareholders for a period of 30 days after written
application by Shareholders holding at least 10% of the then outstanding Shares
of each Series entitled to vote at such meeting (or of all Series if all Series
are entitled to vote at such meeting) requesting a meeting to be called for a
purpose requiring action by the Shareholders as provided herein or in the
Bylaws, then Shareholders holding at least 10% of the then outstanding Shares of
each Series entitled to vote at such meeting (or of all series if all series are
entitled to vote at such meeting) may call and give notice of such meeting, and
thereupon the meeting shall be held in the manner provided for herein in case of
call thereof by the Trustees.
Quorum and Required Vote
- ------------------------
Section 3. A majority of Shares entitled to vote shall be a quorum for the
transaction of business at a Shareholders' meeting, except that where any
provision of law or of this Declaration of Trust permits or requires that
holders of any Series or Class shall vote as a Series or Class then a majority
of the aggregate number of Shares of that Series or Class entitled to vote shall
be necessary to constitute a quorum for the transaction of business by that
Series or Class. Any lesser number shall be sufficient for adjournments. Any
adjourned session or sessions may be held, within a reasonable time after the
date set for the original meeting, without the necessity of further notice.
Except when a larger vote is required by any provision of law or this
Declaration of Trust or the Bylaws, a majority of the Shares voted shall decide
any questions and a plurality shall elect a Trustee, provided that where any
provision of law or of this Declaration of Trust permits or requires that the
holders of any Series shall vote as a Series, then a majority of the Shares of
that Series voted on the matter shall decide that matter insofar as that Series
is concerned.
<PAGE>
Action by Written Consent
- -------------------------
Section 4. Any action taken by Shareholders may be taken without a meeting
if a majority of Shareholders entitled to vote on the matter (or such larger
proportion thereof as shall be required by any express provision of this
Declaration of Trust or the Bylaws) consent to the action in writing and such
written consents are filed with the records of the meetings of Shareholders.
Such consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
Additional Provisions
- ---------------------
Section 5. The Bylaws may include further provisions of Shareholders'
votes and meetings and related matters.
ARTICLE VI
Distributions, Redemptions and Repurchases
Distributions
- -------------
Section 1. The Trustees may each year, or more frequently if they so
determine, distribute to the Shareholders of each Series or Class such income
and capital gains, accrued or realized, as the Trustees may determine, after
providing for actual and accrued expenses and liabilities (including such
reserves as the Trustees may establish) determined in accordance with good
accounting practices. The Trustees shall have full discretion to determine which
items shall be treated as income and which items as capital and their
determination shall be binding upon the Shareholders. Distributions of each
year's income of each Series or Class shall be distributed pro rata to
Shareholders in proportion to the number of Shares of each Series or Class held
by each of them. Such distributions shall be made in cash or Shares or a
combination thereof as determined by the Trustees. Any such distribution paid in
Shares will be paid at the net asset value thereof as determined in accordance
with the Bylaws.
Redemptions and Repurchases
- ---------------------------
Section 2. The Trust shall purchase such Shares as are offered by any
Shareholder for redemption, upon the presentation of any certificate for the
Shares to be purchased, a proper I instrument of transfer and a request directed
to the Trust or a person designated by the Trust that the Trust purchase such
Shares, or in accordance with such other procedures for redemption as the
Trustees may from time to time authorize; and the Trust will pay therefore the
net asset value thereof, as next determined in accordance with the Bylaws.
Payment for said Shares shall be made by the Trust to the Shareholder within
seven days after the date on which the request is made. The obligation set forth
in this section 2 is subject to the provision that in the event that any time
the New York Stock Exchange is closed for other than customary weekends or
holidays, or, if permitted by rules of the Commission, during periods when
trading on the Exchange is restricted or during any emergency which makes it
impractical for the Trust to dispose of its investments or to determine fairly
the value of its net assets, or during any other period permitted by order of
the Commission for the protection of investors, such obligation may be suspended
or postponed by the Trustees. The Trust may also purchase or repurchase Shares
at a price not exceeding the net asset value of such Shares in effect when the
purchase or repurchase or any contract to purchase or repurchase is made.
<PAGE>
Redemptions at the Option of the Trust
- --------------------------------------
Section 3. The Trust shall have the right at its option and at any time to
redeem Shares of any Shareholder at the net asset value thereof as determined in
accordance with the Bylaws: (i) if at such time such Shareholder owns fewer
Shares than, or Shares having an aggregate net asset value of less than, an
amount determined from time to time by the Trustees; or (ii) to the extent that
such Shareholder owns Shares of a particular series or Class of Shares equal to
or in excess of a percentage of the outstanding Shares of that Series or Class
determined from time to time by the Trustees; or (iii) to the extent that such
Shareholder owns Shares of the Trust representing a percentage equal to or in
excess of such percentage of the aggregate number of outstanding Share of the
Trust or the aggregate net asset value of the Trust determined from time to time
by the Trustees.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Compensation
- ------------
Section 1. The Trustees as such shall be entitled to reasonable
compensation from the Trust; they may fix the amount of their compensation.
Nothing herein shall in any way prevent the employment of any Trustee for
advisory, management, legal, accounting, investment banking or other services
and payment for the same by the Trust.
Limitation of Liability
- -----------------------
Section 2. The Trustees shall not be responsible or liable in any event
for any neglect or wrongdoing of any officer, agent, employee, manager or
principal underwriter of the Trust, nor shall any Trustee be responsible for the
act or omission of any other Trustee, but nothing herein contained shall protect
any Trustee against any liability to which he or she 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 or her office.
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only in or with respect to
their or his or her capacity as Trustees or Trustee, and such Trustees or
Trustee shall not be personally liable thereon.
ARTICLE VIII
Indemnification
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 Person in connection with
the defense or disposition of any action, suit or other proceeding, whether
<PAGE>
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 interests 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 that indemnification
of such expenses is authorized under this Article, provided, however, that
either that either (a)such Covered Person shall have 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 Covered 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
<PAGE>
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.
Shareholders
- ------------
Section 4. In case any Shareholder or former Shareholder shall be held to
be personally liable solely by reason of his or her being or having been a
Shareholder and not because of his or her acts or omissions or for some other
reason, the Shareholder or former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of a corporation or
other entity, its corporate or other general successor) shall be entitled to be
held harmless from and indemnified against all loss and expense arising from
such liability, but only out of the assets of the particular Series of Shares of
which he or she is or was a Shareholder.
ARTICLE IX
Miscellaneous
Trustees, Shareholders, etc. Not Personally Liable; Notice
- ----------------------------------------------------------
Section 1. All persons extending credit to, contracting with or having any
claim against the Trust or a particular Series or Class of Shares shall look
only to the assets of the Trust or the assets of that particular Series or Class
of Shares for payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of the Trust's officers, employees or
agents, whether past, present or future, shall be personally liable therefor.
Nothing in this Declaration of Trust shall protect any Trustee against any
liability to which such Trustee would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officer or officers shall give notice that this
Declaration of Trust is on file with the Secretary of The Commonwealth of
Massachusetts and shall recite that the same was executed or made by or on
behalf of the Trust or by them as Trustee or Trustees or as officers or officer
and not individually and that the obligations of such instrument are not binding
<PAGE>
upon any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, and may contain such further recital as he or
she or they may deem appropriate, but the omission thereof shall not operate to
bind any Trustee or Trustees or officer or officers or Shareholder or
Shareholders individually.
Trustee's Good Faith Action, Expert Advice, No Bond or Surety
- -------------------------------------------------------------
Section 2. The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. A Trustee shall be liable
for his or her own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee, and
for nothing else, and shall not be liable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust, and shall be
under, no liability for any act or omission in accordance with such advice or
for failing to follow such advice. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is required.
Liability of Third Persons Dealing with Trustees
- ------------------------------------------------
Section 3. No person dealing with the Trustees shall be bound to make any
inquiry concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
Duration and Termination of Trust
- ---------------------------------
Section 4. Unless terminated as provided herein, the Trust shall continue
without limitation of time. The Trust may be terminated at any time by vote of
Shareholders holding at least 66-2/3% of the Shares entitled to vote or by the
Trustees by written notice to the Shareholders. Any Series or Class of Shares
may be terminated at any time by vote of Shareholders holding at least 66-2/3%
of the Shares of such Series or Class entitled to vote or by the Trustees by
written notice to the Shareholders of such Series or Class.
Upon termination of the Trust or of any one, or more series of Shares,
after paying or otherwise providing for all charges, taxes, expenses and
liabilities, whether due or accrued or anticipated, of the Trust or of the
particular Series as may be determined by the Trustees, the Trust shall in
accordance with such procedures as the Trustees consider appropriate reduce the
remaining assets to distributable form in cash or shares or other securities, or
any combination thereof, and distribute the proceeds to the Shareholders of the
Series involved, ratably according to the number of Shares of such Series held
by the several Shareholders of such Series on the date of termination.
Filing of Copies, References, Headings
- --------------------------------------
Section 5. The original or a copy of this instrument and of each amendment
hereto shall be kept at the office of the Trust where it may be inspected by any
Shareholder. A copy of this instrument and of each amendment hereto shall be
filed by the Trust with the Secretary of The Commonwealth of Massachusetts and
with the Burlington Town Clerk, as well as any other governmental office where
such filing may from time to time be required. Anyone dealing with the Trust may
rely on a certificate by an officer of the Trust as to whether or not any such
amendments have been made and as to any matters in connection with the Trust
hereunder, and, with the same effect as if
<PAGE>
it were the original, may rely on a copy certified by an officer of the Trust to
be a copy of this instrument or of any such amendments. In this instrument and
in any such amendment, references to this instrument and all expressions like
"herein", "hereof" and "hereunder" shall be deemed to refer to this instrument
as amended or affected by any such amendments. Headings are placed herein for
convenience of reference only and shall not be taken as a part hereof or control
or affect the meaning, construction or effect of this instrument. This
instrument may be executed in any number of counterparts each of which shall be
deemed an original.
Applicable Law
- --------------
Section 6. This Declaration of Trust is made in The Commonwealth of
Massachusetts, and it is created under and is to be governed by and construed
and administered according to the laws of said Commonwealth. The Trust shall be
of the type commonly called a Massachusetts business trust, and without limiting
the provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
Amendments
- ----------
Section 7. This Declaration of Trust may be amended at any time by an
instrument in writing signed by a majority of the then Trustees when authorized
to do so by vote of Shareholders holding a majority of the Shares entitled to
vote, except that an amendment which shall affect the holders of one or more
Series or Classes of Shares but not the holders of all outstanding Series or
Classes of Shares shall be authorized by vote of the Shareholders holding a
majority of the Shares entitled to vote of each Series or Class affected and no
vote of Shareholders of a Series or Class not affected shall be required.
Amendments having the purpose of changing the name of the Trust or of supplying
any omission, occuring any ambiguity or curing, correcting or supplementing any
defective or inconsistent provision contained herein shall not require
authorization by Shareholder vote.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals
in the Town of Burlington, Massachusetts for themselves and their assigns, as of
the day and year first above written.
<PAGE>
EXHIBIT 2
AMENDMENT NO. I TO THE AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST OF
U.S. BOSTON INVESTMENT COMPANY
We, the undersigned, being all of the Trustees of U.s. Boston Investment
Company, a Massachusetts business trust created and existing under an Amended
and Restated Agreement and Declaration of Trust dated as of April 2, 1990, (the
"Agreement") , a copy of which is on file in the office of the Secretary of
State of the Commonwealth of Massachusetts, do hereby certify that the following
amendment to said Agreement has been authorized by the unanimous vote of the
Trustees, taken at a meeting held for that purpose on July 14, 1993, consistent
with Article IX, Section 7 of the Agreement, and do hereby amend said Agreement
as follows:
By amending Section 1 of ARTICLE I to read in its entirety as follows:
"Section 1. This Trust shall be known as "The Quantitative Group of Funds",
and the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine."
The foregoing Amendment shall become effective as of the close
of business July 18, 1993.
IN WITNESS WHEREOF, we have hereunto set our hands and common
Seal, for ourselves and our successors and assigns.
______________________
Robert M. Armstrong
______________________
John M. Bulbrook
______________________
Joseph H. Newberg
______________________
Willard L. Umphrey
______________________
Edward A. Bond, Jr.
______________________
Edward E. Burrows
______________________
Leon Okurowski
<PAGE>
Exhibit 3
Amended and Restated
April 2, 1990
BYLAWS
OF
U.S. BOSTON INVESTMENT COMPANY
ARTICLE I
Agreement and Declaration of Trust and Principal Office
1.1 Agreement and Declaration of Trust. These Bylaws shall be subject to
----------------------------------
the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust") of U.S. Boston Investment Company, the Massachusetts
business trust established by the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust. The principal office of the Trust shall
-----------------------------
be located in Burlington, Massachusetts.
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may be held without
----------------
call or notice at such places and at such times as the Trustees may from time to
time determine, provided that notice of the first regular meeting following any
such determination shall be given to absent Trustees. A regular meeting of the
Trustees may be held without call or notice immediately after and at the same
place as the annual meeting of the shareholders.
2.2 Special Meetings. Special meetings of the Trustees may be held at any
----------------
time and at any place designated in the call of the meeting when called by the
Chairman of the Trustees, the President or the Treasurer or by two or more
Trustees, sufficient notice thereof being given to each Trustee by the Clerk or
an Assistant Clerk or by the officer or the Trustees calling the meeting.
2.3 Notice. It shall be sufficient notice to the Trustee of a special
------
meeting to send notice by mail at least forty-eight hours or by telegram at
least twenty-four hours before the meeting addressed to the Trustee at his or
her usual or last known business or residence address or to give notice to him
or her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting
<PAGE>
need not be given to any Trustee if a written waiver of notice, executed by him
or her before the meeting, is filed with the records of the meeting, or to any
Trustee who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her. Neither notice of a meeting nor a
waiver of a notice need specify the purposes of the meeting.
2.4 Quorum. At any meeting of the Trustees a majority of the Trustees then
------
in office shall constitute a quorum. Any meeting may be adjourned from time to
time by a majority of the votes cast upon the question whether or not a quorum
is present, and the meeting may be held as adjourned without further notice.
ARTICLE 3
Officers
3.1 Enumeration: Qualification. The officers of the Trust shall be a
--------------------------
Chairman of the Trustees, a President, a Treasurer, a Clerk, and such other
officers, if any, as the Trustees from time to time may in their discretion
elect. The Trust may also have such agents as the Trustees from time to time may
in their discretion appoint. The Chairman of the Trustees shall be a Trustee and
may but need not be a shareholder; and any other officer may but not need be a
---
Trustee or a shareholder. Any two or more offices may be held by the same
person.
3.2 Election. The Chairman of the Trustees, the President, the Treasurer,
--------
and the Clerk shall be elected by the Trustees upon the occurrence of any
vacancy in any such office. Other officers, if any, may be elected or appointed
by the Trustees at said meeting or at any other time. Vacancies in any office
may be filled at any time.
3.3 Tenure. The Chairman of the Trustees, the President, the Treasurer and
------
the Clerk shall hold office until he or she sooner dies, resigns, is removed or
becomes disqualified. Each other officer shall hold office and each agent shall
retain authority at the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these Bylaws, each officer
------
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as are commonly incident to the
office occupied by him or her as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the Trustees may from
time to time designate.
<PAGE>
3.5 Chairman; President. Unless the Trustees otherwise provide, the
-------------------
Chairman of the Trustees or, if there is none or in the absence of the Chairman,
the President shall preside at all meetings of the shareholders and of the
Trustees. The President shall be the chief executive officer.
3.6 Treasurer. The Treasurer shall be the chief financial and accounting
---------
officer of the Trust, and shall, subject to the provisions of the Declaration of
Trust and to any arrangement made by the Trustees with a custodian, investment
adviser or manager, or transfer, shareholder servicing or similar agent, be
in charge of the valuable papers, books of account and accounting records of the
Trust, and shall have such other duties and powers as may be designated from
time to time by the Trustees or by the President.
3.7 Clerk. The Clerk shall record all proceedings of the shareholders and
-----
the Trustees in books to be kept therefor, which books or a copy thereof shall
be kept at the principal office of the Trust. In the absence of the Clerk from
any meeting of the shareholders or Trustees, an assistant clerk, or if there be
none or if he or she is absent, a temporary clerk chosen at such meeting shall
record the proceedings thereof in the aforesaid books.
3.8 Resignations and Removals. Any Trustee or officer may resign at any
-------------------------
time by written instrument signed by him or her and delivered to the Chairman,
the President or the Clerk or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time. The Trustees may remove any officer elected by them with or without cause.
Except to the extent expressly provided in a written agreement with the Trust,
no Trustee or officer resigning and no officer removed shall have any right to
any compensation for any period following his or her resignation or removal, or
any right to damages on account of such removal.
ARTICLE 4
Committees
4.1 Quorum; Voting. A majority of the members of any Committee of the
--------------
Trustees shall constitute a quorum for the transaction of business, and any
action of such a Committee may be taken at a meeting by a vote of a majority of
the members present (a quorum being present) or evidenced by one or more
writings signed by such a majority. Members of a Committee may participate in a
meeting of such Committee by means of a conference telephone or other
communications equipment by means of which all persons participating in the
<PAGE>
meeting can hear each other at the same time and participation by such means
shall constitute presence in person at a meeting.
ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render reports at the time
-------
and in the manner required by the Declaration of Trust or any applicable law.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
ARTICLE 6
Fiscal Year
6.1 General. Except as from time to time otherwise provided by the
-------
Trustees, the fiscal year of the Trust shall end on March 31 each year.
ARTICLE 7
Seal
7.1 General. The seal of the Trust shall consist of a flat-faced die with
-------
the word "Massachusetts", together with the name of the Trust and the year of
its organization cut or engraved thereon but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and its absence shall
not impair the validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
8.1 General. Except as the Trustees may generally or in particular cases
-------
authorize the execution thereof in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the President or by the Treasurer and need not bear the seal of the Trust.
ARTICLE 9
Issuance of Share Certificates
9.1 Sale of Shares. Except as otherwise determined by the Trustees, the
--------------
Trust will issue and sell for cash or securities from time to time, full and
fractional shares of its shares of beneficial interest, such shares to be issued
and sold at a price of not less than net asset value per share as from time to
time determined in accordance with the
<PAGE>
Declaration of Trust and these By-Laws and, in the case of fractional shares, at
a proportionate reduction in such price. In the case of shares sold for
securities, such securities shall be valued in accordance with the provisions
for determining value of assets of the Trust as stated in the Declaration of
Trust and these By-Laws. The officers of the Trust are severally authorized to
take all such actions as may be necessary or desirable to carry out this Section
9.1.
9.2 Share Certificates. In lieu of issuing certificates for shares, the
----- ------------
Trustees or the transfer agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share certificates.
In that event, each shareholder shall be entitled to a certificate stating the
number of shares owned by him, in such form as shall be prescribed from time to
time by the Trustees. Such certificates shall be signed by the president or
vice-president and by the treasurer or assistant treasurer. Such signatures may
be if the certificate is signed by a transfer agent, or by a registrar, other
than a Trustee, officer or employee of the Trust. In case any officer who has
signed or whose facsimile signature has been placed on such certificate shall
cease to be such officer before such certificate is issued, it may be issued by
the Trust with the same effect as if he were such officer at the time of its
issue.
9.3 Loss of Certificates. In case of the alleged loss or destruction or
--------------------
mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
9.4 Issuance of New Certificates to Pledgee. A pledgee of shares
---------------------------------------
transferred as collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty that is intended
to be secured thereby. Such new certificates shall express on its face that it
is held as collateral security, and the name of the pledgor shall be stated
thereon, who alone shall be liable as a shareholder and entitled to vote
thereon.
9.5 Discontinuance of Issuance of Certificates. The Trustees may at any
------------------------------------------
time discontinue the issuance of share certificates and may, by written notice
to each shareholder, require the surrender of share certificates to the Trust
for
<PAGE>
cancellation. Such surrender and cancellation shall not effect the ownership of
shares in the Trust.
ARTICLE 10
Provisions Relating to the Conduct of the Trust's Business
10.1 Certain Definitions. When used herein the following words shall have
-------------------
the following meanings: "Distributor" shall mean any one or more corporations,
firms or associations which have distributor's or principal underwriter's
contracts in effect with the Trust providing that redeemable shares issued by
the Trust shall be offered and sold by such Distributor. "Managers" shall mean
any one or more corporations, firms or associations which may at the time have
an advisory or management contract with the Trust or with another such entity
having such a contract with the Trust.
10.2 Limitation on Holdings - by the Trust of Certain Securities and on
------------------------------------------------------------------
Dealings with Officers or Trustees. The Trust will not lend any of its assets to
- ----------------------------------
the Distributor or Managers or to any officer or director of the Distributor or
Managers or any officer or Trustee of the Trust, and shall not permit any
officer or Trustee or any officer or director of the Distributor or Managers to
deal for or on behalf of the Trust with himself or herself as principal or
agent, or with any partnership, association or corporation in which he or she
has a financial interest; provided that the foregoing provisions shall not
prevent (a) officers and Trustees of the Trust or officers and directors of the
Distributor or Managers from buying, holding or selling shares in the Trust or
from being partners, officers or directors of or otherwise financially
interested in the Distributor or the Managers; (b) purchases or sales of
securities or other property if such transaction is permitted by or is exempt or
exempted from the provisions of the Investment Company Act of 1940 or any Rule
or Regulation thereunder; (c) employment of legal counsel, registrar, transfer
agent, shareholder servicing agent, dividend disbursing agent or custodian who
is, or has a partner, shareholder, officer or director who is, an officer or
Trustee of the Trust or an officer or director of the Distributor or Managers;
(d) sharing statistical, research, legal and management expenses and office hire
and expenses with any other investment company in which an officer or Trustee of
the Trust or an officer or director of the Distributor or Managers is an officer
or director or otherwise financially interested.
<PAGE>
10.3 Securities and Cash of the Trust to be held by Custodian subject to
-------------------------------------------------------------------
certain Terms and Conditions.
- ----------------------------
(a) All securities and cash owned by this Trust shall be held by or
deposited with one or more banks or trust companies having (according to its
last published report) not less than $5,000,000 aggregate capital, surplus and
undivided profits (any such bank or trust company being hereby designated as
"Custodian"), provided such a Custodian can be found ready and willing to act;
subject to such rules, regulations and orders, if any, as the Securities and
Exchange Commission may adopt, this Trust may, or may permit any Custodian to,
deposit all or any part of the Securities owned by this Trust in a system for
the central handling of securities pursuant to which all securities of any
particular class or series of any issue deposited within the system may be
transferred or pledged by bookkeeping entry, without physical delivery. The
Custodian may appoint, subject to the approval of the Trustees, one or more
subcustodians.
(b) The Trust shall enter into a written contract with each Custodian
regarding the powers, duties and compensation of such Custodian with respect to
the cash and securities of the Trust held by such Custodian. Said contract and
all amendments thereto shall be approved by the Trustees.
(c) The Trust shall upon the resignation or inability to serve of any
Custodian or upon change of any Custodian:
(i) in case of such resignation or inability to serve, use its best
efforts to obtain a successor Custodian;
(ii) require that the cash and securities owned by the Trust be delivered
directly to the successor Custodian; and
(iii)in the event that no successor Custodian can be found, submit to the
shareholders, before permitting delivery of the cash and securities
owned by the Trust otherwise than to a successor Custodian, the
question whether the Trust shall be liquidated or shall function
without a Custodian.
10.4 Reports to Shareholders. The Trust shall send to each shareholder of
-----------------------
record at least semi-annually a statement of the condition of the Trust and of
the results
<PAGE>
of its operations, containing all information required by applicable laws or
regulations.
10.5 Determination of Net Asset Value Per Share. Net asset value per share
------------------------------------------
of each class of shares of each Series of the Trust shall be calculated as
described in Exhibit A to these By-Laws. The per share net asset values shall be
determined on each day on which the New York Stock Exchange is open as of a time
fixed by resolution of the Trustees. As of any time other than the time so fixed
the Trustees may cause the per share net asset values last determined to be
determined again in a similar manner, or adjusted to reflect changes in market
values of securities in the portfolio, such adjustment to be made on the basis
of changes in selected security prices determined by the Trustees to be relevant
to the portfolio of such series or in averages or in other standard and readily
ascertainable market data,and the Trustees may fix the time when such
redetermined or adjusted per share net asset values shall become effective.
In valuing the portfolio investment of any series for determination of per
share net asset values, securities for which market quotations are readily
available shall be valued at prices which, in the opinion of the Trustees or the
person designated by the Trustees to make the determination, most nearly
represent the market value of such securities, and other securities and assets
shall be valued at their fair value as determined by or pursuant to the
direction of the Trustees, which in the case of short-term debt obligations,
commercial paper and repurchase agreements may, but need not, be on the basis of
quoted yields for securities of comparable maturity, quality and type, or on the
basis of amortized cost. Expenses and liabilities of the Trust shall be accrued
each day. Liabilities may include such reserves for taxes, estimated accrued
expenses and contingencies as the Trustees or their designates may in their sole
discretion deem fair and reasonable under the circumstances. No accruals shall
be made in respect of taxes on unrealized appreciation of securities owned
unless the Trustees shall otherwise determine. Dividends payable by the Trust
shall be deducted as at the time of but immediately prior to the determination
of per share net asset values on the record date therefor.
ARTICLE 11
Shareholders
11.1 Meetings. A meeting of the shareholders shall be called by the
--------
Secretary whenever ordered by the Trustees,the Chairman or requested in writing
by the holder or holders of at least one-tenth of the outstanding shares
entitled to vote at such meeting. If the Secretary, when so ordered or
requested, refuses or neglects for more than two days to call such meeting, the
Trustees, Chairman or the shareholders so requesting may, in the name of the
Secretary, call the meeting by giving notice thereof in the manner required when
notice is given by the Secretary.
11.2 Access to Shareholder List. Shareholders of record may apply to the
--------------------------
Trustees for assistance in communicating with other shareholders for the purpose
of calling a meeting in order to vote upon the question of removal of a Trustee.
When ten or more shareholders. of record who have been such for a least six
months preceding the date of application and who hold in the aggregate shares
having a net asset value of at least $25,000 so apply, the Trustees shall within
five business days either:
(i) afford to such applicants access to a list of names and addresses of
all shareholders as recorded on the books of the Trust; or
(ii) inform such applicants of the approximate number of shareholders of
record and the approximate cost of mailing material to them, and, within a
reasonable time thereafter, mail, at the applicants' expense, materials
submitted by the applicants, to all such shareholders of record. the Trustees
shall not be obligated to mail materials which they believe to be misleading or
in violation of applicable law.
11.3 Record Dates. For the purpose of determining the shareholders of any
------------
series who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to receive payment of any dividend or of any other
distribution, the Trustees may from time to time fix a time, which shall be not
more than 60 days before the date of any meeting of shareholders or the date for
the payment of any dividend or of any other distribution, as the record date for
determining the shareholders of such series having the right to notice of and to
vote at such meeting and any adjournment thereof or the right to receive such
dividend or distribution, and in such case only shareholders of record of such
series on such record date shall have such right notwithstanding any transfer of
shares on the books of the Trust after the record date; or without fixing such
<PAGE>
record date the Trustees may for any of such purposes close the register or
transfer books for all or any part of such period.
ARTICLE 12
Amendments to the Bylaws
12.1 General. These Bylaws may be amended or repealed, in whole or in part,
-------
by a majority of the Trustees then in office at any meeting of the Trustees, or
by one or more writings signed by such a majority.
<PAGE>
U.S. Boston Investment Company (the "Fund")
-------------------------------------------
Dual Pricing Funds
------------------
Net Asset Value (NAV)
---------------------
And Dividend/Distribution Determination
---------------------------------------
The Fund will be required to maintain records that account for both classes of
shares (Class A Shares and Existing Shares) within each series. The Class A
Shares will be offered and sold to investors investing at least $1,000,000 in
the Fund. The Class A Shares will not be subject to 12b-1 fees, a deferred sales
charge or a sales load. The class of shares presently outstanding are
principally offered and sold pursuant to a 12b-1 fee and are subject to a 1.00%
fee payable upon redemption. No sales load is charged on the purchase of the
shares presently outstanding Accordingly, separate net asset value's and/or
dividends/distributions must be calculated for each class of shares.
The procedures for calculating NAV and dividends/ distributions depend upon the
dividend policy of the respective series. Presently, each series of the Fund
pays annually as dividends all of its net investment income and distributes
annually substantially all of its net capital gains.
In maintaining the records for the Fund, the profit and loss accounts must be
allocated to each class of shares within each series. That is, net investment
income, unrealized and realized gains or losses will be allocated daily to each
class of shares based on the percentage of net assets at the beginning of the
day. These balances will be accumulated by class of shares.
On a daily basis, expenses are attributable to each class of shares depending on
the nature of the expenditures. These fall into three categories: (1) expense
attributable to both classes that are allocated based on net assets at the
beginning of the day (i.e., legal, audit, etc.); (2) items attributable to only
one class of shares (12b-1); and, (3) certain expenses that have higher cost for
one class versus the other (i.e., transfer agent fee). Prior to determining the
day's NAV or annual dividends/distributions, the following expense items must be
calculated as indicated:
. Management Fee:
Using the prior day's combined net assets of both classes of shares
(i.e. total net assets of the fund) calculate the current day's accrual
and then allocate the amount to each class based on the percentages of
assets by class.
. 12b-1 Fee:
Using the prior day's net assets for the Existing Shares, calculate the
current day's accrual.
. Transfer Agent Fee (where different rates exist for Class A and Existing
Shares):
Using the existing budget for each class of shares, accrue separate
daily amounts for each class.
. Determine the expenses borne by the manager which may be relevant for
---------
each class of shares.
. Allocate all other expenses for which a daily accrual is determined
--------
expense budget.
In designing accounting procedures and controls regarding the allocation of
income and expenses and the calculation of NAV and dividends and distributions
for the two classes of shares the following objectives must be met:
1. To ascertain that- the direct expenses charged to each class of shares
are correctly recorded in the fund accounting records and are allocated
to the correct class of shares,
2. To ascertain that income and operating expense are allocated properly to
each class of shares based upon the value of outstanding share's of each
class at the end of the day, and
<PAGE>
3. To ascertain that the dividend rates and daily NAV per share for each
class of shares reflect the proper allocation of income and operating
expenses as well as the full amount of any direct expenses charged to
the respective class of shares.
Set forth below are the additional procedures which will be implemented to
satisfy the objectives described above. These procedures presume that the normal
procedures and controls remain in effect at State Street Bank and Trust Company
and U.S. Boston Investment Management Corporation for all other daily fund
accounting.
<PAGE>
Dividends/Distributions
- -----------------------
. The dividend is declared annually by the Trustees of the Fund and
consists of substantially all the accumulated undistributed net
investment income for each class of shares as of the record date.
. The capital gains distribution is declared annually by the Trustees of
the Fund and consists of substantially all the accumulated net
undistributed realized gains for each class of shares as of the record
date.
NAV
- ---
. The U.S. Boston Investment Company dual pricing worksheet determines the
NAV by each class of shares.
<PAGE>
DUAL PRICING WORKSHEET
FUND DATE
ASSET ALLOCATION COMPOSITE CLASS A EXISTING
1. PRIOR DAY NAV PER SHAKE
2. Shares Outstanding Beg. of Day
3. Net Share Activity
4. Current Shares Outstanding
5. Adjusted TOW Net Assets
---
6. % Assets By Class
INCOME AND EXPENSES REVIEWED/APPROVED BY FLM:
7. Dividend Income
8. Interest Income
9. Amortization
10. Total Daily Income
11. Management Fee
12. 12b-1 Fee not applicable
--------------
13. Other Expenses - Fund
14. Other Expenses - Class
15. Total Daily Expenses
16. Expenses Borne By The Manager
17. Daily Net Income
CAPITAL
18. Income Distribution
19. Undistributed Net Income
20. Capital Stock Activity
21. Capital Gain Distribution
22. Realized Gain/Loss
23. Unrealized Apprec./Deprecialion
24. Daily Net Asset Change
25. Prior Day Net Assets
26. Net Assets
27. NAV Per Share and Offering Price
<PAGE>
U.S. Boston Investment Company
------------------------------
Line by Line Explanation of Dual Pricing Worksheet
--------------------------------------------------
Line
- ----
1. The net asset value per share by class as of the close of business from the
previous day's worksheet.
2. The total number of shares by class outstanding at the close of business
the previous day, as per the previous day's worksheet, and confirmed by the
transfer agent.
3. The net total of capital share transactions by class for the current day,
as reported by the transfer agent for the previous day's activity.
4. The total of lines 2 and 3 to arrive at today's outstanding shares, and
confirmed with the transfer agent.
5. The value of shares outstanding by class before the current day's change in
net assets. The composite amount is arrived at by adding the total of Class
A assets and Existing assets.
6. The percent of assets each class represents in total assets of the
portfolio.
7. The total dividend income for the portfolio for the current day prorated at
the class level based on line 6.
8. The total interest income for the portfolio for the current day prorated at
the class level based on line 6.
9. The total net (amortization) of premium or accretion of discount for the
current day prorated at the class level based on line 6.
10. The total of lines 7, 8 and 9 to arrive at total income for the portfolio
by class for the current day.
11. Using the prior day's combined net assets, the total costs incurred for
management and advisory services prorated at the class level based on line
6.
12. The 12b-1 distribution fee based on the prior day's net assets for Existing
Shares.
13. The expenses that are attributable to both classes of the Fund, exclusive
of management fees, prorated at the class level based on line 6.
<PAGE>
Line By Line Explanation of Dual Pricing Worksheet (continued)
--------------------------------------------------------------
Line
- ----
14. The transfer agent expenses directly attributable to each class and any
other expenses attributable to a particular class.
15. The total of lines 11, 12, 13 and 14 to arrive at total expenses for the
current day.
16. The portion of expenses, if any, borne by the manager calculated on a class
level.
17. Line 15 subtracted from line 10 which subtotal is added to line 16.
18. The portion of accumulated net income declared as a dividend by the Fund's
Board of Trustees to shareholders on the current day (ex-dividend date).
19. Line 17 minus Line 18.
20. The net dollar amount of all capital share transactions for the current day
as reported by the transfer agent.
21. The portion of accumulated realized gains declared as a capital gain
distribution by the Fund's Board of Trustees to shareholders on the current
day (ex-dividend date).
22. The realized gain or loss for the current day prorated at the class level
based on line 6.
23. The change in the market value of investments from the previous day to the
current day prorated at the class level based on line 6.
24. The total of lines 19 through 23.
25. The net assets of each class of shares from the previous day's worksheet.
26. The total of lines 24 and 25.
27. The net assets for the current day divided by the respective number of
class shares as reported on line 4.
<PAGE>
EXHIBIT 4
AMENDMENT NO. 1 TO
AMENDED AND RESTATED BYLAWS
OF
U.S. BOSTON INVESTMENT COMPANY
Effective July 19, 1993, the heading and Article 1 of the Amended and
Restated Bylaws of U.S. Boston Investment Company dated April 2, 1990 are hereby
amended to read as follows:
BYLAWS
OF
QUANTITATIVE GROUP OF FUNDS
ARTICLE 1
Agreement and Declaration of Trust and Principal office
1.1 Agreement and Declaration of Trust. These Bylaws shall be subject to
-----------------------------------
the Agreement and Declaration of Trust as from time to time in effect (the
"Declaration of Trust"), of Quantitative Group of Funds, the Massachusetts
business trust established by the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust. The principal office of the Trust shall
------------------------------
be located in Lincoln, Massachusetts or such other location as may be determined
by the Trustees of the Trust.
<PAGE>
EXHIBIT 5
ARTICLE V of the Fund's Declaration of Trust Relating to Shareholder Rights
Shareholders' Voting Powers and Meetings
Voting Powers
- -------------
Section 1. The Shareholders shall have power to vote only (i) for the
election of Trustees as provided in Article IV, Section 1, (ii) for the removal
of Trustees as provided in Article IV, Section 1, (iii) with respect to any
Manager as provided in Article IV, Section 6, (iv) with respect to any
termination of this Trust to the extent and as provided in Article IX, Section
4, (v) with respect to any amendment of this Declaration of Trust to the extent
and as provided in Article IX, Section 7, (vi) to the same extent as the
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders,
and (vii) with respect to such additional matters relating to the Trust as may
be required by this Declaration of Trust, the Bylaws or any registration of the
Trust with the Commission (or any successor agency) or any state, or as the
Trustees may consider necessary or desirable. Each whole Share shall be entitled
to one vote as to any matter on which it is entitled to vote and each fractional
Share shall be entitled to a proportionate fractional vote. Notwithstanding any
other provision of this Declaration of Trust, on any matter submitted to a vote
of Shareholders, all Shares of the Trust then entitled to vote shall be voted by
individual Series, except (1) when required by the 1940 Act or any Rules or
Orders hereunder, Shares shall be voted in the aggregate and not by individual
Series; and (2) when the Trustees have determined that the matter affects only
the interests of one or more Series, then only Shareholders of such Series shall
be entitled to vote thereon. There shall be no cumulative voting in the election
of Trustees. Shares may be voted in person or by proxy. A proxy with respect to
Shares held in the name of two or more persons shall be valid if executed by any
one of them unless at or prior to exercise of the proxy the Trust receives a
specific written notice to the contrary from any one of them. A proxy purporting
to be executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger. Until Shares are issued, the Trustees may exercise
all rights of Shareholders and may take any action required by law, this
Declaration of Trust or the Bylaws to be taken by Shareholders.
Voting Power and Meetings.
- --------------------------
Section 2. Meetings of any or all Series or Classes of Shares may be called
by the Trustees from time to time for the purpose of taking action upon any
matter requiring the vote or authority of the Shareholders of such Series or
Class as herein provided or upon any other matter deemed by the Trustees to be
necessary or desirable. Written notice of any meeting of Shareholders shall be
given or caused by mailing such notice at least seven days before such
meeting,postage prepaid, stating the time, place and purpose of the meeting, to
each Shareholder entitled to vote at such meeting at the Shareholder's address
as it appears on the records of the Trust. If the Trustees shall
<PAGE>
fail to call or give notice of any meeting of Shareholders for a period of 30
days after written application by Shareholders holding at least 10% of the then
outstanding Shares of each Series entitled to vote at such meeting (or of all
Series if all Series are entitled to vote at such meeting) requesting a meeting
to be called for a purpose requiring action by the Shareholders as provided
herein or in the Bylaws, then Shareholders holding at least 10% of the then
outstanding Shares of each Series entitled to vote at such meeting (or of all
series if all series are entitled to vote at such meeting) may call and give
notice of such meeting, and thereupon the meeting shall be held in the manner
provided for herein in case of call thereof by the Trustees.
Quorum and Required Vote
- ------------------------
Section 3. A majority of Shares entitled to vote shall be a quorum for the
transaction of business at a Shareholders' meeting, except that where any
provision of law or of this Declaration of Trust permits or requires that
holders of any Series or Class shall vote as a Series or Class then a majority
of the aggregate number of Shares of that Series or Class entitled to vote shall
be necessary to constitute a quorum for the transaction of business by that
Series or Class. Any lesser number shall be sufficient for adjournments. Any
adjourned session or sessions may be held, within a reasonable time after the
date set for the original meeting, without the necessity of further notice.
Except when a larger vote is required by any provision of law or this
Declaration of Trust or the Bylaws, a majority of the Shares voted shall decide
any questions and a plurality shall elect a Trustee, provided that where any
provision of law or of this Declaration of Trust permits or requires that the
holders of any Series shall vote as a Series, then a majority of the Shares of
that Series voted on the matter shall decide that matter insofar as that Series
is concerned.
Action by Written Consent
- -------------------------
Section 4. Any action taken by Shareholders may be taken without a meeting
if a majority of Shareholders entitled to vote on the matter (or such larger
proportion thereof as shall be required by any express provision of this
Declaration of Trust or the Bylaws) consent to the action in writing and such
written consents are filed with the records of the meetings of Shareholders.
Such consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
Additional Provisions
- ---------------------
Section 5. The Bylaws may include further provisions of Shareholders' votes
and meetings and related matters.
<PAGE>
EXHIBIT 6
ARTICLE 11 of the Fund's Bylaws relating to Shareholders rights.
11.1 Meetings. A meeting of the shareholders shall be called by the
---------
Secretary whenever ordered by the Trustees,the Chairman or requested in writing
by the holder or holders of at least one-tenth of the outstanding shares
entitled to vote at such meeting. If the Secretary, when so ordered or
requested, refuses or neglects for more than two days to call such meeting, the
Trustees, Chairman or the shareholders so requesting may, in the name of the
Secretary, call the meeting by giving notice thereof in the manner required when
notice is given by the Secretary.
11.2 Access to Shareholder List. Shareholders of record may apply to the
---------------------------
Trustees for assistance in communicating with other shareholders for the purpose
of calling a meeting in order to vote upon the question of removal of a Trustee.
When ten or more shareholders. of record who have been such for a least six
months preceding the date of application and who hold in the aggregate shares
having a net asset value of at least $25,000 so apply, the Trustees shall within
five business days either:
(i) afford to such applicants access to a list of names and addresses
of all shareholders as recorded on the books of the Trust; or
(ii) inform such applicants of the approximate number of shareholders
of record and the approximate cost of mailing material to them, and, within a
reasonable time thereafter, mail, at the applicants' expense, materials
submitted by the applicants, to all such shareholders of record. the Trustees
shall not be obligated to mail materials which they believe to be misleading or
in violation of applicable law.
11.3 Record Dates. For the purpose of determining the shareholders of any
-------------
series who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to receive payment of any dividend or of any other
distribution, the Trustees may from time to time fix a time, which shall be not
more than 60 days before the date of any meeting of shareholders or the date for
the payment of any dividend or of any other distribution, as the record date for
determining the shareholders of such series having the right to notice of and to
vote at such meeting and any adjournment thereof or the right to receive such
dividend or distribution, and in such case only shareholders of record of such
series on such record date shall have such right notwithstanding any transfer of
shares on the books of the Trust after the record date; or without fixing such
record date the Trustees may for any of such purposes close the register or
transfer books for all or any part of such period.
ARTICL
<PAGE>
EXHIBIT 7
QUANTITATIVE ADVISORS, INC.
---------------------------
MANAGEMENT CONTRACT
-------------------
Management Contract ("Contract") dated as of January 31, 1999, between
QUANTITATIVE GROUP OF FUNDS, a Massachusetts business trust (the "Fund") and
QUANTITATIVE ADVISORS, INC., a Massachusetts corporation (the "Manager").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY MANAGER TO FUND.
(a) Subject always to the control of the trustees (the "Trustees") of the
Fund, the Manager, will, at its expense, manage, supervise and conduct
the affairs and business of the Fund and matters incidental thereto.
In the performance of its duties, the Manager will comply with the
provisions of the Agreement and Declaration of Trust and By-Laws of
the Fund, as amended, and its stated investment objectives, policies
and restrictions as set forth in the then current Prospectus and/or
Statement of Additional Information of the Fund, and will use its best
efforts to safeguard and promote the welfare of the Fund and to comply
with other written policies which the Trustees may from time-to-time
determine and of which the Manager has received notice, and shall
exercise the same care and diligence expected of the Trustees. In its
management, supervision and conduct of the Fund's affairs and
business, the Manager will do all things necessary so that each series
of the Fund (the "Series") may qualify as a "regulated investment
company" within the meaning of the Internal Revenue Code of 1986, as
amended (the "Code"), and the Rules and Regulations thereunder.
(b) Subject to the provisions of the Declaration of Trust and the
Investment Company Act of 1940, as amended, (the "1940 Act"), the
Manager may, at its expense, select and contract with investment
advisers (the "Advisers") for each of the Series and shall supervise
any such Adviser. The Manager will compensate the Advisers for their
services to the Fund from the fee paid to the Manager by the Fund
pursuant to this Management Contract or from other funds available to
the Manager.
<PAGE>
(c) The Fund hereby agrees with the Manager and with any Adviser selected
by the Manger as provided in Section 1(b) hereof that any entity or
person associated with the Manager which is a member of a national
securities exchange is authorized to effect any transaction on such
exchange for the account of the Fund and any Series thereof which is
permitted by Section 11(a) of the Securities Exchange Act of 1934 and
Rule 11a2-2(T) thereunder, and the Fund hereby consents to the
retention of compensation for such transactions in accordance with
Rule 11a2-2(T)(2)(iv).
(d) Except to the extent that any such facilities are provided for any
Series by its Adviser, the Manager, at its expense, will furnish (1)
all necessary investment and management facilities, including salaries
of personnel, required for it to execute its duties faithfully, (2)
suitable office space for the Fund; and (3) administrative facilities,
including bookkeeping, clerical personnel and equipment necessary for
the efficient conduct of the affairs of the Fund, but excluding
shareholder accounting services. The Manager will pay the
compensation, if any, of the officers of the Fund.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Fund may be a shareholder, partner, director, officer or
employee of, or be otherwise interested in, the Manager, and in any person
controlled by or under common control with the Manager, and that the Manager and
any person controlled by or under common control with the Manager may have an
interest in the Fund. It is also understood that the Manager and persons
controlled by or under common control with the Manager 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.
3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.
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 for each Series set forth in Schedule I. Such fee computed with
respect to the net asset value of each of such Series shall be paid from the
assets of such Series. Such aggregate average daily net asset value of the
Series shall be determined by taking an average of all the determinations of
such net asset value during such month at the close of business on each business
day, 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.
<PAGE>
In the event that the expenses of the Quantitative Small Cap Fund,
Quantitative Growth and Income Fund, or Quantitative International Equity Fund
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. Series expenses subject
to this limitation are exclusive of brokerage, interest, taxes and extraordinary
expenses, if any and shall be calculated before giving effect to any custody
credits.
If the Manager 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; and this Contract shall not be amended
as to any Series unless such amendment is approved at a meeting by an
affirmative vote of a majority of the outstanding shares of the Series, and by
the vote, cast in person at a meeting called for the purpose of voting on such
approval, of a majority of the Trustees of the Fund who are not interested
persons of the Fund or of the Manager or of the Advisors.
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 each Series continuously thereafter (unless
terminated automatically as set forth in Section 4) until terminated as follows:
(a) Either party hereto may at any time terminate this Contract as to any
Series or as to the Fund as a whole by not more than sixty days' nor less than
thirty days' written notice delivered or mailed by registered mail, postage
prepaid, to the other party, or
(b) If (i) the Trustees of the Fund, or the shareholders by the affirmative
vote of a majority of the outstanding shares of any Series, and (ii) a majority
of the Trustees of the Fund who are not interested persons of the Fund or of the
Manager, 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 such
Series 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 a Series for their approval
and such shareholders fail to approve such continuance of this Contract as
provided herein, the Manager may continue to serve hereunder in a manner
consistent with the 1940 Act and the Rules and Regulations thereunder.
<PAGE>
Action by the Fund under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the one or more Series affected.
Termination of this Contract pursuant to this Section 5 shall be without
the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of a majority of
the outstanding shares" means the affirmative vote, at a duly called and held
meeting of shareholders, (a) of the holders of 67% or more of the shares of the
Fund or the Series, as the case may be, present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50% of the
outstanding shares of the Fund or the Series, as the case may be, entitled to
vote at such meeting are present in person or by proxy, or (b) of the holders of
more than 50% of the outstanding shares of the Fund or the Series, as the case
may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person",
"control", "interested person" and "assignment" shall have their respective
meanings defined in the 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.
7. NONLIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross negligence on the
part of the Manager, its partners, officers, directors, employees or agents or
reckless disregard of the Manager's obligations and duties hereunder, neither
the Manager nor its officers, directors, employees or agents shall be subject to
any liability to the Fund, or to any shareholder of the Fund, for any act or
omission in the course of, or connected with, rendering services hereunder,
provided however, that such limitation shall not apply to the extent such
limitation violates Federal securities or other laws.
8. LIMITS OF THE LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Fund 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 Trustees of the Fund as
Trustees and not individually and that the obligations of this instrument are
not binding upon any of the Trustees or shareholders individually but are
binding only upon the assets and property of the Fund.
<PAGE>
IN WITNESS WHEREOF, QUANTITATIVE GROUP OF FUNDS and QUANTITATIVE ADVISORS,
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 GROUP OF FUNDS
By___________________________
Willard L. Umphrey
President
QUANTITATIVE ADVISORS, INC.
By__________________________
Willard L. Umphrey
President
<PAGE>
Schedule I to
Management Contract dated as of January 31, 1999
between Quantitative Group of Funds and Quantitative Advisors, Inc.
<TABLE>
Management Fee (as a
Series Percentage of Net Assets)
- ------ -------------------------
<C> <S>
Quantitative Small Cap Fund 1.00%
Quantitative Mid Cap Fund 0.80%
Quantitative Growth and Income Fund 0.75%
Quantitative International Equity Fund 1.00%
Quantitative Emerging Markets Fund 0.80%
Quantitative Foreign Value Fund 1.00%
</TABLE>
<PAGE>
EXHIBIT 8
QUANTITATIVE ADVISORS, INC.
---------------------------
ADVISORY CONTRACT
-----------------
Advisory Contract ("Contract") dated as of January 31, 1999, between
QUANTITATIVE ADVISORS, INC., a Massachusetts corporation (the "Manager") and
COLUMBIA PARTNERS, L.L.C., INVESTMENT MANAGEMENT, a Delaware limited liability
company (the "Advisor").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY ADVISOR TO TRUST.
(a) Subject always to the control of the trustees (the "Trustees") of
Quantitative Group of Funds, a Massachusetts business trust (the "Trust"), and
the Manager, the Advisor, at its expense, will furnish continuously an
investment program for the Quantitative Mid Cap 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.
<PAGE>
(b) The Advisor, at its expense, will (1) furnish all necessary investment
and management facilities, including salaries of personnel, required for it to
execute its duties hereunder, (2) keep records relating to the purchase, sale or
current status of portfolio securities, (3) provide clerical personnel and
equipment necessary for the efficient rendering of investment advice to the
Fund, (4) furnish to the Manager such reports and records regarding the Fund and
the Advisor as the Manager or Trustees shall from time-to-time request, and, (5)
upon reasonable notice, review written references to the Advisor, or its
methodology, whether in a Prospectus, Statement of Additional Information, sales
material or otherwise. The Advisor shall have no obligation with respect to the
determination of the Fund's net asset value, except to provide the Trust's
custodian with information as to the securities held in the Fund's portfolio.
The Advisor shall not be obligated to provide shareholder accounting services.
(c) The Advisor shall place all orders for the purchase and sale of
portfolio investments for the Fund's account with brokers or dealers selected by
the Advisor. In the selection of such brokers or dealers and the placing of
such orders, the Advisor shall use its best efforts to obtain for the Fund the
most favorable price and execution available, except to the extent that it may
be permitted to pay higher brokerage commissions 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.
<PAGE>
(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.
Nothing in this Contract shall prohibit the Advisor or any of its
affiliates from providing any services for any other person or entity or limit
the services which the Advisor or any such affiliate can provide to any person
or entity, provided, however, that without the written consent of the Manager,
the Advisor may not provide investment advisory or investment management
services to another investment company which invests the primary portion of its
assets in companies comprising the Russell 2000 Index, or any other widely
recognized index of small cap stocks. The Manager understands and agrees that
the Advisor and its affiliates perform investment advisory and investment
management services for various clients other than the Manager and the Trust.
The Manager agrees that the Advisor and its affiliates may give advice and take
action in the performance of duties with respect to any other client which may
differ from advice
<PAGE>
given, or the timing or nature of action taken, with respect to the Fund.
Nothing in this Contract shall be deemed to impose upon the Advisor any
obligation to purchase or sell or to recommend for purchase or sale for the Fund
any security or other property which the Advisor or any of its affiliates may
purchase or sell for its own account or for the account of any other client, so
long as it continues to be the policy and practice of the Advisor not to favor
or disfavor consistently or consciously any client or class of clients in the
allocation of investment opportunities, so that to the extent practical, such
opportunities will be allocated among clients over a period of time on a fair
and equitable basis.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE ADVISOR
The Manager will pay to the Advisor, as compensation for the Advisor's
services rendered and for the expenses borne by the Advisor pursuant to Section
1, a fee, computed and paid monthly at the annual rate of 0.40% of the aggregate
average daily net asset value of the Fund. Such fee shall be paid by the
Manager and not by the Fund out of the management fee paid by the Trust to the
Manager pursuant to the Management Contract between the Manager and the Trust or
out of any other funds available to the Manager. Such average daily net asset
value of the Fund shall be determined by taking an average of all the
determinations of such net asset value during such month at the close of
business on each business day, and for non-business days, the net asset value
determined on the previous business day, during such month while this Contract
is in effect. Such fee shall be payable for each month within 30 days after the
end of each month.
If the Advisor shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS TO THIS CONTRACT
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment or in the event that the Management
Contract between the Trust and the Manager is terminated generally, or with
respect to the Fund; and this Contract shall not be amended unless (i) such
amendment is approved at a meeting by an affirmative vote of a majority of the
outstanding shares of the Fund, and (ii) by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
Trustees of the Trust who are not interested persons of the Trust or of the
Manager or of the Advisor. 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.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
<PAGE>
This Contract shall become effective on January 31, 1999 or such other time
as shall be agreed upon by the Manager and the Advisor, and shall remain in full
force and effect as to the Fund continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
(a) The Trust or the Manager may at any time terminate this Contract
as to the Fund by not more than sixty days' or less than thirty days' written
notice delivered or mailed by registered mail, postage prepaid, to the Advisor,
or
(b) The Advisor may at any time terminate this Contract as to the Fund
by not less than one hundred fifty days' written notice delivered or mailed by
registered mail, postage prepaid, to the Manager, or
(c) If (i) the Trustees of the Trust, or the shareholders by the
affirmative vote of a majority of the outstanding shares of the Fund, and (ii) a
majority of the Trustees of the Trust who are not interested persons of the
Trust or of the Manager or of the Advisor, by vote cast in person at a meeting
called for the purpose of voting on such approval, do not specifically approve
at least annually the continuance of this Contract, then this Contract shall
automatically terminate as to the Fund at the close of business on the second
anniversary of the effective date hereof or the expiration of one year from the
effective date of the last such continuance, whichever is later; provided,
however, that if the continuance of this Contract is submitted to the
shareholders of the Fund for their approval and such shareholders fail to
approve such continuance of this Contract as provided herein, the Advisor may
continue to serve hereunder in a manner consistent with the 1940 Act and the
Rules and Regulations thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without
the payment of any penalty.
6. CERTAIN DEFINITIONS
For the purposes of this Contract, the "affirmative vote of a majority of
the outstanding shares" means the affirmative vote, at a duly called and held
meeting of shareholders, (a) of the holders of 67% or more of the shares of the
Trust or the Fund, as the case may be, present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50% of the
outstanding shares of the Trust or the Fund, as the case may be, entitled to
vote at such meeting are present in person or by proxy, or (b) of the holders of
more than 50% of the outstanding shares of the Trust or the Fund, as the case
may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person",
"control", "interested person" and "assignment" shall have their respective
meanings defined in the
<PAGE>
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.
Notwithstanding any other agreement to the contrary, in the absence of
willful misfeasance, bad faith or gross negligence on the part of the Advisor,
its partners, officers, directors, employees or agents or reckless disregard of
the Advisor's obligations and duties hereunder, neither the Advisor nor its
officers, directors, employees or agents shall be subject to any liability to
the Trust or to the Manager, or to any shareholder of the Trust, for any act or
omission in the course of, or connected with, rendering services hereunder,
unless the Advisor is claiming indemnity from any of them in connection
herewith, but then only to the extent of the indemnity obtained.
8. VOTING OF SECURITIES.
The Advisor shall have the power to vote, either in person or by proxy, all
securities in which assets of the Fund may be invested from time to time and
shall not be required to seek or take instructions from the Manager or the
Trustees of the Trust, or to take any action, with respect thereto.
9. REPRESENTATIONS AND COVENANTS OF THE MANAGER.
(a) The Manager represents that the terms of this Contract do not
violate any obligation by which it is bound, whether arising by contract,
operation of law or otherwise, and that it has the power, capacity and authority
to enter into this Contract and to perform in accordance herewith. In addition,
the Manager represents, warrants and covenants to the Advisor that it has the
power, capacity and authority to commit the Trust to this Contract; that a true
and complete copy of the Agreement and Declaration of Trust and By-Laws of the
Trust and the stated objectives, policies and restrictions of the Fund have been
delivered to the Advisor; and that true and complete copies of every amendment
thereto will be delivered to the Advisor as promptly as practicable after the
adoption thereof. The Manager agrees that notwithstanding any other provision of
this Contract to the contrary, the Advisor will not be bound by any such
amendment until the Advisor has received a copy thereof and has had a reasonable
opportunity to review it.
(b) The Manager shall indemnify and hold harmless the Advisor, its
partners, officers, employees and agents and each person, if any, who controls
the Advisor within the meaning of any applicable law (each individually an
"Indemnified Party") from and against all losses, claims, damages, liabilities
and expenses (including, without limitation, reasonable fees and other expenses
of an Indemnified Party's counsel, other than attorneys' fees and costs in
relation to the preparation of this Contract; each
<PAGE>
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.
(c) No public reference to, or description of, the Advisor or its
methodology or work shall be made by the Manager or the Trust, whether in a
prospectus, Statement of Additional Information or otherwise, unless the Manager
provides the Advisor with a reasonable opportunity to review any such reference
or description prior to the first use of such reference or description.
10. REPRESENTATIONS AND COVENANTS OF THE ADVISOR.
(a) The Advisor represents that the terms of this Contract do not
violate any obligation by which it is bound, whether arising by contract,
operation of law, or otherwise, and that it has the power, capacity and
authority to enter into this Contract and to perform in accordance herewith.
(b) The Advisor shall immediately notify the Manager in the event that
the Advisor or any of its affiliates: (1) becomes aware that it is subject to a
statutory disqualification that prevents the Advisor from serving as investment
advisor pursuant to this Contract; or (2) becomes aware that it the subject of
an administrative proceeding or enforcement action by the SEC or any other
regulatory authority. The Advisor further agrees to notify the Manager
immediately of any material fact known to the Advisor respecting or relating to
the Advisor that is not contained in the Trust's Registration Statement
regarding the Fund, or any amendment or supplement thereto, but that is required
to be disclosed therein, and of any statement contained therein that becomes
untrue in any material respect.
<PAGE>
(c) The Advisor agrees to maintain such books and records with respect
to its services to the Fund as are required under the 1940 Act, and rules
adopted thereunder, and by other applicable legal provisions, and to preserve
such records for the periods and in the manner required by that Section, and
those rules and legal provisions. The Advisor also agrees that records it
maintains and preserves pursuant to Rule 31a-1 and Rule 31a-2 under the 1940 Act
and otherwise in connection with its services hereunder are the property of the
Trust and will be surrendered promptly to the Trust upon its request. The
Advisor further agrees that it will furnish to regulatory authorities having the
requisite authority any information or reports in connection with its services
hereunder which may be requested in order to determine whether the operations of
the Fund are being conducted in accordance with applicable laws and regulations.
(d) The Advisor shall provide the Manager with quarterly
representations regarding the compliance of its' employees with the Advisor's
code of ethics governing personal securities transactions. The Advisor shall
provide the Manager with copies of any revisions to its code of ethics.
(e) The Advisor shall indemnify and hold harmless the Manager, the
Fund, their partners, officers, employees and agents and each person, if any,
who controls the Manager or Fund within the meaning of any applicable law (each
individually an "Indemnified Party") from and against all losses, claims,
damages, liabilities and expenses (including, without limitation, reasonable
fees and other expenses of an Indemnified Party's counsel, other than attorneys'
fees and costs in relation to the preparation of this Contract; each party
bearing responsibility for its own such costs and fees), joint or several,
(other than liabilities, losses, expenses, attorneys' fees and costs or damages
arising from the failure of the Manager to perform its responsibilities
hereunder or claims arising from its acts or failure to act in performing this
Contract) arising from Advisor's (or its respective agents and employees)
failure to perform its duties and assume its 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.
<PAGE>
11. USE OF NAME.
It is understood that the name of the Fund (as it may be changed from time
to time while the Advisor provides services pursuant to this Contract) or any
derivative thereof or logo associated with that name is the valuable property of
the Trust and/or its affiliates, and that the Advisor has the right to use such
name (or derivative or logo) only with the approval of the Manager and only so
long as the Advisor is Advisor to the Trust and/or the Fund. Upon termination
of this Contract the Advisor shall forthwith cease to use such name (or
derivative or logo).
12. GOVERNING LAW.
This Contract shall be governed by, and construed and enforced in
accordance with, the substantive laws of The Commonwealth of Massachusetts
without regard to its principles of conflicts of laws, except to the extent such
laws shall be preempted by the Investment Company Act of 1940 or by other
applicable laws.
13. INDEPENDENT CONTRACTOR.
Advisor shall for all purposes of this Contract be deemed to be an
independent contractor and, except as otherwise expressly provided herein, shall
have no authority to act for, bind or represent the Fund in any way or otherwise
be deemed to be an agent of the Fund. Likewise, the Fund, the Manager and their
affiliates, agents and employees shall not be deemed agents of the Advisor and
shall have no authority to bind the Advisor.
14. MISCELLANEOUS.
(a) The captions of this Contract are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(b) In the event that the Advisor or Manager is or becomes a party to
any action or proceedings in respect of which indemnification may be sought
hereunder, the party seeking indemnification shall promptly notify the other
party thereof. The party from whom indemnification is sought shall not be
liable hereunder for any settlement of any action or claim effected without its
written consent, which consent shall not be reasonably withheld.
(c) This Contract may be executed in one or more counterparts, all of
which taken together shall be deemed to constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, QUANTITATIVE ADVISORS, INC. and COLUMBIA PARTNERS,
L.L.C., INVESTMENT MANAGEMENT have each caused this instrument to be signed in
duplicate in its behalf, all as of the day and year first above written.
QUANTITATIVE ADVISORS, INC.
By
---------------------------
Willard L. Umphrey
President
COLUMBIA PARTNERS, L.L.C.,
INVESTMENT MANAGEMENT
By
--------------------------
Name:
Title:
<PAGE>
Exhibit 9
QUANTITATIVE ADVISORS, INC.
---------------------------
ADVISORY CONTRACT
-----------------
Advisory Contract ("Contract") dated as of January 31, 1999, between
QUANTITATIVE ADVISORS, INC., a Massachusetts corporation (the "Manager") and
COLUMBIA PARTNERS, L.L.C., INVESTMENT MANAGEMENT a Delaware limited liability
company (the "Advisor").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY ADVISOR TO TRUST.
(a) Subject always to the control of the trustees (the "Trustees") of
Quantitative Group of Funds, a Massachusetts business trust (the "Trust"), and
the Manager, the Advisor, at its expense, will furnish continuously an
investment program for the Quantitative Small Cap 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.
<PAGE>
(b) The Advisor, at its expense, will (1) furnish all necessary investment
and management facilities, including salaries of personnel, required for it to
execute its duties hereunder, (2) keep records relating to the purchase, sale or
current status of portfolio securities, (3) provide clerical personnel and
equipment necessary for the efficient rendering of investment advice to the
Fund, (4) furnish to the Manager such reports and records regarding the Fund and
the Advisor as the Manager or Trustees shall from time-to-time request, and, (5)
upon reasonable notice, review written references to the Advisor, or its
methodology, whether in a Prospectus, Statement of Additional Information, sales
material or otherwise. The Advisor shall have no obligation with respect to the
determination of the Fund's net asset value, except to provide the Trust's
custodian with information as to the securities held in the Fund's portfolio.
The Advisor shall not be obligated to provide shareholder accounting services.
(c) The Advisor shall place all orders for the purchase and sale of
portfolio investments for the Fund's account with brokers or dealers selected by
the Advisor. In the selection of such brokers or dealers and the placing of
such orders, the Advisor shall use its best efforts to obtain for the Fund the
most favorable price and execution available, except to the extent that it may
be permitted to pay higher brokerage commissions 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.
<PAGE>
(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.
Nothing in this Contract shall prohibit the Advisor or any of its
affiliates from providing any services for any other person or entity or limit
the services which the Advisor or any such affiliate can provide to any person
or entity, provided, however, that without the written consent of the Manager,
the Advisor may not provide investment advisory or investment management
services to another investment company which invests the primary portion of its
assets in companies comprising the Russell 2000 Index, or any other widely
recognized index of small cap stocks. The Manager understands and agrees that
the Advisor and its affiliates perform investment advisory and investment
management services for various clients other than the Manager and the Trust.
The Manager agrees that the Advisor and its affiliates may give advice and take
action in the performance of duties with respect to any other client which may
differ from advice
<PAGE>
given, or the timing or nature of action taken, with respect to the Fund.
Nothing in this Contract shall be deemed to impose upon the Advisor any
obligation to purchase or sell or to recommend for purchase or sale for the Fund
any security or other property which the Advisor or any of its affiliates may
purchase or sell for its own account or for the account of any other client, so
long as it continues to be the policy and practice of the Advisor not to favor
or disfavor consistently or consciously any client or class of clients in the
allocation of investment opportunities, so that to the extent practical, such
opportunities will be allocated among clients over a period of time on a fair
and equitable basis.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE ADVISOR
The Manager will pay to the Advisor, as compensation for the Advisor's
services rendered and for the expenses borne by the Advisor pursuant to Section
1, a fee, computed and paid monthly at the annual rate of 0.50% of the aggregate
average daily net asset value of the Fund. Such fee shall be paid by the
Manager and not by the Fund out of the management fee paid by the Trust to the
Manager pursuant to the Management Contract between the Manager and the Trust or
out of any other funds available to the Manager. Such average daily net asset
value of the Fund shall be determined by taking an average of all the
determinations of such net asset value during such month at the close of
business on each business day, and for non-business days, the net asset value
determined on the previous business day, during such month while this Contract
is in effect. Such fee shall be payable for each month within 30 days after the
end of each month.
If the Advisor shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS TO
THIS CONTRACT
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment or in the event that the Management
Contract between the Trust and the Manager is terminated generally, or with
respect to the Fund; and this Contract shall not be amended unless (i) such
amendment is approved at a meeting by an affirmative vote of a majority of the
outstanding shares of the Fund, and (ii) by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
Trustees of the Trust who are not interested persons of the Trust or of the
Manager or of the Advisor. 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.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
<PAGE>
This Contract shall become effective on January 31, 1999 or such other time
as shall be agreed upon by the Manager and the Advisor, and shall remain in full
force and effect as to the Fund continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
(a) The Trust or the Manager may at any time terminate this Contract as
to the Fund by not more than sixty days' or less than thirty days' written
notice delivered or mailed by registered mail, postage prepaid, to the Advisor,
or
(b) The Advisor may at any time terminate this Contract as to the Fund
by not less than one hundred fifty days' written notice delivered or mailed by
registered mail, postage prepaid, to the Manager, or
(c) If (i) the Trustees of the Trust, or the shareholders by the
affirmative vote of a majority of the outstanding shares of the Fund, and (ii) a
majority of the Trustees of the Trust who are not interested persons of the
Trust or of the Manager or of the Advisor, by vote cast in person at a meeting
called for the purpose of voting on such approval, do not specifically approve
at least annually the continuance of this Contract, then this Contract shall
automatically terminate as to the Fund at the close of business on the second
anniversary of the effective date hereof or the expiration of one year from the
effective date of the last such continuance, whichever is later; provided,
however, that if the continuance of this Contract is submitted to the
shareholders of the Fund for their approval and such shareholders fail to
approve such continuance of this Contract as provided herein, the Advisor may
continue to serve hereunder in a manner consistent with the 1940 Act and the
Rules and Regulations thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without
the payment of any penalty.
6. CERTAIN DEFINITIONS
For the purposes of this Contract, the "affirmative vote of a majority of
the outstanding shares" means the affirmative vote, at a duly called and held
meeting of shareholders, (a) of the holders of 67% or more of the shares of the
Trust or the Fund, as the case may be, present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50% of the
outstanding shares of the Trust or the Fund, as the case may be, entitled to
vote at such meeting are present in person or by proxy, or (b) of the holders of
more than 50% of the outstanding shares of the Trust or the Fund, as the case
may be, entitled to vote at such meeting, whichever is less.
<PAGE>
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.
Notwithstanding any other agreement to the contrary, in the absence of
willful misfeasance, bad faith or gross negligence on the part of the Advisor,
its partners, officers, directors, employees or agents or reckless disregard of
the Advisor's obligations and duties hereunder, neither the Advisor nor its
officers, directors, employees or agents shall be subject to any liability to
the Trust or to the Manager, or to any shareholder of the Trust, for any act or
omission in the course of, or connected with, rendering services hereunder,
unless the Advisor is claiming indemnity from any of them in connection
herewith, but then only to the extent of the indemnity obtained.
8. VOTING OF SECURITIES.
The Advisor shall have the power to vote, either in person or by proxy, all
securities in which assets of the Fund may be invested from time to time and
shall not be required to seek or take instructions from the Manager or the
Trustees of the Trust, or to take any action, with respect thereto.
9. REPRESENTATIONS AND COVENANTS OF THE MANAGER.
(a) The Manager represents that the terms of this Contract do not
violate any obligation by which it is bound, whether arising by contract,
operation of law or otherwise, and that it has the power, capacity and authority
to enter into this Contract and to perform in accordance herewith. In addition,
the Manager represents, warrants and covenants to the Advisor that it has the
power, capacity and authority to commit the Trust to this Contract; that a true
and complete copy of the Agreement and Declaration of Trust and By-Laws of the
Trust and the stated objectives, policies and restrictions of the Fund have been
delivered to the Advisor; and that true and complete copies of every amendment
thereto will be delivered to the Advisor as promptly as practicable after the
adoption thereof. The Manager agrees that notwithstanding any other provision of
this Contract to the contrary, the Advisor will not be bound by any such
amendment until the Advisor has received a copy thereof and has had a reasonable
opportunity to review it.
<PAGE>
(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.
(c) No public reference to, or description of, the Advisor or its
methodology or work shall be made by the Manager or the Trust, whether in a
prospectus, Statement of Additional Information or otherwise, unless the Manager
provides the Advisor with a reasonable opportunity to review any such reference
or description prior to the first use of such reference or description.
10. REPRESENTATIONS AND COVENANTS OF THE ADVISOR.
(a) The Advisor represents that the terms of this Contract do not
violate any obligation by which it is bound, whether arising by contract,
operation of law, or otherwise, and that it has the power, capacity and
authority to enter into this Contract and to perform in accordance herewith.
<PAGE>
(b) The Advisor shall immediately notify the Manager in the event that
the Advisor or any of its affiliates: (1) becomes aware that it is subject to a
statutory disqualification that prevents the Advisor from serving as investment
advisor pursuant to this Contract; or (2) becomes aware that it the subject of
an administrative proceeding or enforcement action by the SEC or any other
regulatory authority. The Advisor further agrees to notify the Manager
immediately of any material fact known to the Advisor respecting or relating to
the Advisor that is not contained in the Trust's Registration Statement
regarding the Fund, or any amendment or supplement thereto, but that is required
to be disclosed therein, and of any statement contained therein that becomes
untrue in any material respect.
(c) The Advisor agrees to maintain such books and records with respect
to its services to the Fund as are required under the 1940 Act, and rules
adopted thereunder, and by other applicable legal provisions, and to preserve
such records for the periods and in the manner required by that Section, and
those rules and legal provisions. The Advisor also agrees that records it
maintains and preserves pursuant to Rule 31a-1 and Rule 31a-2 under the 1940 Act
and otherwise in connection with its services hereunder are the property of the
Trust and will be surrendered promptly to the Trust upon its request. The
Advisor further agrees that it will furnish to regulatory authorities having the
requisite authority any information or reports in connection with its services
hereunder which may be requested in order to determine whether the operations of
the Fund are being conducted in accordance with applicable laws and regulations.
(d) The Advisor shall provide the Manager with quarterly
representations regarding the compliance of its' employees with the Advisor's
code of ethics governing personal securities transactions. The Advisor shall
provide the Manager with copies of any revisions to its code of ethics.
(e) The Advisor shall indemnify and hold harmless the Manager, the
Fund, their partners, officers, employees and agents and each person, if any,
who controls the Manager or Fund within the meaning of any applicable law (each
individually an "Indemnified Party") from and against all losses, claims,
damages, liabilities and expenses (including, without limitation, reasonable
fees and other expenses of an Indemnified Party's counsel, other than attorneys'
fees and costs in relation to the preparation of this Contract; each party
bearing responsibility for its own such costs and fees), joint or several,
(other than liabilities, losses, expenses, attorneys' fees and costs or damages
arising from the failure of the Manager to perform its responsibilities
hereunder or claims arising from its acts or failure to act in performing this
Contract) arising from Advisor's (or its respective agents and employees)
failure to perform its duties and assume its 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,
<PAGE>
which fact should have been made known or provided by the Advisor to the
Manager. With respect to any claim for which an Indemnified Party is entitled to
indemnity hereunder, the Advisor shall assume the reasonable expenses and costs
(including any reasonable attorneys' fees and costs) of the Indemnified Party of
investigating and/or defending any claim asserted or threatened by any party,
subject always to the Advisor first receiving a written undertaking from the
Indemnified Party to repay any amounts paid on its behalf in the event and to
the extent of any subsequent determination that the Indemnified Party was not
entitled to indemnification hereunder with respect of such claim.
11. USE OF NAME.
It is understood that the name of the Fund (as it may be changed from time
to time while the Advisor provides services pursuant to this Contract) or any
derivative thereof or logo associated with that name is the valuable property of
the Trust and/or its affiliates, and that the Advisor has the right to use such
name (or derivative or logo) only with the approval of the Manager and only so
long as the Advisor is Advisor to the Trust and/or the Fund. Upon termination
of this Contract the Advisor shall forthwith cease to use such name (or
derivative or logo).
12. GOVERNING LAW.
This Contract shall be governed by, and construed and enforced in
accordance with, the substantive laws of The Commonwealth of Massachusetts
without regard to its principles of conflicts of laws, except to the extent such
laws shall be preempted by the Investment Company Act of 1940 or by other
applicable laws.
13. INDEPENDENT CONTRACTOR.
Advisor shall for all purposes of this Contract be deemed to be an
independent contractor and, except as otherwise expressly provided herein, shall
have no authority to act for, bind or represent the Fund in any way or otherwise
be deemed to be an agent of the Fund. Likewise, the Fund, the Manager and their
affiliates, agents and employees shall not be deemed agents of the Advisor and
shall have no authority to bind the Advisor.
14. MISCELLANEOUS.
(a) The captions of this Contract are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
<PAGE>
(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.
IN WITNESS WHEREOF, QUANTITATIVE ADVISORS, INC. and COLUMBIA PARTNERS,
L.L.C., INVESTMENT MANAGEMENT have each caused this instrument to be signed in
duplicate in its behalf, all as of the day and year first above written.
QUANTITATIVE ADVISORS, INC.
By_________________________
Willard L. Umphrey
President
COLUMBIA PARTNERS, L.L.C.,
INVESTMENT MANAGEMENT
By_________________________
Name:
Title:
<PAGE>
Exhibit 10
QUANTITATIVE ADVISORS, INC.
--------------------------
ADVISORY CONTRACT
-----------------
Advisory Contract ("Contract") dated as of January 31, 1999, between
QUANTITATIVE ADVISORS, INC., a Massachusetts corporation (the "Manager") and
INDEPENDENCE INTERNATIONAL ASSOCIATES, INC., a Massachusetts Corporation (the
"Advisor").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY ADVISOR TO 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 Emerging Markets 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.
<PAGE>
(b) The Advisor, at its expense, will (1) furnish all necessary investment
and management facilities, including salaries of personnel, required for it to
execute its duties hereunder, (2) keep records relating to the purchase, sale or
current status of portfolio securities, (3) provide clerical personnel and
equipment necessary for the efficient rendering of investment advice to the
Fund, (4) furnish to the Manager such reports and records regarding the Fund and
the Advisor as the Manager or Trustees shall from time-to-time request, and, (5)
upon reasonable notice, review written references to the Advisor, or its
methodology, whether in a Prospectus, Statement of Additional Information, sales
material or otherwise. The Advisor shall have no obligation with respect to the
determination of the Fund's net asset value, except to provide the Trust's
custodian with information as to the securities held in the Fund's portfolio.
The Advisor shall not be obligated to provide shareholder accounting services.
(c) The Advisor shall place all orders for the purchase and sale of
portfolio investments for the Fund's account with brokers or dealers selected by
the Advisor. In the selection of such brokers or dealers and the placing of
such orders, the Advisor shall use its best efforts to obtain for the Fund the
most favorable price and execution available, except to the extent that it may
be permitted to pay higher brokerage commissions 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.
<PAGE>
(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.
Nothing in this Contract shall prohibit the Advisor or any of its
affiliates from providing any services for any other person or entity or limit
the services which the Advisor or any such affiliate can provide to any person
or entity. The Manager understands and agrees that the Advisor and its
affiliates perform investment advisory and investment management services for
various clients other than the Manager and the Trust. The Manager agrees that
the Advisor and its affiliates may give advice and take action in the
performance of duties with respect to any other client which may differ from
advice given, or the timing or nature of action taken, with respect to the Fund.
Nothing in this 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
<PAGE>
the account of any other client, so long as it continues to be the policy and
practice of the Advisor not to favor or disfavor consistently or consciously any
client or class of clients in the allocation of investment opportunities, so
that to the extent practical, such opportunities will be allocated among clients
over a period of time on a fair and equitable basis.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE ADVISOR
The Manager will pay to the Advisor, as compensation for the Advisor's
services rendered and for the expenses borne by the Advisor pursuant to Section
1, a fee, computed and paid monthly at the annual rate of 0.40% of the aggregate
average daily net asset value of the Fund. Such fee shall be paid by the
Manager and not by the Fund out of the management fee paid by the Trust to the
Manager pursuant to the Management Contract between the Manager and the Trust or
out of any other funds available to the Manager. Such average daily net asset
value of the Fund shall be determined by taking an average of all the
determinations of such net asset value during such month at the close of
business on each business day, and for non-business days, the net asset value
determined on the previous business day, during such month while this Contract
is in effect. Such fee shall be payable for each month within 30 days after the
end of each month.
If the Advisor shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS TO
THIS CONTRACT
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment or in the event that the Management
Contract between the Trust and the Manager is terminated generally, or with
respect to the Fund; and this Contract shall not be amended unless (i) such
amendment is approved at a meeting by an affirmative vote of a majority of the
outstanding shares of the Fund, and (ii) by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
Trustees of the Trust who are not interested persons of the Trust or of the
Manager or of the Advisor. 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.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective on January 31, 1999 or such other time
as shall be agreed upon by the Manager and the Advisor, and shall remain in full
force and effect as to the Fund continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
<PAGE>
(a) The Trust or the Manager may at any time terminate this Contract as
to the Fund by not more than sixty days' or less than thirty days' written
notice delivered or mailed by registered mail, postage prepaid, to the Advisor,
or
(b) The Advisor may at any time terminate this Contract as to the Fund
by not less than one hundred fifty days' written notice delivered or mailed by
registered mail, postage prepaid, to the Manager, or
(c) If (i) the Trustees of the Trust, or the shareholders by the
affirmative vote of a majority of the outstanding shares of the Fund, and (ii) a
majority of the Trustees of the Trust who are not interested persons of the
Trust or of the Manager or of the Advisor, by vote cast in person at a meeting
called for the purpose of voting on such approval, do not specifically approve
at least annually the continuance of this Contract, then this Contract shall
automatically terminate as to the Fund at the close of business on the second
anniversary of the effective date hereof or the expiration of one year from the
effective date of the last such continuance, whichever is later; provided,
however, that if the continuance of this Contract is submitted to the
shareholders of the Fund for their approval and such shareholders fail to
approve such continuance of this Contract as provided herein, the Advisor may
continue to serve hereunder in a manner consistent with the 1940 Act and the
Rules and Regulations thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without
the payment of any penalty.
6. CERTAIN DEFINITIONS
For the purposes of this Contract, the "affirmative vote of a majority of
the outstanding shares" means the affirmative vote, at a duly called and held
meeting of shareholders, (a) of the holders of 67% or more of the shares of the
Trust or the Fund, as the case may be, present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50% of the
outstanding shares of the Trust or the Fund, as the case may be, entitled to
vote at such meeting are present in person or by proxy, or (b) of the holders of
more than 50% of the outstanding shares of the Trust or the Fund, as the case
may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person",
"control", "interested person" and "assignment" shall have their respective
meanings defined in the 1940 Act and the Rules and Regulations thereunder,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission ("SEC") under said Act; the term "specifically approve at
least annually" shall be construed in a manner consistent with the 1940 Act and
the Rules and Regulations thereunder; and the
<PAGE>
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.
Notwithstanding any other agreement to the contrary, in the absence of
willful misfeasance, bad faith or gross negligence on the part of the Advisor,
its partners, officers, directors, employees or agents or reckless disregard of
the Advisor's obligations and duties hereunder, neither the Advisor nor its
officers, directors, employees or agents shall be subject to any liability to
the Trust or to the Manager, or to any shareholder of the Trust, for any act or
omission in the course of, or connected with, rendering services hereunder,
unless the Advisor is claiming indemnity from any of them in connection
herewith, but then only to the extent of the indemnity obtained.
8. VOTING OF SECURITIES.
The Advisor shall have the power to vote, either in person or by proxy, all
securities in which assets of the Fund may be invested from time to time and
shall not be required to seek or take instructions from the Manager or the
Trustees of the Trust, or to take any action, with respect thereto.
9. REPRESENTATIONS AND COVENANTS OF THE MANAGER.
(a) The Manager represents that the terms of this Contract do not violate
any obligation by which it is bound, whether arising by contract, operation of
law or otherwise, and that it has the power, capacity and authority to enter
into this Contract and to perform in accordance herewith. In addition, the
Manager represents, warrants and covenants to the Advisor that it has the power,
capacity and authority to commit the Trust to this Contract; that a true and
complete copy of the Agreement and Declaration of Trust and By-Laws of the Trust
and the stated objectives, policies and restrictions of the Fund have been
delivered to the Advisor; and that true and complete copies of every amendment
thereto will be delivered to the Advisor as promptly as practicable after the
adoption thereof. The Manager agrees that notwithstanding any other provision
of this Contract to the contrary, the Advisor will not be bound by any such
amendment until the Advisor has received a copy thereof and has had a reasonable
opportunity to review it.
(b) The Manager shall indemnify and hold harmless the Advisor, its partners,
officers, employees and agents and each person, if any, who controls the Advisor
within the meaning of any applicable law (each individually an "Indemnified
Party") from and against all losses, claims, damages, liabilities and expenses
(including, without limitation, reasonable fees and other expenses of an
Indemnified Party's counsel, other than attorneys' fees and costs in relation to
the preparation of this Contract; each party bearing responsibility for its own
such costs and fees), joint or several, (other than liabilities, losses,
expenses, attorneys' fees and costs or damages arising from the failure of the
Advisor to perform its responsibilities hereunder or claims arising from its
acts or failure to act in performing this Contract) to which the Advisor or any
other Indemnified
<PAGE>
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.
(c) No public reference to, or description of, the Advisor or its
methodology or work shall be made by the Manager or the Trust, whether in a
prospectus, Statement of Additional Information or otherwise, unless the Manager
provides the Advisor with a reasonable opportunity to review any such reference
or description prior to the first use of such reference or description..
10. REPRESENTATIONS AND COVENANTS OF THE ADVISOR.
(a) The Advisor represents that the terms of this Contract do not
violate any obligation by which it is bound, whether arising by contract,
operation of law, or otherwise, and that it has the power, capacity and
authority to enter into this Contract and to perform in accordance herewith.
(b) The Advisor shall immediately notify the Manager in the event that
the Advisor or any of its affiliates: (1) becomes aware that it is subject to a
statutory disqualification that prevents the Advisor from serving as investment
advisor pursuant to this Contract; or (2) becomes aware that it the subject of
an administrative proceeding or enforcement action by the SEC or any other
regulatory authority. The Advisor further agrees to notify the Manager
immediately of any material fact known to the Advisor respecting or relating to
the Advisor that is not contained in the Trust's Registration Statement
regarding the Fund, or any amendment or supplement thereto, but that is required
to be disclosed therein, and of any statement contained therein that becomes
untrue in any material respect.
(c) The Advisor agrees to maintain such books and records with respect
to its services to the Fund as are required under the 1940 Act, and rules
adopted thereunder, and by other applicable legal provisions, and to preserve
such records for the periods and in the manner required by that Section, and
those rules and legal provisions. The Advisor also agrees that records it
maintains and preserves pursuant to Rule 31a-1
<PAGE>
and Rule 31a-2 under the 1940 Act and otherwise in connection with its services
hereunder are the property of the Trust and will be surrendered promptly to the
Trust upon its request. The Advisor further agrees that it will furnish to
regulatory authorities having the requisite authority any information or reports
in connection with its services hereunder which may be requested in order to
determine whether the operations of the Fund are being conducted in accordance
with applicable laws and regulations.
(d) The Advisor shall provide the Manager with quarterly
representations regarding the compliance of its' employees with the Advisor's
code of ethics governing personal securities transactions. The Advisor shall
provide the Manager with copies of any revisions to its code of ethics.
(e) The Advisor shall indemnify and hold harmless the Manager, the
Fund, their partners, officers, employees and agents and each person, if any,
who controls the Manager or Fund within the meaning of any applicable law (each
individually an "Indemnified Party") from and against all losses, claims,
damages, liabilities and expenses (including, without limitation, reasonable
fees and other expenses of an Indemnified Party's counsel, other than attorneys'
fees and costs in relation to the preparation of this Contract; each party
bearing responsibility for its own such costs and fees), joint or several,
(other than liabilities, losses, expenses, attorneys' fees and costs or damages
arising from the failure of the Manager to perform its responsibilities
hereunder or claims arising from its acts or failure to act in performing this
Contract) arising from Advisor's (or its respective agents and employees)
failure to perform its duties and assume its 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.
<PAGE>
11. USE OF NAME.
It is understood that the name of the Fund (as it may be changed from time
to time while the Advisor provides services pursuant to this Contract) or any
derivative thereof or logo associated with that name is the valuable property of
the Trust and/or its affiliates, and that the Advisor has the right to use such
name (or derivative or logo) only with the approval of the Manager and only so
long as the Advisor is Advisor to the Trust and/or the Fund. Upon termination
of this Contract the Advisor shall forthwith cease to use such name (or
derivative or logo).
12. GOVERNING LAW.
This Contract shall be governed by, and construed and enforced in
accordance with, the substantive laws of The Commonwealth of Massachusetts
without regard to its principles of conflicts of laws, except to the extent such
laws shall be preempted by the Investment Company Act of 1940 or by other
applicable laws.
13. INDEPENDENT CONTRACTOR.
Advisor shall for all purposes of this Contract be deemed to be an
independent contractor and, except as otherwise expressly provided herein, shall
have no authority to act for, bind or represent the Fund in any way or otherwise
be deemed to be an agent of the Fund. Likewise, the Fund, the Manager and their
affiliates, agents and employees shall not be deemed agents of the Advisor and
shall have no authority to bind the Advisor.
14. MISCELLANEOUS.
(a) The captions of this Contract are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(b) In the event that the Advisor or Manager is or becomes a party to
any action or proceedings in respect of which indemnification may be sought
hereunder, the party seeking indemnification shall promptly notify the other
party thereof. The party from whom indemnification is sought shall not be
liable hereunder for any settlement of any action or claim effected without its
written consent, which consent shall not be reasonably withheld.
(c) This Contract may be executed in one or more counterparts, all of
which taken together shall be deemed to constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, QUANTITATIVE ADVISORS, INC. and INDEPENDENCE
INTERNATIONAL ASSOCIATES, INC., have each caused this instrument to be signed in
duplicate in its behalf, all as of the day and year first above written.
QUANTITATIVE ADVISORS, INC.
By___________________________
Willard L. Umphrey
President
INDEPENDENCE INTERNATIONAL
ASSOCIATES, INC.
By__________________________
Name:
Title:
<PAGE>
EXHIBIT 11
QUANTITATIVE ADVISORS, INC.
---------------------------
ADVISORY CONTRACT
-----------------
Advisory Contract ("Contract") dated as of January 31, 1999, between
QUANTITATIVE ADVISORS, INC., a Massachusetts corporation (the "Manager") and
INDEPENDENCE INTERNATIONAL ASSOCIATES, INC., a Massachusetts Corporation (the
"Advisor").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY ADVISOR TO 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 International Equity 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.
<PAGE>
(b) The Advisor, at its expense, will (1) furnish all necessary investment
and management facilities, including salaries of personnel, required for it to
execute its duties hereunder, (2) keep records relating to the purchase, sale or
current status of portfolio securities, (3) provide clerical personnel and
equipment necessary for the efficient rendering of investment advice to the
Fund, (4) furnish to the Manager such reports and records regarding the Fund and
the Advisor as the Manager or Trustees shall from time-to-time request, and, (5)
upon reasonable notice, review written references to the Advisor, or its
methodology, whether in a Prospectus, Statement of Additional Information, sales
material or otherwise. The Advisor shall have no obligation with respect to the
determination of the Fund's net asset value, except to provide the Trust's
custodian with information as to the securities held in the Fund's portfolio.
The Advisor shall not be obligated to provide shareholder accounting services.
(c) The Advisor shall place all orders for the purchase and sale of
portfolio investments for the Fund's account with brokers or dealers selected by
the Advisor. In the selection of such brokers or dealers and the placing of
such orders, the Advisor shall use its best efforts to obtain for the Fund the
most favorable price and execution available, except to the extent that it may
be permitted to pay higher brokerage commissions 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.
<PAGE>
(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.
Nothing in this Contract shall prohibit the Advisor or any of its
affiliates from providing any services for any other person or entity or limit
the services which the Advisor or any such affiliate can provide to any person
or entity. The Manager understands and agrees that the Advisor and its
affiliates perform investment advisory and investment management services for
various clients other than the Manager and the Trust. The Manager agrees that
the Advisor and its affiliates may give advice and take action in the
performance of duties with respect to any other client which may differ from
advice given, or the timing or nature of action taken, with respect to the Fund.
Nothing in this 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
<PAGE>
the account of any other client, so long as it continues to be the policy and
practice of the Advisor not to favor or disfavor consistently or consciously any
client or class of clients in the allocation of investment opportunities, so
that to the extent practical, such opportunities will be allocated among clients
over a period of time on a fair and equitable basis.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE ADVISOR
The Manager will pay to the Advisor, as compensation for the Advisor's
services rendered and for the expenses borne by the Advisor pursuant to Section
1, a fee, computed and paid monthly at the annual rate of 0.50% of the aggregate
average daily net asset value of the Fund. Such fee shall be paid by the
Manager and not by the Fund out of the management fee paid by the Trust to the
Manager pursuant to the Management Contract between the Manager and the Trust or
out of any other funds available to the Manager. Such average daily net asset
value of the Fund shall be determined by taking an average of all the
determinations of such net asset value during such month at the close of
business on each business day, and for non-business days, the net asset value
determined on the previous business day, during such month while this Contract
is in effect. Such fee shall be payable for each month within 30 days after the
end of each month.
If the Advisor shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS TO
THIS CONTRACT
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment or in the event that the Management
Contract between the Trust and the Manager is terminated generally, or with
respect to the Fund; and this Contract shall not be amended unless (i) such
amendment is approved at a meeting by an affirmative vote of a majority of the
outstanding shares of the Fund, and (ii) by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
Trustees of the Trust who are not interested persons of the Trust or of the
Manager or of the Advisor. 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.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective on January 31, 1999 or such other time
as shall be agreed upon by the Manager and the Advisor, and shall remain in full
force and effect as to the Fund continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
<PAGE>
(a) The Trust or the Manager may at any time terminate this Contract as to
the Fund by not more than sixty days' or less than thirty days' written notice
delivered or mailed by registered mail, postage prepaid, to the Advisor, or
(b) The Advisor may at any time terminate this Contract as to the Fund by
not less than one hundred fifty days' written notice delivered or mailed by
registered mail, postage prepaid, to the Manager, or
(c) If (i) the Trustees of the Trust, or the shareholders by the
affirmative vote of a majority of the outstanding shares of the Fund, and (ii) a
majority of the Trustees of the Trust who are not interested persons of the
Trust or of the Manager or of the Advisor, by vote cast in person at a meeting
called for the purpose of voting on such approval, do not specifically approve
at least annually the continuance of this Contract, then this Contract shall
automatically terminate as to the Fund at the close of business on the second
anniversary of the effective date hereof or the expiration of one year from the
effective date of the last such continuance, whichever is later; provided,
however, that if the continuance of this Contract is submitted to the
shareholders of the Fund for their approval and such shareholders fail to
approve such continuance of this Contract as provided herein, the Advisor may
continue to serve hereunder in a manner consistent with the 1940 Act and the
Rules and Regulations thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without
the payment of any penalty.
6. CERTAIN DEFINITIONS
For the purposes of this Contract, the "affirmative vote of a majority of
the outstanding shares" means the affirmative vote, at a duly called and held
meeting of shareholders, (a) of the holders of 67% or more of the shares of the
Trust or the Fund, as the case may be, present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50% of the
outstanding shares of the Trust or the Fund, as the case may be, entitled to
vote at such meeting are present in person or by proxy, or (b) of the holders of
more than 50% of the outstanding shares of the Trust or the Fund, as the case
may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person",
"control", "interested person" and "assignment" shall have their respective
meanings defined in the 1940 Act and the Rules and Regulations thereunder,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission ("SEC") under said Act; the term "specifically approve at
least annually" shall be construed in a manner consistent with the 1940 Act and
the Rules and Regulations thereunder; and the
<PAGE>
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.
Notwithstanding any other agreement to the contrary, in the absence of
willful misfeasance, bad faith or gross negligence on the part of the Advisor,
its partners, officers, directors, employees or agents or reckless disregard of
the Advisor's obligations and duties hereunder, neither the Advisor nor its
officers, directors, employees or agents shall be subject to any liability to
the Trust or to the Manager, or to any shareholder of the Trust, for any act or
omission in the course of, or connected with, rendering services hereunder,
unless the Advisor is claiming indemnity from any of them in connection
herewith, but then only to the extent of the indemnity obtained.
8. VOTING OF SECURITIES.
The Advisor shall have the power to vote, either in person or by proxy, all
securities in which assets of the Fund may be invested from time to time and
shall not be required to seek or take instructions from the Manager or the
Trustees of the Trust, or to take any action, with respect thereto.
9. REPRESENTATIONS AND COVENANTS OF THE MANAGER.
(a) The Manager represents that the terms of this Contract do not
violate any obligation by which it is bound, whether arising by contract,
operation of law or otherwise, and that it has the power, capacity and authority
to enter into this Contract and to perform in accordance herewith. In addition,
the Manager represents, warrants and covenants to the Advisor that it has the
power, capacity and authority to commit the Trust to this Contract; that a true
and complete copy of the Agreement and Declaration of Trust and By-Laws of the
Trust and the stated objectives, policies and restrictions of the Fund have been
delivered to the Advisor; and that true and complete copies of every amendment
thereto will be delivered to the Advisor as promptly as practicable after the
adoption thereof. The Manager agrees that notwithstanding any other provision of
this Contract to the contrary, the Advisor will not be bound by any such
amendment until the Advisor has received a copy thereof and has had a reasonable
opportunity to review it.
(b) The Manager shall indemnify and hold harmless the Advisor, its
partners, officers, employees and agents and each person, if any, who controls
the Advisor within the meaning of any applicable law (each individually an
"Indemnified Party") from and against all losses, claims, damages, liabilities
and expenses (including, without limitation, reasonable fees and other expenses
of an Indemnified Party's counsel, other than attorneys' fees and costs in
relation to the preparation of this Contract; each party bearing responsibility
for its own such costs and fees), joint or several, (other than liabilities,
losses, expenses, attorneys' fees and costs or damages arising from the failure
of the Advisor to perform its responsibilities hereunder or claims arising from
its acts or failure to act in performing this Contract) to which the Advisor or
any other Indemnified
<PAGE>
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.
(c) No public reference to, or description of, the Advisor or its
methodology or work shall be made by the Manager or the Trust, whether in a
prospectus, Statement of Additional Information or otherwise, unless the Manager
provides the Advisor with a reasonable opportunity to review any such reference
or description prior to the first use of such reference or description..
10. REPRESENTATIONS AND COVENANTS OF THE ADVISOR.
(a) The Advisor represents that the terms of this Contract do not
violate any obligation by which it is bound, whether arising by contract,
operation of law, or otherwise, and that it has the power, capacity and
authority to enter into this Contract and to perform in accordance herewith.
(b) The Advisor shall immediately notify the Manager in the event that
the Advisor or any of its affiliates: (1) becomes aware that it is subject to a
statutory disqualification that prevents the Advisor from serving as investment
advisor pursuant to this Contract; or (2) becomes aware that it the subject of
an administrative proceeding or enforcement action by the SEC or any other
regulatory authority. The Advisor further agrees to notify the Manager
immediately of any material fact known to the Advisor respecting or relating to
the Advisor that is not contained in the Trust's Registration Statement
regarding the Fund, or any amendment or supplement thereto, but that is required
to be disclosed therein, and of any statement contained therein that becomes
untrue in any material respect.
(c) The Advisor agrees to maintain such books and records with respect
to its services to the Fund as are required under the 1940 Act, and rules
adopted thereunder, and by other applicable legal provisions, and to preserve
such records for the periods and in the manner required by that Section, and
those rules and legal provisions. The Advisor also agrees that records it
maintains and preserves pursuant to Rule 31a-1
<PAGE>
and Rule 31a-2 under the 1940 Act and otherwise in connection with its services
hereunder are the property of the Trust and will be surrendered promptly to the
Trust upon its request. The Advisor further agrees that it will furnish to
regulatory authorities having the requisite authority any information or reports
in connection with its services hereunder which may be requested in order to
determine whether the operations of the Fund are being conducted in accordance
with applicable laws and regulations.
(d) The Advisor shall provide the Manager with quarterly
representations regarding the compliance of its' employees with the Advisor's
code of ethics governing personal securities transactions. The Advisor shall
provide the Manager with copies of any revisions to its code of ethics.
(e) The Advisor shall indemnify and hold harmless the Manager, the
Fund, their partners, officers, employees and agents and each person, if any,
who controls the Manager or Fund within the meaning of any applicable law (each
individually an "Indemnified Party") from and against all losses, claims,
damages, liabilities and expenses (including, without limitation, reasonable
fees and other expenses of an Indemnified Party's counsel, other than attorneys'
fees and costs in relation to the preparation of this Contract; each party
bearing responsibility for its own such costs and fees), joint or several,
(other than liabilities, losses, expenses, attorneys' fees and costs or damages
arising from the failure of the Manager to perform its responsibilities
hereunder or claims arising from its acts or failure to act in performing this
Contract) arising from Advisor's (or its respective agents and employees)
failure to perform its duties and assume its 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.
<PAGE>
11. USE OF NAME.
It is understood that the name of the Fund (as it may be changed from time
to time while the Advisor provides services pursuant to this Contract) or any
derivative thereof or logo associated with that name is the valuable property of
the Trust and/or its affiliates, and that the Advisor has the right to use such
name (or derivative or logo) only with the approval of the Manager and only so
long as the Advisor is Advisor to the Trust and/or the Fund. Upon termination
of this Contract the Advisor shall forthwith cease to use such name (or
derivative or logo).
12. GOVERNING LAW.
This Contract shall be governed by, and construed and enforced in
accordance with, the substantive laws of The Commonwealth of Massachusetts
without regard to its principles of conflicts of laws, except to the extent such
laws shall be preempted by the Investment Company Act of 1940 or by other
applicable laws.
13. INDEPENDENT CONTRACTOR.
Advisor shall for all purposes of this Contract be deemed to be an
independent contractor and, except as otherwise expressly provided herein, shall
have no authority to act for, bind or represent the Fund in any way or otherwise
be deemed to be an agent of the Fund. Likewise, the Fund, the Manager and their
affiliates, agents and employees shall not be deemed agents of the Advisor and
shall have no authority to bind the Advisor.
14. MISCELLANEOUS.
(a) The captions of this Contract are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(b) In the event that the Advisor or Manager is or becomes a party to
any action or proceedings in respect of which indemnification may be sought
hereunder, the party seeking indemnification shall promptly notify the other
party thereof. The party from whom indemnification is sought shall not be
liable hereunder for any settlement of any action or claim effected without its
written consent, which consent shall not be reasonably withheld.
(c) This Contract may be executed in one or more counterparts, all of
which taken together shall be deemed to constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, QUANTITATIVE ADVISORS, INC. and INDEPENDENCE
INTERNATIONAL ASSOCIATES, INC., have each caused this instrument to be signed in
duplicate in its behalf, all as of the day and year first above written.
QUANTITATIVE ADVISORS, INC.
By___________________________
Willard L. Umphrey
President
INDEPENDENCE INTERNATIONAL
ASSOCIATES, INC.
By__________________________
Name:
Title:
<PAGE>
EXHIBIT 12
QUANTITATIVE ADVISORS, INC.
---------------------------
ADVISORY CONTRACT
-----------------
Advisory Contract ("Contract") dated as of January 31, 1999, 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
<PAGE>
hereunder, (2) keep records relating to the purchase, sale or current status of
portfolio securities, (3) provide clerical personnel and equipment necessary for
the efficient rendering of investment advice to the Fund, (4) furnish to the
Manager such reports and records regarding the Fund and the Advisor as the
Manager or Trustees shall from time-to-time request, and, (5) upon reasonable
notice, review written references to the Advisor, or its methodology, whether in
a Prospectus, Statement of Additional Information, sales material or otherwise.
The Advisor shall have no obligation with respect to the determination of the
Fund's net asset value, except to provide the Trust's custodian with information
as to the securities held in the Fund's portfolio. The Advisor shall not be
obligated to provide shareholder accounting services.
(c) The Advisor shall place all orders for the purchase and sale of
portfolio investments for the Fund's account with brokers or dealers selected by
the Advisor. In the selection of such brokers or dealers and the placing of
such orders, the Advisor shall use its best efforts to obtain for the Fund the
most favorable price and execution available, except to the extent that it may
be permitted to pay higher brokerage commissions 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
<PAGE>
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.
Nothing in this Contract shall prohibit the Advisor or any of its
affiliates from providing any services for any other person or entity or limit
the services which the Advisor or any such affiliate can provide to any person
or entity. The Manager understands and agrees that the Advisor and its
affiliates perform investment advisory and investment management services for
various clients other than the Manager and the Trust. The Manager agrees that
the Advisor and its affiliates may give advice and take action in the
performance of duties with respect to any other client which may differ from
advice given, or the timing or nature of action taken, with respect to the Fund.
Nothing in this 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.
<PAGE>
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 fee shall be paid by the
Manager and not by the Fund out of the management fee paid by the Trust to the
Manager pursuant to the Management Contract between the Manager and the Trust or
out of any other funds available to the Manager. Such average daily net asset
value of the Fund shall be determined by taking an average of all the
determinations of such net asset value during such month at the close of
business on each business day, and for non-business days, the net asset value
determined on the previous business day, during such month while this Contract
is in effect. Such fee shall be payable for each month within 30 days after the
end of each month.
If the Advisor shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS TO THIS CONTRACT
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment or in the event that the Management
Contract between the Trust and the Manager is terminated generally, or with
respect to the Fund; and this Contract shall not be amended unless (i) such
amendment is approved at a meeting by an affirmative vote of a majority of the
outstanding shares of the Fund, and (ii) by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
Trustees of the Trust who are not interested persons of the Trust or of the
Manager or of the Advisor. 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.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective on January 31, 1999 or such other time
as shall be agreed upon by the Manager and the Advisor, and shall remain in full
force and effect as to the Fund continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
(a) The Trust or the Manager may at any time terminate this Contract
as to the Fund by not more than sixty days' or less than thirty days' written
notice delivered or mailed by registered mail, postage prepaid, to the Advisor,
or
<PAGE>
(b) The Advisor may at any time terminate this Contract as to the
Fund by not less than one hundred fifty days' written notice delivered or mailed
by registered mail, postage prepaid, to the Manager, 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.
<PAGE>
7. NONLIABILITY OF ADVISOR.
Notwithstanding any other agreement to the contrary, in the absence of
willful misfeasance, bad faith or gross negligence on the part of the Advisor,
its partners, officers, directors, employees or agents or reckless disregard of
the Advisor's obligations and duties hereunder, neither the Advisor nor its
officers, directors, employees or agents shall be subject to any liability to
the Trust or to the Manager, or to any shareholder of the Trust, for any act or
omission in the course of, or connected with, rendering services hereunder,
unless the Advisor is claiming indemnity from any of them in connection
herewith, but then only to the extent of the indemnity obtained.
8. VOTING OF SECURITIES.
The Advisor shall have the power to vote, either in person or by proxy, all
securities in which assets of the Fund may be invested from time to time and
shall not be required to seek or take instructions from the Manager or the
Trustees of the Trust, or to take any action, with respect thereto.
9. REPRESENTATIONS AND COVENANTS OF THE MANAGER.
(a) The Manager represents that the terms of this Contract do not violate
any obligation by which it is bound, whether arising by contract, operation of
law or otherwise, and that it has the power, capacity and authority to enter
into this Contract and to perform in accordance herewith. In addition, the
Manager represents, warrants and covenants to the Advisor that it has the power,
capacity and authority to commit the Trust to this Contract; that a true and
complete copy of the Agreement and Declaration of Trust and By-Laws of the Trust
and the stated objectives, policies and restrictions of the Fund have been
delivered to the Advisor; and that true and complete copies of every amendment
thereto will be delivered to the Advisor as promptly as practicable after the
adoption thereof. The Manager agrees that notwithstanding any other provision
of this Contract to the contrary, the Advisor will not be bound by any such
amendment until the Advisor has received a copy thereof and has had a reasonable
opportunity to review it.
(b) The Manager shall indemnify and hold harmless the Advisor, its
partners, officers, employees and agents and each person, if any, who controls
the Advisor within the meaning of any applicable law (each individually an
"Indemnified Party") from and against all losses, claims, damages, liabilities
and expenses (including, without limitation, reasonable fees and other expenses
of an Indemnified Party's counsel, other than attorneys' fees and costs in
relation to the preparation of this Contract; each party bearing responsibility
for its own such costs and fees), joint or several, (other than liabilities,
losses, expenses, attorneys' fees and costs or damages arising from the failure
of the Advisor to perform its responsibilities hereunder or claims arising from
its acts or failure to act in performing this Contract) to which the Advisor or
any other Indemnified Party may become subject under any federal or state law as
a result of any failure of the Manager or, if caused by any failure of the
Manager, of the Trust or the Fund, to disclose
<PAGE>
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.
(c) No public reference to, or description of, the Advisor or its
methodology or work shall be made by the Manager or the Trust, whether in a
prospectus, Statement of Additional Information or otherwise, unless the Manager
provides the Advisor with a reasonable opportunity to review any such reference
or description prior to the first use of such reference or description..
(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
<PAGE>
respecting or relating to the Advisor that is not contained in the Trust's
Registration Statement regarding the Fund, or any amendment or supplement
thereto, but that is required to be disclosed therein, and of any statement
contained therein that becomes untrue in any material respect.
(c) The Advisor agrees to maintain such books and records with
respect to its services to the Fund as are required under the 1940 Act, and
rules adopted thereunder, and by other applicable legal provisions, and to
preserve such records for the periods and in the manner required by that
Section, and those rules and legal provisions. The Advisor also agrees that
records it maintains and preserves pursuant to Rule 31a-1 and Rule 31a-2 under
the 1940 Act and otherwise in connection with its services hereunder are the
property of the Trust and will be surrendered promptly to the Trust upon its
request. The Advisor further agrees that it will furnish to regulatory
authorities having the requisite authority any information or reports in
connection with its services hereunder which may be requested in order to
determine whether the operations of the Fund are being conducted in accordance
with applicable laws and regulations.
(d) The Advisor shall provide the Manager with quarterly
representations regarding the compliance of its' employees with the Advisor's
code of ethics governing personal securities transactions. The Advisor shall
provide the Manager with copies of any revisions to its code of ethics.
(e) The Advisor shall indemnify and hold harmless the Manager, the
Fund, their partners, officers, employees and agents and each person, if any,
who controls the Manager or Fund within the meaning of any applicable law (each
individually an "Indemnified Party") from and against all losses, claims,
damages, liabilities and expenses (including, without limitation, reasonable
fees and other expenses of an Indemnified Party's counsel, other than attorneys'
fees and costs in relation to the preparation of this Contract; each party
bearing responsibility for its own such costs and fees), joint or several,
(other than liabilities, losses, expenses, attorneys' fees and costs or damages
arising from the failure of the Manager to perform its responsibilities
hereunder or claims arising from its acts or failure to act in performing this
Contract) arising from Advisor's (or its respective agents and employees)
failure to perform its duties and assume its 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
<PAGE>
Indemnified Party was not entitled to indemnification hereunder with respect of
such claim.
11. NON-COMPETITION COVENANT.
(a) For a period of two years from May 18, 1998, 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
Sections 11(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 contendere (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.]
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.
<PAGE>
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.
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
President
POLARIS CAPITAL
MANAGEMENT, INC.
By
--------------------------
Name:
Title:
<PAGE>
AMENDMENT NO. I TO THE AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST OF
U.S. BOSTON INVESTMENT COMPANY
We, the undersigned, being all of the Trustees of U.s. Boston Investment
Company, a Massachusetts business trust created and existing under an Amended
and Restated Agreement and Declaration of Trust dated as of April 2, 1990, (the
"Agreement") , a copy of which is on file in the office of the Secretary of
State of the Commonwealth of Massachusetts, do hereby certify that the following
amendment to said Agreement has been authorized by the unanimous vote of the
Trustees, taken at a meeting held for that purpose on July 14, 1993, consistent
with Article IX, Section 7 of the Agreement, and do hereby amend said Agreement
as follows:
By amending Section 1 of ARTICLE I to read in its entirety as follows:
"Section 1. This Trust shall be known as "The Quantitative Group of Funds",
and the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine."
The foregoing Amendment shall become effective as of the close
of business July 18, 1993.
IN WITNESS WHEREOF, we have hereunto set our hands and common
Seal, for ourselves and our successors and assigns.
______________________
Robert M. Armstrong
______________________
John M. Bulbrook
______________________
Joseph H. Newberg
______________________
Willard L. Umphrey
______________________
Edward A. Bond, Jr.
______________________
Edward E. Burrows
______________________
Leon Okurowski
<PAGE>
EXHIBIT 13
QUANTITATIVE ADVISORS,INC.
--------------------------
ADVISORY CONTRACT
-----------------
Advisory Contract ("Contract") dated as of January 31, 1999, between
QUANTITATIVE ADVISORS, INC., a Massachusetts corporation (the "Manager") and
STATE STREET BANK AND TRUST COMPANY, a Massachusetts banking 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 Growth and Income 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.
<PAGE>
(b) The Advisor, at its expense, will (1) furnish all necessary investment
and management facilities, including salaries of personnel, required for it to
execute its duties hereunder, (2) keep records relating to the purchase, sale or
current status of portfolio securities, (3) provide clerical personnel and
equipment necessary for the efficient rendering of investment advice to the
Fund, (4) furnish to the Manager such reports and records regarding the Fund and
the Advisor as the Manager or Trustees shall from time-to-time request, and, (5)
upon reasonable notice, review written references to the Advisor, or its
methodology, whether in a Prospectus, Statement of Additional Information, sales
material or otherwise. The Advisor shall have no obligation with respect to the
determination of the Fund's net asset value, except to provide the Trust's
custodian with information as to the securities held in the Fund's portfolio.
The Advisor shall not be obligated to provide shareholder accounting services.
(c) The Advisor shall place all orders for the purchase and sale of
portfolio investments for the Fund's account with brokers or dealers selected by
the Advisor. In the selection of such brokers or dealers and the placing of such
orders, the Advisor shall use its best efforts to obtain for the Fund the most
favorable price and execution available, except to the extent that it may be
permitted to pay higher brokerage commissions 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
<PAGE>
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.
Nothing in this Contract shall prohibit the Advisor or any of its
affiliates from providing any services for any other person or entity or limit
the services which the Advisor or any such affiliate can provide to any person
or entity. The Manager understands and agrees that the Advisor and its
affiliates perform investment advisory and investment management services for
various clients other than the Manager and the Trust. The Manager agrees that
the Advisor and its affiliates may give advice and take action in the
performance of duties with respect to any other client which may differ from
advice given, or the timing or nature of action taken, with respect to the Fund.
Nothing in this 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
<PAGE>
opportunities will be allocated among clients over a period of time on a fair
and equitable basis.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE ADVISOR
The Manager will pay to the Advisor, as compensation for the Advisor's
services rendered and for the expenses borne by the Advisor pursuant to Section
1, a fee, computed and paid monthly at the annual rate of 0.375% 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. Such fee shall be paid by the
Manager and not by the Fund out of the management fee paid by the Trust to the
Manager pursuant to the Management Contract between the Manager and the Trust or
out of any other funds available to the Manager. Such average daily net asset
value of the Fund shall be determined by taking an average of all the
determinations of such net asset value during such month at the close of
business on each business day, and for non-business days, the net asset value
determined on the previous business day, during such month while this Contract
is in effect. Such fee shall be payable for each month within 30 days after the
end of each month.
If the Advisor shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS TO THIS CONTRACT
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment or in the event that the Management
Contract between the Trust and the Manager is terminated generally, or with
respect to the Fund; and this Contract shall not be amended unless (i) such
amendment is approved at a meeting by an affirmative vote of a majority of the
outstanding shares of the Fund, and (ii) by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
Trustees of the Trust who are not interested persons of the Trust or of the
Manager or of the Advisor. 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.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective on January 31, 1999 or such other time
as shall be agreed upon by the Manager and the Advisor, and shall remain in full
force and effect as to the Fund continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
<PAGE>
(a) The Trust or the Manager may at any time terminate this Contract as to
the Fund by not more than sixty days' or less than thirty days' written notice
delivered or mailed by registered mail, postage prepaid, to the Advisor, or
(b) The Advisor may at any time terminate this Contract as to the Fund by
not less than one hundred fifty days' written notice delivered or mailed by
registered mail, postage prepaid, to the Manager, or
(c) If (i) the Trustees of the Trust, or the shareholders by the
affirmative vote of a majority of the outstanding shares of the Fund, and (ii) a
majority of the Trustees of the Trust who are not interested persons of the
Trust or of the Manager or of the Advisor, by vote cast in person at a meeting
called for the purpose of voting on such approval, do not specifically approve
at least annually the continuance of this Contract, then this Contract shall
automatically terminate as to the Fund at the close of business on the second
anniversary of the effective date hereof or the expiration of one year from the
effective date of the last such continuance, whichever is later; provided,
however, that if the continuance of this Contract is submitted to the
shareholders of the Fund for their approval and such shareholders fail to
approve such continuance of this Contract as provided herein, the Advisor may
continue to serve hereunder in a manner consistent with the 1940 Act and the
Rules and Regulations thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without
the payment of any penalty.
6. CERTAIN DEFINITIONS
For the purposes of this Contract, the "affirmative vote of a majority of
the outstanding shares" means the affirmative vote, at a duly called and held
meeting of shareholders, (a) of the holders of 67% or more of the shares of the
Trust or the Fund, as the case may be, present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50% of the
outstanding shares of the Trust or the Fund, as the case may be, entitled to
vote at such meeting are present in person or by proxy, or (b) of the holders of
more than 50% of the outstanding shares of the Trust or the Fund, as the case
may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person",
"control", "interested person" and "assignment" shall have their respective
meanings defined in the 1940 Act and the Rules and Regulations thereunder,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission ("SEC") under said Act; the term "specifically approve at
least annually" shall be construed in a manner consistent with the 1940 Act and
the Rules and Regulations thereunder; and the
<PAGE>
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.
Notwithstanding any other agreement to the contrary, in the absence of
willful misfeasance, bad faith or gross negligence on the part of the Advisor,
its partners, officers, directors, employees or agents or reckless disregard of
the Advisor's obligations and duties hereunder, neither the Advisor nor its
officers, directors, employees or agents shall be subject to any liability to
the Trust or to the Manager, or to any shareholder of the Trust, for any act or
omission in the course of, or connected with, rendering services hereunder,
unless the Advisor is claiming indemnity from any of them in connection
herewith, but then only to the extent of the indemnity obtained.
8. VOTING OF SECURITIES.
The Advisor shall have the power to vote, either in person or by proxy, all
securities in which assets of the Fund may be invested from time to time and
shall not be required to seek or take instructions from the Manager or the
Trustees of the Trust, or to take any action, with respect thereto.
9. REPRESENTATIONS AND COVENANTS OF THE MANAGER.
(a) The Manager represents that the terms of this Contract do not violate
any obligation by which it is bound, whether arising by contract, operation of
law or otherwise, and that it has the power, capacity and authority to enter
into this Contract and to perform in accordance herewith. In addition, the
Manager represents, warrants and covenants to the Advisor that it has the power,
capacity and authority to commit the Trust to this Contract; that a true and
complete copy of the Agreement and Declaration of Trust and By-Laws of the Trust
and the stated objectives, policies and restrictions of the Fund have been
delivered to the Advisor; and that true and complete copies of every amendment
thereto will be delivered to the Advisor as promptly as practicable after the
adoption thereof. The Manager agrees that notwithstanding any other provision of
this Contract to the contrary, the Advisor will not be bound by any such
amendment until the Advisor has received a copy thereof and has had a reasonable
opportunity to review it.
(b) The Manager shall indemnify and hold harmless the Advisor, its
partners, officers, employees and agents and each person, if any, who controls
the Advisor within the meaning of any applicable law (each individually an
"Indemnified Party") from and against all losses, claims, damages, liabilities
and expenses (including, without limitation, reasonable fees and other expenses
of an Indemnified Party's counsel, other than attorneys' fees and costs in
relation to the preparation of this Contract; each party bearing responsibility
for its own such costs and fees), joint or several, (other than liabilities,
losses, expenses, attorneys' fees and costs or damages arising from the failure
of the Advisor to perform its responsibilities hereunder or claims arising from
its acts or failure to act in performing this Contract) to which the Advisor or
any other Indemnified
<PAGE>
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.
(c) No public reference to, or description of, the Advisor or its
methodology or work shall be made by the Manager or the Trust, whether in a
prospectus, Statement of Additional Information or otherwise, unless the Manager
provides the Advisor with a reasonable opportunity to review any such reference
or description prior to the first use of such reference or description.
10. REPRESENTATIONS AND COVENANTS OF THE ADVISOR.
(a) The Advisor represents that the terms of this Contract do not violate
any obligation by which it is bound, whether arising by contract, operation of
law, or otherwise, and that it has the power, capacity and authority to enter
into this Contract and to perform in accordance herewith.
(b) The Advisor shall immediately notify the Manager in the event that the
Advisor or any of its affiliates: (1) becomes aware that it is subject to a
statutory disqualification that prevents the Advisor from serving as investment
advisor pursuant to this Contract; or (2) becomes aware that it the subject of
an administrative proceeding or enforcement action by the SEC or any other
regulatory authority. The Advisor further agrees to notify the Manager
immediately of any material fact known to the Advisor respecting or relating to
the Advisor that is not contained in the Trust's Registration Statement
regarding the Fund, or any amendment or supplement thereto, but that is required
to be disclosed therein, and of any statement contained therein that becomes
untrue in any material respect.
(c) The Advisor agrees to maintain such books and records with respect to
its services to the Fund as are required under the 1940 Act, and rules adopted
thereunder, and by other applicable legal provisions, and to preserve such
records for the periods and in the manner required by that Section, and those
rules and legal provisions. The Advisor also agrees that records it maintains
and preserves pursuant to Rule 31a-1
<PAGE>
and Rule 31a-2 under the 1940 Act and otherwise in connection with its services
hereunder are the property of the Trust and will be surrendered promptly to the
Trust upon its request. The Advisor further agrees that it will furnish to
regulatory authorities having the requisite authority any information or reports
in connection with its services hereunder which may be requested in order to
determine whether the operations of the Fund are being conducted in accordance
with applicable laws and regulations.
(d) The Advisor shall provide the Manager with quarterly representations
regarding the compliance of its' employees with the Advisor's code of ethics
governing personal securities transactions. The Advisor shall provide the
Manager with copies of any revisions to its code of ethics.
(e) The Advisor shall indemnify and hold harmless the Manager, the Fund,
their partners, officers, employees and agents and each person, if any, who
controls the Manager or Fund within the meaning of any applicable law (each
individually an "Indemnified Party") from and against all losses, claims,
damages, liabilities and expenses (including, without limitation, reasonable
fees and other expenses of an Indemnified Party's counsel, other than attorneys'
fees and costs in relation to the preparation of this Contract; each party
bearing responsibility for its own such costs and fees), joint or several,
(other than liabilities, losses, expenses, attorneys' fees and costs or damages
arising from the failure of the Manager to perform its responsibilities
hereunder or claims arising from its acts or failure to act in performing this
Contract) arising from Advisor's (or its respective agents and employees)
failure to perform its duties and assume its 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.
<PAGE>
11. USE OF NAME.
It is understood that the name of the Fund (as it may be changed from time
to time while the Advisor provides services pursuant to this Contract) or any
derivative thereof or logo associated with that name is the valuable property of
the Trust and/or its affiliates, and that the Advisor has the right to use such
name (or derivative or logo) only with the approval of the Manager and only so
long as the Advisor is Advisor to the Trust and/or the Fund. Upon termination of
this Contract the Advisor shall forthwith cease to use such name (or derivative
or logo).
12. GOVERNING LAW.
This Contract shall be governed by, and construed and enforced in
accordance with, the substantive laws of The Commonwealth of Massachusetts
without regard to its principles of conflicts of laws, except to the extent such
laws shall be preempted by the Investment Company Act of 1940 or by other
applicable laws.
13. INDEPENDENT CONTRACTOR.
Advisor shall for all purposes of this Contract be deemed to be an
independent contractor and, except as otherwise expressly provided herein, shall
have no authority to act for, bind or represent the Fund in any way or otherwise
be deemed to be an agent of the Fund. Likewise, the Fund, the Manager and their
affiliates, agents and employees shall not be deemed agents of the Advisor and
shall have no authority to bind the Advisor.
14. MISCELLANEOUS.
(a) The captions of this Contract are included for convenience only and in
no way define or limit any of the provisions hereof or otherwise affect their
construction or effect.
(b) In the event that the Advisor or Manager is or becomes a party to any
action or proceedings in respect of which indemnification may be sought
hereunder, the party seeking indemnification shall promptly notify the other
party thereof. The party from whom indemnification is sought shall not be liable
hereunder for any settlement of any action or claim effected without its written
consent, which consent shall not be reasonably withheld.
(c) This Contract may be executed in one or more counterparts, all of
which taken together shall be deemed to constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, QUANTITATIVE ADVISORS, INC. and STATE STREET BANK AND
TRUST COMPANY 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
President
STATE STREET BANK AND TRUST
COMPANY
By__________________________
Name:
Title:
<PAGE>
EXHIBIT 14
DISTRIBUTION AGREEMENT
Distribution Agreement dated April 17, 1985, by and between U.S. BOSTON
INVESTMENT COMPANY, a Massachusetts business trust (the "Trust") and U.S. BOSTON
CAPITAL CORPORATION, a Massachusetts corporation ("U.S. Boston Capital").
WHEREAS, the Trust and U.S. Boston Capital are desirous of entering into an
agreement providing for the distribution by U.S. Boston Capital of shares of the
Trust;
NOW, THEREFORE, in consideration of the mutual agreements contained in the
Terms and Conditions of Distribution Agreement attached to and forming a part of
this Contract (the "Terms and Conditions"), the Trust hereby appoints U.S.
Boston Capital as a distributor of shares of the Trust, and U.S. Boston Capital
hereby accepts such appointment, all as set forth in the Terms and Conditions.
A copy of the Agreement and Declaration of Trust of the Trust 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 Trustees of the Trust as
Trustees and not individually, and that the obligations of or arising out of
this instrument are not binding upon any of the Trustees or shareholders
individually but are binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, U.S. BOSTON INVESTMENT COMPANY and U.S. BOSTON CAPITAL
CORPORATION have each caused this Distribution Agreement to be signed in
duplicate in its behalf, all as of the day and year first above written.
U.S. BOSTON INVESTMENT COMPANY
By:
U.S. BOSTON CAPITAL CORPORATION
By:
<PAGE>
TERMS AND CONDITIONS
OF
DISTRIBUTION AGREEMENT
1. Sale of Shares to U.S. Boston Capital and Sales b U.S. Boston Capital.
----------------------------------------------------------------------
U.S. Boston Capital will have the right, as principal, to sell shares of
beneficial interest ("shares") of the Trust to investors against orders therefor
at net asset value.
Upon receipt of an order from an investor to purchase Trust shares, U.S.
Boston Capital will promptly purchase shares from the Trust to fill such order.
Upon receipt of registration instructions in proper form and payment for such
shares, U.S. Boston Capital will transmit such instructions to the Trust or its
agent for registration of the shares purchased.
The net asset value of shares shall be determined in the manner provided in
the Agreement and Declaration of Trust and By-laws of the Trust as then amended.
On every sale the Trust shall receive the net asset value of the shares.
2. Fee and Expense Limitation. For its services as distributor of the
----------------------------
shares of the Trust, U.S. Boston Capital shall receive from the Trust a
distribution fee at the rate and upon the terms and conditions set forth in the
Distribution Plan attached as Exhibit A hereto, and as amended from time to
time, as well as reimbursement for the cost of preparing and printing of Trust
prospectuses as set forth therein. The distribution fee shall be accrued daily
and paid monthly within five (5) business days following the last day of each
month.
In the event that the expenses of any Series for any fiscal year exceed 2%
of such Series' average net assets after giving effect to the reduction of the
compensation paid to the Fund's Manager with respect to such Series in
accordance with the terms of its Management Contract with the Fund, the
compensation of the Distributor with respect to such Series shall be reduced to
the extent the Series expenses exceed 2% of average net assets. Series expenses
subject to this limitation are exclusive of brokerage, interest, taxes and
extraordinary expenses, if any. The Distributor's compensation shall not be
reduced pursuant to this paragraph to the extent that the Distributor is
committed to make payments to non-affiliated entities for services in connection
with the distribution of a Series' shares.
<PAGE>
3. Reservation of Right Not to Sell. The Trust reserves the right to refuse
----------------------------------
at any time or times to sell any of its shares for any reason deemed adequate by
it.
4. Sales of Shares by the Trust. The Trust reserves the right to issue
------------------------------
shares at any time directly to its shareholders as a stock dividend or stock
split and to sell shares to its shareholders or to other persons at not less
than net asset value.
5. Repurchase of Shares. U.S. Boston Capital will act as agent for the
----------------------
Trust in connection with the repurchase and redemption of shares by the Trust
upon the terms and conditions set forth in the then current prospectus of the
Trust or as the Trust acting through its Trustees may otherwise direct. Any
redemption fee imposed on redemptions upon the terms and conditions set forth in
the then current prospectus of the Trust shall be paid to U.S. Boston Capital.
6. Basis of Purchases and Sales of Shares. U.S. Boston Capital's obligation
----------------------------------------
to sell shares hereunder shall be on a best efforts basis only and U.S. Boston
Capital shall not be obligated to sell any specific number of shares. Shares
will be sold by U.S. Boston Capital only against orders therefor. U.S. Boston
Capital will not purchase shares from anyone other than the Trust except in
accordance with Section 5, and will not take "long" or "short" positions in
shares contrary to the Agreement and Declaration of Trust of the Trust.
7. Rules of NASD, etc. U.S. Boston Capital will conform to the Rules of
-------------------
Fair Practice of the National Association of Securities Dealers, Inc. and the
securities laws of any jurisdiction in which it sells, directly or indirectly,
any shares. U.S. Boston Capital also agrees to furnish to the Trust sufficient
copies of any agreements or plans it intends to use in connection with any sales
of shares in adequate time for the Trust to file and clear them with the proper
authorities before they are put in use, and not to use them until so filed and
cleared.
8. Independent Contractor. U.S. Boston Capital shall be an in dependent
------------------------
contractor and neither U.S. Boston Capital nor any of its officers or employees
as such, is or shall be an employee of the Trust. U.S. Boston Capital is
responsible for its own conduct and the employment, control and conduct of its
agents and employees and for injury to such agents or employees or to others
through its agents or employees. U.S. Boston Capital assumes full responsibility
for its agents and employees under applicable statutes and agrees to pay all
employer taxes thereunder.
<PAGE>
9. Expenses. The Trust will pay or reimburse U.S. Boston Capital for all
----------
expenses of qualifying shares of the Trust for sale under the securities or so-
called "Blue Sky" laws of any state and of registering shares under the Federal
Securities Act of 1933 and Investment Company Act of 1940. U.S. Boston Capital
will pay all expenses of preparing, printing and distributing advertising and
sales literature and the Trust will pay all costs of the preparation and
printing of prospectuses and reports as required by said Acts and the direct
expenses of the issue of shares.
10. Indemnification of Trust. U.S. Boston Capital agrees to indemnify and
-------------------------
hold harmless the Trust and each person who has been, is, or may hereafter be a
Trustee of the Trust against expenses reasonably incurred by any of them in
connection with any claim or in connection with any action, suit or proceeding
to which any of them may be a party, which arises out of or is alleged to arise
out of any misrepresentation or omission to state a material fact, or out of any
alleged misrepresentation or omission to state a material fact, on the part of
U.S. Boston Capital or any agent or employee of U.S. Boston Capital or any other
person for whose acts U.S. Boston Capital is responsible or is alleged to be
responsible, unless such misrepresentation or omission was made in reliance upon
written information furnished by the Trust. U.S. Boston Capital also agrees
likewise to indemnify and hold harmless the Trust and each such person in
connection with any claim or in connection with any action, suit or proceeding
which arises out of or is alleged to arise out of U.S. Boston Capital's failure
to exercise reasonable care and diligence with respect to its services rendered
in connection with investment, reinvestment, employee benefit and other plans
for shares. The term "expenses" includes amounts paid in satisfaction of
judgments or in settlements which are made with U.S. Boston Capital's consent.
The foregoing rights of indemnification shall be in addition to any other rights
to which the Trust or a Trustee may be entitled as a matter of law.
11. Indemnification of U.S. Boston Capital. The Trust agrees to indemnify
---------------------------------------
and hold harmless U.S. Boston Capital, its several officers, employees and
directors, and any person who controls U.S. Boston Capital within the meaning of
Section 15 of the Securities Act of 1933, against expenses reasonably incurred
by any of them in connection with any claim or in connection with any action,
suit or proceeding to which any of them may be a party, which arises out of or
is alleged to arise out of any misrepresentation or omission to state a material
fact, or out of any alleged misrepresentation or omission to state a material
fact in the Registration Statement or prospectus, provided that in
<PAGE>
no event shall anything contained in this Agreement be construed so as to
protect U.S. Boston Capital against any liability to the Trust or its
shareholders to which U.S. Boston Capital would otherwise be subject by reason
of willful misfeasance, bad faith, or gross negligence, in the performance of
its duties under this Agreement.
12. Assignment Terminates this Contract; Amendments of this Contract. This
-----------------------------------------------------------------
Contract shall automatically terminate, without the payment of any penalty, in
the event of its assignment. This Contract may be amended only if such amendment
be approved either by action of the Trustees of the Trust or at a meeting of the
shareholders of the Trust by the affirmative vote of a majority of the
outstanding shares of the Trust, and by a majority of the Trustees of the Trust
who are not interested persons of the Trust and who have no direct or indirect
financial interest in the operation of the Distribution Plan or this Contract by
vote cast in person at a meeting called for the purpose of voting on such
approval.
13. Effective Period and Termination of this Contract. This Contract shall
--------------------------------------------------
take effect upon the date first above written and shall remain in full force and
effect continuously as to a series of the Trust ("Series") (unless terminated
automatically as set forth in Section 12) until terminated:
(a) Either by such Series or U.S. Boston Capital by not more than sixty (60)
days' nor less than ten (10) days' written notice delivered or mailed by
registered mail, postage prepaid, to the other party; or
(b) Automatically as to any Series at the close of business on the second
anniversary of the execution of this Contract or upon the expiration of one
year from the effective date of the last continuance of this Contract,
whichever is later, if the continuance of this Contract is not specifically
approved at least annually by the Trustees of the Trust or the shareholders
of such Series by the affirmative vote of a majority of the outstanding
shares of such Series, and by a majority of the Trustees of the Trust who
are not interested persons of the Trust and who have no direct or indirect
financial interest in the operation of the Distribution Plan or this
Contract by vote cast in person at a meeting called for the purpose of
voting on such approval.
<PAGE>
Action by a Series of the Trust under (a) above may be taken either (i) by
vote of the Trustees of the Trust, or (ii) by the affirmative vote of a majority
of the outstanding shares of such Series. The requirement under (b) above that
continuance of this Contract be "specifically approved at least annually" shall
be construed in a manner consistent with the Investment Company Act of 1940 and
the Rules and Regulations thereunder.
Termination of this Contract pursuant to this Section 12 shall be without
the payment of any penalty.
If this Contract is terminated or not renewed with respect to one or more
Series, it may continue in effect with respect to any Series as to which it has
not been terminated (or has been renewed).
14. Certain Definitions. For the purpose 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 Series, as the case may be, present (in person
or by proxy) and entitled to vote at such meeting, if the holders of more than
50% of the outstanding shares of the Trust or the Series, 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
Series, as the case may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "interested persons" and
"assignment" shall have the meanings defined in the Investment Company Act of
1940, subject, however, to such exemptions as may be granted by the Securities
and Exchange Commission under said Act. Certain other items used herein that are
not otherwise defined have the meaning given in the current prospectus of the
Trust or constituent agreements or documents of the Trust.
<PAGE>
EXHIBIT 15
QUANTITATIVE GROUP OF FUNDS
---------------------------
AMENDMENT TO TERMS AND CONDITIONS OF DISTRIBUTION AGREEMENT
-----------------------------------------------------------
Amendment dated April 8, 1994 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 Disciplined Growth Series, and the Trust and U.S. Boston Capital desire to
adjust as to the Disciplined Growth Series only the fee payable to U.S. Boston
Capital under the Terms and Conditions of the Distribution Agreement;
Now, therefore, in consideration of the mutual covenants set forth in the
Distribution Agreement, the Trust and U.S. Boston Capital agree that 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
Disciplined Growth Series.
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 8
day of April, 1994.
QUANTITATIVE GROUP OF FUNDS
By:
President
U.S. BOSTON CAPITAL CORPORATION
By:
President
<PAGE>
EXHIBIT 16
QUANTITATIVE CROUP OF FUNDS
---------------------------
AMENDMENT TO TERMS AND CONDITIONS OF DISTRIBUTION AGREEMENT
-----------------------------------------------------------
Amendment dated May 15, 1994 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 two new
series, the Foreign Frontier Series and the Boston Numeric II Series, and the
Trust and U.S. Boston Capital desire to set as to the Foreign Frontier Series
and the Boston Numeric II Series the fee payable to U.S. Boston Capital under
the Terms and Conditions of the Distribution Agreement;
Now, therefore, in consideration of the mutual covenants set forth in the
Distribution Agreement, the Trust and U.S. Boston Capital agree that 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
Disciplined Growth Series, Foreign Frontier Series and the Boston Numeric II
Series.
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 19
day of May, 1994.
QUANTITATIVE GROUP OF FUNDS
By:
President
U.S. BOSTON CAPITAL CORPORATION
By:
President
<PAGE>
EXHIBIT 17
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, and the Trust and U.S. Boston Capital
desire to set as to the Quantitative Foreign Value Fund the fee payable to U.S.
Boston Capital under the Terms and Conditions of the Distribution Agreement; and
Now, therefore, in consideration of the mutual covenants set forth in the
Distribution Agreement, the Trust and U.S. Boston Capital agree that: (1) 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 Mi Cap Fund, Quantitative Emerging Markets Fund, or Quantitative
Foreign Value 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 Corporation 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. Such 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
Fund Name Annual Fee
- --------- ----------
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 Emerging Markets Fund 0.50%
Quantitative Foreign Value Fund 0.25%
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
By:
President
U.S. BOSTON CAPITAL CORPORATION
By:
President
<PAGE>
EXHIBIT 18
QUANTITATIVE GROUP OF FUNDS
ORDINARY SHARE SELLING AGREEMENT
(fully disclosed accounts)
Ladies and Gentlemen:
U.S. Boston Capital Corporation ("Distributor") is the exclusive
underwriter and distributor for the Quantitative Group of Funds (collectively
the "Funds") and each series of the Funds (individually a "Fund"). We invite
you to distribute Ordinary Shares of the Fund(s) listed in Exhibit A to this
Agreement, subject to the terms and conditions set forth below. As used herein,
the term "Prospectus" shall mean the then current prospectus of the Funds as
filed with the Securities and Exchange Commission.
SALES AND SERVICE FEES
Distributor hereby agrees to sell to you as agent, to cover orders
received by you from your customers, shares of the Fund(s) in states in which
you are registered and which shares of the Fund(s) are currently qualified for
sale. In no transactions shall you have any authority to act as agent for the
Funds, or for the Distributor, or for any affiliates, including employees and
directors, of the Funds or Distributor.
In return for sales of the Fund for which you are the dealer of record,
except as noted below, Distributor will pay a sales fee as set forth in Exhibit
A of this Agreement. The Distributor agrees to accept and confirm such sales
orders to you at the applicable public offering price. Payments of sales fees
will be mailed to dealers monthly within twenty (20) days of the end of each
month, based on fully paid orders of Fund(s) shares during that month. The net
asset value and public offering price of the shares of the Fund(s) will be
furnished on a daily basis to public information sources or, if applicable, made
available through other sources as set forth in an addendum to this Agreement.
The Distributor and/or the Fund(s) may at any time modify the sales fee to
be paid in connection with the sale of shares of the Fund(s). In the event of
any such change, you agree that you will have no continuing claim to or vested
interest in the level of sales fees established by this Agreement as to any
shares of the Fund(s) sold by you subsequent to any such change.
You agree to act as service agent, in accordance with the terms of the
Service Agreement with Distributor dated _______________________________, and as
amended. Pursuant to the terms of the Service Agreement, in addition to the
foregoing sales fee, you will be entitled to receive for each Fund account in
Ordinary Shares for which, on the last business day of the period you are the
dealer of record, a quarterly service fee equal to the fee set forth in Exhibit
A of the Service Agreement, as calculated by the Distributor. Service fee
payments will be mailed to you within thirty (30) days of quarter end.
You hereby agree that the Distributor has made no representations to you
with respect to the Distribution Plan of any of the Funds which are in addition
to, or in conflict with the description set forth in the Funds' Prospectus and
that you will look solely to the Distributor for the payment of the one time
sales fee and quarterly service fees. All sales fees and service fees will be
paid to you at the address of your principal office, as indicated below in your
acceptance of this Agreement.
No sales fee will be paid for sales of shares to Contributory Qualified
Plans under Section 401(k) of the Internal Revenue Code and other persons for
whom a deferred sales charge is not imposed (as set forth in the Prospectus).
Employees of broker-dealers having a selling agreement
<PAGE>
with the Distributor may purchase no load Institutional Shares of the Funds. The
term "employee" includes an employee's spouse and minor children, and retired
employees. To purchase Institutional Shares, sales to employees of broker
dealers must be made for investment purposes only and such shares may not be
resold except to the Funds. Any employee of a broker-dealer exercising this
right should first obtain the proper forms from the Distributor prior to
purchasing shares. In addition, no sales fee will be paid for sales of the
Ordinary Shares of the Quantitative Mid Cap Fund or Institutional Shares of any
Fund.
REPRESENTATIONS AND WARRANTIES
All sales of shares issued by the Fund(s) are subject to the following
terms:
In ordering shares of any Fund, you may rely upon the representations
contained in the Prospectus. You agree that all offers or sales of Fund shares
will be made by you in compliance with all applicable federal and state
securities laws and the rules and regulations of applicable regulatory agencies
or authorities.
You will not make any representations concerning any Fund other than those
contained in the Prospectus, or in any promotional materials or sales literature
furnished to you by the Distributor or the Funds. Except as otherwise provided,
you will not furnish or cause to be furnished to any person or display or
publish any information or material relating to the Funds or any Fund,
(including without limitation, promotional materials and sales literature,
advertisements, press releases, announcements, statements, posters, signs or
other similar material), except such information and materials as may be
furnished to you by the Distributor or the Fund(s), and other materials as may
be approved in writing by the Distributor.
In connection with sales and offers to sell shares of the Fund(s), you will
furnish to each person to whom any such sale or offer is made, a copy of one
Prospectus and, if requested, the statement of additional information at or
prior to the time of written offering (including any confirmation) or sale.
Distributor will furnish additional copies of the Prospectus in reasonable
quantities, upon request.
You represent and warrant that (i) you are a corporation, partnership or
other entity duly organized and validly existing in good standing under the laws
of the jurisdiction in which you are organized; (ii) you are a member of the
National Association of Securities Dealers, Inc. ("NASD") and that with respect
to any sales in the United States, you agree to abide by all its rules and
regulations, including, without limitation, its Rules of Fair Practice.
The Distributor represents that it is currently in compliance with the
provisions of Rule 2830 of the NASD's Rules of Fair Practice relating to
investment company sales charges and that each Fund's sales charges currently
comply with such provisions.
We agree to inform you, upon request, as to the states in which the shares
of the Funds have been qualified for sale under, or are exempt from the
registration requirements of, the respective securities laws of such states.
You agree to notify us immediately in the event of (a) your expulsion or
suspension from the NASD, or (b) your violation of any applicable federal or
state law, rule or regulation arising out of your sales of Fund shares in
connection with this Agreement, and (c) any other action by federal or state
regulators that may otherwise affect in any material way your ability to act as
a dealer in accordance with the terms of this Agreement. Your expulsion from
the NASD will automatically terminate this Agreement immediately without notice.
Our suspension from the NASD for violation of any applicable federal or state
ii
<PAGE>
law, rule or regulation will terminate this Agreement effective immediately upon
our written notice to you of termination.
PAYMENT AND DELIVERY
All orders for the purchase of any Fund(s) shares will be executed at the
then current public offering price per share and all orders for the redemption
of any Fund(s) shares will be executed at the net asset value per share, less
any redemption fee payable to us, as described in the Prospectus. Pursuant to
Rule 18f-1 of the Investment Company Act of 1940, we reserve the right, as set
forth in the Prospectus, to redeem in-kind any redemption requests in excess of
$250,000 per Fund, unless we receive thirty (30) days' prior notice of the
redemption. We acknowledge that each of your customers who is a named account
holder of the Fund(s) shares held in your account is an individual "shareholder"
of such shares within the meaning of Rule 18f-1 and the Fund's election to
redeem in-kind filed with the Securities and Exchange Commission pursuant to the
Rule. For purpose of complying with Rule 18f-1, in the event of a redemption in
excess of $250,000, you agree to provide us, upon request, the names and account
numbers, the number of shares held, and other relevant information for each of
your account holders who are the owners of Fund(s) shares participating in the
redemption.
All orders are subject to acceptance or rejection by us at our sole
discretion. Each transaction will be promptly confirmed by us or by
Quantitative Institutional Services, Transfer Agent of the Funds ("Transfer
Agent"), on our behalf, directly to you, unless separately agreed and set forth
as an addendum to this Agreement. We reserve the right, at our sole discretion,
to suspend or withdraw the sale of shares of any the Funds.
You agree to pay for purchase orders of any Fund(s) shares from the
Distributor in accordance with the terms of the Prospectus. On or before three
(3) business days from trade date of each purchase order for shares of any Fund,
or such earlier time as shall be required by rule or regulation of the NASD or
Securities and Exchange Commission, you shall remit to an account designated by
the Distributor with the Transfer Agent an amount equal to the then current
public offering price of the Fund(s)' shares being purchased, without deduction
for any sales fee or dealer reallowance.
All checks should be made payable to Quantitative Group of Funds and
forwarded to:
Quantitative Institutional Services
55 Old Bedford Road
Lincoln, Massachusetts 01773
Wire orders for any Fund(s) are to be placed through our office at (781)
259-1144.
If payment is not received in accordance with the terms of this Agreement
or the Prospectus, we reserve the right, without notice, to cancel the sale and
to hold you responsible for any loss sustained as a result thereof.
INDEMNITIES
The parties in this Agreement hereby agree to indemnify and hold harmless
each other, their officers and directors/trustees, and any person who is or may
be deemed to be a controlling
iii
<PAGE>
person of each other, from and against any losses claims, damages, liabilities
or expenses (including reasonable fees of counsel), whether joint or several,
and to which any such person or entity may become subject, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
arise out of, or are based upon, (a) any untrue statement or alleged untrue
statement of material fact, or any omission to state a material fact made or
omitted by them in this Agreement, or (b) any willful misfeasance or gross
misconduct by them in the performance of their duties and obligations set forth
in this Agreement.
In consideration of Distributor's distribution services, and Quantitative
Institutional Services' services as Transfer Agent, in liquidating, exchanging
and/or transferring unissued shares of the Fund(s) for your customer(s) without
the use of original or underlying documentation supporting such transactions
(e.g. a signed stock power or signature guarantee) you hereby agree to indemnify
the Distributor, Transfer Agent, the Funds and each respective Fund against any
losses, including reasonable attorney's fees, that may arise from such
liquidation, exchange and/or transfer of unused shares upon your direction. You
represent and warrant to the Fund(s), the Distributor, and Transfer Agent, that
all such transactions shall be properly authorized by your customers. The
indemnification contained herein shall not apply to any losses (including
attorney's fees) caused by a failure of the Distributor, Transfer Agent, or
Fund(s) to comply with any of your instructions governing any of the above
transactions, or any negligent act or omission of the Distributor, Transfer
Agent, or Fund(s), or any of their directors/trustees, officers, employees or
agents.
The Distributor, Fund(s), Transfer Agent, or you may revoke the indemnity
herein upon prior written notice to each of the parties hereto, and in the case
of such revisions, this indemnity agreement shall remain effective as to trades
made prior to such revocation.
This Agreement shall become effective only when accepted and signed by you,
and may be terminated at any time by either party hereto upon fifteen days prior
written notice to the other party. This Agreement may be amended only by a
written instrument signed by both of the parties hereto and may not be assigned
by either party without the prior written consent of the other party. This
Agreement constitutes the entire agreement and understanding between the parties
hereto relating to the subject matter hereof and supersedes any and all prior
agreement between the parties hereto relating to the subject matter hereof.
This agreement shall be governed by and construed in accordance with the
internal laws of the State of Massachusetts.
----------------------------------
Name of Broker-Dealer (please type or print)
----------------------------------
----------------------------------
----------------------------------
Address
Date:______________________ By:__________________________________
Title:_______________________________
Note: Please sign and return both copies of this agreement to U.S. Boston
Capital Corporation. Upon acceptance, one countersigned copy will be returned
to you for your files.
Accepted: U.S. BOSTON CAPITAL CORPORATION
iv
<PAGE>
Date:______________________ By:__________________________________
Title:_______________________________
v
<PAGE>
EXHIBIT A
to Ordinary Share Selling Agreement
Quantitative Group of Funds
<TABLE>
<CAPTION>
Ordinary Shares
- ---------------
Sales Fee (as a
percentage of
Ticker the public
Fund Name CUSIP Symbol offering price)
- --------- --------- ------ ----------------
<S> <C> <C> <C>
Quantitative Small Cap Fund 74762R608 USBNX 1.0%
Quantitative Mid Cap Fund 74762R806 QNIIX 0.0%
Quantitative Growth and Income Fund 74762R202 USBOX 1.0%
Quantitative International Equity Fund 74762R400 USBFX 1.0%
Quantitative Emerging Markets Fund 74762R855 QFFOX 1.0%
Quantitative Foreign Value Fund 74762R830 none 1.0%
</TABLE>
vi
<PAGE>
Policies and Procedures With Respect to Sales of Quantitative Group of Funds
Under Multiple Class Pricing Structure.
Each series of the Quantitative Group of Funds offers two classes of
shares. It is important for investors to choose not only the proper series, but
also the correct class of shares that will best suit their investment needs. In
addition to Ordinary Shares, which are covered by the Selling Agreement, the
Fund also offers investors Institutional Shares. Institutional Shares bear no
sales charge and carry no 12b-1 fee or service charges. These Shares are
available only to investors that can meet the minimum investment requirements of
$1 million and who meet certain other criteria as set forth in the Prospectus,
or who can invest through certain managed account programs in which the
investment manager is compensated directly by his or her client for providing
investment advice and other services.
A National Association of Securities Dealers, Inc. rule specifically
prohibits "breakpoint" sales of mutual funds. A "breakpoint sale" is defined as
a sale to an investor of an amount of shares just below the amount which would
be subject to the next breakpoint on the fund's sales charge schedule. The
minimum investment requirements for Institutional Shares of the Fund in some
ways may be analogous to breakpoints of other mutual funds. From time-to-time
you may wish to inform investors that investments in a series of the Fund above
the minimum investment requirement for Institutional Shares may eliminate both
any sales charge and annual 12b-1 fees that they would incur. Moreover, in some
cases you may wish to advise investors who initially have purchased Ordinary
Shares in amounts below the minimum investment requirement for Institutional
Shares of a series, but who have subsequently attained investment amounts
exceeding that minimum, that they may have the option of redeeming their
Ordinary Shares, subject to a redemption fee, and purchasing Institutional
Shares.
Responsibilities of the Broker-Dealer
You must assure that all employees receiving investor inquiries about the
purchase of shares in the Fund have advised appropriate investors of the
available investment options and the impact of choosing one class of shares
rather than another. Questions relating to this policy should be directed to
Mark A. Katzoff, U.S. Boston Capital Corporation, Lincoln North, Lincoln,
Massachusetts, 01773 (800) 331-1244.
vii
<PAGE>
EXHIBIT 19
QUANTITATIVE GROUP OF FUNDS
ORDINARY AND INSTITUTIONAL SHARE SELLING AGREEMENT
Ladies and Gentlemen:
U.S. Boston Capital Corporation ("Distributor") is the exclusive
underwriter and distributor for the Quantitative Group of Funds (collectively
the "Funds") and each series of the Funds (individually a "Fund"). We invite
you to distribute Ordinary and Institutional Shares of the Fund(s) listed in
Exhibit A to this Agreement, subject to the terms and conditions set forth
below. As used herein, the term "Prospectus" shall mean the then current
prospectus of the Funds as filed with the Securities and Exchange Commission.
SALES AND SERVICE FEES
Distributor hereby agrees to sell to you as principal, to cover orders
received by you from your customers, shares of the Fund(s) in states in which
you are registered and which shares of the Fund(s) are currently qualified for
sale. In no transactions shall you have any authority to act as agent for the
Funds, or for the Distributor, or for any affiliates, including employees and
directors, of the Funds or Distributor.
In return for sales of the Fund for which you are the dealer of record,
except as noted below, Distributor will pay a sales fee as set forth in Exhibit
A of this Agreement. The Distributor agrees to accept and confirm such sales
orders to you at the applicable public offering price. Payments of sales fees
will be mailed to dealers monthly within twenty (20) days of the end of each
month, based on fully paid orders of Fund(s) shares during that month. The net
asset value and public offering price of the shares of the Fund(s) will be
furnished on a daily basis to public information sources or, if applicable, made
available through other sources as set forth in an addendum to this Agreement.
The Distributor and/or the Fund(s) may at any time modify the sales fee to
be paid in connection with the sale of shares of the Fund(s). In the event of
any such change, you agree that you will have no continuing claim to or vested
interest in the level of sales fees established by this Agreement as to any
shares of the Fund(s) sold by you subsequent to any such change.
You agree to act as service agent, in accordance with the terms of the
Service Agreement with Distributor dated _______________________________, and as
amended. Pursuant to the terms of the Service Agreement, in addition to the
foregoing sales fee, you will be entitled to receive for each Fund account in
Ordinary Shares for which, on the last business day of the period you are the
dealer of record, a quarterly service fee equal to the fee set forth in Exhibit
A of the Service Agreement, as calculated by the Distributor. Service fee
payments will be mailed to you within thirty (30) days of quarter end.
You hereby agree that the Distributor has made no representations to you
with respect to the Distribution Plan of any of the Funds which are in addition
to, or in conflict with the description set forth in the Funds' Prospectus and
that you will look solely to the Distributor for the payment of the one time
sales fee and quarterly service fees. All sales fees and service fees will be
paid to you at the address of your principal office, as indicated below in your
acceptance of this Agreement.
No sales fee will be paid for sales of shares to Contributory Qualified
Plans under Section 401(k) of the Internal Revenue Code and other persons for
whom a deferred sales charge is not imposed (as set forth in the Prospectus),
including employees of broker-dealers having a selling
<PAGE>
agreement with the Distributor. The term "employee" includes an employee's
spouse and minor children, and retired employees. To avoid a deferred sales
charge, sales to employees of broker dealers must be made for investment
purposes only and such shares may not be resold except to the Funds. Any
employee of a broker-dealer exercising this right should first obtain the proper
forms from the Distributor prior to purchasing shares. In addition, no sales fee
will be paid for sales of the Ordinary Shares of the Quantitative Mid Cap Fund
or of the Institutional Shares of any Funds.
[delete for fully disclosed]
We understand that you serve as clearing broker for other broker dealers who may
hold Fund shares in the accounts that you will maintain with the Funds. You
agree to forward promptly to such broker dealers, after receipt from us, any
sales or service fees attributable to accounts for which such broker dealers are
the dealers of record with you.
REPRESENTATIONS AND WARRANTIES
All sales of shares issued by the Fund(s) are subject to the following
terms:
In ordering shares of any Fund, you may rely upon the representations
contained in the Prospectus. You agree that all offers or sales of Fund shares
will be made by you in compliance with all applicable federal and state
securities laws and the rules and regulations of applicable regulatory agencies
or authorities.
You will not make any representations concerning any Fund other than those
contained in the Prospectus, or in any promotional materials or sales literature
furnished to you by the Distributor or the Funds. Except as otherwise provided,
you will not furnish or cause to be furnished to any person or display or
publish any information or material relating to the Funds or any Fund,
(including without limitation, promotional materials and sales literature,
advertisements, press releases, announcements, statements, posters, signs or
other similar material), except such information and materials as may be
furnished to you by the Distributor or the Fund(s), and other materials as may
be approved in writing by the Distributor.
In connection with sales and offers to sell shares of the Fund(s), you will
furnish to each person to whom any such sale or offer is made, a copy of one
Prospectus and, if requested, the statement of additional information at or
prior to the time of written offering (including any confirmation) or sale.
Distributor will furnish additional copies of the Prospectus in reasonable
quantities, upon request.
You represent and warrant that (i) you are a corporation, partnership or
other entity duly organized and validly existing in good standing under the laws
of the jurisdiction in which you are organized; (ii) you are a member of the
National Association of Securities Dealers, Inc. ("NASD") and that with respect
to any sales in the United States, you agree to abide by all its rules and
regulations, including, without limitation, its Rules of Fair Practice.
The Distributor represents that it is currently in compliance with the
provisions of Rule 2830 of the NASD's Rules of Fair Practice relating to
investment company sales charges and that each Fund's sales charges currently
comply with such provisions.
We agree to inform you, upon request, as to the states in which the shares
of the Funds have been qualified for sale under, or are exempt from the
registration requirements of, the respective securities laws of such states.
You agree to notify us immediately in the event of (a) your expulsion or
suspension from the NASD, or (b) your violation of any applicable federal or
II
<PAGE>
state law, rule or regulation arising out of your sales of Fund shares in
connection with this Agreement, and (c) any other action by federal or state
regulators that may otherwise affect in any material way your ability to act as
a dealer in accordance with the terms of this Agreement. Your expulsion from
the NASD will automatically terminate this Agreement immediately without notice.
Our suspension from the NASD for violation of any applicable federal or state
law, rule or regulation will terminate this Agreement effective immediately upon
our written notice to you of termination.
PAYMENT AND DELIVERY
All orders for the purchase of any Fund(s) shares will be executed at the
then current public offering price per share and all orders for the redemption
of any Fund(s) shares will be executed at the net asset value per share, less
any redemption fee payable to us, as described in the Prospectus. Pursuant to
Rule 18f-1 of the Investment Company Act of 1940, we reserve the right, as set
forth in the Prospectus, to redeem in-kind any redemption requests in excess of
$250,000 per Fund, unless we receive thirty (30) days' prior notice of the
redemption. We acknowledge that each of your customers who is a named account
holder of the Fund(s) shares held in your account is an individual "shareholder"
of such shares within the meaning of Rule 18f-1 and the Fund's election to
redeem in-kind filed with the Securities and Exchange Commission pursuant to the
Rule. For purpose of complying with Rule 18f-1, in the event of a redemption in
excess of $250,000, you agree to provide us, upon request, the names and account
numbers, the number of shares held, and other relevant information for each of
your account holders who are the owners of Fund(s) shares participating in the
redemption.
All orders are subject to acceptance or rejection by us at our sole
discretion. Each transaction will be promptly confirmed by us or by
Quantitative Institutional Services, Transfer Agent of the Funds ("Transfer
Agent"), on our behalf, directly to you, unless separately agreed and set forth
as an addendum to this Agreement. We reserve the right, at our sole discretion,
to suspend or withdraw the sale of shares of any the Funds.
You agree to pay for purchase orders of any Fund(s) shares from the
Distributor in accordance with the terms of the Prospectus. On or before three
(3) business days from trade date of each purchase order for shares of any Fund,
or such earlier time as shall be required by rule or regulation of the NASD or
Securities and Exchange Commission, you shall remit to an account designated by
the Distributor with the Transfer Agent an amount equal to the then current
public offering price of the Fund(s)' shares being purchased, without deduction
for any sales fee or dealer reallowance.
All checks should be made payable to Quantitative Group of Funds and
forwarded to:
Quantitative Institutional Services.
55 Old Bedford Road
Lincoln, Massachusetts 01773
Wire orders for any Fund(s) are to be placed through our office at (781)
259-1144.
If payment is not received in accordance with the terms of this Agreement
or the Prospectus, we reserve the right, without notice, to cancel the sale and
to hold you responsible for any loss sustained as a result thereof.
INDEMNITIES
III
<PAGE>
The parties in this Agreement hereby agree to indemnify and hold harmless
each other, their officers and directors/trustees, and any person who is or may
be deemed to be a controlling person of each other, from and against any losses
claims, damages, liabilities or expenses (including reasonable fees of counsel),
whether joint or several, and to which any such person or entity may become
subject, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) arise out of, or are based upon, (a) any untrue
statement or alleged untrue statement of material fact, or any omission to state
a material fact made or omitted by them in this Agreement, or (b) any willful
misfeasance or gross misconduct by them in the performance of their duties and
obligations set forth in this Agreement.
In consideration of Distributor's distribution services, and Quantitative
Institutional Services' services as Transfer Agent, in liquidating, exchanging
and/or transferring unissued shares of the Fund(s) for your customer(s) without
the use of original or underlying documentation supporting such transactions
(e.g. a signed stock power or signature guarantee) you hereby agree to indemnify
the Distributor, Transfer Agent, the Funds and each respective Fund against any
losses, including reasonable attorney's fees, that may arise from such
liquidation, exchange and/or transfer of unused shares upon your direction. You
represent and warrant to the Fund(s), the Distributor, and Transfer Agent, that
all such transactions shall be properly authorized by your customers. The
indemnification contained herein shall not apply to any losses (including
attorney's fees) caused by a failure of the Distributor, Transfer Agent, or
Fund(s) to comply with any of your instructions governing any of the above
transactions, or any negligent act or omission of the Distributor, Transfer
Agent, or Fund(s), or any of their directors/trustees, officers, employees or
agents.
The Distributor, Fund(s), Transfer Agent, or you may revoke the indemnity
herein upon prior written notice to each of the parties hereto, and in the case
of such revisions, this indemnity agreement shall remain effective as to trades
made prior to such revocation.
This Agreement shall become effective only when accepted and signed by you,
and may be terminated at any time by either party hereto upon fifteen days prior
written notice to the other party. This Agreement may be amended only by a
written instrument signed by both of the parties hereto and may not be assigned
by either party without the prior written consent of the other party. This
Agreement constitutes the entire agreement and understanding between the parties
hereto relating to the subject matter hereof and supersedes any and all prior
agreement between the parties hereto relating to the subject matter hereof.
This agreement shall be governed by and construed in accordance with the
internal laws of the Commonwealth of Massachusetts.
--------------------------------------------
Name of Broker-Dealer (please type or print)
--------------------------------------------
--------------------------------------------
--------------------------------------------
Address
Date: By:
--------------------- -----------------------------------------
Title:
--------------------------------------
Note: Please sign and return both copies of this agreement to U.S. Boston
Capital Corporation. Upon acceptance, one countersigned copy will be returned
to you for your files.
IV
<PAGE>
Accepted: U.S. BOSTON CAPITAL CORPORATION
Date: By:
--------------------- ----------------------------------------
Dealer/agent/3/99 Title:
-------------------------------------
V
<PAGE>
EXHIBIT A
to Ordinary and Institutional Share Selling Agreement
Quantitative Group of Funds
<TABLE>
<CAPTION>
Ordinary Shares
- ---------------
Sales Fee (as a
percentage of
Ticker the public
Fund Name CUSIP Symbol offering price)
- --------- --------- ------ ----------------
<S> <C> <C> <C>
Quantitative Small Cap Fund 74762R608 USBNX 1.0%
Quantitative Mid Cap Fund 74762R806 QNIIX 0.0%
Quantitative Growth and Income Fund 74762R202 USBOX 1.0%
Quantitative International Equity Fund 74762R400 USBFX 1.0%
Quantitative Emerging Markets Fund 74762R855 QFFOX 1.0%
Quantitative Foreign Value Fund 74762R830 none 1.0%
Institutional Shares
- --------------------
Sales Fee (as a
percentage of
Ticker the public
Fund Name CUSIP Symbol offering price)
- --------- --------- ------ ---------------
Quantitative Small Cap Fund 74762R509 QBNAX 0.0%
Quantitative Mid Cap Fund 74762R707 QNIAX 0.0%
Quantitative Growth and Income Fund 74762R103 QGIAX 0.0%
Quantitative International Equity Fund 74762R301 QIEAX 0.0%
Quantitative Emerging Markets Fund 74762R863 QEMAX 0.0%
Quantitative Foreign Value Fund 74762R848 none 0.0%
</TABLE>
VI
<PAGE>
Policies and Procedures With Respect to Sales of Quantitative Group of Funds
Under Multiple Class Pricing Structure.
Each series of the Quantitative Group of Funds offers two classes of
shares. It is important for investors to choose not only the proper series, but
also the correct class of shares that will best suit their investment needs. In
addition to Ordinary Shares, which are covered by the Selling Agreement, the
Fund also offers investors Institutional Shares. Institutional Shares bear no
sales charge and carry no 12b-1 fee or service charges. These Shares are
available only to investors that can meet the minimum investment requirements of
$1 million and who meet certain other criteria as set forth in the Prospectus,
or who can invest through certain managed account programs in which the
investment manager is compensated directly by his or her client for providing
investment advice and other services.
A National Association of Securities Dealers, Inc. rule specifically
prohibits "breakpoint" sales of mutual funds. A "breakpoint sale" is defined as
a sale to an investor of an amount of shares just below the amount which would
be subject to the next breakpoint on the fund's sales charge schedule. The
minimum investment requirements for Institutional Shares of the Fund in some
ways may be analogous to breakpoints of other mutual funds. From time-to-time
you may wish to inform investors that investments in a series of the Fund above
the minimum investment requirement for Institutional Shares may eliminate both
any sales charge and annual 12b-1 fees that they would incur. Moreover, in some
cases you may wish to advise investors who initially have purchased Ordinary
Shares in amounts below the minimum investment requirement for Institutional
Shares of a series, but who have subsequently attained investment amounts
exceeding that minimum, that they may have the option of redeeming their
Ordinary Shares, subject to a redemption fee, and purchasing Institutional
Shares.
Responsibilities of the Broker-Dealer
You must assure that all employees receiving investor inquiries about
the purchase of shares in the Fund have advised appropriate investors of the
available investment options and the impact of choosing one class of shares
rather than another. Questions relating to this policy should be directed to
Mark A. Katzoff, U.S. Boston Capital Corporation, Lincoln North, Lincoln,
Massachusetts, 01773 (800) 331-1244.
Dealcomb/3/99
VII
<PAGE>
EXHIBIT 20
CUSTODY AND INVESTMENT ACCOUNTING AGREEMENT
THIS AGREEMENT is made effective the 19 day of January, 1998, by and
---
between INVESTORS FIDUCIARY TRUST COMPANY, a trust company chartered under the
laws of the state of Missouri, having its principal office and place of business
located at 801 Pennsylvania, Avenue, Kansas City, Missouri 64105 ("IFTC"), and
QUANTITATIVE GROUP OF FUNDS, a Massachusetts business trust, having its
principal office and place of business at 55 Old Bedford Road, Lincoln, MA 01773
("Fund").
WITNESSETH:
WHEREAS, Fund desires to appoint IFTC as custodian of the assets of the
Fund's investment portfolio or portfolios (each a "Portfolio", and collectively
the "Portfolios") and as its agent to perform certain investment accounting and
recordkeeping functions; and
WHEREAS, IFTC is willing to accept such appointment on the terms and
conditions hereinafter set forth;
NOW THEREFORE, for and in consideration of the mutual promises contained
her parties hereto, intending to be legally bound, mutually covenant and agree
as follows:
1. APPOINTMENT OF CUSTODIAN AND AGENT. Fund hereby constitutes and appoints
-----------------------------------
IFTC as:
A. Custodian of the investment securities, interests in loans and other
non-cash investment property, and monies at any time owned by each of
the Portfolios and delivered to IFTC as custodian hereunder
("Assets"); and
B. Agent to perform certain accounting and recordkeeping functions
relating to portfolio transactions required of a duly registered
investment company under Rule 3 1 a of the Investment Company Act of
1940, as amended (the " 1940 Act") and to calculate the net asset
value of the Portfolios.
2. REPRESENTATIONS AND WARRANTIES.
-------------------------------
A. Fund hereby represents, warrants and acknowledges to IFTC:
1. That it is a trust duly organized and existing and in good
standing under the laws of its state of organization, and that it
is registered under the 1940 Act; and
2. That it has the requisite power and authority under applicable
law and its declaration of trust to enter into this Agreement;
that it has taken all requisite action necessary to appoint IFTC
as custodian and investment accounting and recordkeeping agent;
that this Agreement has been duly executed and delivered by Fund;
and that this Agreement constitutes a legal, valid and binding
obligation of Fund, enforceable in accordance with its terms.
B. IFTC hereby represents, warrants and acknowledges to Fund:
1. That it is a trust company duly organized and existing and in
good standing under the laws of the State of Missouri; and
2. That it has the requisite power and authority under applicable
law, its charter and its bylaws to enter into and perform this
Agreement; that this Agreement has been duly executed and
<PAGE>
delivered by IFTC; and that this Agreement constitutes a legal,
valid and binding obligation of IFTC, enforceable in accordance
with its terms.
3. DUTIES AND RESPONSIBILITIES OF THE PARTIES.
-------------------------------------------
A. Delivery of Assets. Except as permitted by the 1940 Act, Fund will
--------------------
deliver or cause to be delivered to IFTC on the effective date hereof,
or as soon thereafter as practicable, and from time to time
thereafter, all Assets acquired by, owned by or from time to time
coming into the possession of each of the Portfolios during the term
hereof. IFTC has no responsibility or liability whatsoever for or on
account of assets not so delivered.
B. Delivery of Accounts and Records. Fund will turn over or cause to be
----------------------------------
turned over to IFTC all accounts and records needed by IFTC to fully
and properly perform its duties and responsibilities hereunder. IFTC
may rely conclusively on the completeness and correctness of such
accounts and records.
C. Delivery of Assets to Third Parties. IFTC will receive delivery of
------------------------------------
and keep safely the Assets of each Portfolio segregated in a separate
account. IFTC will not deliver, assign, pledge or hypothecate any such
Assets to any person except as permitted by the provisions hereof or
any agreement executed according to the terms of Section 3.P hereof.
Upon delivery of any such Assets to a subcustodian appointed pursuant
hereto (hereinafter referred to as "Subcustodian"), IFTC will create
and maintain records identifying such Assets as belonging to the
applicable Portfolio. IFTC is responsible for the safekeeping of the
Assets only until they have been transmitted to and received by other
persons as permitted under the terms hereof, except for Assets
transmitted to Subcustodians, for which IFTC remains responsible to
the extent provided herein. IFTC may participate directly or
indirectly through a subcustodian in the Depository Trust Company
(DTC), Treasury/Federal Reserve Book Entry System (Fed System),
Participant Trust Company (PTC) or other depository approved by Fund
(as such entities are defined at 17 CFR Section 270.17f4(b)) (each a
"Depository" and collectively the "Depositories"). IFTC will be
responsible to Fund for any loss, damage or expense suffered or
incurred by Fund resulting from the actions or omissions of any
Depository only to the same extent such Depository is responsible to
IFTC, unless such injury was occasioned by IFTC's failure to act in
good faith and with reasonable care and diligence, in which case IFTC
shall be responsible to Fund for any loss, damage or expense arising
out of Depository's actions or omissions.
D. Registration. IFTC will at all times hold registered Assets in the
-------------
name of IFTC as custodian, the applicable Portfolio, or a nominee of
either of them, unless specifically directed by Instructions, as
hereinafter defined, to hold such registered Assets in so called
"street name;" provided that, in any event, IFTC will hold all such
Assets in an account of IFTC as custodian containing only Assets of
the applicable Portfolio, or only assets held by IFTC as a fiduciary
or custodian for customers; and provided further, IFTC's records will
at all times indicate the Portfolio or other customer for which such
Assets are held and the respective interests therein. If, however,
Fund directs IFTC to maintain Assets in "street name", notwithstanding
anything contained herein to the contrary, IFTC will be obligated only
to utilize its best efforts to timely collect income due the Portfolio
on such Assets and to notify the Portfolio of relevant information,
such as maturities and pendency of calls, and corporate actions
including, without limitation, calls for redemption, tender or
exchange offers, declaration, record and payment dates and amounts of
any dividends or income, reorganization, recapitalization, merger,
consolidation, split-up of shares, change of par value, or conversion
("Corporate Actions"). All Assets and the ownership thereof by
Portfolio will at all times be identifiable on the records of IFTC.
Fund agrees to hold IFTC and its nominee harmless for any liability
arising solely out of its being a shareholder of record of securities
held in custody.
<PAGE>
E. Exchange. Upon receipt of Instructions, IFTC will exchange, or cause
----------
to be exchanged, Assets held for the account of a Portfolio for other
Assets issued or paid in connection with any Corporate Action or
otherwise, and will deposit any such Assets in accordance with the
terms of any such Corporate Action. Without Instructions, IFTC is
authorized to exchange Assets in temporary form for Assets in
definitive form, to effect an exchange of shares when the par value of
stock is changed, and, upon receiving payment therefor, to surrender
bonds or other Assets at maturity or when advised of earlier call for
redemption, except that IFTC will receive Instruction prior to
surrendering any convertible security; provided that the
Assets to be issued are to be delivered to IFTC on behalf of
the relevant portfolio.
F. Purchases of Investments -- Other Than Options and Futures. On each
-----------------------------------------------------------
business day on which a Portfolio makes a purchase of Assets other
than options and futures, Fund will deliver to IFTC Instructions
specifying with respect to each such purchase:
1. If applicable, the name of the Portfolio making such purchase;
2. The name of the issuer and description of the Asset;
3. The number of shares and the principal amount purchased, and
accrued interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage commission, taxes and
other expenses payable in connection with the purchase;
7. The total amount payable upon such purchase;
8. The name of the person from whom or the broker or dealer through
whom the purchase was made; and
9. Whether the Asset is to be received in certificated form or via a
specified Depository.
In accordance with such Instructions, IFTC will pay for out of monies
held for the purchasing Portfolio, but only insofar as such monies are
available for such purpose, and receive the Assets so purchased by or
for the account of such Portfolio, except that IFTC, or a
Subcustodian, may in its sole discretion advance funds to such
Portfolio which may result in an overdraft because the monies held on
behalf of such Portfolio are insufficient to pay the total amount
payable upon such purchase. Except as otherwise instructed by Fund,
IFTC will make such payment only upon receipt of Assets: (a) by IFTC;
(b) by a clearing corporation of a national exchange of which IFTC is
a member; or (c) by a Depository. Notwithstanding the foregoing, (i)
IFTC may release funds to a Depository prior to the receipt of advice
from the Depository that the Assets underlying a repurchase agreement
have been transferred by bookentry into the account maintained with
such Depository by IFTC on behalf of its customers; provided that
IFTC's instructions to the Depository require that the Depository make
payment of such funds only upon transfer by book-entry of the Assets
underlying the repurchase agreement in such account; (ii) IFTC may
make payment for time deposits, call account deposits, currency
deposits and other deposits, foreign exchange transactions, futures
contracts or options, before receipt of an advice or confirmation
evidencing said deposit or entry into such transaction; and (iii) IFTC
may make, or cause a Subcustodian to make, payment for the purchase of
Assets the settlement of which occurs outside of the United States of
America in accordance with generally accepted local custom and market
practice generally accepted by Institutional Clients (as defined
below) in the country in which settlement occurs, provided that in
every case IFTC shall be subject to the standard of care set forth in
Section 5. For purposes of this Agreement, "Institutional Clients"
means U.S. registered investment companies or major, U.S.-based
commercial banks, insurance companies, pension funds or substantially
similar financial institutions which, as a substantial part of their
business operations, purchase or sell securities and make use of
custodial services.
<PAGE>
G. Sales and Deliveries of Investments -- Other Than Options and Futures.
----------------------------------------------------------------------
On each business day on which a Portfolio makes a sale of Assets other
than options and futures, Fund will deliver to IFTC Instructions
specifying with respect to each such sale:
1. If applicable, the name of the Portfolio making such sale;
2. The name of the issuer and description of the Asset;
3. The number of shares and principal amount sold, and accrued
interest, if any;
4. The date on which the Assets sold were purchased or other
information identifying the Assets sold and to be delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage commission, taxes or
other expenses payable in connection with such sale;
8. The total amount to be received by the Portfolio upon such sale;
and
9. The name and address of the broker or dealer through whom or
person to whom the sale was made.
IFTC will deliver or cause to be delivered the Assets thus designated
as sold for the account of the selling Portfolio as specified in the
Instructions. Except as otherwise instructed by Fund, IFTC will make
such delivery upon receipt of. (a) payment therefor in such form as is
satisfactory to IFTC; (b) credit to the account of IFTC with a
clearing corporation of a national securities exchange of which IFTC
is a member; or (c) credit to the account maintained by IFTC on behalf
of its customers with a Depository. Notwithstanding the foregoing: (i)
IFTC will deliver Assets held in physical form in accordance with
"street delivery custom" to a broker or its clearing agent, provided
that IFTC shall have taken reasonable steps to ensure prompt
collection of the payment for, or the return of, such Assets by the
broker or its clearing agent; or (ii) IFTC may make, or cause a
Subcustodian to make, delivery of Assets the settlement of which
occurs outside of the United States of America upon payment therefor
in accordance with generally accepted local custom and market practice
generally accepted by Institutional Clients in the country in which
settlement occurs, provided that in every case IFTC shall be subject
to the standard of care set forth in Section 5.
H. Purchases or Sales of Options and Futures. On each business day on
----------------------------------
which a Portfolio makes a purchase or sale of the options and/or
futures listed below, Fund will deliver to IFTC Instructions
specifying with respect to each such purchase or sale:
1. If applicable, the name of the Portfolio making such purchase or
sale;
2. In the case of security options:
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening, exercising, expiring or
closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. Market on which option traded; and
j. Name and address of the broker or dealer through whom the sale
or purchase was made.
3. In the case of options on indices:
a. The index;
<PAGE>
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
g. Whether the transaction is an opening, exercising, expiring
or closing transaction;
h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased; and
j. The name and address of the broker or dealer through whom the
sale or purchase was made, or other applicable settlement
instructions.
4. In the case of options on index future contracts:
a. The underlying index future contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening, exercising,
expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased; and
i. The market on which the option is traded.
5. In the case of security index futures contracts:
a. The last trading date specified in the contract and, when
available, the closing level, thereof;
b. The index level on the date the contract is entered into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin account (in addition to
Instructions, and if not already in the possession of IFTC,
Fund will deliver a substantially complete and executed
custodial safekeeping account and procedural agreement,
incorporated herein by this reference); and
f. The name and address of the futures commission merchant
through whom the sale or purchase was made, or other
applicable settlement instructions.
I. Assets Pledged or Loaned. If specifically allowed for in the
-------------------------
prospectus of a Portfolio, and subject to such additional terms and
conditions as IFTC may require:
1. Upon receipt of Instructions, IFTC will release or cause to be
released Assets to the designated pledgee by way of pledge or
hypothecation to secure any loan incurred by a Portfolio;
provided, however, that IFTC will release Assets only upon payment
to IFTC of the monies borrowed, except that in cases where
additional collateral is required to secure a borrowing already
made, further Assets may be released or caused to be released for
that purpose. Upon receipt of Instructions, IFTC will pay, but
only from funds available for such purpose, any such loan upon
redelivery to it of the Assets pledged or hypothecated therefor
and upon surrender of the note or notes evidencing such loan.
2. Upon receipt of Instructions, IFTC will release Assets to the
designated borrower; provided, however, that the Assets will be
released only upon deposit with IFTC of full cash collateral as
specified in such Instructions, and that the lending Portfolio
will retain the right to any dividends, interest or distribution
on such loaned Assets. Upon receipt of Instructions and the loaned
Assets, IFTC will release the cash collateral to the borrower.
<PAGE>
J. Routine Matters. IFTC will, in general, attend to all routine and
-----------------
mechanical matters in connection with the sale, exchange,
substitution, purchase, transfer, or other dealings with the Assets
except as may be otherwise provided herein or upon Instruction from
Fund.
K. Deposit Accounts. IFTC will open and maintain one or more special
------------------
purpose deposit accounts for each Portfolio in the name of IFTC in
such banks or trust companies (including, without limitation,
affiliates of IFTC) as may be designated by it or Fund in writing
("Accounts"), subject only to draft or order by IFTC upon receipt of
Instructions. IFTC will deposit all monies received by IFTC from or
for the account of a Portfolio in an Account maintained for such
Portfolio. Subject to Section 5.K hereof, IFTC agrees:
1. To make Fed Funds available to the applicable Portfolio at 9:00
a.m., Kansas City time, on the second business day after deposit
of any check into an Account, in the amount of the check;
2. To make funds available immediately upon a deposit made by Federal
Reserve wire; and
3. To make funds available on the next business day after deposit of
ACH wires.
L. Income and Other Payments. IFTC will:
--------------------------
1. Collect, claim and receive and deposit for the account of the
applicable Portfolio all income (including income from the
Accounts) and other payments which become due and payable on or
after the effective date hereof with respect to the Assets, and
credit the account of such Portfolio
in
accordance with the schedule attached hereto as Exhibit A. If, for
any reason, a Portfolio is credited with income that is not
subsequently collected, IFTC may reverse that credited amount. If
monies are collected after such reversal, IFTC will credit the
Portfolio in that amount;
2. Execute ownership and other certificates and affidavits for all
federal, state and local tax purposes in connection with the
collection of bond and note coupons; and
3. Take such other action as may be necessary or proper in connection
with (a) the collection, receipt and deposit of such income and
other payments, including but not limited to the presentation for
payment of all coupons and other income items requiring
presentation; and all other Assets which may mature or be called,
redeemed, retired or otherwise become payable and regarding which
IFTC has actual knowledge, or should reasonably be expected to
have knowledge; and (b) the endorsement for collection, in the
name of Fund or a Portfolio, of all checks, drafts or other
negotiable instruments.
IFTC, however, will not be required to institute suit or take other
extraordinary action to enforce collection except upon receipt of
Instructions and upon being indemnified to its satisfaction against
the costs and expenses of such suit or other actions. IFTC will
receive, claim and collect all stock dividends, rights and other
similar items and will deal with the same pursuant to Instructions.
M. Proxies and Notices. IFTC will promptly deliver or mail or have
---------------------
delivered or mailed to Fund all proxies properly signed, all notices
of meetings, all proxy statements and other notices, requests or
announcements affecting or relating to Assets and will, upon receipt
of Instructions, execute and deliver or mail (or cause its nominee to
execute and deliver or mail) such proxies or other authorizations as
may be required. Except as provided herein or pursuant to
Instructions hereafter received by IFTC, neither it nor its nominee
will exercise any power inherent in any such Assets, including any
power to vote the
<PAGE>
same, or execute any proxy, power of attorney, or other similar
instrument voting any of such Assets, or give any consent, approval or
waiver with respect thereto, or take any other similar action.
N. Disbursements. IFTC will pay or cause to be paid, insofar as funds are
---------------
available for the purpose, bills, statements and other obligations of
each Portfolio (including but not limited to obligations in connection
with the conversion, exchange or surrender of Assets, interest
charges, dividend disbursements, taxes, management fees, custodian
fees, legal fees, auditors' fees, transfer agents' fees, brokerage
commissions, compensation to personnel, and other operating expenses
of such Portfolio) pursuant to Instructions setting forth the name of
the person to whom payment is to be made, and the amount and purpose
of the payment.
O. Daily Statement of Accounts. IFTC will render to Fund, as of the close
-----------------------------
of business on each day, a detailed statement of the amounts received
or paid and of Assets received or delivered for the account of each
Portfolio during each business day. IFTC will maintain such books and
records as are necessary to enable it to render, from time to time
upon request by Fund, a detailed statement of the Assets. IFTC will
permit, and upon Instruction will cause any Subcustodian to permit,
such persons as are authorized by Fund, including Fund's independent
public accountants, reasonable access to such records or will provide
reasonable confirmation of the contents of such records, and if
demanded, IFTC will permit, and will cause any Subcustodian to permit,
federal and state regulatory agencies to examine the Assets, books and
records of the Portfolio.
P. Appointment of Subcustodians. Notwithstanding any other provisions
-----------------------------
hereof:
1. All or any of the Assets may be held in IFTC's own custody or in
the custody of one or more other banks or trust companies
(including, without limitation, affiliates of IFTC) acting as
Subcustodians as may be selected by IFTC; provided that IFTC, to
the extent practicable, shall notify the Fund in writing of the
identity and qualifications of any proposed Subcustodian other
than an affiliate of IFTC at least 30 days prior to appointment of
such Subcustodian, and the Fund may, in its sole discretion, by
written notice to IFTC disapprove of the appointment of such
Subcustodian. If following notice by IFTC to the Fund regarding
appointment of a Subcustodian and the expiration of 30 days after
the date of such notice the Fund shall have failed to notify IFTC
of its disapproval thereof, IFTC may, in its discretion, appoint
such proposed Subcustodian as its subcustodian. Any such
Subcustodian selected by IFTC must have the qualifications
required for a custodian under the 1940 Act. Neither IFTC nor
Subcustodian will be entitled to reimbursement by Fund for any
fees or expenses of any Subcustodian. The appointment of a
Subcustodian will not relieve IFTC of any of its obligations under
this Agreement. IFTC will be responsible to the applicable
Portfolio for any loss, damage or expense suffered or incurred by
such Portfolio resulting from the actions or omissions of any
Subcustodians selected and appointed by IFTC (except Subcustodians
appointed at the request of Fund and as provided in Subsection 2
below) to the same extent IFTC would be responsible to Fund
hereunder if it committed the act or omission itself.
2. Upon request of Fund, IFTC will contract with other Subcustodians
reasonably acceptable to IFTC for purposes of (a) effecting third-
party repurchase transactions with banks, brokers, dealers, or
other entities through the use of a common custodian or
subcustodian, or (b) providing depository
and clearing agency services with respect to certain variable rate
demand note securities, or (c) for other reasonable purposes
specified by Fund; provided, however, that IFTC will be
responsible to Fund for any loss, damage or expense suffered or
incurred by Fund resulting from the actions or omissions of any
such Subcustodian only to the same extent such Subcustodian is
responsible to IFTC. Fund may review IFTC's contracts with such
Subcustodians.
<PAGE>
Q. Foreign Custody Manager.
------------------------
1. Delegation to IFIC as FCM. The Fund, pursuant to resolution
---------------------------
adopted by its Board of Trustees or Directors (the "Board"),
hereby delegates to IFTC, subject to Section (b) of Rule 17f-5,
the responsibilities set forth in this new Section with respect
to Foreign Assets held outside the United States, and IFTC hereby
accepts such delegation, as FCM of each Portfolio. It is
understood and agreed that IFTC will sub-contract the performance
of its responsibilities hereunder with State Street Bank & Trust
Company. IFTC will be responsible to the applicable Portfolio for
any loss, damage or expense suffered or incurred by such
Portfolio resulting from the actions or omissions of State Street
Bank & Trust Company to the same extent IFTC would be responsible
to Fund hereunder if it committed the act or omission itself.
References herein to "FCM" shall include IFTC and State Street
Bank & Trust Company.
2. Definitions. Capitalized terms in this Section have the following
-------------
meanings:
"Country Risk" means all factors reasonably related to the
systemic risk of holding Foreign Assets in a particular country
including, but not limited to, such country's political
environment; economic and financial infrastructure (including
financial institutions such as any Mandatory Securities
Depositories operating in the country); prevailing or developing
custody and settlement practices; and laws and regulations
applicable to the safekeeping and recovery of Foreign Assets held
in custody in that country.
"Eligible Foreign Custodian" has the meaning set forth in section
(a)(1) of Rule 17f-5, except that the term does not include
Mandatory Securities Depositories.
"Foreign Assets" means any of the Portfolios' investments
(including foreign currencies) for which the primary market is
outside the United States and such cash and cash equivalents in
amounts deemed by Fund to be reasonably necessary to effect the
Portfolios' transactions in such investments.
"Foreign Custody Manager" or "FCM" has the meaning set forth in
section (a)(2) of Rule 17f-5.
"Mandatory Securities Depository" means a foreign securities
depository or clearing agency that, either as a legal or
practical matter, must be used if the Fund determines to place
Foreign Assets in a country outside the United States (1) because
required by law or regulation; (ii) because securities cannot be
withdrawn from such foreign securities depository or clearing
agency; or (iii) because maintaining or effecting trades in
securities outside the foreign securities depository or clearing
agency is not consistent with prevailing or developing custodial
or market practices.
3. Countries Covered. The FCM is responsible for performing the
------------------
delegated responsibilities defined below only with respect to the
countries and custody arrangements for each such country listed
on Exhibit D to this Supplement, which may be amended from time
to time by the FCM. The FCM will list on Exhibit D the Eligible
Foreign Custodians selected by the FCM to maintain the assets of
each Portfolio. Mandatory Securities Depositories are listed on
Exhibit E to this Supplement, which Exhibit E may be amended from
time to time by the FCM. The FCM will provide amended versions of
Exhibits D and E in accordance with Section 7 of this section.
Upon the receipt by the FCM of Instructions to open an account,
or to place or maintain Foreign Assets, in a country listed on
Exhibit D, and the fulfillment by the Fund of the applicable
account opening requirements for such country, the FCM is deemed
to have been delegated by the Board responsibility as FCM with
respect to that country and to have accepted such delegation.
<PAGE>
Following the receipt of Instructions directing the FCM to close
the account of a Portfolio with the Eligible Foreign Custodian
selected by the FCM in a designated country, the delegation by
the Board to IFTC as FCM for that country is deemed to have been
withdrawn and IFTC will immediately cease to be the FCM of the
Portfolio with respect to that country.
The FCM may withdraw its acceptance of delegated responsibilities
with respect to a designated country upon written notice to the
Fund. Thirty days (or such longer period as to which the parties
agree in writing) after receipt of any such notice by the Fund,
IFTC will have no further responsibility as FCM to a Portfolio
with respect to the country as to which IFTC's acceptance of
delegation is withdrawn.
4. Scope of Delegated Responsibilities.
------------------------------------
a. Selection of Eligible Foreign Custodians. Subject to the
------------------------------------------
provisions of this Section, the FCM may place and maintain
the Foreign Assets in the care of the Eligible Foreign
Custodian selected by the FCM in each country listed on
Exhibit D, as amended from time to time.
In performing its delegated responsibilities as FCM to place
or maintain Foreign Assets with an Eligible Foreign
Custodian, the FCM will determine that the Foreign Assets
will be subject to reasonable care, based on the standards
applicable to custodians in the country in which the Foreign
Assets will be held by that Eligible Foreign Custodian,
after considering all factors relevant to the safekeeping of
such assets, including, without limitation, those set forth
in Rule 17f-5(c)(1)(1) through (iv).
b. Contracts With Eligible Foreign Custodians. The FCM will
--------------------------------------------
determine that the contract (or the rules or established
practices or procedures in the case of an Eligible Foreign
Custodian that is a foreign securities depository or
clearing agency) governing the foreign custody arrangements
with each Eligible Foreign Custodian selected by the FCM
will provide reasonable care for the Foreign Assets held by
that Eligible Foreign Custodian based on the standards
applicable to custodians in the particular country. Each
such contract will include the provisions set forth in Rule
17f-5(c)(2)(1)(A) through (F), or, in lieu of any or all of
the provisions set forth in said (A) through (F), such other
provisions that the FCM determines will provide, in their
entirety, the same or greater level of care and protection
for the Foreign Assets as the provisions set forth in said
(A) through (F) in their entirety.
c. Monitoring. In each case in which the FCM maintains Foreign
------------
Assets with an Eligible Foreign Custodian selected by the
FCM, the FCM will establish a system to monitor (a) the
appropriateness of maintaining the Foreign Assets with such
Eligible Foreign Custodian and (b) the contract governing
the custody arrangements established by the FCM with the
Eligible Foreign Custodian. In the event the FCM determines
that the custody arrangements with an Eligible Foreign
Custodian it has selected are no longer appropriate, the FCM
will notify the Board in accordance with Section 7 of this
section.
5. Guidelines for the Exercise of Delegated Authority. For purposes
----------------------------------------------------
of this Section, the Board will be solely responsible for
considering and determining to accept such Country Risk as is
incurred by placing and maintaining the Foreign Assets in each
country for which IFTC is serving as FCM of a
Portfolio, and the Board will be solely responsible for
monitoring on a continuing basis such Country Risk to the extent
that the Board considers necessary or appropriate. The Fund, on
<PAGE>
behalf of the Portfolios, and IFTC each expressly acknowledge
that the FCM will not be delegated any
responsibilities under this Section with respect to Mandatory
Securities Depositories.
6. Standard of Care as FCM of a Portfolio. In performing the
----------------------------------------
responsibilities delegated to it, the FCM agrees to exercise
reasonable care, prudence and diligence such as a person having
responsibility for the safekeeping of assets of management
investment companies registered under the 1940 Act would
exercise.
7. Reporting Requirements. The FCM will report the withdrawal of the
-----------------------
Foreign Assets from an Eligible Foreign Custodian and the
placement of such Foreign Assets with another Eligible Foreign
Custodian by providing to the Board amended Exhibits D and E at
the end of the calendar quarter in which an amendment to either
Schedule has occurred. The FCM will make written reports
notifying the Board of any other material change in the foreign
custody arrangements of a Portfolio described in this Section
after the occurrence of the material change.
8. Representations with Respect to Rule 17f-5. The FCM represents to
--------------------------------------------
the Fund that it is a U.S. Bank as defined in section (a)(7) of
Rule 17f-5.
The Fund represents to IFTC that the Board has determined that it
is reasonable for the Board to rely on IFTC and State Street Bank
& Trust Company to perform the responsibilities delegated
pursuant to this Contract to IFTC and State Street Bank & Trust
Company as the FCM of each Portfolio and that IFTC has been
granted the authority by Fund to delegate to State Street Bank &
Trust Company the FCM functions to which IFTC has been appointed
by Fund.
9. Effective Date and Termination of IFTC as FCM. The Board's
-----------------------------------------------
delegation to IFTC as FCM of a Portfolio will be effective as of
the date of execution of this Supplement and will remain in
effect until terminated at any time, without penalty, by written
notice from the terminating party to the nonterminating party.
Termination will become effective thirty days after receipt by
the non-terminating party of such notice. The provisions of
Section 3 of this Section govern the delegation to and
termination of IFTC as FCM of the Fund with respect to designated
countries.
R. Accounts and Records. IFTC will prepare and maintain, with the
----------------------
direction and as interpreted by Fund, Fund's or Portfolio's
accountants and/or other advisors, in complete, accurate and current
form all accounts and records: (1) required to be maintained by Fund
with respect to portfolio transactions under Section 3 1 (a) of the
1940 Act and the rules and regulations from time to time adopted
thereunder; (2) required to be maintained as a basis for calculation
of each Portfolio's net asset value; and (3) as otherwise agreed upon
by the parties. Fund will advise IFTC in writing of all applicable
record retention requirements, other than those set forth in the 1940
Act. IFTC will preserve such accounts and records in the manner and
for the periods prescribed in the 1940 Act or for such longer period
as is agreed upon by the parties. Fund will furnish, in writing or its
electronic or digital equivalent, accurate and timely information
needed by IFTC to complete such accounts and records, including
Corporate Actions, when such information is not readily available from
generally accepted securities industry services or publications.
S. Accounts and Records Property of Fund. IFTC acknowledges that all of
---------------------------------
the accounts and records maintained by IFTC pursuant hereto are the
property of Fund, and will be made available to Fund for inspection or
reproduction within a reasonable period of time, upon demand. IFTC
will assist Fund's independent auditors, or upon approval of Fund, or
upon demand, any regulatory body, in any requested review of Fund's
accounts and records but Fund will reimburse IFTC for all expenses and
employee time invested in any such review outside of routine and
nominal periodic reviews. Upon receipt from Fund of
<PAGE>
the necessary information or instructions, IFTC will supply
information from the books and records it maintains for Fund that Fund
needs for tax returns, questionnaires, periodic reports to
shareholders and such other reports and information requests as Fund
and IFTC agree upon from time to time. IFTC shall take all reasonable
action as Fund may request in order for the Fund to obtain from year
to year favorable opinions from the Fund's independent certified
public accountants with respect to IFTC's activities hereunder in
connection with the preparation of amendments to the Fund's
Registration Statement on Form N- 1 A, the Fund's annual and
semiannual reports to shareholders and the Fund's filings on Form N-
SAR or other periodic reports to SEC and with respect to any other
requirements of the SEC.
T. Adoption of Procedures. IFTC and Fund hereby adopt the Funds Transfer
------------------------
Operating Guidelines attached hereto as Exhibit B. IFTC and Fund may
from time to time adopt such additional procedures as they agree upon,
and IFTC may conclusively assume that no procedure approved or
directed by Fund, Fund's or Portfolio's accountants or other advisors
conflicts with or violates any requirements of the prospectus,
declaration of trust, any applicable law, rule or regulation, or any
order, decree or agreement by which Fund may be bound. Fund will be
responsible for notifying IFTC of any changes in statutes,
regulations, rules, requirements or policies which might necessitate
changes in IFTC's responsibilities or procedures.
U. Calculation of Net Asset Value. Fund will give Instructions to IFTC
--------------------------------
specifying the outside pricing sources to be utilized as sources of
Asset prices ("Pricing Sources"). In the event that Fund specifies
Reuters America, Inc., it will enter into the Agreement attached
hereto as Exhibit C. IFTC will calculate each Portfolio's net asset
value, in accordance with the Portfolio's prospectus. IFTC will price
the Assets, including foreign currency holdings, of each Portfolio for
which market quotations are available from the Pricing Sources; all
other Assets will be priced in accordance with Fund's Instructions.
V. Advances. Fund will pay on demand any advance of cash or securities
----------
made by IFTC or any Subcustodian, in its sole discretion, for any
purpose (including but not limited to securities settlements, purchase
or sale of foreign exchange or foreign exchange contracts and assumed
settlement) for the benefit of any Portfolio. Any such cash advance
will be subject to an overdraft charge at the rate set forth in the
then-current fee schedule from the date advanced until the date
repaid. As security for each such advance, Fund hereby grants IFTC and
such Subcustodian a lien on and security interest in all Assets at any
time held for the account of the applicable Portfolio, including
without limitation all Assets acquired with the amount advanced.
Should Fund fail to promptly repay the advance, IFTC and such
Subcustodian may utilize available cash and dispose of such
Portfolio's Assets pursuant to applicable law to the extent necessary
to obtain reimbursement of the amount advanced and any related
overdraft charges.
W. Exercise of Rights; Tender Offers. Upon receipt of Instructions, IFTC
-----------------------------------
will: (1) deliver warrants, puts, calls, rights or similar securities
to the issuer or trustee thereof, or to the agent of such issuer or
trustee, for the purpose of exercise or sale, provided that the new
Assets, if any, are to be delivered to IFTC; and (2) deposit
securities upon invitations for tenders thereof, provided that the
consideration for such securities is to be paid or delivered to IFTC
or the tendered securities are to be returned to IFTC.
X. Fund Shares.
------------
1. Fund will deliver to IFTC Instructions with respect to the
declaration and payment of any dividend or other distribution on
the shares of capital stock of a Portfolio ("Fund Shares") by a
Portfolio. On the date specified in such Instruction, IFTC will
pay out of the monies held for the account of the Portfolio,
insofar as it is available for such purposes, and credit to the
account of the Dividend Disbursing Agent for the Portfolio, the
amount specified in such Instructions.
2. Whenever Fund Shares are repurchased or redeemed by a Portfolio,
Portfolio or its agent will give IFTC Instructions regarding the
aggregate dollar amount to be paid for such shares. Upon
<PAGE>
receipt of such Instruction, IFTC will charge such aggregate
dollar amount to the account of the Portfolio and either deposit
the same in the account maintained for the purpose of paying for
the repurchase or redemption of Fund Shares or deliver the same in
accordance with such Instruction. IFTC has no duty or
responsibility to determine that Fund Shares have been removed
from the proper shareholder accounts or that the proper number of
Fund Shares have been canceled and removed from the shareholder
records.
3. Whenever Fund Shares are purchased from Fund, Fund will deposit or
cause to be deposited with IFTC the amount received for such
shares. IFTC has no duty or responsibility to determine that Fund
Shares purchased from Fund have been added to the proper
shareholder account or that the proper number of such shares have
been added to the shareholder records.
4. INSTRUCTIONS.
-------------
A. The term "Instructions", as used herein, means written (including
telecopied, telexed, or electronically transmitted) or oral
instructions which IFTC reasonably believes were given by a designated
representative of Fund. Fund will deliver to IFTC, prior to delivery
of any Assets to IFTC and thereafter from time to time as changes
therein are necessary, written Instructions naming one or more
designated representatives to give Instructions in the name and on
behalf of Fund, which Instructions may be received and accepted by
IFTC as conclusive evidence of the authority of any designated
representative to act for Fund and may be considered to be in full
force and effect until receipt by IFTC of notice to the contrary.
Unless such written Instructions delegating authority to any person to
give Instructions specifically limit such authority to specific
matters or require that the approval of anyone else will first have
been obtained, IFTC will be under no obligation to inquire into the
right of such person, acting alone, to give any Instructions
whatsoever. If Fund fails to provide IFTC any such Instructions naming
designated representatives, any Instructions received by IFTC from a
person reasonably believed to be an appropriate representative of Fund
will constitute valid and proper Instructions hereunder. "Designated
representatives" may include Fund's or a Portfolio's employees and
agents, including investment, managers and their employees.
B. No later than the next business day immediately following each oral
Instruction, Fund will send IFTC written confirmation of such oral
Instruction. At IFTC's sole discretion, IFTC may record on tape, or
otherwise, any oral Instruction whether given in person or via
telephone, each such recording identifying the date and the time of
the beginning and ending of such oral Instruction.
C. Fund will provide, upon IFTC's request, a certificate signed by an
officer or designated representative of Fund, as conclusive proof of
any fact or matter required to be ascertained from Fund hereunder.
Fund will also provide IFTC Instructions with respect to any matter
concerning this Agreement requested by IFTC. If IFTC reasonably
believes that it could not prudently act according to the
Instructions, or the instruction or advice of Fund's or a Portfolio's
accountants or counsel, it may in its discretion, with notice to Fund,
not act according to such Instructions.
5. LIMITATION OF LIABILITY OF IFTC. IFTC shall hold harmless and indemnify
---------------------------------
Fund from and against any loss or liability arising out of IFTC's failure
to comply with the terms of this Agreement or arising out of IFTC's
negligence, willful misconduct, or bad faith. Upon the occurrence of any
event which causes or may cause any losses to Fund, IFTC shall, and shall
cause any applicable Subcustodian to use all commercially reasonable
efforts and take all reasonable steps under the circumstances to mitigate
the effects of such event and to avoid continuing harm to Fund.
In addition to the liability of IFTC under this Section 5, IFTC shall be
liable to Fund for all reasonable costs and expenses incurred by Fund in
connection with any claim by Fund against IFTC arising from the obligations
of
<PAGE>
IFTC hereunder including, without limitation, all reasonable attorneys'
fees and expenses incurred by Fund in asserting any such claim, and all
reasonable expenses incurred by Fund in connection with any investigations,
lawsuits or proceedings relating to such claim, provided that Fund has
recovered from IFTC for such claim.
IFTC is not responsible or liable for, and Fund will indemnify and hold
IFTC harmless from and against, any and all costs, expenses, losses,
damages, charges, counsel fees, payments and liabilities which may be
asserted against or incurred by IFTC or for which IFTC may be held to be
liable, arising out of or attributable to:
A. IFTC's action or omission to act pursuant to the terms of this
Agreement; provided that IFTC has acted in good faith and with due
diligence and reasonable care; and provided further, that IFTC is not
liable for consequential, special, or punitive damages in any event.
B. IFTC's payment of money as requested by Fund, or the taking of any
action which might make it or its nominee liable for payment of monies
or in any other way; provided, however, that nothing herein obligates
IFTC to take any such action or expend its own monies in its, sole
discretion.
C. IFTC's action or omission to act hereunder upon any Instructions,
advice, notice, request, consent, certificate or other instrument or
paper appearing to it to be genuine and to have been properly
executed, including any Instructions, communications, data or other
information received by IFTC by means of the Systems, as hereinafter
defined, or any electronic system of communication.
D. IFTC's action or omission to act in good faith reliance on the advice
or opinion of counsel for Fund or of its own counsel with respect to
questions or matters of law, which advice or opinion may be obtained
by IFTC from counsel for Fund at the expense of Fund or from IFTC's
counsel at its own expense, or on the Instructions, advice or
statements of any officer or employee of Fund, or Fund's accountants
or other authorized individuals, and other persons believed by it in
good faith to be expert in matters upon which they are consulted.
E. The purchase or sale of any securities or foreign currency positions.
Without limiting the generality of the foregoing, IFTC is under no
duty or obligation to inquire into:
1. The validity of the issue of any securities purchased by or for
any Portfolio, or the legality of the purchase thereof or of
foreign currency positions, or evidence of ownership required by
Fund to be received by IFTC, or the propriety of the decision to
purchase or the amount paid therefor;
2. The legality of the sale of any securities or foreign currency
positions by or for any Portfolio, or the propriety of the amount
for which the same are sold; or
3. The legality of the issue or sale of any Fund Shares, or the
sufficiency of the amount to be received therefore, the legality
of the repurchase or redemption of any Fund Shares, or the
propriety of the amount to be paid therefor, or the legality of
the declaration of any dividend by Fund, or the legality of the
issue of any Fund Shares in payment of any stock dividend.
F. Any error, omission, inaccuracy or other deficiency in any Portfolio's
accounts and records or other information provided by or on behalf of
a Portfolio to IFTC, including the accuracy of the prices quoted by
the Pricing Sources or for the information supplied by Fund to price
the Assets, or the failure of Fund to provide, or provide in a timely
manner, any accounts, records, or information needed by IFTC to
perform hereunder.
G. Fund's refusal or failure to comply with the terms hereof (including
without limitation Fund's failure to pay or reimburse IFTC under
Section 5 hereof), Fund's negligence or willful misconduct, or the
failure of
<PAGE>
any representation or warranty of Fund hereunder to be and remain true
and correct in all respects at all times.
H. The use or misuse, whether authorized or unauthorized, of the Systems
or any electronic system of communication used hereunder, by Fund or
by any person who acquires access to the Systems or such other systems
through the terminal device, passwords, access instructions or other
means of access to such Systems or such other system which are
utilized by, assigned to or otherwise made available to Fund,
except to the extent attributable to any negligence or willful
misconduct by IFTC.
I. Except as otherwise provided in this Agreement, any money represented
by any check, draft, wire transfer, clearinghouse funds, uncollected
funds, or instrument for the payment of money to be received by IFTC
on behalf of a Portfolio until actually received; provided, however,
that IFTC will advise Fund promptly if it fails to receive any such
money in the ordinary course of business and will cooperate with Fund
toward the end that such money is received.
J. Except as provided in Section 3.P hereof, loss occasioned by the acts,
neglects, defaults or insolvency of any broker, bank, trust company,
or any other person with whom IFTC may deal.
K. The failure or delay in performance of its obligations hereunder, or
those of any entity for which it is responsible hereunder, arising out
of or caused, directly or indirectly, by circumstances beyond the
affected entity's reasonable control, including, without limitation:
any interruption, loss or malfunction of any utility, transportation,
computer (hardware or software) or communication service; inability to
obtain labor, material, equipment or transportation, or a delay in
mails; governmental or exchange action, statute, ordinance, rulings,
regulations or direction; war, strike, riot, emergency, civil
disturbance, terrorism, vandalism, explosions, labor disputes,
freezes, floods, fires, tornadoes, acts of God or public enemy,
revolutions, or insurrection.
6. COMPENSATION. In consideration for its services hereunder, Fund will pay to
--------------
IFTC the compensation set forth in a separate fee schedule, incorporated
herein by this reference, to be agreed to by Fund and IFTC from time to
time, and reimbursement for IFTC's cash disbursements and reasonable out-
of-pocket costs and expenses, including attorney's fees deemed necessary in
IFTC's judgment to keep safe or protect Assets of the Fund, incurred by
IFTC in connection with the performance of services hereunder, on demand.
IFTC may charge such compensation against monies held by it for the account
of the Portfolios. IFTC will also be entitled to charge against any monies
held by it for the account of the Portfolios the amount of any loss,
damage, liability, advance, overdraft or expense for which it is entitled
to reimbursement from Fund, including but not limited to fees and expenses
due to IFTC for other services provided to Fund by IFTC. IFTC will be
entitled to reimbursement by Fund for the losses, damages, liabilities,
advances, overdrafts and expenses of Subcustodians only to the extent that
(a) IFTC would have been entitled to reimbursement hereunder if it had
incurred the same itself directly, and (b) IFTC is obligated to reimburse
the Subcustodian therefore.
7. SUBROGATION. Notwithstanding anything to the contrary contained herein,
-------------
Fund shall have, at its election upon reasonable notice to IFTC, the right
to enforce, to the extent permitted by any applicable agreement and
applicable law, IFTC's rights against any Subcustodian, Depository or other
person for losses caused Fund by such Subcustodian, Depository or other
person, and shall be entitled to enforce the rights of IFTC with respect to
any claim against such Subcustodian, Depository or other person which IFTC
may have as a consequence of any such losses, if and to the extent that
Fund has not been made whole for such losses. If IFTC makes Fund whole for
such losses, IFTC shall retain the ability to enforce its rights directly
against such Subcustodian, Depository or other person. Upon Fund's election
to enforce any rights of IFTC under this Section 7, Fund shall reasonably
prosecute all actions and proceedings directly relating to the rights of
IFTC in respect of the losses incurred by Fund; provided that, so long as
Fund has acknowledged in writing its obligation to indemnify IFTC under
Section
<PAGE>
5 hereof with respect to such claim, Fund shall retain the right to settle,
compromise and/or terminate any action or proceeding in respect of the
losses incurred by Fund without IFTC's consent and provided further that if
Fund has not made an acknowledgment of its obligation to indemnify IFTC,
Fund shall not settle, compromise or terminate any such action or
proceeding without the written consent of IFTC, which consent shall not be
unreasonably withheld or delayed. IFTC agrees to cooperate with Fund and
take all actions reasonably requested by Fund in connection with Fund's
enforcement of any rights of IFTC. Fund agrees to reimburse IFTC for all
reasonable out-of-pocket expenses incurred by IFTC in connection with the
fulfillment of its obligations under this Section 7, provided that such
reimbursement shall not apply to expenses occasioned by or resulting from
the negligence, misfeasance or misconduct of IFTC.
8. TERM AND TERMINATION. The initial term of this Agreement is for a period of
----------------------
one (1) year. Thereafter, Fund or IFTC may terminate the same by notice in
writing, delivered or mailed, postage prepaid, to the other party and
received not less than ninety (90) days prior to the date upon which such
termination will take effect. Upon termination hereof:
A. Fund will pay IFTC its fees and compensation due hereunder and its
reimbursable disbursements, costs and expenses paid or incurred to
such date upon receipt by Fund of a statement setting forth such
disbursements, costs and expenses;
B. Fund will designate a successor investment accounting and
recordkeeping agent (which may be Fund) by Instruction to IFTC;
C. Fund will designate a successor custodian by Instruction to IFTC. In
the event no such Instruction has been delivered to IFTC on or before
the date when such termination becomes effective, then IFTC may, at
its option, (i) choose as successor custodian a bank or trust company
meeting the qualifications for custodian set forth in the 1940 Act and
having not less than Two Million Dollars ($2,000,000) aggregate
capital, surplus and undivided profits, as shown by its last published
report, or (ii) apply to a court of competent jurisdiction for the
appointment of a successor or other proper relief, or take any other
lawful action under the circumstances; provided, however, that Fund
will reimburse IFTC for its costs and expenses, including reasonable
attorney's fees, incurred in connection therewith; and
D. IFTC will, upon payment of all sums due to IFTC from Fund hereunder or
otherwise, deliver at IFTC's office (i) all accounts and records to
the successor investment accounting and recordkeeping agent or, if
none, to Fund; and (ii) all Assets, duly endorsed and in form for
transfer, to the successor custodian, or as specified by the court.
IFTC will cooperate in effecting changes in book-entries at all
Depositories. Upon proper delivery to a successor or as specified by
the court, IFTC will have no further obligations or liabilities
hereunder. Thereafter such successor will be the successor hereunder
and will be entitled to reasonable compensation for its services.
In the event that accounts, records or Assets remain in the possession of
IFTC after the date of termination hereof for any reason other than IFTC's
failure to deliver the same, IFTC is entitled to compensation as provided
in the then-current fee schedule for its services during such period, and
the provisions hereof relating to the duties and obligations of IFTC will
remain in full force and effect.
9. NOTICES. Notices, requests, instructions and other writings addressed to
---------
Fund at the address set forth above, or at such other address as Fund may
have designated to IFTC in writing, will be deemed to have been properly
given to Fund hereunder. Notices, requests, Instructions and other writings
addressed to IFTC at the address set forth above, Attention: Custody
Department, or to such other address as it may have designated to Fund in
writing, will be deemed to have been properly given to IFTC hereunder.
10. THE SYSTEMS; CONFIDENTIALITY.
-----------------------------
<PAGE>
A. If IFTC provides Fund direct access to the computerized investment
portfolio custody, recordkeeping and accounting systems used by IFTC
("Systems") or if IFTC and Fund agree to utilize any electronic system
of communication, Fund agrees to implement and enforce appropriate
security policies and procedures to prevent unauthorized or improper
access to or use of the Systems or such other system.
B. Fund will preserve the confidentiality of the Systems and the tapes,
books, reference manuals, instructions, records, programs,
documentation and Information of, and other materials relevant to,
the Systems and the business of IFTC ("Confidential Information").
Fund agrees that it will not voluntarily disclose any such
Confidential Information to any other person other than its own
employees who reasonably have a need to know such information pursuant
hereto. Fund will return all such Confidential Information to IFTC
upon termination or expiration hereof.
C. Fund has been informed that the Systems are licensed for use by IFTC
from one or more third parties ("Licensors"), and Fund acknowledges
that IFTC and Licensors have proprietary rights in and to the Systems
and all other IFTC or Licensor programs, code, techniques, know-how,
data bases, supporting documentation, data formats, and procedures,
including without limitation any changes or modifications made at the
request or expense or both of Fund (collectively, the "Protected
Information"). Fund acknowledges that the Protected Information
constitutes confidential material and trade secrets of IFTC and
Licensors. Fund will preserve the confidentiality of the Protected
Information, and Fund hereby acknowledges that any unauthorized use,
misuse, disclosure or taking of Protected Information, residing or
existing internal or external to a computer, computer system, or
computer network, or the knowing and unauthorized accessing or causing
to be accessed of any computer, computer system, or computer network,
may be subject to civil liabilities and criminal penalties under
applicable law. Fund will so inform employees and agents who have
access to the Protected Information or to any computer equipment
capable of accessing the same. Licensors are intended to be and are
third party beneficiaries of Fund's obligations and undertakings
contained in this Section.
D. Fund hereby represents and warrants to IFTC that it has determined to
its satisfaction that the Systems are appropriate and suitable for its
use. THE SYSTEMS ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. IFTC
EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED
HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
11. MULTIPLE PORTFOLIOS. If Fund is comprised of more than one Portfolio:
---------------------
A. Each Portfolio will be regarded for all purposes hereunder as a
separate party apart from each other Portfolio. Unless the context
otherwise requires, with respect to every transaction covered hereby,
every reference herein to Fund is deemed to relate solely to the
particular Portfolio to which such transaction relates. Under no
circumstances will the rights, obligations or remedies with respect to
a particular Portfolio constitute a right, obligation or remedy
applicable to any other Portfolio. The use of this single document to
memorialize the separate agreement of each Portfolio is understood to
be for clerical convenience only and will not constitute any basis for
joining the Portfolios for any reason.
B. Fund may appoint IFTC as its custodian and investment accounting and
recordkeeping agent for additional Portfolios from time to time by
written notice, provided that IFTC consents to such addition. Rates or
charges for each additional Portfolio will be as agreed upon by IFTC
and Fund in writing.
12. MISCELLANEOUS.
--------------
<PAGE>
A. This Agreement will be construed according to, and the rights and
liabilities of the parties hereto will be governed by, the laws of The
Commonwealth of Massachusetts without reference to the choice of laws
principles thereof.
B. All terms and provisions hereof will be binding upon, inure to the
benefit of and be enforceable by the parties hereto and their
respective successors and permitted assigns.
C. The representations and warranties, the indemnifications extended
hereunder, and the provisions of Section 10 hereof are intended to and
will continue after and survive the expiration, termination or
cancellation hereof.
D. No provisions hereof may be amended or modified in any manner except
by a written agreement properly authorized and executed by each party
hereto.
E. The failure of either party to insist upon the performance of any
terms or conditions hereof or to enforce any rights resulting from any
breach of any of the terms or conditions hereof, including the payment
of damages, will not be construed as a continuing or permanent waiver
of any such terms, conditions, rights or privileges, but the same will
continue and remain in full force and effect as if no such forbearance
or waiver had occurred. No waiver, release or discharge of any party's
rights hereunder will be effective unless contained in a written
instrument signed by the party sought to be charged.
F. The captions herein are included for convenience of reference only,
and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
G. This Agreement may be executed in two or more counterparts, each of
which is deemed an original but all of which together constitute one
and the same instrument.
H. If any provision hereof is determined to be invalid, illegal, in
conflict with any law or otherwise unenforceable, the remaining
provisions hereof will be considered severable and will not be
affected thereby, and every remaining provision hereof will remain in
full force and effect and will remain enforceable to the fullest
extent permitted by applicable law.
I. This Agreement shall be binding on and shall inure to the benefit of
Fund and IFTC and their respective successors and assigns, provided
that neither party hereto may assign this Agreement or any of its
rights hereunder without the prior written consent of the other party.
J. Neither the execution nor performance hereof will be deemed to create
a partnership or joint venture by and between IFTC and Fund or any
Portfolio.
K. Except as specifically provided herein, this Agreement does not in any
way affect any other agreements entered into among the parties hereto
and any actions taken or omitted by either party hereunder will not
affect any rights or obligations of the other party hereunder.
L. Notice is hereby given that a copy of Fund's Trust Agreement and all
amendments thereto is on file with the Secretary of State of the state
of its organization; that this Agreement has been executed on behalf
of Fund by the undersigned duly authorized representative of Fund in
his/her capacity as such and not individually; and that the
obligations of this Agreement are binding only upon the assets and
property of Fund and not upon any trustee, officer of shareholder of
Fund individually.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers.
<PAGE>
INVESTORS FIDUCIARY TRUST QUANTITATIVE GROUP OF FUNDS
COMPANY
By: By:
Title: Title:
<PAGE>
EXHIBIT A -- INCOME AVAILABILITY SCHEDULE
Foreign -- Income will be credited contractually on pay day in the markets noted
with Contractual Income Policy. The markets noted with Actual income policy will
be credited income when it is received.
<TABLE>
<CAPTION>
Market Income Policy Market Income Policy Market Income Policy
=================================================================================================================
<S> <C> <C> <C> <C> <C>
Argentina Actual Hong Kong Contractual Poland Actual
- -----------------------------------------------------------------------------------------------------------------
Australia Contractual Hungary Actual Portugal Contractual
- -----------------------------------------------------------------------------------------------------------------
Austria Contractual India Actual Russia Actual
- -----------------------------------------------------------------------------------------------------------------
Bahrain Actual Indonesia Actual Singapore Contractual
- -----------------------------------------------------------------------------------------------------------------
Bangladesh Actual Ireland Actual Slovak Republic Actual
- -----------------------------------------------------------------------------------------------------------------
Belgium Contractual Israel Actual South Africa Actual
- -----------------------------------------------------------------------------------------------------------------
Bermuda Actual Italy Contractual South Korea Actual
- -----------------------------------------------------------------------------------------------------------------
* Bolivia Actual Ivory Coast Actual Spain Contractual
- -----------------------------------------------------------------------------------------------------------------
Botswana Actual * Jamaica Actual Sri Lanka Actual
- -----------------------------------------------------------------------------------------------------------------
Brazil Actual Japan Contractual Swaziland Actual
- -----------------------------------------------------------------------------------------------------------------
Canada Contractual Jordan Actual Sweden Contractual
- -----------------------------------------------------------------------------------------------------------------
Chile Actual Kenya Actual Switzerland Contractual
- -----------------------------------------------------------------------------------------------------------------
China Actual Lebanon Actual Taiwan Actual
- -----------------------------------------------------------------------------------------------------------------
Colombia Actual Luxembourg Actual Thailand Actual
- -----------------------------------------------------------------------------------------------------------------
Cyprus Actual Malaysia Actual * Trinidad & Tobago Actual
- -----------------------------------------------------------------------------------------------------------------
Czech Republic Actual Mauritius Actual * Tunisia Actual
- -----------------------------------------------------------------------------------------------------------------
Denmark Contractual Mexico Actual Turkey Actual
- -----------------------------------------------------------------------------------------------------------------
Ecuador Actual Morocco Actual United Kingdom Contractual
- -----------------------------------------------------------------------------------------------------------------
Egypt Actual Namibia Actual United States See Attached
- -----------------------------------------------------------------------------------------------------------------
** Euroclear Contractual/ Actual Netherlands Contractual Uruguay Actual
- -----------------------------------------------------------------------------------------------------------------
Euro CDS Actual New Zealand Contractual Venezuela Actual
- -----------------------------------------------------------------------------------------------------------------
Finland Contractual Norway Contractual Zambia Actual
- -----------------------------------------------------------------------------------------------------------------
France Contractual Oman Actual Zimbabwe Actual
- -----------------------------------------------------------------------------------------------------------------
Germany Contractual Pakistan Actual
- -----------------------------------------------------------------------------------------------------------------
Ghana Actual Peru Actual
- -----------------------------------------------------------------------------------------------------------------
Greece Actual Philippines Actual
=================================================================================================================
</TABLE>
* Market is not 17F-5 eligible
** For EuroClear, contractual income paid only in markets listed with
Income Policy of Contractual.
<PAGE>
United States
<TABLE>
<CAPTION>
Income Type DTC FED PTC Physical
====================================================================================
<S> <C> <C> <C> <C>
Dividends Contractual N/A N/A Actual
- ------------------------------------------------------------------------------------
Fixed Rate Interest Contractual Contractual N/A Actual
- ------------------------------------------------------------------------------------
Variable Rate Interest Contractual Contractual N/A Actual
- ------------------------------------------------------------------------------------
GNMA I N/A N/A Contractual PD +1 N/A
- ------------------------------------------------------------------------------------
GNMA II N/A N/A Contractual PD *** N/A
- ------------------------------------------------------------------------------------
Mortgages Actual Contractual Contractual Actual
- ------------------------------------------------------------------------------------
Maturities Actual Contractual N/A Actual
====================================================================================
</TABLE>
Exceptions to the above Contractual Income Policy include securities that are:
. Involved in a trade whose settlement either States); failed, or is pending
over the record date (excluding the United States);
. On loan under a self directed securities lending program other than IFTC's
own vendor lending program
. Known to be in a condition of default, or suspected to present a risk of
default or payment delay;
. In the asset categories, without limitation, of Private Placements,
Derivatives, Options, Futures, CMOs, and Zero Coupon Bonds.
. Securities whose amount of income and redemption cannot be calculated in
advance of payable date, or determined in advance of actual collection,
examples include ADRs;
. Payments received as the result of a corporate action, not limited to, bond
calls, and tender offers.
*** For GNMA 11 securities, if the 19th day of the month is a business day,
Payable/Distribution Date is the next business day. If the 19th is not a
business day, but the 20th is a business day, Payable/Distribution date is the
first business day after the 20th. If both the 19th and 20th are not business
days, Payable/Distribution will be the next business day thereafter.
<PAGE>
EXHIBIT B -- FUNDS TRANSFER OPERATING GUIDELINES
1. OBLIGATION OF THE SENDER: IFTC is authorized to promptly debit Fund's
("Client's") account(s) upon the receipt of a payment order in compliance with
any of the Security Procedures chosen by the Client, from those offered on the
attached selection form (and any updated selection forms hereafter executed by
the Client), for funds transfers and in the amount of money that IFTC has been
instructed to transfer. IFTC is hereby instructed to accept funds transfer
instructions only via the delivery methods and Security Procedures indicated on
the attached selection form (and any updated executed by the Client). The Client
agrees that the Security Procedures are reasonable and adequate for its wire
transfer transactions and agrees to be bound by any payment orders, amendments
and cancellations, whether or not authorized, issued in its name and accepted by
IFTC after being confirmed by any of the selected Security Procedures. The
Client also agrees to be bound by any other valid and authorized payment order
accepted by IFTC. IFTC shall execute payment orders in compliance with the
selected Security Procedures and with the Client's/Investment Manager's
instructions on the execution date provided that such payment order is received
by the customary deadline for processing such a request, unless the payment
order specifies a later time. IFTC will use reasonable efforts to execute on the
execution date payment orders received after the customary deadline, but if it
is unable to execute any such payment order on the execution date, such payment
order will be deemed to have been received on the next business day.
2. SECURITY PROCEDURES: The Client acknowledges that the selected Security
Procedures were selected by the Client from Security Procedures offered by IFTC.
The Client shall restrict access to confidential information relating to the
Security Procedures to authorized persons as communicated in writing to IFTC.
The Client must notify IFTC immediately if it has reason to believe unauthorized
persons may have obtained access to such information or of any change in the
Client's authorized personnel. IFTC shall verify the authenticity of all
instructions according to the selected Security Procedures.
3. ACCOUNT NUMBERS: IFTC shall process all payment orders on the basis of the
account number contained in the payment order. In the event of a discrepancy
between any name indicated on the payment order and the account number, the
account number shall take precedence and govern. Financial institutions that
receive payment orders initiated by IFTC at the instruction of the Client may
also process payment orders on the basis of account numbers, regardless of any
name included in the payment order. IFTC will also rely on any financial
institution identification numbers included in any payment order, regardless of
any financial institution name included in the payment order.
4. REJECTION: IFTC reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected balance in
the account to be charged at the time of IFTC's receipt of such payment order;
(b) if initiating such payment order would cause IFTC, in IFTC's sole judgment,
to exceed any applicable volume, aggregate dollar, network, time, credit or
similar limits upon wire transfers; or (c) if IFTC, in good faith, is unable to
satisfy itself that the transaction has been properly authorized.
5. CANCELLATION OR AMENDMENT: IFTC shall use reasonable efforts to act on all
authorized requests to cancel or amend payment orders received in compliance
with the selected Security Procedures provided that such requests are received
in sufficient time to afford IFTC a reasonable opportunity to act prior to
executing the payment order. However, IFTC assumes no liability if the request
for amendment or cancellation cannot be satisfied by IFTC's reasonable efforts.
6. ERRORS: IFTC shall assume no responsibility for failure to detect any
erroneous payment order provided that IFTC complies with the payment order
instructions as received and IFTC complies with the selected Security
Procedures. The Security Procedures are established for the purpose of
authenticating payment orders only and not for the detection of errors in
payment orders.
7. INTEREST AND LIABILITY LIMITS: IFTC shall assume no responsibility for lost
interest with respect to the refundable amount of any unauthorized payment
order, unless IFTC is notified of the unauthorized payment order within thirty
(30) days of notification by IFTC of the acceptance of such payment order. In no
event (including but not limited to
<PAGE>
failure to execute a payment order) shall IFTC be liable for special, indirect
or consequential damages, even if advised of the possibility of such damages.
8. AUTOMATED CLEARING HOUSE ("ACH") CREDIT ENTRIES/PROVISIONAL PAYMENTS: When
the Client initiates or receives ACH credit and debit entries pursuant to these
Guidelines and the rules of the National Automated Clearing House Association
and the MidAmerica Payment Exchange or other similar body, IFTC or its agent
will act as an Originating Depository Financial Institution and/or Receiving
Depository Financial Institution, as the case may be, with respect to such
entries. Credits given with respect to an ACH credit entry are provisional until
final settlement for such entry is received from the Federal Reserve Bank. If
such final settlement is not received, the Client agrees to promptly refund the
amount credited to the Client in connection with such entry, and the party
making payment to the Client via entry shall not be such deemed to have paid the
amount of the entry.
9. CONFIRMATIONS: Confirmation of IFTC's execution of payment orders shall
ordinarily be provided within 24 hours. Notice may be delivered through IFTC's
account statements, advices, information systems, or by facsimile or callback.
The Client must report any objections to the execution of a payment order within
30 days.
10. MISCELLANEOUS: IFTC may use the Federal Reserve System Fedwire to execute
payment orders, and any payment order carried in whole or in part through
Fedwire will be subject to applicable Federal Reserve Board rules and
regulations. IFTC and the Client agree to cooperate to attempt to recover any
funds erroneously paid to wrong parties, regardless of any fault of IFTC or the
Client, but the party responsible for the erroneous payment shall bear all costs
and expenses incurred in trying to effect such recovery. These Guidelines may
not be amended except by a written agreement signed by the parties.
<PAGE>
SECURITY PROCEDURES SELECTION FORM
Please select one or more of the funds transfer security procedures indicated
below.
[_] SWIFT SWIFT (Society for Worldwide Interbank Financial Telecommunication)
is a cooperative society owned and operated by member financial
institutions that provides telecommunication services for its membership.
Participation is limited to securities brokers and dealers, clearing and
depository institutions, recognized exchanges for securities, and
investment management institutions. SWIFT provides a number of security
features through encryption and authentication to protect against
unauthorized access, loss or wrong delivery of messages, transmission
errors, loss of confidentiality and fraudulent changes to messages.
Selection of this security procedure would be most appropriate for existing
SWIFT members.
[_] REMOTE BATCH TRANSMISSION Wire transfer instructions are delivered via
Computer-to-Computer (CPU-CPU) data communications between the Client
and/or its agent and IFTC and/or its agent. Security procedures include
encryption and/or the use of a test key by those individuals authorized as
Automated Batch Verifiers or a callback procedure to those individuals.
Clients selecting this option should have an existing facility for
completing CP U-CP U transmissions. This delivery mechanism is typically
used for highvolume business such as shareholder redemptions and dividend
payments.
[X] TELEPHONE CONFIRMATION (CALL BACK) This procedure requires Clients to
designate individuals as authorized initiators and authorized verifiers.
IFTC will verifythat the instruction contains the signature of an
authorized person and prior to execution ofthe payment order, will contact
someone other than the originator at the Client's location to authenticate
the instruction. Selection of this alternative is appropriate for Clients
who do not have the capability to use other security procedures.
[_] TEST KEY Test Key confirmation will be used to verify all non-repetitive
funds transfer instructions received via facsimile or phone. IFTC will
provide test keys if this option is chosen. IFTC will verify that the
instruction contains the signature of an authorized person and prior to
execution of the payment order, will authenticate the test key provided
with the corresponding test key at IFTC. Selection of this alternative is
appropriate for Clients who do not have the capability to use other
security procedures.
[X] REPETITIVE WIRES For situations where funds are transferred periodically
from an existing authorized account to the same payee (destination bank and
account number) and only the date and currency amount are variable, a
repetitive wire may be implemented. Repetitive wires will be subject to a
$10 million limit. If the payment order exceeds the $10 million limit, the
instruction will be confirmed by telephone or test key prior to
execution. Repetitive wire instructions must be reconfirmed annually.
Clients may establish Repetitive Wires by following the agreed upon
security procedures as described by Telephone Confirmation (Call Back) or
Test Key. This alternative is recommended whenever funds are frequently
transferred between the same two accounts.
[_] STANDING INSTRUCTIONS Funds are transferred by IFTC to a counter party on
the Client's established list of authorized counter parties. Only the date
and the dollar amount are variable. Clients may establish Standby
Instructions by following the agreed upon security procedures as described
by Telephone Confirmation (Call Back) or Test Key. This option is used for
transactions that include but are not limited to Foreign Exchange
Contracts, Time Deposits and Tri-Party Repurchase Agreements.
<PAGE>
[_] AUTOMATED CLEARING HOUSE (ACH) IFTC or its agent receives an automated
transmission from a Client for the initiation of payment (credit) or
collection (debit) transactions through the ACH network. The transactions
contained on each transmission or tape must be authenticated by the Client.
The transmission is sent from the Client's or its agent's system to IFTC's
or its agent's system with encryption.
KEY CONTACT INFO
Whom shall we contact to implement your selection(s)?
CLIENT OPERATIONS CONTACT ALTERNATE CONTACT
Mariella Harrington Joan Coco (1) Sheila Bennett (2)
- ------------------- --------------------------------
Name Name
Lincoln North Lincoln North
55 Old Bedford Road 55 Old Bedford Road
- ------------------- -------------------
Address Address
Lincoln, MA 01773 Lincoln, MA 01773
- ----------------- -----------------
City/State/Zip Code City/State/Zip Code
(781) 259 - 1144 (781) 259 - 1144
- ---------------- ----------------
Telephone Number Telephone Number
(781) 259 - 1166
- ----------------
Facsimile Number
___________________
SWIFT Number
QUANTITATIVE GROUP OF FUNDS
By:
Title:
Date:
<PAGE>
EXHIBIT C--REUTERS DATA SERVICE AGREEMENT
The undersigned acknowledges and agrees that some of the data being provided in
the service by IFTC to Fund contains information supplied to IFTC by Reuters
America Inc. ("Reuters") (the "Data"). Fund agrees that:
(i) although Reuters makes every effort to ensure the accuracy and
reliability of the Data, Fund acknowledges that Reuters, its
employees, agents, contractors, subcontractors, contributors and
third party providers will not be liable for any loss, cost or
damage suffered or incurred by Fund arising out of any fault,
interruption or delays in the Data or out of any inaccuracies,
errors or omissions in the Data however such faults, interruptions,
delays, inaccuracies, errors or omissions arise, unless due to the
gross negligence or willful misconduct of Reuters;
(ii) it will not transfer, transmit, recirculate by digital or analogue
means, republish or resell all or part of the Data; and
(iii) certain parts of the Data are proprietary and unique to Reuters.
The undersigned further agrees that the benefit of this clause will inure to the
benefit of Reuters.
QUANTITATIVE GROUP OF FUNDS
By:
Title:
Date:
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT D
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND OPTIONAL DEPOSITORIES
Country Subcustodian Optional Depositories
<S> <C>
Argentina Citibank, N.A. <C>
Australia Westpac Banking Corporation
Austria GiroCredit Bank Aktiengesellschaft der Sparkassen
Bahrain The British Bank of the Middle East (as delegate of the
Hongkong and Shanghai Banking Corporation Limited)
Bangladesh Standard Chartered Bank
Belgium Generale Bank
Bermuda The Bank of Bermuda Limited
Bolivia Banco Boliviano Americano
Botswana Barclays Bank of Botswana Limited
Brazil Citibank, N.A.
Canada Canada Trustco Mortgage Company
Chile Citibank, N.A.
People's The Hongkong and Shanghai Banking Corporation
Republic of Limited Shanghai and Shenzhen branches
China
Colombia Cititrust Colombia S.A.Sociedad Fiduciaria
Croatia Privredana banka Zagreb d.d
Cyprus Barclays Bank PLC Cyprus Offshore Banking Unit
Czech Ceskoslovenska, Obchodni Banka A.S.
Republic
Denmark Den Danske Bank
Ecuador Citibank, N.A.
Egypt National Bank of Egypt
Estonia Hansabank
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT D
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND OPTIONAL DEPOSITORIES
Country Subcustodian Optional Depositories
<S> <C> <C>
Finland Merita Bank Limited
France Banque Paribas
Germany Dresdner Bank AG
Ghana Barclays Bank of Ghana Limited
Greece National Bank of Greece S.A. Bank of Greece
Hong Kong Standard Chartered Bank
Hungary Citibank Budapest Rt.
India Deutsche Bank AG; The Hongkong and Shanghai
Banking Corporation Limited
Indonesia Standard Chartered Bank
Ireland Bank of Ireland
Israel Bank Hapoalim B.M.
Italy Banque Paribas
Ivory Coast Societe Generale de Banques en Cote d'Ivoire
Jamaica Scotiabank Trust and Merchant Bank
Jordan The Daiwa Bank, Limited; The Fuji Bank Limited Japan Securities Depository
The Sumitomo Trust & Banking Co., Ltd.
Kenya Barclays Bank of Kenya Limited
Republic of Korea Citibank, N.A.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT D
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND OPTIONAL DEPOSITORIES
Country Subcustodian Optional Depositories
<S> <C> <C>
Lebanon The British Bank of the Middle East Custodian and Clearing Center of
(as delegate of the Hongkong and Financial Instruments for Lebanon
Shanghai Banking Corporation Limited) (MIDCLEAR) S.A.L.;
Malaysia Standard Chartered Bank Malaysia Berhad
Mauritius The Hongkong and Shanghai Banking
Corporation Limited
Mexico Citibank Mexico, S.A.
Morocco Banque Commerciale du Maroc
Namibia (via) Standard Bank of South Africa
Netherlands MeesPierson N.V.
New Zealand ANZ Banking Group (New Zealand) Limited
Norway Christiania Bank og Kreditkasse
Oman The British Bank of the Middle East (as delegate of the
Hongkong and Shanghai Banking Corporation Limited)
Pakistan Deutsche Bank AG
Peru Citibank, N.A.
Philippines Standard Chartered Bank
Poland Citibank Poland S.A.
Portugal Banco Comercial Portugues
Romania ING Bank, N.V.
Russia Credit Suisse First Boston, Zurich via Credit
Suisse First Boston Limited, Moscow
Singapore The Development Bank of Singapore Ltd.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT D
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND OPTIONAL DEPOSITORIES
Country Subcustodian Optional Depositories
<S> <C> <C>
Slovak Ceskoslovenska. Obchodn6Banka A.S.
Republic
South Africa Standard Bank of South Africa Limited
Spain Banco Santander, S.A
SriLanka The Hongkong and Shanghai Banking
Corporation Limited
Swaziland Barclays Bank of Swaziland Limited
Sweden Skandinaviska, Enskilda Banken
Switzerland Union Bank of Switzerland
Taiwan R.O.C. Central Trust of China
Thailand Standard Chartered Bank
Trinidad Republic Bank Ltd.
& Tobago
Tunisia Banque Internationale Arabe de Tunisie
Turkey Citibank, N.A.
United State Street Bank and Trust
Kingdom
Uruguay Citibank, N.A.
Venezuela Citibank, N.A.
Zambia Barclays Bank of Zambia Limited
Zimbabwe Barclays Bank of Zimbabwe Limited
Euroclear (The Euroclear System)
Cedel (Cedel Bank, societe anonyme)
INTERSETTLE (for EASDAQ Securities)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT E
STATE STREET GLOBAL CUSTODY NETWORK MANDATORY DEPOSITORIES
<S> <C>
Country Mandatory Depositories (Includes entities for which use is
mandatory as a matter of law or effectively mandatory as a
matter of market practice)
Argentina -Caja de Valores S.A.;
-CRYL
Australia -Austraclear Limited;
-Reserve Bank Information and Transfer System
Austria -Oesterreichische Kontrollbank AG (Wertpapiersammelbank Division)
Belgium -Caisse Interprofessionnelle de Depots et de Virements de Titres S.A.;
-Banque Nationale de Belgique
Brazil -Bolsa de Valores de Sao Paulo;
-Balsa de Valores de Rio de Janeiro
-All SSB clients presently use Calispa
-Central de Custodia e de Liquidagdo Financeira de Titulos
-Banco Central do Brasil, systema Especial de Liquidacao e Custodia
Canada -The Canadian Depository for Securities Limited; West Canada
Depository Trust Company [depositories linked]
People's Republic -Shanghai Securities Central Clearing and Registration Corporation;
of China -Shenzhen Securities Central Clearing Co., Ltd.
Croatia Ministry of Finance
Czech Republic -Stredisko cennych papiru;
-Czech National Bank
Denmark -Vaerdipapircentralen - The Danish Securities Center
Egypt -Misr Company for Clearing, Settlement, and Central Depository
Estonia -Eesti Vaartpaberite Keskdepositooruim
Finland -The Finnish Central Securities Depository
France -Societe Interprofessionnelle pour la Compensation des Valeurs Mobilieres;
-Banque de France, Saturate System
Germany -The Deutscher Kassenverein AG
Greece -The Central Securities Depository (Apothetirion Titlon A.E.);
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT E
STATE STREET GLOBAL CUSTODY NETWORK MANDATORY DEPOSITORIES
<S> <C>
Country Mandatory Depositories (Includes entities for which use is mandatory as a matter of
law or effectively mandatory as a matter of market practice)
Hong Kong -The Central Clearing and Settlement System;
-The Central Money Markets Unit
Hungary -The Central Depository and Clearing House (Budapest) Ltd.
[Mandatory for Gov't Bonds only; SSB does not use for other securities]
Indonesia -Bank of Indonesia
Ireland -The Central Bank of Ireland, The Gilt Settlement Office
Israel -The Clearing House of the Tel Aviv Stock Exchange;
-Bank of Israel
Italy -Monte Titoli S.p.A.;
-Banca d'Italia
Japan -Bank of Japan Net System
Republic of Korea -Korea Securities Depository
Lebanon -The Central Bank of Lebanon
Malaysia -Malaysian Central Depository Sdn. Bhd.;
-Bank Negara Malaysia, Scripless Securities Trading and Safekeeping Systems
Mauritius -The Central Depository & Settlement System
Mexico -S.D. INDEVAL, S.A. de C.V. (Instituto para el Deposito de valorem)
Netherlands -Nederlands Centraal Instituut voor Giraal Effectenverkeer B.V. ("NECIGEF")
[* * It is planned that as of 111198 NBNV will no longer hold
government securities, all securities will be transferred to NECIGEF];
-De Nederlandsche Bank N.V. ("NBNV")**
New Zealand -New Zealand Central Securities Depository Limited
Norway - Verdipapirsentralen - The Norwegian Registry of Securities
Oman -Muscat Securities Market
Peru -Caja de Valores y Liquidaciones (CAVALI, S.A.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT E
STATE STREET GLOBAL CUSTODY NETWORK MANDATORY DEPOSITORIES
<S> <C>
Country Mandatory Depositories (Includes entities for which use is mandatory as a matter of
law or effectively mandatory as a matter of market practice)
Philippines -The Philippines Central Depository Inc.;
-The Book-Entry-System of Bangko Sentral ng Pilipinas;
-The Registry of Scripless Securities of the Bureau of the Treasury
Poland -The National Depository of Securities (Krajowy Depozyt Papier6w Wartos~ciowych);
-National Bank of Poland
Portugal -Central de Valores Mobilidrios
Romania -National Securities Clearing, Settlement and Depository Co.;
-Bucharest Stock Exchange;
-National Bank of Romania
Singapore -The Central Depository (Pte)Limited; -Monetary Authority of Singapore
Slovak Republic -Stredisko Cennych Papierov;
-National Bank of Slovakia
South Africa -The Central Depository Limited
Spain -Servicio de Compensacion y Liquidacion de valorem, S.A.;
-Banco de Emporia, Anotaciones en Cuenta
SriLanka -Central Depository System (Pvt) Limited
Sweden -Vardepapperscentralen VPC AB - The Swedish Central Securities Depository
Switzerland -Schweizerische Effekten - Giro AG;
Taiwan - R.O.C. -The Taiwan Securities Central Depository Company, Ltd.
Thailand -Thailand Securities Depository Company Limited
Tunisia -STICODEVAM;
-Central Bank of Tunisia;
-Junisian Treasury
Turkey -Takas ve Saklama Bankasi A.S.;
-Central Bank of Turkey
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT E
STATE STREET GLOBAL CUSTODY NETWORK MANDATORY DEPOSITORIES
<S> <C>
Country Mandatory Depositories (Includes entities for which use is mandatory as a matter of
law or effectively mandatory as a matter of market practice)
United Kingdom -The Bank of England, The Central Gilts Office; The Central Money markets
Office; The European Settlements Office;
-First Chicago Clearing Centre
Uruguay -Central Bank of Uruguay
Zambia -Lusaka Central Depository
</TABLE>
<PAGE>
INVESTORS FIDUCIARY TRUST COMPANY
FEE SCHEDULE
QUANTITATIVE GROUP OF FUNDS
I. INVESTMENT ACCOUNTING
A. Monthly Base Fee Per Portfolio
------------------------------
$500 (not included in minimum monthly asset fee discussed in I.B. below.)
B. Minimum Monthly Fee
-------------------
There is a monthly minimum fee of $2,000 per fund/portfolio. The monthly
minimum fee per portfolio does not apply to any portfolio if the asset
based fee discussed in I C. below produces greater revenue than the
aggregate minimum.
C. Asset Based Fee on a Total Relationship Basis
---------------------------------------------
3/100 of 1% (3 basis points) on the first $400 million in assets
2/100 of 1% (2 basis points) on the next $200 million in assets
1/100 of 1% (1 basis point) on all assets in excess of $600 million in
assets
D. Monthly Base Fee Per Additional Class
-------------------------------------
$ 400 (not included in minimum monthly fee discussed in LB)
E. Navigator Automated Pricing
---------------------------
Monthly Base Charge Waived
Monthly Quote Charge:
Municipal Bonds via Kenny/S & P or Muller Data $16.00
Corporate, Municipal, Convertible, Government Bonds
and Adjustable Rate Preferred Stocks Via IDSI $13.00
Government, Corporate Bonds via Kenny/S & P or Muller $11.00
Government, Corporate and Convertible Bonds via Merrill Lynch $11.00
Foreign Bonds via Extel $10.00
Options, Futures and Private Placements $ 8.00
Listed Equities (including International) and OTC Equities $ 8.00
<PAGE>
Quantitative Funds
Fee Schedule (Continued)
NOTES:
1. For billing purposes, the monthly quote charge will be based on the average
number of positions in the portfolio at month end.
2. Quantitative will not be charged a monthly pricing fee on US Equities.
II. SECURITY CUSTODY
A. Domestic Securities
-------------------
Asset-Based Fee on a total relationship basis:
0.5/100 of 1% (0.5 basis point) on all assets
B. Transaction Fee, per transaction:
---------------------------------
Physical Settlements - $20.00
DTC or Fed Book Entry - $8.00
Participant Trust Company (PTC) Eligible - $10.00
PTC Asset-backed Security Paydown - $10.00
Other Asset-backed Security Paydown - $10.00
Federal Funds Wire Received or Delivered - $5.50
C. Foreign Securities
------------------
See appendix I for Global Agreement.
D. Balance Credits
---------------
IFTC will offset fees with balance credits calculated at 75% of the
90 day T-Bill rate in effect the last business day of each month will
be applied to the average custody collected cash balances for the
month. Balance credits can be used to offset fees. Any credits in
excess of fees will be carried forward from month to month through the
end of the calendar year. Any excess credit remaining at year-end will
not be carried forward. For calculation purposes, IFTC uses an
actual/actual basis.
III. NOTES TO THE ABOVE, FEE SCHEDULE
A. Asset based fees will be billed monthly at 1/12th of the annual stated
rate based on monthly average net assets. Annual maintenance fees are
payable monthly at 1/12th of the annual stated rate.
<PAGE>
Quantitative Funds
Fee Schedule (Continued)
B. The above schedule does not include out-of-pocket expenses that would
be incurred by IFTC on the client's behalf. Examples of out-of-pocket
expenses include but are not limited to microfiche, disaster recovery,
pricing and research services, overnight mailing services, foreign
registration and script fees, etc. IFTC bills out-of-pocket expenses
separately from service fees.
C. The fees stated above are exclusive of terminal equipment required in
the client's location(s) and communication line costs.
D. Any fees or out-of-pocket expenses not paid within 30 days of the date
of the original invoice will be charged a late payment fee of 1% per
month until payment of the fees are received by IFTC.
E. The above fee schedule is applicable for selections made and
communicated within 90 days of the date of this proposal. The fees are
guaranteed for a one-year period commencing on the effective date of
the service agreement between IFTC and the client. All changes to the
fee schedule will be communicated in writing at least 60 days prior to
their effective date.
F. Overdrafts will be calculated at the monthly average Prime rate (as
published in the Wall Street Journal) and charged on the monthly
----------------------
average overdraft balance.
--------------------------
_________________________________ ___________________________________
Investors Fiduciary Trust Company Quantitative Group of Funds
Date Date
<PAGE>
Appendix I
Quantitative Fund
Global Custody Fees
1. Country Based Charges:
----------------------
<TABLE>
<CAPTION>
Market Asset Charge Transaction Charge Market Asset Charge Transaction Charge
=================================================================================================
<S> <C> <C> <C> <C> <C>
Argentina 35 $125 Malaysia 10 $ 30
- -------------------------------------------------------------------------------------------------
Australia 8 $ 30 Mauritius 40 $125
- -------------------------------------------------------------------------------------------------
Austria 8 $ 30 Mexico 8 $ 30
- -------------------------------------------------------------------------------------------------
Bangladesh 40 $125 Morocco 30 $125
- -------------------------------------------------------------------------------------------------
Belgium 8 $ 30 Namibia 40 $ 30
- -------------------------------------------------------------------------------------------------
Belize 75 $125 Netherlands 8 $ 30
- -------------------------------------------------------------------------------------------------
Botswana 35 $125 New Zealand 8 $ 30
- -------------------------------------------------------------------------------------------------
Brazil 30 $ 75 Norway 8 $ 30
- -------------------------------------------------------------------------------------------------
Canada 5 $ 30 Pakistan 40 $125
- -------------------------------------------------------------------------------------------------
Euroclear 5 $ 30 Peru 40 $125
- -------------------------------------------------------------------------------------------------
Chile 40 $125 Philippines 15 $ 75
- -------------------------------------------------------------------------------------------------
Colombia 45 $125 Poland 40 $125
- -------------------------------------------------------------------------------------------------
Czech Republic 30 $125 Portugal 10 $ 75
- -------------------------------------------------------------------------------------------------
Denmark 8 $ 30 Shanghai (China) 35 $125
- -------------------------------------------------------------------------------------------------
Egypt 100 $125 Shenzhen (China) 35 $125
- -------------------------------------------------------------------------------------------------
ECU* 5 $ 45 Singapore 10 $ 30
- -------------------------------------------------------------------------------------------------
Finland 8 $ 30 South Africa 8 $ 30
- -------------------------------------------------------------------------------------------------
France 6 $ 30 South Korea 25 $ 75
- -------------------------------------------------------------------------------------------------
Germany 6 $ 30 Spain 10 $ 30
- -------------------------------------------------------------------------------------------------
Ghana 40 $125 Sri Lanka 25 $125
- -------------------------------------------------------------------------------------------------
Greece 30 $125 Swaziland 40 $125
- -------------------------------------------------------------------------------------------------
Hong Kong 10 $ 30 Sweden 8 $ 30
- -------------------------------------------------------------------------------------------------
Hungary 40 $125 Switzerland 6 $ 30
- -------------------------------------------------------------------------------------------------
India 45 $125 Taiwan 30 $125
- -------------------------------------------------------------------------------------------------
Indonesia 15 $100 Thailand 10 $ 30
- -------------------------------------------------------------------------------------------------
Ireland 8 $ 30 Turkey 30 $125
- -------------------------------------------------------------------------------------------------
Israel 35 $ 75 United Kingdom 6 $ 30
- -------------------------------------------------------------------------------------------------
Italy 8 $ 30 Uruguay 45 $125
- -------------------------------------------------------------------------------------------------
Japan 6 $ 30 Venezuela 40 $125
- -------------------------------------------------------------------------------------------------
Jordan 45 $125 Zimbabwe 35 $125
- -------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Any country not listed above will be negotiated at time of investment.
Out of Pocket Expenses: As incurred (e.g. stamp taxes, registration costs,
script fees, special transportation costs, etc.).
* ECU = European Currency Unit.
<PAGE>
Exhibit 21
FIRST AMENDMENT
TO CUSTODY AND INVESTMENT ACCOUNTING AGREEMENT
THIS FIRST AMENDMENT TO CUSTODY AND INVESTMENT ACCOUNTING AGREEMENT (the
"Amendment") is made and entered into as of March 1, 1998 by and among
QUANTITATIVE GROUP OF FUNDS ("Client"), a Massachusetts business trust, and
INVESTORS FIDUCIARY TRUST COMPANY, a Missouri trust company ("IFTC").
WITNESSETH:
WHEREAS, Client and IFTC are parties to that certain Custody and Investment
Accounting Agreement dated as of January 19, 1998 (the "Agreement"); and
WHEREAS, Client and IFTC desire to amend and supplement the Agreement upon
the following terms and conditions.
NOW THEREFORE, for and in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Client and IFTC hereby agree that the Agreement
is amended and supplemented as follows:
1. The Security Procedures Selection Form attached to the Agreement shall be
replaced in its entirety by the Security Procedures Selection Form dated
March 1, 1998 attached hereto and incorporated herein by this reference.
2. General Provisions. This Amendment is made in the State of Missouri, and
will at all times and in all respects be construed, interpreted, and
governed by the laws of the State of Missouri, without giving effect to the
conflict of laws provisions thereof. This Amendment may be executed in any
number of counterparts, each constituting an original and all considered
one and the same agreement. This Amendment is intended to modify and amend
the Agreement and the terms of this Amendment and the Agreement are to be
construed to be cumulative and not exclusive of each other. Except as
provided herein, the Agreement is hereby ratified and confirmed and remains
in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their duly authorized officers to be effective as of the date first above
written.
INVESTORS FIDUCIARY TRUST COMPANY
By:
Stephen R. Hilliard, Executive Vice President
QUANTITATIVE GROUP OF FUNDS
By:
<PAGE>
SECURITY PROCEDURES SELECTION FORM
March 1, 1998
Please select one or more of the funds transfer security procedures indicated
below.
[_] SWIFT SWIFT (Society for Worldwide Interbank Financial Telecommunication)
is a cooperative society owned and operated by member financial
institutions that provides telecommunication services for its membership.
Participation is limited to securities brokers and dealers, clearing and
depository institutions, recognized exchanges for securities, and
investment management institutions. SWIFT provides a number of security
features through encryption and authentication to protect against
unauthorized access, loss or wrong delivery of messages, transmission
errors, loss of confidentiality and fraudulent changes to messages.
Selection of this security procedure would be most appropriate for existing
SWIFT members.
[_] REMOTE BATCH TRANSMISSION Wire transfer instructions are delivered via
Computer-to-Computer (CPU-CPU) data communications between the Client
and/or its agent and IFTC and/or its agent. Security procedures include
encryption and/or the use of a test key by those individuals authorized as
Automated Batch Verifiers or a callback procedure to those individuals.
Clients selecting this option should have an existing facility for
completing CPU-CPU transmissions. This delivery mechanism is typically used
for highvolume business such as shareholder redemptions and dividend
payments.
[X] TELEPHONE CONFIRMATION (CALL BACK) This procedure requires Clients to
designate individuals as authorized initiators and authorized verifiers.
IFTC will verify that the instruction contains the signature of an
authorized person and prior to execution of the payment order, will contact
someone other than the originator at the Client's location to authenticate
the instruction. Selection of this alternative is appropriate for Clients
who do not have the capability to use other security procedures.
[_] TEST KEY Test Key confirmation will be used to verify all non-repetitive
funds transfer instructions received via facsimile or phone. IFTC will
provide test keys if this option is chosen. IFTC will verify that the
instruction contains the signature of an authorized person and prior to
execution of the payment order, will authenticate the test key provided
with the corresponding test key at IFTC. Selection of this alternative is
appropriate for Clients who do not have the capability to use other
security procedures.
[X] REPETITIVE WIRES For situations where funds are transferred periodically
from an existing authorized account to the same payee (destination bank and
account number) and only the date and currency amount are variable, a
repetitive wire may be implemented. Repetitive wires will be subject to a
$10 million limit. If the payment order exceeds the $10 million limit, the
instruction will be confirmed by telephone or test key prior to execution.
Repetitive wire instructions must be reconfirmed annually. Clients may
establish Repetitive Wires by following the agreed upon security procedures
as described by Telephone Confirmation (Call Back) or Test Key. This
alternative is recommended whenever funds are frequently transferred
between the same two accounts.
<PAGE>
[_] STANDING INSTRUCTIONS Funds are transferred by IFTC to a counter party on
the Client's established list of authorized counter parties. Only the date
and the dollar amount are variable. Clients may establish Standby
Instructions by following the agreed upon security procedures as described
by Telephone Confirmation (Call Back) or Test Key. This option is used for
transactions that include but are not limited to Foreign Exchange
Contracts, Time Deposits and Tri-Parly Repurchase Agreements.
[_] AUTOMATED CLEARING HOUSE (ACH) IFTC or its agent receives an automated
transmission from a Client for the initiation of payment (credit) or
collection (debit) transactions through the ACH network. The transactions
contained on each transmission or tape must be authenticated by the Client.
The transmission is sent from the Client's or its agent's system to IFTC's
or its agent's system with encryption.
KEY CONTACT INFORMATION
Whom shall we contact to implement your selection(s)?
CLIENT OPERATIONS CONTACT
Mariella Harrington
- -------------------
Name
Lincoln North
55 Old Bedford Road
- -------------------
Address
Lincoln MA 01773
- ----------------
City/State/Zip Code
(781) 259 - 1144
- ----------------
Telephone Number
(781) 259 - 1166
- ----------------
Facsimile Number
________________
SWIFT Number
ALTERNATE CONTACT
Joan Coco (1) Sheila Bennett (2)
- --------------------------------
Name
Lincoln North
55 Old Bedford Road
- -------------------
Address
Lincoln MA 01773
- ----------------
City/State/Zip Code
(781) 259 - 1144
- ----------------
Telephone Number
<PAGE>
Schedule A
17f-5 Approval
The Board of Directors/Trustees of Quantitative Group of Funds - Quantitative
Foreign Frontier Fund has approved certain foreign Banking institutions and
foreign securities depositories within State Street's Global Custody Network for
use as subcustodians for the Fund's securities, cash and cash equivalents held
outside of the United States.
Board approval is as indicated by the Fund's Authorized Officer:
<TABLE>
<CAPTION>
Fund officer
Initials Country Subcustodian Central Depository
<S> <C> <C> <C>
________ State Street's entire Global Custody Network listed below
________ Argentina Citibank, N.A. Caja de Valores S.A.
________ Australia Westpac Banking Corporation Austraclear Limited;
Reserve Bank Information and
Transfer System (RITS)
________ Austria GiroCredit Bank Aktiengesellschaft Oesterreichischc Kontrollbank AG
der Sparkassen (Weripapiersammelbank Division)
________ Bahrain The British Bank of the Middle Fast None
(as delegate of the Hongkong and
Shan" Banking Corporation Limited)
________ Bangladesh Standard Chartered Bank None
________ Belgium Generale Bank Caisse Interprofessionnelle de
Depots et de Virements de Titres,
S.A. (CIK);
Banque Nationale de Belgique
________ Bermuda The Bank of Bermuda Limited None
________ Botswana Barclays Bank of Botswana Limited None
________ Brazil Citibank, N.A. Bolsa de Valores de Sao Paulo
(Bovespa);
Banco Central de Brasil, Systema
Especial de Liquidacao e Custodi
(SELIC)
________ Canada Canada tTrusteo Mortgage Company Canadian Depositor for
Securities Limited (CDS)
________ Chile Citibank, N.A. None
</TABLE>
<PAGE>
Schedule A: 17f.5 Approval
Page 2
<TABLE>
<CAPTION>
Fund officer
Initials Country Subcustodian Central Depository
<S> <C> <C> <C>
_________ People's Republic The Hongkong and Shanghai Shanghai Securities Central Clearing and
of China Banking Corporations Limited Registration Corporation (SSCCRC);
Shanghai and Shenzhen branches
Shenzhen Securities Central Clearing Co., Ltd.
(SSCC)
_________ Colombia Cititrust Colombia SAL None
SociedaidFiduciaria
_________ Cyprus Barclays Bank PLC None
Cyprus Offshore Banking Unit
_________ Czech Republic Ceskoslovenska Obchodni Stredisko cennych papiru (SCP);
Banka A.S.
Czech National Bank (CNB)
_________ Denmark Den Danske Bank Vaardipapircentralen - The Danish
Securities Center (VP)
_________ Ecuador Citibank N.A. None
_________ Egypt National Bank of Egypt Misr Company for Clearing, Settlement,
and Central Depository (MCSD)
________ Finland Merita Bank Limited The Finnish Central Securities
Depository (CSD)
_________ France Banque Paribas Societe Interprofessionnelle
pour la Compensation des
Valeurs Mobilieres (SICOVAM);
Banque de France
Saturne System
________ Germany Dresdner Bank AG The Deutscher Kassenverein AG
________ Ghana Barclays Rank of Ghana Limited None
________ Greece National Bank of Greece S.A. The Central Securities Depository
(Apothetirion Titlon A.E.);
Bank of Greece
</TABLE>
<PAGE>
Schedule A- 17f-S Approval Page 3
<TABLE>
<CAPTION>
Fund officer
Initials Country Subcustodian Central Depository
<S> <C> <C> <C>
_______ Hong Kong Standard Chartered Bank The Central Clearing and Settlement
System (CCASS);
The Central Money Markets Unit (CMU)
_______ Hungary Citibanbk Budapest Rt. The Central Depository and Clearing
House(Budapest) Ltd. (KELER Ltd.)
_______ India Deutsche Bank AG None
The Hong Kong and Shanghai None
Banking Corporation Limited
_______ Indonesia Standard Chartered Bank None
_______ Ireland Bank of Ireland None;
The Central Bank of Ireland,
The Gift Settlement Office (GSO)
_______ Israel Bank Hapoalim B.M. The Clearing House of the
Tel Aviv Stock Exchange;
Bank of Israel
_______ Italy Banque Paribas Monre Titoli S.p.A.
Banca d'Italia.
_______ Ivory Coast Societe Generale de Banques None
en Cote D'Ivoire
_______ Japan The Daiwa Bank, Limited Japan Securities Depository
Center IASDEC
Bank of Japan Net System
The Fuji Bank, Limited Japan Securities Depository
Center IASDEC
Bank of Japan Net
The Sumitomo Trust Japan Securities Depository
& Banking Co., La Center JASDEC
Bank of Japan Net System
</TABLE>
<PAGE>
Schedule A: 17f.5 Approval
Page 2
<TABLE>
<CAPTION>
Fund officer
Initials Country Subcustodian Central Depository
<S> <C> <C> <C>
_________ People's Republic The Hongkong and Shanghai Shanghai Securities Central Clearing and
of China Banking Corporations Limited Registration Corporation (SSCCRC);
Shanghai and Shenzhen branches
Shenzhen Securities Central Clearing Co., Ltd.
(SSCC)
_________ Colombia Cititrust Colombia SAL None
SociedaidFiduciaria
_________ Cyprus Barclays Bank PLC None
Cyprus Offshore Banking Unit
_________ Czech Republic Ceskoslovenska Obchodni Stredisko cennych papiru (SCP);
Banka A.S.
Czech National Bank (CNB)
_________ Denmark Den Danske Bank Vaardipapircentralen - The Danish
Securities Center (VP)
_________ Ecuador Citibank N.A. None
_________ Egypt National Bank of Egypt Misr Company for Clearing, Settlement,
and Central Depository (MCSD)
________ Finland Merita Bank Limited The Finnish Central Securities
Depository (CSD)
_________ France Banque Paribas Societe Interprofessionnelle
pour la Compensation des
Valeurs Mobilieres (SICOVAM);
Banque de France
Saturne System
________ Germany Dresdner Bank AG The Deutscher Kassenverein AG
________ Ghana Barclays Rank of Ghana Limited None
________ Greece National Bank of Greece S.A. The Central Securities Depository
(Apothetirion Titlon A.E.);
Bank of Greece
</TABLE>
<PAGE>
Schedule A- 17f-S Approval Page 3
<TABLE>
<CAPTION>
Fund officer
Initials Country Subcustodian Central Depository
<S> <C> <C> <C>
_______ Hong Kong Standard Chartered Bank The Central Clearing and Settlement
System (CCASS);
The Central Money Markets Unit (CMU)
_______ Hungary Citibanbk Budapest Rt. The Central Depository and Clearing
House(Budapest) Ltd. (KELER Ltd.)
_______ India Deutsche Bank AG None
The Hong Kong and Shanghai None
Banking Corporation Limited
_______ Indonesia Standard Chartered Bank None
_______ Ireland Bank of Ireland None;
The Central Bank of Ireland,
The Gift Settlement Office (GSO)
_______ Israel Bank Hapoalim B.M. The Clearing House of the
Tel Aviv Stock Exchange;
Bank of Israel
_______ Italy Banque Paribas Monre Titoli S.p.A.
Banca d'Italia.
_______ Ivory Coast Societe Generale de Banques None
en Cote D'Ivoire
_______ Japan The Daiwa Bank, Limited Japan Securities Depository
Center IASDEC
Bank of Japan Net System
The Fuji Bank, Limited Japan Securities Depository
Center IASDEC
Bank of Japan Net
The Sumitomo Trust Japan Securities Depository
& Banking Co., La Center JASDEC
Bank of Japan Net System
</TABLE>
<PAGE>
Schedule A- 17f-S Approval Page 3
<TABLE>
<CAPTION>
Fund officer
Initials Country Subcustodian Central Depository
<S> <C> <C> <C>
________ Jordan The British Bank of the Middle East None
(as Delegate of The HongKong and
Shanghai Banking Corporation Limited)
________ Kenya Barclays Bank of Kenya Limited None
________ Republic of Korea SEOULBANK Korea Securities Depository (KSD)
________ Lebanon The British Bank of the Middle East Custodian and Clearing Center of
(as delegate of the Hongkong and Financial Instruments for Lebanon
Shanghai Banking Corporation Ltd (midclear) S.A.L
The Central Bank of Lebanon
________ Malaysia Standard Chartered Bank Malaysia Central Depository
Malaysia Berhad Sdn Bhd (MCD);
Bank Negara Malaysia,
Scripless Securities Trading and
Safekeeping Systems (SSTS)
________ Mauritius The Hongkong and Shanghai The Central Depository &
Settlement Banking Corporation
Limited System (CDS)
________ Mexico Citibank Mexico, SA. S.D. INDEVAL, S.A.
(Instituto para el Deposito de
Valores)
________ Morocco Banque Commerciale de Maroc None
________ Netherlands MeesPierson N.V. Netherlands Centraal Instituut voor
Giraal Effectenverkeer B.V.
(NECIGEF);
De Nederlandsche Bank N.V.
________ New Zealand ANZ Banking Group New Zealand Central Securities
(New Zealand Limited) Depository Limited (NZCSD)
________ Norway Christiania Bank og Verdipapirscritralea - The
Norwegian Registry of Securities
(VPS)
</TABLE>
<PAGE>
Schedule A- 17f-S Approval Page 3
<TABLE>
<CAPTION>
Fund officer
Initials Country Subcustodian Central Depository
<S> <C> <C> <C>
________ Oman The British Bank of the Middle Muscat Securities Market (MSM)
East (as delegate of the Hongkong and
Shanghai Backing Corporaiton Limited)
________ Pakistan Deutsche Bank AG None
________ Peru Citibank, N.A. Caja do Valores y Liquidacioncs
(CAVALI S.A.)
________ Philippines Standard Chartered Bank The Philippines Central
Depository Inc. (PCD);
The Book-Entry-System (BES) of
Bangko Sentral ng Pilipinas The
Registry of Scripless Securities
(ROSS) of the Bureau of Treasury
________ Poland Citibank Poland S.A. The National Depository of
Securities (Kralowy
Depozyt Papier6w
Wartosciowych);
National Bank of Poland
_________ Portugal Banco Comercial Portugues Central de Valores Mobilidrios
(Central)
__________ Romania ING Bank, N.V. National Securities Clearing,
Settlement and Depository Company
(SNCDD)
__________ Russia Credit Suisse First Boston, Zurich None
via Credit Suisse First Boston
Limited, Moscow
_________ Singapore The Development Bank The Central Depository (Pte)
of Singapore Ltd. Limited (CDP)
_________ Slovak Republic Ceskoslovenska Obchodna Stredisko Cennych Papierov
Banka A.S. (SCP);
_________ South Africa Standard Bank of South Africa Limited The Central Depository Limited
</TABLE>
<PAGE>
Schedule A- 17f-S Approval Page 3
<TABLE>
<CAPTION>
Fund officer
Initials Country Subcustodian Central Depository
<S> <C> <C> <C>
________ Spain Banco Santander, S.A Servicio de Compensacion y
Liquidacion de Valores, S.A.
(SCLV);
Banco de Espana
Anotaciones en Cuenta
________ Sri Lanka The Hongkong and Shanghai Central Depository System
Banking Corporation Limited (Pvt) Limited
________ Swaziland Barclays Bank of Swaziland Limited None
________ Sweden Skandinavikka Enskilda, Banken Vardcpappscentralen VPC, AB -
The Swedish Central Securities
Depository
________ Switzerland Union Bank of Switzerland Schweizerische Effekten Giro
AG (SEGA);
INTERSETTLE
________ Taiwan - ROC. Central Trust Of China The Taiwan Securities Central
or Depository Company, Ltd.
(Client Designted Subcustodian)
________ Thailand Standard Chartered Bank Thailand Securities Depository
Company Limited (TSD)
________ Turkey Citibank, N.A. Takas ve Saklama Bankasi A.S
(TAKASBANK);
Central Bank of Turkey
________ United Kingdom State Street Bank and Trust None;
Company
The Bank of England
The Central Gilts Office (CGO)
The Central Moneymarkets Office
The European Settlements Office
________ Uruguay Citibank, N.A. None
________ Venezuela Citibank, N.A. None
</TABLE>
<PAGE>
Schedule A- 17f-S Approval Page 3
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fund officer
Initials Country Subcustodian Central Depository
________ Zambia Barclays Bank of Zambia Limited Lusaka Central Depository (LCD)
________ Zimbabwe Barclays Bank of Zi,mbabwe Limited None
________ Euroclear (The Euroclear System)/State Street London Limited
________ Cedel (Cedel Bank, societe anonyme)/ State Street London Limited
</TABLE>
<PAGE>
FIRST AMENDMENT
TO CUSTODY AND INVESTMENT ACCOUNTING AGREEMENT
THIS FIRST AMENDMENT TO CUSTODY AND INVESTMENT ACCOUNTING AGREEMENT (the
"Amendment") is made and entered into as of March 1, 1998 by and among
QUANTITATIVE GROUP OF FUNDS ("Client"), a Massachusetts business trust, and
INVESTORS FIDUCIARY TRUST COMPANY, a Missouri trust company ("IFTC").
WITNESSETH:
WHEREAS, Client and IFTC are parties to that certain Custody and Investment
Accounting Agreement dated as of January 19, 1998 (the "Agreement") ;and
WHEREAS, Client and IFTC desire to amend and supplement the Agreement upon
the following terms and conditions.
NOW THEREFORE, for and in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Client and IFTC hereby agree that the Agreement
is amended and supplemented as follows:
1 The Security Procedures Selection Form attached to the Agreement shall be
replaced in its entirety by the Security Procedures Selection Form dated
March 1, 1998 attached hereto and incorporated herein by this reference.
General Provisions. This Amendment is made in the State of Missouri, and will at
all times and in all respects be construed, interpreted, and governed by the
laws of the State of Missouri, without giving effect to the conflict of laws
provisions thereof. This Amendment may be executed in any number of
counterparts, each constituting an original and all considered one and the same
agreement. This Amendment is intended to modify and amend the Agreement and the
terms of this Amendment and the Agreement are to be construed to be cumulative
and not exclusive of each other. Except as provided herein, the Agreement is
hereby ratified and confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their duly authorized officers to be effective as of the date first above
written.
INVEST DU TRUST COMPANY
By:
Stephen R. Hilliard, Executive Vice President
QUANTITATIVE GROUP OF FUNDS
<PAGE>
SECURITY PROCEDURES SELECTION FORM
Please select one or more of the funds transfer security procedures indicated
below.
March 1, 1998
SWIFT SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a
cooperative society owned and operated by member financial institutions that
provides telecommunication services for its membership. Participation is limited
to securities brokers and dealers, clearing and depository institutions,
recognized exchanges for securities, and investment management institutions.
SWIFT provides a number of security features through encryption and
authentication to protect against unauthorized access, loss or wrong delivery of
messages, transmission errors, loss of confidentiality and fraudulent changes to
messages. Selection of this security procedure would be most appropriate for
existing SWIFT members.
REMOTE BATCH TRANSMISSION Wire transfer instructions are delivered via Computer-
to-Computer (CPU-CPU) data communications between the Client and/or its agent
and IFTC and/or its agent. Security procedures include encryption and/or the use
of a test key by those individuals authorized as Automated Batch Verifiers or a
callback procedure to those individuals. Clients selecting this option should
have an existing facility for completing CPU-CPU transmissions. This delivery
mechanism is typically used for highvolume business such as shareholder
redemptions and dividend payments.
TELEPHONE CONFIRMATION (CALL BACK) This procedure requires Clients to
designate individuals as authorized initiators and authorized verifiers.
IFTC will verify that the instruction contains the signature of an
authorized person and prior to execution of the payment order, will contact
someone other than the originator at the Client's location to authenticate
the instruction. Selection of this alternative is appropriate for Clients
who do not have the capability to use other security procedures.
TEST KEY Test Key confirmation will be used to verify all non-repetitive funds
transfer instructions received via facsimile or phone. IFTC will provide test
keys if this option is chosen. IFTC will verify that the instruction contains
the signature of an authorized person and prior to execution of the payment
order, will authenticate the test key provided with the corresponding test key
at IFTC. Selection of this alternative is appropriate for Clients who do not
have the capability to use other security procedures.
REPETITIVE WIRES For situations where funds are transferred periodically from an
existing authorized account to the same payee (destination bank and account
number) and only the date and currency amount are variable, a repetitive wire
may be implemented. Repetitive wires will be subject to a $10 million limit. If
the payment order exceeds the $10 million limit, the instruction will be
confirmed by telephone or test key prior to execution. Repetitive wire
instructions must be reconfirmed annually. Clients may establish Repetitive
Wires by following the agreed upon security procedures as described by Telephone
Confirmation (Call Back) or Test Key. This alternative is recommended whenever
funds are frequently transferred between the same two accounts.
<PAGE>
STANDING INSTRUCTIONS Funds are transferred by IFTC to a counter party on the
Client's established list of authorized counter parties. Only the date and the
dollar amount are variable. Clients may establish Standby Instructions by
following the agreed upon security procedures as described by Telephone
Confirmation (Call Back) or Test Key. This option is used for transactions that
include but are not limited to Foreign Exchange Contracts, Time Deposits and
Tri-Party Repurchase Agreements.
AUTOMATED CLEARING HOUSE (ACH) IFTC or its agent receives an automated
transmission from a Client for the initiation of payment (credit) or collection
(debit) transactions through the ACH network. The transactions contained on each
transmission or tape must be authenticated by the Client. The transmission is
sent from the Client's or its agent's system to IFTC's or its agent's system
with encryption.
KEY CONTACT INFORMATION
Whom shall we contact to implement your selection(s)?
CLIENT OPERATIONS CONTACT
Mariella Harrington
Name
Lincoln North
55 Old Bedford Road
Address
Lincoln MA 01773
City/State/Zip Code
(781) 259 - 1144
Telephone Number
(781) 259 - 1166
- ----------------
Facsimile Number
SWIFT Number
ALTERNATE CONTACT
Joan Coco (1) Sheila Bennett
Lincoln North
55 Old Bedford Road
Address
Lincoln MA 01773
City/State/Zip Code
<PAGE>
(781) 299 - 1144
----------------
Telephone Number
<PAGE>
EXHIBIT 22
TRANSFER AGENT AND SERVICE AGREEMENT
between
U.S. BOSTON INVESTMENT COMPANY
and
U.S. BOSTON INSTITUTIONAL SERVICES, INC.
<PAGE>
TRANSFER AGENT AND SERVICE AGREEMENT
AGREEMENT made as of the 31st day of October, 1989, by and between U.S.
BOSTON INVESTMENT COMPANY, a Massachusetts business trust, having its principal
office and place of business at Six New England Executive Park, Burlington,
Massachusetts 01803 (the "Fund"), and U.S. Boston Institutional Services Inc., a
Massachusetts Corporation having its principal office and place of business at
Six New England Executive Park, Burlington, Massachusetts 01803 ("USBIS") which
is duly registered as a transfer agent pursuant to Section 17A(c)(1) of the
Securities Exchange Act of 1934.
WHEREAS, the Fund is authorized to issue its shares of beneficial interest
("Shares") in separate Series, with each such Series representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Fund intends to presently offer Shares in two Series, as
identified in Exhibit A attached hereto (such Series, together with all other
Series subsequently established by the Fund and made subject to this Agreement
in accordance with Article 13, being herein referred to as the "Series");
WHEREAS, the Fund desires to appoint USBIS as its transfer agent, dividend
disbursing agent and agent in connection with certain other activities; and
USBIS desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Terms of Appointment; Duties of USBIS.
--------------------------------------
1.1 Subject to the terms and conditions set forth in this Agreement, the
Fund hereby employs and appoints USBIS to act as, and USBIS agrees to act as its
transfer agent for the Shares, dividend disbursing agent and agent in connection
with any accumulation, open-account or similar plans provided to the
shareholders of the Fund ("Shareholders") and set out in the currently effective
Prospectus or Statement of Additional Information of the Fund, including without
limitation any periodic investment plan or periodic withdrawal program.
1.2 USBIS agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund and USBIS, USBIS shall:
(i) receive for acceptance, orders for the purchase of Shares of
each Series and promptly deliver payment and appropriate documentation therefor
to the Custodian of the Fund authorized pursuant to the Agreement and
Declaration of Trust of the Fund (the "Custodian") and will instruct the
Custodian as to the account of which Series such payment should be credited to;
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder account;
<PAGE>
(iii) receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation therefor to the Custodian
identifying to the Custodian the Series whose Shares are being redeemed;
(iv) at the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay over or cause to be paid
over in the appropriate manner such monies as instructed by the redeeming
Shareholders;
(v) effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
(vi) prepare and transmit (or credit to the appropriate Shareholder
account) payments for dividends and distributions declared with respect to each
Series and
(vii) maintain records of account for and advise the Fund and its
Shareholders as to the foregoing.
(b) In addition to and not in lieu of the services set forth in the above
paragraph (a), USBIS shall:
(i) perform all of the customary services of a transfer agent,
dividend disbursing agent and as relevant, agent in connection with
accumulation, open-account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to : maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing proxies, receiving and tabulating proxies, mailing Shareholder
reports and prospectuses to current Shareholders, withholding taxes on non-
resident alien accounts, preparing and filing U.S. Treasury Department Forms
1099 and other appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to Shareholders for all purchases
and redemptions of Shares and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for Shareholders, and
providing Shareholder account information; and
(ii) provide a system which will enable the Fund to monitor the total
number of Shares sold in each State. The Fund shall (A) identify to USBIS in
writing those transactions to be treated as exempt from blue sky reporting for
each state and (B) verify the establishment of transactions for each state on
the system prior to activation and thereafter monitor the daily activity for
each state. The responsibility of USBIS for the Fund's blue sky state
registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the reporting of
such transactions to the Fund as provided above.
Procedures applicable to certain of these services may be established from
time to time by agreement between the Fund and USBIS
<PAGE>
2. Fees and Expenses.
------------------
2.1 For performance by USBIS pursuant to this Agreement, the Fund agrees
to pay USBIS an annual maintenance fee for each Shareholder account as set out
in the initial fee schedule attached hereto as Exhibit B. Such fees and out-of-
pocket expenses and advances identified under Section 2.2 below may be changed
from time to time subject to mutual written agreement between the Fund and
USBIS.
2.2 In addition to the fee paid under 2.1 above, the Fund agrees to
reimburse USBIS for out-of pocket expenses or advances incurred by USBIS for the
items set out in the fee schedule attached hereto. In addition, any other
expenses incurred by USBIS at the request or with the consent of the Fund will
be reimbursed by the Fund.
2.3 The Fund agrees to pay all fees and reimbursable expenses within five
days following the mailing of the respective billing notice. Postage for mailing
of dividends, proxies, Fund reports and other mailings to all Shareholder
accounts shall be advanced to USBIS by the Fund at least seven (7) days prior to
the mailing date of such materials.
3. Representations and Warranties of USBIS.,
-----------------------------------------
USBIS represents and warrants to the Fund that:
3.1 It is a corporation duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its business in the Commonwealth of
Massachusetts.
3.3 It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
3.4 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
Representations and Warranties of the Fund.
- -------------------------------------------
The Fund represents and warrants to USBIS that:
4.1 It is a Massachusetts business trust duly organized and existing and
in good standing under the laws of the Commonwealth of Massachusetts.
<PAGE>
4.2 It is empowered under applicable laws and by its Agreement and
Declaration of Trust and By-Laws to enter into and perform this Agreement.
4.3 All proceedings required by said Agreement and Declaration of Trust
and By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.4 It is an open-end and non-diversified management investment company
registered under the Investment Company Act of 1940.
4.5 A registration statement under the Securities Act of 1933 with respect
to all Shares of any Series being offered for sale will be effective before any
Shares of any Series are issued and sold and will remain effective, and
appropriate state securities law filings with respect to all Shares of any
Series being offered for sale will have been made before any Shares of any
Series are issued and sold and will continue to be made before any Shares of any
Series are issued and sold.
5. Indemnification.
----------------
5.1 USBIS shall not be responsible for, and the Fund shall indemnify and
hold USBIS harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to:
(a) All actions of USBIS or its agents or subcontractors required to be
taken pursuant to this Agreement;
(b) The Fund's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Fund's lack of good faith, negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of the Fund hereunder;
(c) The reliance on or use by USBIS or its agents or subcontractors of
information, records and documents which (i) are received by USBIS or its agents
or subcontractors and furnished to it by or on behalf of the Fund, and (ii) have
been prepared and/or maintained by the Fund or any other person or firm on
behalf of the Fund;
(d) The reliance on, or carrying out by USBIS or its agents or
subcontractors of any instructions or requests of the Fund;
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or regulations of
any State and that such Shares be registered in such State or in violation of
any stop order or other determination or ruling by any federal agency or State
with respect to the offer or sale of such Shares in such State unless such
violation results from any action or omission by USBIS or any of its agents or
subcontractors which fails to comply with written instructions of the Fund or
any officer of the Fund that no offers or sales be made in general or to the
residents of a particular State;
<PAGE>
provided, however, that the Fund shall not indemnify or hold USBIS harmless from
and against any losses, damages, costs, charges, counsel fees, payments,
expenses or liability arising out of or attributable to any actions or omissions
of USBIS taken or made in bad faith or resulting from USBIS's negligence or
willful misconduct.
5.2 USBIS shall indemnify and hold the Fund harmless from and against any
and all losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to any action or failure or omission to
act by USBIS as a result of USBIS's lack of good faith, negligence or willful
misconduct,
5.3 At any time USBIS may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by USBIS under this
Agreement, and USBIS and it agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or taken or omitted by it in reliance upon the
opinion of such counsel. USBIS, it agents and subcontractors shall be protected
and indemnified in acting upon any paper or document furnished by or on behalf
of the Fund, reasonably believed to be genuine and to have been signed by the
proper officer or agent of the Fund, or upon any instruction, information, data,
records or documents provided USBIS or its agents or subcontractors by machine
readable input, telex, CRT data entry or other similar means authorized by the
Fund, and shall not be held to have notice of any change of authority of any
person, until receipt of written notice thereof from the Fund. USBIS, its agents
and subcontractors shall also be protected and indemnified in recognizing stock
certificates which are reasonably believed to bear the proper manual or
facsimile signatures of the officers of the Fund, and the proper
countersignature of any former transfer agent or registrar, or of a co-transfer
agent or co-registrar.
5.4 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, such party shall
not be liable for damages to the other for any damages resulting from such
failure to perform or otherwise from such causes.
5.5 Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any act or
failure to act hereunder.
5.6 In order for the indemnification provisions contained in this Article
5 to apply, upon the assertion of a claim for which either party may be required
to indemnify the other, the party seeking indemnification shall promptly notify
the other party of such assertion, and shall keep the other party advised with
respect to all developments concerning such
<PAGE>
claim. The party who may be required to indemnify shall have the option to
participate with the party seeking indemnification in the defense of such claim.
The party seeking indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to indemnify it
except with the other party's prior written consent.
6. Covenants of the Fund and USBIS.
--------------------------------
6.1 The Fund shall promptly furnish to USBIS the following:
(a) A certified copy of the resolution of the Trustees of the Fund
authorizing the appointment of USBIS and the execution and delivery of this
Agreement.
(b) A copy of the Agreement and Declaration of Trust and By-Laws of
the Fund and all amendments thereto.
6.2 USBIS hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
6.3 USBIS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, USBIS agrees that all such records prepared or maintained
by USBIS relating to the services to be performed by USBIS hereunder are the
property of the Fund and will be preserved, maintained and made available in
accordance with such Section and Rules, and will be surrendered promptly to the
Fund on and in accordance with its request.
6.4 USBIS and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other person, except
as may be required by law.
6.5 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, USBIS will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. USBIS reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.
<PAGE>
7. Termination of Agreement.
-------------------------
7.1 This Agreement may be terminated by either party upon one hundred
twenty (120) days' written notice to the other.
7.2 Should this Agreement be terminated, all out-of-pocket expenses
associated with the movement of records and material will be borne by the Fund.
Additionally, USBIS reserves the right to charge for any other reasonable
expenses associated with such termination.
8. Assignment.
-----------
8.1 Neither this Agreement nor any rights or obligations hereunder may
assigned by USBIS without the written consent of the Fund.
8.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
9. Amendment.
----------
9.1 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the
Trustees of the Fund.
10. Massachusetts Law, to Apply.
----------------------------
10.1 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
11. Merger of Agreement.
--------------------
11.1 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
12. Limitation of Liability of Trustees and Shareholders.
-----------------------------------------------------
12.1 A copy of the Agreement and Declaration of Trust of the Fund 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 Trustees of the
Fund as Trustees and not individually, and that the obligations of or arising
out of this instrument are not binding upon any of the Trustees or Shareholders
individually but are binding only upon the assets and property of the Fund.
<PAGE>
13. Additional Series.
------------------
13.1 In the event that the Fund establishes one or more Series of Shares in
addition to those identified in Exhibit A attached hereto with respect to which
it desires to have USBIS render services as transfer agent under the terms
hereof, it shall so notify USBIS in writing, and if USBIS agrees in writing to
provide such services, such Series of Shares shall become a Series hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
U.S. Boston Investment Company
By: Willard L. Umphrey, President
Attest:
U.S. Boston Institutional Services, Inc.
By: Ronald L. Castignetti, President
Attest:
<PAGE>
AMENDED EXHIBIT A
July 23, 1992
Series of Shares
Boston Growth and Income
Boston Foreign Growth and Income
Boston Numeric
<PAGE>
AMENDED SCHEDULE A
------------------
May 18, 1998
Quantitative Small Cap Fund
Quantitative Mid Cap Fund
Quantitative Growth and Income Fund
Quantitative International Equity Fund
Quantitative Emerging Markets Fund
Quantitative Foreign Value Fund
<PAGE>
QUANTITATIVE GROUP OF FUNDS
---------------------------
AMENDMENT TO TRANSFER AGENT AND SERVICE AGREEMENT
-------------------------------------------------
Amendment to Transfer Agent and Service Agreement (the "Agreement") dated
as of October 31, 1989, by and between QUANTITATIVE GROUP OF FUNDS, formerly
U.S. Boston Investment Company, a Massachusetts business trust (the "Trust"),
U.S. BOSTON INSTITUTIONAL SERVICES, INC., a Massachusetts corporation ("USBIS"),
and QUANTITATIVE ADVISORS, INC. d/b/a QUANTITATIVE INSTITUTIONAL SERVICES, a
Massachusetts corporation ("QIS") dated as of July 11, 1995.
Witnesseth:
Whereas, USBIS desires to assign its rights and responsibilities under the
Agreement to QIS, and the Trust and QIS desire to revise the fee for servicing
the Trust under the Agreement-,
Now, therefore, in consideration of the mutual covenants set forth in the
Agreement Trust, USBIS and QIS agree as follows:
1. USBIS hereby assigns its rights and responsibilities under the
Agreement to QIS, QIS accepts such transfer, and the Trust hereby assents to
such transfer, said assignment to become effective upon the effective
registration of QIS as a transfer agent with the Securities and Exchange
Commission.
2. The Agreement shall be amended by replacing Schedule B of the
Agreement with the Schedule B attached hereto, such amendment to become
effective retroactively to July 1, 1995.
IN WITNESS WHEREOF, QUANTITATIVE GROUP OF FUNDS, U.S. BOSTON INSTITUTIONAL
SERVICES, INC., and QUANTITATIVE ADVISORS, INC. have each caused this instrument
to be signed 'in triplicate 'in its behalf by its President thereunto duly
authorized on this 11th day of July, 1995.
QUANTITATIVE GROUP OF FUNDS
By:
President
QUANTITATIVE ADVISORS, INC.
D/B/A QUANTITATIVE
INSTITUTIONAL SERVICES
By:
President
U.S. BOSTON INSTITUTIONAL SERVICES, INC.
By:
President
<PAGE>
EXHIBIT B
---------
July 11, 1995
FEES:
Pursuant to the Transfer Agent and Service Agreement dated October 31, 1989, as
amended (the "Agreement"), USBIS, and, upon assignment of the Agreement, QIS,
shall be paid a fee, computed and paid monthly, at an annual rate of .13% of the
aggregate average daily net asset value of each series of the Trust, such fee to
be payable in arrears by the 15th of each month.
OUT-OF-POCKET EXPENSES:
Out-of-pocket expenses include, but are not limited to: legal fees, confirmation
production, report preparation, postage, forms, telephone, microfilm or
microfiche, and expenses incurred at the specific direction of the Fund, as
agreed upon from time-to-time.
Quantitative Group of Funds
Attest
Edward L. Pittman, President
Attest: Quantitative Advisors, Inc.
Title: President
U.S. Boston Institutional Services, Inc.
Ronald Castignetti
President
<PAGE>
AMENDED EXHIBIT A
-----------------
October 1, 1994
Quantitative Growth and Income Fund
Quantitative International Equity Fund
Quantitative Numeric Fund
Disciplined Growth Fund
Foreign Frontier Fund
Quantitative Numeric II Fund
Quantitative Group of Funds
Attest:
Edward L. Pittman, President
U.S. Boston Institutional Services, Inc.
Attest:
Ronald L. Castignetti, President
<PAGE>
AMENDED EXHIBIT B
-----------------
October 1, 1994
FEES:
Pursuant to the Transfer Agent and Service Agreement dated October 31, 1989, as
amended (the "Agreement"), USBIS shall be paid a fee of $9,583.333 per month
($115,000 annually), said fee to be payable in arrears by the 15th of each
month. The fee will be allocated among the Series listed in Amended Exhibit A
dated October --, 1994 as follows: 70% of the monthly fee will be allocated to
the Ordinary Shares of the Series as a group, and 30% of the monthly fee will be
allocated to the Institutional Shares of the Series as a group. Within each
class of shares, Ordinary and Institutional, the fees shall be allocated on a
proportionate basis among each Series and class based on the average daily net
asset value represented by that Series and class for the month for which the fee
is being paid.
USBIS will waive the fees attributable to an individual Series or class of
shares of a Series under the following circumstances: (i) for the first six
months after a Series commences its investment program; and (ii) to the extent
required to reduce total payments of fees and expenses under this Agreement for
any fiscal year to 0.10% of the class' average net assets. Out of pocket
expenses, as set forth below, are not subject to the waiver described in
subparagraph (i), and shall be allocated among the Series and classes of shares
of a Series in the same fashion as fees stated above.
OUT-OF-POCKET EXPENSES:
Out-of-pocket expenses include, but are not limited to: confirmation production,
postage, forms, telephone, microfilm or microfiche, and expenses incurred at the
specific direction of the Fund, as agreed upon from time-to-time.
PRIOR AGREEMENTS:
Effective with the fees payable for the month of October 1994, this Amended
Exhibit B supersedes and terminates all prior fee schedules set forth as
exhibits to the Agreement.
Attest:
Quantitative Funds
Edward L. Pittman, President
U.S. Boston Institutional Services, Inc.
Attest:
Ronald L. Castignetti, President
---------
<PAGE>
U.S. BOSTON INSTITUTIONAL SERVICES, INC.
SIX NEW ENGLAND EXECUTIVE PARK
BURLINGTON MASSACHUSETTS 01803
TEL: (617) 272-6420
FAX: (617) 272-Ml
GENERAL:
Transfer Agent and Service Agreement fees are based on a fixed monthly charge
per series. Shares, except Class A Shares, of each Series shall have fees based
on a fixed monthly charge of $1,750. Class A Shares of each Series shall have
fees based on a fixed monthly charge of $250.
OUT-OF-POCKET:
Out-of-Pocket expenses include but are not limited to:
Confirmation production, Postage, Forms, Telephone, Microfilm or Microfiche, and
Expenses at the specific direction of the Fund.
PAYMENT:
The above fees will be paid by approximately the 15th day in the calendar month.
<PAGE>
EXHIBIT A
Series of Shares
Boston Growth and Income
Boston Foreign Growth and Income
<PAGE>
EXHIBIT 23
Limited Agency Agreement for
Transfer Agency Services
WHEREAS, One or more open-end investment companies registered under the
Investment Company Act of 1940, as amended (the "Act"), which are identified on
the attached Exhibit A, as the same may be amended from time to time ("Funds")
desire to use Fund Services, Inc. ("Limited Agent") to provide access to the
Fund/SERV trade clearing system ("Fund/SERV") maintained by the National
Securities Clearing Corporation ("NSCC");
WHEREAS, the Funds utilize an entity, identified on the attached Exhibit A, as
the same may be amended from time to time ("Transfer Agent") to serve as
transfer agent for Funds; and
WHEREAS, Limited Agent is a transfer agent registered under Section 17A(c)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
therefore qualified to serve as a sub-transfer agent to the Funds when delegated
authority by the Transfer Agent; and
WHEREAS, Transfer Agent desires that Limited Agent serve as sub-transfer agent
of the Funds, for the limited purposes set forth herein, with respect to
transactions made through Fund/SERV;
NOW, THEREFORE, in consideration of the promises and the mutual covenants
hereinafter contained, Funds, Transfer Agent, and Limited Agent hereby agree as
follows:
1. Transfer Agent hereby appoints Limited Agent as a sub-transfer agent of the
Funds, and Limited Agent hereby accepts such appointment on the terms set
forth herein, for the limited purposes of (a) accepting and transmitting
Orders from, broker-dealers using Fund/SERV for the purchase and redemption
of Fund shares ("Orders"); and (b) communicating the acceptance of such
Orders by the Funds to such broker-dealers ("Confirmations").
2. Funds represent and warrant that Transfer Agent has transfer agency
authority for Funds and further that this authority can be delegated to
Limited Agent.
3. Transfer Agent will establish a Fund/SERV account in each of the Funds.
Limited Agent will place an aggregate Order, directly to each Fund, or its
specified agent, in ,accordance with procedures mutually agreed upon from
time to time by Transfer Agent and Limited Agent which procedures shall be
attached hereto as Exhibit B and made a part hereof ("Procedures"). The
Procedures shall be consistent with the terms of each Fund's prospectus
and, the requirements of the Investment Company Act of 1940. Limited Agent
shall be responsible for maintaining records relating to each broker-dealer
placing Orders through Fund/SERV, and shall, upon request, provide Transfer
Agent with information regarding the number of shares, and dollar value,
purchased or sold by each broker-dealer, the date of the transaction and
such other information as the Transfer Agent may reasonably request.
4. Orders will only be accepted and transmitted by Limited Agent hereunder on
days that the New York Stock Exchange is open for business ("Business
Day").
5. Limited Agent represents and warrants that all Orders accepted and
transmitted by it hereunder will be based upon instructions that it
receives through Fund/SERV. It is understood by the parties that Fund/SERV
orders will be received after the close of trading (currently 4:00 p.m. ET)
of the New York Stock Exchange on that Business Day ("Close of Trading")
and will be based on orders received by the brokers utilizing Fund/SERV
prior to the Close of Trading.
6. Funds will furnish Limited Agent by no later than price availability time
specified in the Price Communication portion of the Procedures ("Price
Communication Time") on each Business Day a confirmed net asset value per
share for each Fund as of the Close of Trading of the previous Business
Day.
<PAGE>
7. Transfer Agent represents and warrants that, subject to compliance by
Limited Agent with the representation and warranty set forth in Section 5
and (in the case of net purchases) receipt by the relevant Fund of payment
in accordance with Section 9, Orders placed by the Trade Order Cutoff time
established in the Procedures and in accordance with the Procedures on any
Business Day will be accepted by each of the Funds at the net asset value
price for such Fund as of the Close of Trading on that Business Day.
However, redemptions of Ordinary Shares of certain Funds will be subject to
a redemption fee, as described in the Funds' prospectus.
8. In the event that Orders are not entered by the Trade Order Cutoff time
established in the Procedures, due to mechanical difficulties or other
reasons beyond Limited Agent's reasonable control, As-Of trades will be
accepted, subject to provisions in the Procedures. Transfer Agent
represents and warrants that if an Order placed by Limited Agent on any
Business Day is not received by the Trade Order Cutoff time due to
mechanical difficulties or other reasons beyond Limited Agent's reasonable
control, such Order shall nonetheless be accepted by the relevant Fund as
if it had been received by such deadline, provided that Limited Agent
resubmits the Order no later than 10:30 a.m. ET on the immediately
following Business Day. Transfer Agent may require reasonable assurances
that there was an attempt to place the Order by the Trade Order Cutoff
time. Transfer Agent shall cause each Fund to immediately furnish Limited
Agent confirmation with respect to any order which is resubmitted pursuant
to the preceding sentence. Limited Agent shall make reasonable efforts to
Inform Transfer Agent by 9:30 a.m. ET of any anticipated delay in placing
orders by Trade Cutoff Time.
9. The Transfer Agent, based on information provided by the Limited Agent, and
NSCC, and not the Limited Agent, will be responsible for arranging payments
for net purchases and redemptions of shares in each Fund. Limited Agent's
sole responsibility with respect to such shall be to forward information
provided by NSCC to Transfer Agent with respect to net settlement amounts.
Limited Agent will not receive funds from, or on behalf of, Transfer Agent
and the Funds.
10. Transfer Agent shall cause each Fund to furnish Limited Agent a
Confirmation with respect to each Order placed hereunder by no later than
12:00 PM ET on the Business Day immediately following placement of the
Order ("Start of Trading"). Immediately upon receipt of each confirmation,
Limited Agent shall verify its accuracy and shall notify Transfer Agent of
any errors appearing thereon.
11. Funds shall promptly furnish Limited Agent notice of any dividends or
distributions payable on the shares of each Fund. If such dividends and
distributions are reinvested in additional shares of the Funds, Transfer
Agent, shall notify Limited Agent as to the number of shares so issued.
12. Funds represent and warrant their shares are registered and authorized for
issue in accordance with applicable Federal and State laws, but are not
registered in all states. Attached as Exhibit D is a list of states in
which the Funds' shares are registered and authorized for issue and
trading,
13. Funds represent and warrant that broker-dealers may execute purchase and
redemption transactions on each and every Business Day without regard for
the number or market value of transactions executed in any prior time
periods.
14. Limited Agent acknowledges that the records prepared by it of transactions
in shares of the Funds are the sole property, and proprietary information,
of the Funds. Except as may be necessary to discharge its obligations under
this Agreement, or as otherwise authorized by this Agreement, Limited Agent
will not communicate the information in those records to any third party
without the express written permission of the Funds. Upon the request of
Transfer Agent or any Fund, Limited Agent shall furnish or cause to be
furnished copies of all records in Limited Agent's possession as may
reasonably be requested to enable the Transfer Agent, the Fund or the
Fund's representatives including, without limitation, its auditors,
investment advisor, or distributor to comply with any request of a
governmental body, self-regulatory organization, auditor, or shareholder.
<PAGE>
15. In consideration for the services provided by Limited Agent, Funds shall
pay Limited Agent the fees set forth in Exhibit C to this Agreement,
Monthly fees shall not be payable until Funds utilize Limited Agent for
Fund/SERV transactions, and shall not increase, except as set forth in
Exhibit C, for a period of at least 12 months after the initial
transaction.
16. Limited Agent shall not be responsible for any expenses of Transfer Agent
or the Funds incident to this Agreement including, without limitation,
expenses in connection with the registration of Fund shares, preparation of
Fund prospectuses, proxy materials and reports, the distribution of such
items to the beneficial holders of the Fund/SERV accounts, and the
preparation of all statements and notices required by any Federal or State
law,
No party shall charge the other any fee for bank wires executed pursuant to
this agreement.
17. Each party shall be excused from performing any of its respective duties
and obligations hereunder in the event that, and so long as, performance of
such duties and obligations is prevented, delayed or hindered by Acts of
God, fires earthquakes, extreme weather conditions, strikes, impossibility
of obtaining materials or other events beyond the reasonable control of the
party in question.
18. Limited Agent agrees to indemnify Transfer Agent, the Funds and each of
their trustees, directors, officers, employees and agents and hold each of
them harmless against any and all direct losses, damages, claims or
liabilities resulting from or relating to the Limited Agent's performance
of the duties and obligations, or breach of any representation or warranty,
of Limited Agent hereunder.
Transfer Agent agrees to indemnify Limited Agent, and each of its
directors, officers, employees, and agents and hold each of them harmless
against any and all direct losses, damages, claims or liabilities resulting
from or relating to the performance of the duties and obligations, or
breach of any representation or warranty, of Transfer Agent hereunder.
Without limiting the foregoing to the extent the Transfer Agent is entitled
to indemnification under its Transfer Agent Agreement with any of the Funds
in connection with any loss, damage, claim, or liability arising from or
relating to the investment of any broker-dealer in such Fund, Limited Agent
and each of its directors, officers and employees and agents shall be
afforded the same right of indemnification.
19. In order for the indemnification provisions contained in Section 18 of this
agreement to apply, upon the assertion of a claim for which either party
may be required to indemnify the other, the party seeking indemnification
shall promptly notify the other party of such assertion, and shall keep the
other party advised with respect to all developments concerning such claim.
The party who may be required to indemnify shall have the option to
participate, with the party seeking indemnification in the defense of such
claim or to defend against said claim in its own name or in the name of the
other party. The party seeking indemnification shall in no case confess any
claim or make any compromise in any case which the other party may be
required to indemnify it except with the other party's prior written
consent.
20. Limited Agent agrees to notify Transfer Agent immediately in the event of
(a) the suspension or termination of its registration as a transfer agent,
or (b) Limited Agent's violation of any applicable federal or state law,
rule or regulation arising out of its service as Limited Agent in
connection with this Agreement, and (c) any other action by federal or
state regulators that may otherwise affect in any material way Limited
Agent's ability to act as Limited Agent in accordance with the terms of
this Agreement. The termination of Limited Agent's registration as a
transfer agent will automatically terminate this Agreement immediately
without notice.
<PAGE>
21. Except as to matters governed by the prospectus of any Fund, this Agreement
shall be construed in accordance with the laws of the Commonwealth of
Massachusetts.
22. Every notice required by this Agreement shall be sufficiently given when
sent in accordance with the Procedures.
23. This agreement shall not be amended except by written instrument signed by
all parties, provided that changes to Exhibit A may be effected by Transfer
Agent with written notice to Limited Agent. No party shall assign any of
its rights, powers or duties under this Agreement without the other party's
written consent.
This Agreement shall become affective as of the date hereof It
shall continue in effect for an initial term of one (1) year and thereafter
from year to year after its initial term until terminated in accordance
with the provisions hereof This Agreement may be terminated at any time by
either party upon ninety (90) days written notice to the other party.
This agreement shall automatically be terminated upon revocation of
transfer agency authority granted by Funds to Transfer Agent.
WITNESS the following signatures as of 4 June, 1997.
LIMITED AGENT:
Fund Services, Inc.
By:
Title: President
TRANSFER AGENT:
- ---------------
Quantitative Institutional Services
By:
Title: Vice
President
FUNDS:
- ------
Quantitative Group of Funds
By:
Title: President
<PAGE>
Exhibit A to
Limited Agency Agreement for
Transfer Agency Services
Amendment Number: 1 Effective Date- -5/18/98
Transfer Agent: Quantitative Institutional Services
Funds: Quantitative Group of Funds, consisting of
<TABLE>
<CAPTION>
Fund Name: CUSIP Symbol
<S> <C> <C>
Ordinary Share
Quantitative Small Cap Fund 74762R608 USBNX
Quantitative Mid Cap Fund 74762R806 QNIIX
Quantitative Growth and Income Fund 74762R202 USBOX
Quantitative International Equity Fund 74762R400 USBFX
Quantitative Emerging Markets Fund 74762R855 QFFOX
Quantitative Foreign Value Fund 74762R830
Institutional Shares
Quantitative Small Cap Fund 74762R509 QBNAX
Quantitative Mid Cap Fund 74762R707 QNIAX
Quantitative Growth and Income Fund 74762RI03 QGIAX
Quantitative International Equity Fund 74762R301 QIEAX
Quantitative Emerging Markets Fund 74762R863 QEMAX
Quantitative Foreign Value Fund 74762R848
</TABLE>
<PAGE>
Exhibit B to
Limited Agency Agreement for
Transfer Agency Services
Operational Procedures
Price Communication
Price Communication Time: 9:00 a.m. ET of the subsequent Business Day
Price Information is Communicated by FAX to 804-285-8018.
Prior to Price Communication Time of each Business Day, the Fund will
communicate to the Limited Agent that day's Net Asset Value and Offering Price
(if different) and any appropriate accrual/dividend factors for all Funds on
Exhibit A of this agreement.
If for any reason, the Transfer Agent processes purchases, redemptions, or
income reinvestments with any different information than what was Communicated
to the Limited Agent, the Fund is responsible for contacting the Limited Agent
with a phone call and a follow-up fax containing the revised information by
12:00 p.m. ET of the Business Day next following the Business Day of the
original communication. If the Transfer Agent does not identify a change in
information until after 12:00 p.m. ET, the Transfer Agent will notify the
Limited Agent immediately after identification of the change.
Trade Orders
Trade Order Cutoff. 9:30 a.m. ET of the following Business Day
Trade Orders are Communicated by FAX to 617-259-1166.
Each Business Day, after completion of receipt of Fund/SERV activity, the
Limited Agent will transmit Trade Orders (purchases and redemptions) for each
Fund to the Transfer Agent to be processed at that Business Day's Net Asset
Value or Offering Price as appropriate for next-day settlement (trade date + 1
settlement). Trade Orders may be communicated in dollars or shares.
The Limited Agent will communicate all Trade Orders to the Transfer Agent by the
Trade Order Cutoff above on each Business Day ("Trade Date"). On days where
there are no Trade Orders, the communication will contain zeros in each field.
If the Transfer Agent does not receive the required communications prior to the
Trade Order Cutoff on any Business Day and As-Of trading is authorized by the
Agreement
<PAGE>
above, the Transfer Agent will contact the Limited Agent by 12:00 p.m. ET of the
following Business Day. The Limited Agent will then re-communicate the
appropriate Trade Orders to the Transfer Agent for execution as of the Trade
Date.
Trade Settlement
Settlement shall be made in accordance with the then-prevailing rules of the
Fund/SERV system, which are incorporated herein by reference.
Notice
Any notice required under the Agreement shall be sent to the parties at the
following addresses and fax numbers:
Quantitative Group of Funds
55 Old Bedford Road Lincoln, MA 01773 fax: (617) 259-1166
Quantitative Institutional Services 55 Old Bedford Road Lincoln, MA 0 1773 fax:
(617) 259-1166
Fund Services, Inc.
1500 Forest Ave., Suite 111
Richmond, VA 23229
Fax- (804) 285-8018
<PAGE>
Exhibit C to
Limited Agency Agreement for
Transfer Agency Services
Amendment Number: Effective Date:
Fees: Access Server Upgrades and File Set-Up: Out of pocket costs, not
to exceed $3,500 Processing Fund/SERV trades: $500 per month for
the first six months of the Agreement, then $750 per month for the
next six months, plus National Securities Clearing Corporation
fees, communications fees and out-of-pocket expenses.
Payment Date: The monthly fee will be paid monthly in arrears by the 15 th of
the month, Out-of-pocket expenses within two weeks of submission,
subject to verification by the Transfer Agent
<PAGE>
Exhibit D to
Limited Agency Agreement for
Transfer Agency Services
Listed below are the states in which the Ordinary Shares of our five funds
are registered and available for sale. The footnotes indicate that a fund is not
registered in a given state.
Alabama 3,4,5,6
Arizona
California
Colorado
Connecticut
Delaware 3,4,5,6
District of Columbia
Florida
Georgia
Hawaii
Idaho 2,3,4,5,6
Illinois
Indiana
Iowa l,2,4,5,6
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Missouri
New Jersey
New Mexico 2,4,5,6
New York
North Carolina
Ohio
Oregon
Pennsylvania
Rhode Island
South Carolina 5
Tennessee
Texas
Utah
Virginia
Vermont 2
Washington
Wisconsin 3,4,5,6
1 Quantitative Small Cap Fund
2 Quantitative Mid Cap Fund
3 Quantitative Growth and Income Fund
4 Quantitative International Equity Fund
5 Quantitative Emerging Markets Fund
6 Quantitative Foreign Value Fund
<PAGE>
Listed below are the states in which the Institutional Class of Shares of
our five funds are registered and available for sale.
Alabama 3,4,5,6
Arizona 2,3,4,5,6
California
Colorado
Connecticut
Delaware 3,4,5,6
District of Columbia
Florida
Georgia
Hawaii
Idaho 2,3,4,5,6
Illinois
Indiana
Iowa l,2,4,5,6
Kansas l,3,4,5,6
Kentucky
Louisiana
Maine
Maryland 3,4,5,6
Massachusetts
Michigan 4,5,6
Minnesota
Missouri
Nevada l,3,4,5,6
New Jersey
New Mexico 2,4,5,6
New York
North Carolina
Ohio
Oregon
Pennsylvania
Rhode Island
South Carolina 3,5
Tennessee 4,5,6
Texas 4,5,6
Utah
Virginia
Washington 4,5,6
West Virginia 2,3,4,6
Wisconsin 2,3,4,5,6
1 Quantitative Small Cap Fund
2 Quantitative Mid Cap Fund
3 Quantitative Growth and Income Fund
4 Quantitative International Equity Fund
5 Quantitative Emerging Markets Fund
6 Quantitative Foreign Value Fund
<PAGE>
Exhibit E to
Limited Agency Agreement for
Transfer Agency Services
Transfer Restrictions
- ---------------------
Shares of any Fund may be exchanged for shares of the same class of any other
Fund. Exchanges are not permitted between shares of different classes in either
the same or different funds. Accordingly, transfers are permitted within each of
the two following groups but not between the groups.
<TABLE>
Fund Name: CUSIP Symbol
<S> <C> <C>
Ordinary Shares
- ---------------
Quantitative Small Cap Fund 74762R608 USBNX
Quantitative Mid Cap Fund 74762R806 QNIIX
Quantitative Growth and Income Fund 74762R202 USBOX
Quantitative International Equity Fund 74762R400 USBFX
Quantitative Emerging Markets Fund 74762R855 QFFOX
Quantitative Foreign Value Fund 74762R830
Institutional Shares
- --------------------
Quantitative Small Cap Fund 74762R509 QBNAX
Quantitative Mid Cap Fund 74762R707 QNIAX
Quantitative Growth and Income Fund 74762RI03 QGIAX
Quantitative International Equity Fund 74762R301 QIEAX
Quantitative Emerging Markets Fund 74762R863 QEMAX
Quantitative Foreign Value Fund 74762R848
</TABLE>
<PAGE>
Exhibit A to
Limited Agency Agreement for
Transfer Agency Services
Amendment Number: Effective Date:
Transfer Agent: Quantitative Institutional Services
Funds: Quantitative Group of Funds, consisting of
<TABLE>
Fund Name: CUSIP Symbol
<S> <C> <C>
Ordinary Shares
- ---------------
Quantitative Numeric Fund 74762R608 USBNX
Quantitative Numeric 11 Fund 74762R806 QNIIX
Quantitative Growth and Income Fund 74762R202 USBOX
Quantitative International Equity Fund 74762R400 USBFX
Quantitative Foreign Frontier Fund 74762R855 QFFOX
Institutional Shares
- --------------------
Quantitative Numeric Fund 74762R509 QBNAX
Quantitative Numeric 11 Fund 74762R707
Quantitative Growth and Income Fund 74762RI03 QGIAX
Quantitative International Equity Fund 74762R301 QIEAX
Quantitative Foreign Frontier Fund 74762R863
</TABLE>
<PAGE>
Exhibit D to
Limited Agency Agreement for
Transfer Agency Services
Listed below are the states in which the Ordinary Shares of our five funds
are registered and available for sale. The footnotes indicate that a fund is not
registered in a given state.
Alabama 3,4,5
Arizona
California
Colorado
Connecticut
Delaware 3,4,5
District of Columbia
Florida
Georgia
Hawaii
Idaho 2,3,4,5
Illinois
Indiana
Iowa l,2,4,5
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Minnesota
Missouri
New Jersey
New Mexico 2,4,5
New York
North Carolina
Ohio
Oregon
Pennsylvania
Rhode Island
South Carolina 3,5
Tennessee
Texas
Utah
Virginia
Vermont 2
Washington
Wisconsin 3,4,5
1 Quantitative Numeric Fund
2 Quantitative Numeric II Fund
3 Quantitative Growth and Income Fund
4 Quantitative International Equity Fund
5 Quantitative Foreign Frontier Fund
<PAGE>
Listed below are the states in which the Institutional Class of Shares of
our five funds are registered and available for sale.
Alabama 3,4,5
Arizona 2,3,4,5
California
Colorado
Connecticut
Delaware 3,4,5
District of Columbia
Florida
Georgia
Hawaii
Idaho 2,3 ,4,5
Illinois
Indiana
Iowa 1,2,4,5
Kansas 1, 3,4,5
Kentucky
Louisiana
Maryland 4,5
Massachusetts
Michigan 4,5
Minnesota
Missouri
Nevada l,3,4,5
New Hampshire 3,5
New Jersey
New Mexico 2,4,5
New York
North Carolina
Ohio
Oregon
Pennsylvania
Rhode Island
South Carolina 3,5
Tennessee 3,4,5
Texas 4,5
Utah
Vermont 2,3,5
Virginia
Washington 4,5
Wisconsin 2,3,4,5
1 Quantitative Numeric Fund
2 Quantitative Numeric 11 Fund
3 Quantitative Growth and Income Fund
4 Quantitative International Equity Fund
5 Quantitative Foreign Frontier Fund
<PAGE>
Exhibit E to
Limited Agency Agreement for
Transfer Agency Services
Transfer Restrictions
- ---------------------
Shares of any Fund may be exchanged for shares of the same class of any other
Fund. Exchanges are not permitted between shares of different classes in either
the same or different funds. Accordingly, transfers are permitted within each of
the two following groups but not between the groups.
<TABLE>
Fund Name: CUSIP Symbol
<S> <C> <C>
Ordinary Shares
- ---------------
Quantitative Numeric Fund 74762R608 USBNX
Quantitative Numeric II Fund 74762R806 QNIIX
Quantitative Growth and Income Fund 74762R202 USBOX
Quantitative International Equity Fund 74762R400 USBFX
Quantitative Foreign Frontier Fund 74762RS55 QFFOX
Institutional Shares
- --------------------
Quantitative Numeric Fund 74762R509 QBNAX
Quantitative Numeric II Fund 74762R707
Quantitative Growth and Income Fund 74762RI03 QGIAX
Quantitative International Equity Fund 74762R301 QIEAX
Quantitative Foreign Frontier Fund 74762R863
</TABLE>
<PAGE>
EXHIBIT 24
[Dechert Price & Rhoads letterhead]
July 28, 1999
Quantitative Group of Funds
55 Old Bedford Road
Lincoln, MA 01773
Re: Post-Effective Amendment No. 20 to Registration Statement
on Form N-1A of Quantitative Group of Funds
---------------------------------------------------------
Gentlemen:
Quantitative Group of Funds (the "Trust") is a trust created under a
written Agreement and Declaration of Trust dated June 27, 1983, and executed and
delivered in Burlington, Massachusetts. The Declaration of Trust was amended by
an Amended and Restated Agreement and Declaration of Trust dated April 2, 1990,
which was most recently amended on July 18, 1993 (as amended, the "Declaration
of Trust"). The beneficial interest thereunder is represented by transferable
shares with no par value per share ("Shares"). The Trustees have the powers set
forth in the Declaration of Trust, subject to the terms, provisions and
conditions therein provided.
We are of the opinion that the legal requirements have been complied with
in the creation of the Trust and that said Declaration of Trust is legal and
valid.
Under Article III, Section 3 of the Declaration of Trust, the Trustees are
empowered, in their discretion, from time to time, to issue Shares for such
amount and type of consideration, at such time or times and on such terms as the
Trustees may deem best. Under Article III, Section 1, it is provided that the
number of Shares authorized to be issued under the Declaration of Trust is
unlimited. Under Article III, Section 1, the Trustees may authorize the
division of Shares into two or more series or classes.
By resolution of the Board of Trustees on April 17, 1985, the Trustees
divided the Shares into four series, designated the Boston I Series, the Boston
II Series, the Boston Index Plus Series and the Boston International Series of
the Trust. By resolution of the Board of Trustees
<PAGE>
on July 29, 1987, the Trustees redesignated the Boston I Series, the Boston II
Series, the Boston Index Plus Series and the Boston International Series as the
Boston Growth and Income Series, the Boston Performance Series, the Boston
Foreign Growth and Income Series and the Boston Foreign Performance Series. By
written consent of the Board of Trustees dated May 28, 1992, the Trustees
redesignated the Boston Performance Series as the Boston Numeric Series. By
resolution of the Board of Trustees on November 30, 1988, the Trustees abolished
and dissolved the Boston Foreign Performance Series of the Trust. By resolution
of the Board of Trustees dated May 17, 1994, the Trustees established and
designated the Boston Numeric II Series, the Foreign Frontier Series and the
Disciplined Growth Series of the Trust. By resolution of the Board of Trustees
on July 13, 1994, the Trustees redesignated the Boston Growth and Income Series,
the Boston Foreign Growth and Income Series, the Boston Numeric Series, the
Boston Numeric II Series, the Disciplined Growth Series and the Foreign Frontier
Series, respectively, as the Quantitative Growth and Income Fund, the
Quantitative International Equity Fund, the Quantitative Numeric Fund, the
Quantitative Numeric II Fund, the Quantitative Disciplined Growth Fund and the
Quantitative Foreign Frontier Fund. By resolution of the Board of Trustees on
April 7, 1998, the Trustees abolished and dissolved the Quantitative Disciplined
Growth Fund of the Trust. By resolution of the Board of Trustees dated February
13, 1998, the Trustees established and designated the Quantitative Foreign Value
Fund of the Trust. By resolution of the Board of Trustees on April 7, 1998, the
Trustees redesignated the Quantitative Numeric Fund, the Quantitative Numeric II
Fund and the Quantitative Foreign Frontier Fund, respectively, as the
Quantitative Small Cap Fund, the Quantitative Mid Cap Fund and the Quantitative
Emerging Markets Fund.
By resolution of the Board of Trustees on June 27, 1983, the Trustees of
the Trust authorized the officers of the Trust, from time to time, to determine
the appropriate number of Shares to be registered, and to register with the
Securities and Exchange Commission, and to issue and sell to the public, such
Shares.
We understand that you are about to file with the Securities and Exchange
Commission, on Form N-1A, Post Effective Amendment No. 20 to the Trust's
Registration Statement (the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act"), in connection with the continuous
offering of the Shares. We understand that our opinion is required to be filed
as an exhibit to the Registration Statement.
Based upon the foregoing and subject to compliance with the Securities Act,
the Investment Company Act of 1940, as amended, and applicable state laws
regulating the sale of securities, it is our opinion that the Shares have been
duly authorized and, when issued and sold at the public offering price
contemplated by the Registration Statement and delivered by the Trust against
receipt of the net asset value of the Shares, will be issued as fully paid and
nonassessable shares of the Trust.
<PAGE>
We consent to your filing this opinion with the Securities and Exchange
Commission as an exhibit to Post-Effective Amendment No. 20 to the Registration
Statement.
Very truly yours,
DECHERT PRICE & RHOADS
<PAGE>
EXHIBIT 25
DISTRIBUTION PLAN
-----------------
(As Amended April 2, 1990)
This Plan (the "Plan") constitutes the Distribution Plan of U.S. BOSTON
INVESTMENT COMPANY, a Massachusetts business trust (the "Trust").
Section 1. The Trust will pay to U.S. BOSTON CAPITAL CORPORATION: a
----------
Massachusetts corporation which acts as the principal distributor of the Trust's
shares (the "Distributor"), a monthly fee at the annual rate of 0.5% of the
average net asset value of shares (excluding Class A 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.
In addition to the above-described fee, the Trust shall pay, or reimburse
the Distributor for, the cost of the preparation and printing of Trust
prospectuses and shareholders' reports used by it in the sale of Trust shares,
provided that total distribution expenses permitted pursuant to this Section 1,
- --------
including the Distributor's monthly fee, shall not exceed, for any fiscal year,
0.6% of the average net asset value of Qualified Accounts.
Section 2. This Plan shall not take effect until it has been approved by a
----------
vote of at least a majority of the outstanding voting securities of the Trust.
Section 3. This Plan shall not take effect until it has been approved,
----------
together with any related agreements, by votes of the majority (or whatever
greater percentage may, from time to time, be required by Section 12(b) of the
Investment Company Act of 1940 (the "Act") or the rules regulations thereunder)
of both (a) the Trustees of the Trust, and (b) the Qualified Trustees of the
Trust cast in person at a meeting called for the purpose of voting on this Plan
or such agreement.
Section 4. This Plan shall continue in effect for a period more than one
----------
year after it takes effect only so long as such continuance is specifically
approved at least annually in the manner provided for approval of this Plan's
Section 3.
Section 5. Any person authorized to direct the and disposition of monies
----------
paid or payable by the Trust pursuant to this Plan or any related agreement
shall Provide to the Trustees of the Trust, and the Trustees shall review,
at least quarterly, a written report of the amounts so extended and the
purposes for which such expenditures were made.
Section 6. This Plan may be terminated at any time by vote of a majority of
----------
the Qualified Trustees, or by vote of a majority of the Trust's outstanding
voting securities.
Section 7. All agreements with any person relating to Implementation of
----------
this Plan shall be in writing, and any agreement related to this Plan shall
provide:
A. That such agreement may be terminated at any time, without payment of
any penalty, by vote of a majority of the Qualified Trustees or by vote
of a majority of the Trust's outstanding voting securities, on not more
than 60 days' written notice to any other party to the agreement; and
That such agreement shall terminate automatically in the event of its
assignment.
<PAGE>
Section 8. This Plan may not be amended to increase materially the amount
----------
of distribution expenses permitted pursuant to Section 1 hereof without the
approval of a majority of the outstanding voting securities of the Trust, and
all material amendments to this Plan shall be approved in the manner provided
for approval of this Plan in Section 3.
Section 9. (a) As used in this Plan, the term "Qualified Trustees" shall
----------
mean those Trustees of the Trust who are not interested persons of the Trust,
and have no direct or indirect financial interest in the operation of this Plan
or any agreements related to it. For so long as this Plan is in effect,
selection and nomination of those Trustees of the Trust who are not interested
persons of the Trust shall he committed to the discretion of such is interested
Trustees.
(b) As used in this Plan, the terms "assignment" and "interested person"
shall have the respective meanings specified in the Act and the rules and
regulations thereunder, subject to such exemptions as may be granted by the
Securities and Exchange Commission.
<PAGE>
EXHIBIT 26
QUANTITATIVE GROUP OF FUNDS
SERVICE AGREEMENT
For Ordinary and Institutional Shares of the Quantitative Group of Funds
Ladies and Gentlemen:
U.S. Boston Capital Corporation is the exclusive underwriter and
distributor (the "Distributor") of the Quantitative Group of Funds (each series
a "Fund" and collectively the "Funds") an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), currently comprised of the Funds listed in Exhibit A to this
Agreement. Each Fund offers both Institutional and Ordinary Shares, therefore,
the current prospectus of each Fund should be read carefully.
Pursuant to a certain Ordinary and Institutional Share Selling Agreement
between you and the Distributor dated ________________________, we have agreed
to sell to you, to cover orders received from you as principal, Ordinary Shares
of each of the Funds in those states in which shares of the Funds are currently
qualified for sale, and in compliance with the Investment Company Act of 1940
and the Securities Act of 1933, as amended, and in accordance with the terms and
conditions of this Agreement.
I. SERVICE FEES
Pursuant to the terms of this Service Agreement, and pursuant to the Fund's
Distribution Plan which is permitted by Rule 12b-1 under the Investment Company
Act (the "Distribution Plan"), we are authorized to pay to you service fees in
connection with the accounts of your customers that hold Ordinary Shares of a
Fund. Payment of such service fees is subject to your initial and continuing
satisfaction of the following terms and conditions, which may be revised by us
from time to time in our sole discretion:
A. Qualification Requirements
1. The aggregate asset value of the accounts in the Funds for which you
are the dealer of record equals $25,000 or more.
2. You are the dealer of record for the accounts in the Funds on the last
day of the period for which a service fee is to be paid.
3. One or more of your current employees must be designated as registered
representative(s) on accounts in the Fund during the period for which a service
fee is to be paid.
4. You will provide the following information and agree that we will be
entitled to rely on the accuracy of such information in updating our records for
determining the levels of service fees payable to you under the terms of this
Agreement. You understand, however, that such payments will be based solely on
the Funds' records.
a. For each Fund account registered in the name of one of your
customers, you will provide the registered representative's identification
number and branch number and you will provide updated information at least
quarterly.
b. For each Fund account registered in your name (street name), you
will provide the percentage allocation among the registered representative
numbers and branch numbers and you will provide updated percentage allocations
at least quarterly.
c. For each sub-account registered in your name (street name), you
will provide the registered representative numbers and branch numbers and you
will provide updated information at least quarterly.
<PAGE>
B. Service Fees
1. If you meet the qualification requirements set forth above in
Section I. A., you will be paid a service fee on assets in the Funds for which
you are the dealer of record and which are serviced by a registered
representative of your firm meeting the registered representative requirements,
if any, as follows: on the last business day of the period you are the dealer
of record, a quarterly service fee in the amount set forth in Exhibit A, as
calculated by the Distributor, it being understood that no service fee will be
paid unless you are the dealer of record with respect to customer accounts
having an aggregate asset value of $25,000 or more in the Funds. Service fee
payments will be mailed to you within thirty (30) days of quarter end.
2. You understand and agree that:
a. all service fee payments to be made pursuant to this Agreement
are contingent upon and are subject to the limitations contained in the Funds'
Distribution Plan, which may be amended or discontinued at any time;
b. your failure to provide the services described in Section I. D.
below as may be amended from time to time, or otherwise comply with the terms of
this Agreement, will render you and your registered representatives ineligible
to receive service fees; and
c. failure of an assigned registered representative to provide
services required by this Agreement will render that representative's accounts
ineligible as accounts on which service fees are paid.
d. the obligation of the Distributor to pay service fees under this
agreement is conditioned upon the receipt by it of 12b-1 fees pursuant to the
Funds' Distribution Agreement between the Fund and the Distributor.
C. Payments and Communications to Registered Representatives
You will pay to your registered representatives a significant share of the
service fees paid to you pursuant to this Agreement, and, upon request by the
Distributor, you will fully account for all such payments.
D. Required Services
1. You will assign one of your registered representatives to each Fund
account on your records and reassign such account in the event that a
representative to whom a particular Fund account has been assigned ceases to be
employed by your firm as a registered representative.
2. You and your registered representative will assist us and our
affiliates in providing the following services to shareholders of the Funds:
a. Maintain regular contact with shareholders in assigned-accounts and
assist in answering inquiries concerning the Funds (customer name accounts).
b. Assist in distributing sales and service literature provided by us,
particularly to the beneficial owners of accounts registered in your name
(street name accounts).
c. Provide any other information or services as the customer or we
may reasonably request.
3. You will support our marketing efforts by granting reasonable requests
for visits to your offices by our representatives and by including any Fund(s)
on your "approved" list.
ii
<PAGE>
4. Your compliance with the service requirements set forth in this
Agreement will be evaluated by us from time to time by surveying shareholder
satisfaction with service, by monitoring redemption levels of shareholder
accounts assigned to you and by such other methods as we deem appropriate.
5. The provisions of this Section l. D. may be amended by us from time to
time upon notice to you.
II. GENERAL
A. Amendment
We reserve the right to amend this Agreement including any Schedule hereto,
and to implement any modification of this Agreement, by written notice delivered
by us to you.
B. Effective Period and Termination
The provisions of this Agreement shall remain in effect for a period of
not more than one year from the date of its execution or adoption and thereafter
for successive annual periods only so long as such continuance is specifically
approved at least annually by the Trustees of Funds in conformity with the
requirements of Rule 12b-1 under the Investment Company Act. This Agreement
shall automatically terminate in the event of its assignment (as defined in the
Investment Company Act). In addition, this Agreement may be terminated at any
time, without the payment of any penalty, by either party upon written notice
delivered or mailed by registered mail, postage prepaid, to the other party, or,
as provided in Rule 12b-1 under the Investment Company Act, the Trustees of the
Funds, or by the vote of the holders of the outstanding voting securities of the
Funds. We reserve the right to terminate this Agreement in the event of
violation by you of any of its provisions or for any cause which, in our
opinion, justifies such action. This Agreement shall terminate automatically in
the event of your ceasing to be a member in good standing of the National
Association of Securities Dealers, Inc. as you represent yourself to be.
C. Written Reports
The Trustees shall be provided with and shall review at least quarterly, a
written report of the amounts paid to you under this Agreement and the purposes
for which such expenditures were made.
You agree that this Agreement is made under and will be governed by the
laws of the Commonwealth of Massachusetts.
Very truly yours,
U.S. BOSTON CAPITAL CORPORATION
By:______________________________ Title:___________________________
The undersigned hereby accepts this Agreement and agrees to abide by all of its
terms and conditions.
Date:______________________19_____ By:_____________________________
Authorized Signature
__________________________________
Firm _____________________________
Please print name and title.
__________________________________
__________________________________ Phone:__________________________
Address
iii
<PAGE>
EXHIBIT A
to Service Agreement
Quantitative Group of Funds
<TABLE>
<CAPTION>
Ordinary Shares
- ---------------
Ticker Annual
Fund Name CUSIP Symbol Fee
- --------- --------- ------ ------
<S> <C> <C> <C>
Quantitative Small Cap Fund 74762R608 USBNX 0.25%
Quantitative Mid Cap Fund 74762R806 QNIIX 0.25%
Quantitative Growth and Income Fund 74762R202 USBOX 0.25%
Quantitative International Equity Fund 74762R400 USBFX 0.25%
Quantitative Emerging Markets Fund 74762R855 QFFOX 0.25%
Quantitative Foreign Value Fund 74762R830 none 0.25%
Institutional Shares
- --------------------
Ticker Annual
Fund Name CUSIP Symbol Fee
- --------- --------- ------ ------
Quantitative Small Cap Fund 74762R509 QBNAX 0.00%
Quantitative Mid Cap Fund 74762R707 QNIAX 0.00%
Quantitative Growth and Income Fund 74762R103 QGIAX 0.00%
Quantitative International Equity Fund 74762R301 QIEAX 0.00%
Quantitative Emerging Markets Fund 74762R863 QEMAX 0.00%
Quantitative Foreign Value Fund 74762R848 none 0.00%
</TABLE>
iv
<PAGE>
EXHIBIT 28
QUANTITATIVE GROUP OF FUNDS
SERVICE AGREEMENT
For Ordinary Shares of the Quantitative Group of Funds
(for No Transaction Fee Programs)
Ladies and Gentlemen:
U.S. Boston Capital Corporation is the exclusive underwriter and
distributor (the "Distributor") of the Quantitative Group of Funds (each series
listed on the attached Exhibit A a "Fund" and collectively the "Funds") an open-
end management investment company registered under the Investment Company Act of
1940, as amended (the "Investment Company Act). Each Fund offers both
Institutional and Ordinary Shares, therefore, the current prospectus of each
Fund should be read carefully.
I. SERVICE FEES
Pursuant to the terms of this Service Agreement, and pursuant to the Fund's
Distribution Plan which is permitted by Rule 12b-1 under the Investment Company
Act (the "Distribution Plan"), we are authorized to pay to you service fees in
connection with the accounts of your customers that hold Ordinary Shares of a
Fund. Payment of such service fees is subject to your initial and continuing
satisfaction of the following terms and conditions, which may be revised by us
from time to time in our sole discretion:
A. Qualification Requirements
1. The aggregate asset value of the accounts in the Funds for which you
are the dealer of record equals $25,000 or more.
2. You are the dealer of record for the accounts in the Funds on the last
day of the period for which a service fee is to be paid.
3. One or more of your current employees must be designated as registered
representative(s) on accounts in the Fund during the period for which a service
fee is to be paid.
4. You will provide the following information and agree that we will be
entitled to rely on the accuracy of such information in updating our records for
determining the levels of service fees payable to you under the terms of this
Agreement. You understand, however, that such payments will be based solely on
the Funds' records.
a. For each Fund account registered in the name of one of your
customers, you will provide the registered representative's identification
number and branch number and you will provide updated information at least
quarterly.
b. For each Fund account registered in your name (street name), you
will provide the percentage allocation among the registered representative
numbers and branch numbers and you will provide updated percentage allocations
at least quarterly.
c. For each sub-account registered in your name (street name), you
will provide the registered representative numbers and branch numbers and you
will provide updated information at least quarterly.
<PAGE>
B. Service Fees
1. If you meet the qualification requirements set forth above in Section
I. A., you will be paid a service fee on assets in the Funds for which you are
the dealer of record and which are serviced by a registered representative of
your firm meeting the registered representative requirements, if any, as
follows: on the last business day of the period you are the dealer of record, a
quarterly service fee equal to .0625% of average assets (.25% annualized), as
calculated by the Distributor, it being understood that no service fee will be
paid unless you are the dealer of record with respect to customer accounts
having an aggregate asset value of $25,000 or more in the Funds. Service fee
payments will be mailed to you within thirty (30) days of quarter end.
2. You understand and agree that:
a. all service fee payments to be made pursuant to this Agreement are
contingent upon and are subject to the limitations contained in the Funds'
Distribution Plan, which may be amended or discontinued at any time;
b. your failure to provide the services described in Section I. D.
below as may be amended from time to time, or otherwise comply with the terms of
this Agreement, will render you and your registered representatives ineligible
to receive service fees; and
c. failure of an assigned registered representative to provide
services required by this Agreement will render that representative's accounts
ineligible as accounts on which service fees are paid.
d. the obligation of the Distributor to pay service fees under this
agreement is conditioned upon the receipt by it of 12b-1 fees pursuant to the
Funds' Distribution Agreement between the Fund and the Distributor.
C. Payments and Communications to Registered Representatives
You will pay to your registered representatives a significant share of the
service fees paid to you pursuant to this Agreement, and, upon request by the
Distributor, you will fully account for all such payments.
D. Required Services
1. You will assign one of your registered representatives to each Fund
account on your records and reassign such account in the event that a
representative to whom a particular Fund account has been assigned ceases to be
employed by your firm as a registered representative.
2. You and your registered representative will assist us and our
affiliates in providing the following services to shareholders of the Funds:
a. Maintain regular contact with shareholders in assigned-accounts
and assist in answering inquiries concerning the Funds (customer name accounts).
b. Assist in distributing sales and service literature provided by
us, particularly to the beneficial owners of accounts registered in your name
(street name accounts).
c. Provide any other information or services as the customer or we
may reasonably request.
3. You will support our marketing efforts by granting reasonable requests
for visits to your offices by our representatives and by including any Fund(s)
on your "approved" list.
ii
<PAGE>
4. Your compliance with the service requirements set forth in this
Agreement will be evaluated by us from time to time by surveying shareholder
satisfaction with service, by monitoring redemption levels of shareholder
accounts assigned to you and by such other methods as we deem appropriate.
5. The provisions of this Section l. D. may be amended by us from time to
time upon notice to you.
II. GENERAL
A. Amendment
We reserve the right to amend this Agreement including any Schedule hereto,
and to implement any modification of this Agreement, by written notice delivered
by us to you.
B. Effective Period and Termination
The provisions of this Agreement shall remain in effect for a period of
not more than one year from the date of its execution or adoption and thereafter
for successive annual periods only so long as such continuance is specifically
approved at least annually by the Trustees of Funds in conformity with the
requirements of Rule 12b-1 under the Investment Company Act. This Agreement
shall automatically terminate in the event of its assignment (as defined in the
Investment Company Act). In addition, this Agreement may be terminated at any
time, without the payment of any penalty, by either party upon written notice
delivered or mailed by registered mail, postage prepaid, to the other party, or,
as provided in Rule 12b-1 under the Investment Company Act, the Trustees of the
Funds, or by the vote of the holders of the outstanding voting securities of the
Funds. We reserve the right to terminate this Agreement in the event of
violation by you of any of its provisions or for any cause which, in our
opinion, justifies such action. This Agreement shall terminate automatically in
the event of your ceasing to be a member in good standing of the National
Association of Securities Dealers, Inc. as you represent yourself to be.
C. Written Reports
The Trustees shall be provided with and shall review at least quarterly, a
written report of the amounts paid to you under this Agreement and the purposes
for which such expenditures were made.
You agree that this Agreement is made under and will be governed by the
laws of the Commonwealth of Massachusetts.
Very truly yours,
U.S. BOSTON CAPITAL CORPORATION
By:______________________________ Title:___________________________
The undersigned hereby accepts this Agreement and agrees to abide by all of its
terms and conditions.
Date:______________________19_____ By:_____________________________
Authorized Signature
- ----------------------------------
- ---------------------------------- -----------------------------
Firm Please print name and title.
- ----------------------------------
Phone:
- ---------------------------------- -----------------------
Address
iii
<PAGE>
EXHIBIT A
SERVICE AGREEMENT
Quantitative Group of Funds
Ordinary Shares
- ---------------
<TABLE>
<CAPTION>
Ticker
Fund Name CUSIP Symbol
- ----------------------------------------- --------- ------
<S> <C> <C>
Quantitative Small Cap Fund 74762R608 USBNX
Quantitative Mid Cap Fund 74762R806 QNIIX
Quantitative Growth and Income Fund 74762R202 USBOX
Quantitative International Equity Fund 74762R400 USBFX
Quantitative Foreign Value Fund 74762R830 none
Quantitative Emerging Markets Fund 74762R855 QFFOX
</TABLE>
iv
<PAGE>
EXHIBIT 29
QUANTITATIVE GROUP OF FUNDS
SERVICE AGREEMENT
For Ordinary Shares of the Quantitative Group of Funds
(fully disclosed accounts)
Ladies and Gentlemen:
U.S. Boston Capital Corporation is the exclusive underwriter and
distributor (the "Distributor") of the Quantitative Group of Funds (each series
a "Fund" and collectively the "Funds") an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Investment
Company Act), currently comprised of the Funds listed in Exhibit A to this
Agreement. Each Fund offers both Institutional and Ordinary Shares, therefore,
the current prospectus of each Fund should be read carefully.
Pursuant to a certain Ordinary Share Selling Agreement between you and the
Distributor dated ________________________, we have agreed to sell to you, to
cover orders received from you as agent, Ordinary Shares of each of the Funds in
those states in which shares of the Funds are currently qualified for sale, and
in compliance with the Investment Company Act of 1940 and the Securities Act of
1933, as amended, and in accordance with the terms and conditions of this
Agreement.
I. SERVICE FEES
Pursuant to the terms of this Service Agreement, and pursuant to the Fund's
Distribution Plan which is permitted by Rule 12b-1 under the Investment Company
Act (the "Distribution Plan"), we are authorized to pay to you service fees in
connection with the accounts of your customers that hold Ordinary Shares of a
Fund. Payment of such service fees is subject to your initial and continuing
satisfaction of the following terms and conditions, which may be revised by us
from time to time in our sole discretion:
A. Qualification Requirements
1. The aggregate asset value of the accounts in the Funds for which you
are the dealer of record equals $25,000 or more.
2. You are the broker of record for the accounts in the Funds on the last
day of the period for which a service fee is to be paid.
3. One or more of your current employees must be designated as registered
representative(s) on accounts in the Fund during the period for which a service
fee is to be paid.
4. You will provide the following information and agree that we will be
entitled to rely on the accuracy of such information in updating our records for
determining the levels of service fees payable to you under the terms of this
Agreement. You understand, however, that such payments will be based solely on
the Funds' records.
a. For each Fund account registered in the name of one of your
customers, you will provide the registered representative's identification
number and branch number and you will provide updated information at least
quarterly.
b. For each Fund account registered in your name (street name), you
will provide the percentage allocation among the registered representative
numbers and branch numbers and you will provide updated percentage allocations
at least quarterly.
c. For each sub-account registered in your name (street name), you
will provide the registered representative numbers and branch numbers and you
will provide updated information at least quarterly.
<PAGE>
B. Service Fees
1. If you meet the qualification requirements set forth above in Section
I. A., you will be paid a service fee on assets in the Funds for which you are
the dealer of record and which are serviced by a registered representative of
your firm meeting the registered representative requirements, if any, as
follows: on the last business day of the period you are the dealer of record, a
quarterly service fee equal to .0625% of average assets (.25% annualized), as
calculated by the Distributor, it being understood that no service fee will be
paid unless you are the dealer of record with respect to customer accounts
having an aggregate asset value of $25,000 or more in the Funds. Service fee
payments will be mailed to you within thirty (30) days of quarter end.
2. You understand and agree that:
a. all service fee payments to be made pursuant to this Agreement are
contingent upon and are subject to the limitations contained in the Funds'
Distribution Plan, which may be amended or discontinued at any time;
b. your failure to provide the services described in Section I. D.
below as may be amended from time to time, or otherwise comply with the terms of
this Agreement, will render you and your registered representatives ineligible
to receive service fees; and
c. failure of an assigned registered representative to provide
services required by this Agreement will render that representative's accounts
ineligible as accounts on which service fees are paid.
d. the obligation of the Distributor to pay service fees under this
agreement is conditioned upon the receipt by it of 12b-1 fees pursuant to the
Funds' Distribution Agreement between the Fund and the Distributor.
C. Payments and Communications to Registered Representatives
You will pay to your registered representatives a significant share of the
service fees paid to you pursuant to this Agreement, and, upon request by the
Distributor, you will fully account for all such payments.
D. Required Services
1. You will assign one of your registered representatives to each Fund
account on your records and reassign such account in the event that a
representative to whom a particular Fund account has been assigned ceases to be
employed by your firm as a registered representative.
2. You and your registered representative will assist us and our
affiliates in providing the following services to shareholders of the Funds:
a. Maintain regular contact with shareholders in assigned-accounts
and assist in answering inquiries concerning the Funds (customer name accounts).
b. Assist in distributing sales and service literature provided by
us, particularly to the beneficial owners of accounts registered in your name
(street name accounts).
c. Provide any other information or services as the customer or we
may reasonably request.
3. You will support our marketing efforts by granting reasonable requests
for visits to your offices by our representatives and by including any Fund(s)
on your "approved" list.
ii
<PAGE>
4. Your compliance with the service requirements set forth in this
Agreement will be evaluated by us from time to time by surveying shareholder
satisfaction with service, by monitoring redemption levels of shareholder
accounts assigned to you and by such other methods as we deem appropriate.
5. The provisions of this Section l. D. may be amended by us from time to
time upon notice to you.
II. GENERAL
A. Amendment
We reserve the right to amend this Agreement including any Schedule hereto,
and to implement any modification of this Agreement, by written notice delivered
by us to you.
B. Effective Period and Termination
The provisions of this Agreement shall remain in effect for a period of
not more than one year from the date of its execution or adoption and thereafter
for successive annual periods only so long as such continuance is specifically
approved at least annually by the Trustees of Funds in conformity with the
requirements of Rule 12b-1 under the Investment Company Act. This Agreement
shall automatically terminate in the event of its assignment (as defined in the
Investment Company Act). In addition, this Agreement may be terminated at any
time, without the payment of any penalty, by either party upon written notice
delivered or mailed by registered mail, postage prepaid, to the other party, or,
as provided in Rule 12b-1 under the Investment Company Act, the Trustees of the
Funds, or by the vote of the holders of the outstanding voting securities of the
Funds. We reserve the right to terminate this Agreement in the event of
violation by you of any of its provisions or for any cause which, in our
opinion, justifies such action. This Agreement shall terminate automatically in
the event of your ceasing to be a member in good standing of the National
Association of Securities Dealers, Inc. as you represent yourself to be.
C. Written Reports
The Trustees shall be provided with and shall review at least quarterly, a
written report of the amounts paid to you under this Agreement and the purposes
for which such expenditures were made.
[THIS SPACE INTENTIONALLY LEFT BLANK]
iii
<PAGE>
You agree that this Agreement is made under and will be governed by the
laws of the State of Massachusetts.
Very truly yours,
U.S. BOSTON CAPITAL CORPORATION
By:______________________________ Title:___________________________
The undersigned hereby accepts this Agreement and agrees to abide by all of its
terms and conditions.
Date:______________________19_____ By:_____________________________
Authorized Signature
_________________________________
Firm _______________________________
Please print name and title.
_________________________________
_________________________________ Phone:__________________________
Address
iv
<PAGE>
EXHIBIT A
to Service Agreement
Quantitative Group of Funds
Ordinary Shares
- ---------------
<TABLE>
<CAPTION>
Ticker Annual
Fund Name CUSIP Symbol Fee
- --------- ----- ------ ------
<S> <C> <C> <C>
Quantitative Small Cap Fund 74762R608 USBNX 0.25%
Quantitative Mid Cap Fund 74762R806 QNIIX 0.25%
Quantitative Growth and Income Fund 74762R202 USBOX 0.25%
Quantitative International Equity Fund 74762R400 USBFX 0.25%
Quantitative Emerging Markets Fund 74762R855 QFFOX 0.25%
Quantitative Foreign Value Fund 74762R830 - 0.25%
</TABLE>
v
<PAGE>
C. Clearing Agent
The Distributor acknowledges that Tucker Anthony is an introducing firm
whose securities trading activities are cleared through the correspondent
services of a clearing firm (the "Agent"). The Distributor agrees that one or
more of the services specified herein may be performed on Tucker Anthony's
behalf by the Agent and that such performance will not constitute an
impermissible assignment under the terms of this Agreement nor will it affect in
any way the payment of service fees to Tucker Anthony as set forth in this
Agreement.
vi
<PAGE>
Exhibit 31
As filed with the Securities and Exchange Commission
on August __, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
In the matter of
QUANTITATIVE GROUP OF FUNDS
and
QUANTITATIVE ADVISORS, INC.
55 Old Bedford Road
Lincoln, Massachusetts 01773
AMENDMENT NO. 1 TO APPLICATION FOR AN ORDER OF
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
SECTION 6(c) OF THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED, EXEMPTING APPLICANTS FROM C(Pounds)RTAIN
REQUIREMENTS OF SECTION 15(a) THEREOF AND RULE 18f-2
THEREUNDER
File No. 812-11144
Page One of 37 Pages
-------------
<PAGE>
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
__________________________________X
In the Matter of )
)
)
QUANTITATIVE GROUP OF FUNDS )
: ) AMENDMENT NO. 1 TO APPLICATION
and ) PURSUANT TO SECTION 6(c) OF THE
) INVESTMENT COMPANY ACT OF 1940, AS
QUANTITATIVE ADVISORS, INC. ) AMENDED, FOR AN ORDER OF
) EXEMPTION FROM CERTAIN
55 Old Bedford Road ) REQUIREMENTS OF SECTION 15(a)
Lincoln, MA 01733 ) THEREOF AND RULE 18f-2.
) THEREUNDER
)
File No. 812-11144 )
__________________________________X
Communications regarding this application should be directed to:
Mark A. Katzoff, Esq.
QUANTITATIVE GROUP OF FUNDS.
55 Old Bedford Road
Lincoln, Massachusetts 01773
(800) 331-1244
with a copy to:
Joseph R. Fleming, Esq.
DECHERT PRICE & RHOADS
10 Post Office Square, Suite 1230
Boston, MA 02109
(617) 728-7161
I Background
----------
A The Trust
---------
Quantitative Group of Funds (the "Trust") is an open-end, management
investment company organized as a Massachusetts business trust and currently
composed of six separate series
2
<PAGE>
(each, a "Fund," and collectively, the "Funds"). Each Fund is managed as though
it were a separate mutual fund issuing its own shares. The Trust is registered
as an investment company under the Investment Company Act of 1940, as amended
(the "Act").
The investment adviser to the Trust, Quantitative Advisors, Inc.
("Quantitative Advisors" or the "Adviser"), selects sub-advisers (each a "Fund
Manager." and collectively, the "Fund Managers") to provide investment advice
for the Funds. The Funds and their respective Fund Managers are identified in
the discussion on page 6 below. The Adviser and the Fund Managers are each
registered as investment advisers under the Investment Advisers Act of 1940.
The Trust and the Adviser are collectively referred to in this
Application as "Applicants". Applicants seek the relief requested with respect
to the Trust, the Funds, and any series of the Trust organized in the future and
for any open-end management investment company in the future advised by the
Adviser or by a person controlling, controlled by, or under common control
(within the meaning of section 2(a)(9) of the Act) with the Adviser, provided
that such investment company operates in substantially the same manner as the
Trust and complies with the conditions to the order requested as is set forth
below in Section II. B. All existing investment companies that currently intend
to rely on the order have been named as applicants, and any other existing or
future investment companies that subsequently rely on the order will comply with
the terms and conditions of the application.
B. Advisor Services and Compensation
---------------- --- ------------
Quantitative Advisors is wholly owned by officers and trustees of the
Trust. Quantitative Advisors has entered into an investment adviser agreement
(the "Adviser Agreement" ) with the Trust and is responsible for conducting all
operations of the Trust except those operations contracted to its transfer agent
and custodian and certain other service providers. The Adviser Agreement
obligates Quantitative Advisors to provide investment advisory services to the
Funds, to furnish the Trust with
3
<PAGE>
certain administrative, clerical, bookkeeping and statistical services, office
space and facilities, and to pay the compensation, if any, of the officers of
the Trust.
Quantitative Advisors has in turn entered into an agreement with each
Fund Manager (each, a "Fund Manager's Agreement" and collectively the "Fund
Manager's Agreements"). The Fund Manager's Agreements are substantially the same
in all material respects, except for the names of the Fund Managers and the
rates of compensation, which are a portion of the management fee that is paid by
each Fund to Quantitative Advisors and which Quantitative Advisors pays to the
Fund Managers.
It is the Advisor's responsibility under the Adviser Agreement to
select, subject to the review and approval of the Board of Trustees of each Fund
(the "Board"), Fund Managers who have distinguished themselves by able
performance in their respective areas of expertise, and to review their
continued performance. The oversight and management services provided by
Quantitative Advisors include (i) supervising the Fund Managers' compliance with
state and federal regulations, including the Act, (ii) evaluating the Fund
Managers' performance, (iii) analyzing the composition of the investment
portfolios of each Fund and preparing reports thereon for the Board or any
committee of the Board, (iv) calculating each Fund's performance in comparison
to similar mutual funds and other market information, (v) conducting searches,
upon a request of the Board, for a replacement for any Fund Manager then serving
the respective Fund, and (vi) preparing presentations to shareholders that
analyze each Fund's overall investment program and performance. Furthermore,
under the terms of the Advisory Contracts with the Fund Managers, the Adviser
has the authority to terminate the contracts without prior approval by the
Board. However, the Advisor has never exercised this right without first
discussing the matter with the Board. The Board is kept fully apprised of
actions of this type contemplated by the Adviser, and all such actions are
subject to review by the Board.
The Funds' prospectus has consistently described the Advisor's
oversight function.
4
<PAGE>
"The Funds are managed by [the Advisor], which provides overall management and
administration of the Funds. Under the terms of the management agreement, the
[Advisor] may, subject to the approval of the Trustees, manage the Funds itself
or, subject to the approval by the Trustees and the shareholders, select [Fund
Managers] to manage certain of the Funds. In the latter case, the [Advisor]
monitors the [Fund Managers'] investment program and results, reviews brokerage
matters, oversees compliance by the Funds with various federal and state
statutes and carries out the directives of the Trustees." The Funds have
employed an Advisor/Fund Manager structure since their inception in 1985. The
Advisor monitors the performance of the Fund Managers on a daily basis and
reports quarterly to the Board regarding their performance, including their
relative performance to appropriate benchmarks and peer groups. The Manager
periodically reviews investment strategies with the Fund Managers and from time
to time has made recommendations to the Fund Managers regarding changes to those
strategies.
In selecting Fund Managers, the Advisor considers a number of
different criteria, including the nature of the strategy employed by the Fund
Manager, the performance of the Fund Manager in strategies with investment
objectives similar to those used by the Funds, the Fund Manager's reputation in
the investment community, and, to a lesser extent, the Fund Manager's ability to
participate in the marketing of the Funds. To locate and evaluate Fund
Managers, the Advisor has employed personal contacts and manager databases, as
well as discussions with prospective Fund Managers and their existing clients.
In determining whether an existing Fund Manager should be terminated, the
Advisor primarily focuses on the relative performance of the Fund Manager.
5
<PAGE>
C Fund Manager Services And Compensation
--------------------------------------
The Adviser performs the management, supervisory, and administrative
functions for the Funds, and the Fund Managers serve in a sub-advisory capacity
to the respective Funds. Subject to the supervision and direction of the Adviser
and, ultimately, the Board, each Fund Manager's responsibilities are limited to
furnishing the Fund advice with respect to the investment and reinvestment of
the assets of the Fund in accordance with investment objectives, restrictions
and limitations of the Fund set forth in the Trust's Registration Statement on
Form N-IA, and to direct securities transactions pursuant to such investment
advice. A Fund may be managed by a single Fund Manager or may be allocated by
the Adviser between or among more than one Fund Manager. Currently, no Fund has
more than a single Fund Manager. None of the Fund Managers is an affiliated
person of the Adviser within the meaning of Section 2(a)(3) of the Act.
The Fund Managers of the individual Funds are as follows:
Quantitative Small Cap Fund: The Fund Manager of the Quantitative Small Cap
- ---------------------------
Fund is currently Columbia Partners, LLC, Investment Management. The
Quantitative Small Cap Fund was formerly called the Quantitative Numeric Fund.
Quantitative Mid Cap Fund: The Fund Manager of the Quantitative Mid Cap Fund
- -------------------------
currently is Columbia Partners, LLC, Investment Management. The Quantitative Mid
Cap Fund was formerly called the Quantitative Numeric II Fund.
Quantitative Growth and Income Fund: The Fund Manager of the Quantitative Growth
- -----------------------------------
and Income Fund currently is State Street Global Advisors.
Quantitative International Equity Fund: The Fund Manager of the Quantitative
- --------------------------------------
International Equity Fund is currently Independence International Associates,
Inc.
Quantitative Emerging Markets Fund: The Fund Manager of the Quantitative
- ----------------------------------
Emerging Markets Fund
6
<PAGE>
currently is Independence International Associates, Inc. The Quantitative Small
Cap Fund was formerly called the Quantitative Numeric Fund.
Quantitative Foreign Value Fund. The Fund Manager of the Quantitative Foreign
- -------------------------------
Value Fund currently is Polaris Capital Management, Inc.
II. Discussion
-----------
Applicants request that the Commission grant an exemption from Section
15(a) of the Act and Rule 18f-2 thereunder to permit the Adviser to enter into
or make material changes to Fund Manager's Agreements with the Adviser, without
obtaining shareholder approval therefor. The Adviser Agreement between the
Adviser and the Funds would in all cases be subject to the shareholder voting
requirements of Section 15(a). For the reasons set forth below, Applicants
respectfully submit that the requested exemptions would be in accordance with
the standards of Section 6(c) of the Act.
A. Relevant Legal Provisions
-------------- ----------
1. Section 15(a) of the Act
-------------------- ---
Section 15(a) of the Act provides, in part, that;
It shall be unlawful for any person to serve or act as investment
advisor of a registered investment company, except pursuant to a
written contract, which contract. whether with such registered
company or with an investment adviser of such registered company,
has been approved by the vote of a majority of the outstanding
voting securities of such registered company....
2. Rule 18f-2 under the Act
------------------------
Rule l8f-2 under the Act provides, in relevant part, that
(c)(1) With respect to the submission of an investment advisory
contract to the holders of the outstanding voting securities of a
series company for the approval required by Section 15(a) of the
Act, such matter shall be deemed to be effectively acted upon
with respect to any class or series of securities of such
7
<PAGE>
company if a majority of the outstanding voting securities of
such class or series vote for the approval of such matter,
notwithstanding (A) that such matter has not been approved by the
holders of a majority of the outstanding voting securities of any
other class or series affected by such matter, and (B) that such
matter has not been approved by the vote of a majority of the
outstanding voting securities of such company....
Rule l8f-2 further provides that:
(c)(2) If any class or series of securities of a series company
fails to approve an investment advisory contract in the manner
required by subparagraph (1) of this paragraph, the investment
adviser of such company may continue to serve or act in such
capacity for the period of time pending such required approval of
such contract, of a new contract with the same or different
adviser, or other definitive action; provided that the
compensation received by such investment adviser during such
period is equal to no more than its actual costs incurred in
furnishing investment advisory services to such class or series
or the amount it would have received under the advisory contract,
whichever is less.
3. Section 6(c) of the Act
-----------------------
Section 6(c) of the Act provides, in part, that;
The Commission ... by order upon application, may conditionally
or unconditionally exempt any person or any class or classes of
persons... from any provisions of (the Act] or of any rule or
regulation thereunder, if and to the extent that such exemption
is necessary or appropriate in the public interest and consistent
with tile protection of investors and the purposes fairly
intended by the policy and provisions of (the Act).
B. Exemptions Requested and Conditions Imposed
-------------------------------------------
Applicants request that the Commission grant an exemption from Section
15(a) of the Act and Rule 18f-2 thereunder to permit the Adviser to enter into
new or amended contracts with Fund Managers without obtaining shareholder
approval therefor, including new Fund Manager's Agreements necessitated because
the prior Fund Manager's Agreements were terminated as a result of an
"assignment" (as defined in Section 2(a)(4) of the Act). In order to protect
against the abuse that Section 15 addresses, and that may arise under
arrangements such as those proposed in this Application -- the transfer of
responsibility for management of a Fund's assets without Fund shareholders'
acquiescence --
8
<PAGE>
Applicants agree to the imposition of the conditions enumerated below to the
granting of the exemptive order requested (the "Order"). The conditions proposed
are intended to ensure that Fund shareholders receive adequate disclosure about
the Fund Managers, permitting them to "vote with their feet" on the Adviser's
decision to appoint a new Fund Manager or to change the terms of a Fund
Manager's agreement.
Applicants agree that any order granting the requested relief shall be subject
to the following conditions:
a. The Advisor will provide general management and administrative
services to the Funds, including overall supervisory responsibility for the
general management and investment of the Fund's securities portfolios, and,
subject to review and approval by each Board with respect to its respective
Funds, will (i) set the Funds' overall investment strategies; (ii) select Fund
Managers; (iii) monitor and evaluate the performance of Fund Managers; (iv)
allocate and, when appropriate, reallocate a Fund's assets among its Fund
Managers in those cases where the Advisor decides to select more than one Fund
Manager for a particular Fund; and (v) ensure that the Fund Managers comply with
the relevant Fund's investment objectives, policies, and restrictions.
b. Before a Fund may rely on the Order requested hereby, the operation of
the Fund in the manner described in this Application will be approved by a
majority of its outstanding voting securities, as defined in the Act, or, in the
case of a new Fund whose public shareholders purchased shares on the basis of a
prospectus containing the disclosure contemplated by condition (d) below, by the
sole shareholder before offering of shares of such Fund to the public.
c. Within 90 days of the hiring of a new Fund Manager, each Fund will
furnish to its shareholders all information about the new Fund Manager or Fund
Manager Agreement that would be
9
<PAGE>
included in a proxy statement, including any change in the disclosure required
by the addition of a new Fund Manager. The information will include disclosure
as to the level of fees to be paid to the Adviser and each Fund Manager. Each
fund will meet this condition by providing shareholders, within 90 days of the
hiring of a Fund Manager, with an information statement meeting the requirements
of Regulation 14C and Schedule 14C under the Exchange Act. The information
statement will also meet the requirements of Item 22 of Schedule 14A under the
Exchange Act.
d. Each Fund will disclose in its prospectuses the existence, substance
and effect of the Order granted pursuant to this Application. In addition,
each Fund will hold itself out to the public as employing the "manager of
managers" approach described in the application. The prospectus relating to a
Fund will prominently disclose that the Adviser has ultimate responsibility for
the investment performance of the Fund due to its responsibility to oversee Fund
Managers and recommend their hiring, termination, and replacement.
e. No director, trustee or officer of the Funds or director or officer of
the Adviser will own directly or indirectly (other than through a pooled
investment vehicle that is not controlled by any such director, trustee or
officer) any interest in any Fund Manager except for (i) ownership of interests
in the Adviser or any entity that controls, is controlled by or is under common
control with the Adviser, or (ii) ownership of less than 1% of the outstanding
securities of any class of equity or debt of a publicly-traded company that is
either a Fund Manager or any entity that controls, is controlled by or is under
common control with a Fund Manager
f. The Adviser will not enter into a Fund Manager's Agreement with any
Fund Manager that is an affiliated person, as defined in Section 2(a)(3) of the
Act, of the Adviser or the Funds other
10
<PAGE>
than by reason of serving as Fund Manager to one or more Funds ("Affiliated Fund
Manager") without such agreement, including the compensation to he paid
thereunder, being approved by the shareholders of the applicable Fund.
g. At all times, a majority of the members of the Board will be persons
each of whom is not an "interested person" of the respective Fund as defined in
Section 2(a)(19) of the Act ("Independent Trustee"), and the nomination of new
or additional Independent Trustees will be placed within the discretion of the
then existing Independent Trustees.
h. When a Fund Manager change is proposed for a Fund with an Affiliated
Fund Manager, the Board, including a majority of the Independent Trustees, will
make a separate finding. reflected in the Board's minutes, that such change is
in the best interests of the Fund and its shareholders and does not involve a
conflict of interest from which the Adviser or the Affiliated Fund Manager
derives an inappropriate advantage.
C. The Requested Exemptions Meet the standards of Section 6(c) of the Act
----------------------------------------------------------------------
1. Necessary or Appropriate in the Public Interest
------------------------------- ------ --------
As stated earlier, any contract between the Adviser and the Trust would
remain subject to the shareholder voting requirements of Section 15(a) of the
Act, Rule 18f-2 under the Act and related proxy disclosure requirements of Rule
20a-1 under the Act. Applicants are not seeking any exemptive relief with
respect to such contracts. Rather, Applicants are requesting that the Adviser be
permitted to enter into new or amended contracts with Fund Managers without
seeking shareholder approval. This
11
<PAGE>
exemption would permit the Adviser more efficiently to perform the functions the
Funds are paying it to perform: that is, selecting Fund Managers, monitoring
their performance, and making whatever changes in the roster of Fund Managers
the Adviser deems appropriate, subject to the approval of the Board. To require
that shareholders approve each new Fund Manager would not only result in
unnecessary administrative expense to the Funds, but could result in harmful
delays in executing changes in Fund Managers that the Adviser and the Board have
determined are necessary. To the extent this occurred, shareholders of the Funds
would be receiving less satisfactory service than would otherwise be the case,
and their expectations would be frustrated.
It is in order to avoid the aforementioned expenses and delays that
Applicants are requesting relief from Section 15(a) of the Act and Ru1e 18f-2
thereunder.
2. Consistent with the Protection of Investors
-------------------------------------------
Primary responsibility for management of the Funds -- including in
particular the selection and supervision of the Fund Managers - is vested in the
Adviser, subject to oversight by the Board. The Advisor Agreement with the Trust
will remain fully subject to the requirements of Section 15(a) of the Act and
Rule 18f-2 thereunder, including the requirements for shareholder voting.
Applicants believe it is consistent with the protection of investors to vest the
selection and supervision of Fund Managers in the Adviser given the advisory
structure of the Trust, as well as the Adviser's significant experience and
experience in selecting Fund Managers. It is submitted that, within this
structure and in view of such experience and expertise, the Adviser is in a
better position to make an informed selection of a Fund Manager than individual
investors. Significantly, the Trust's prospectus discloses information
concerning the identity, ownership, qualifications and compensation of the Fund
Managers in full compliance with
12
<PAGE>
Form N-1A. Further, the information statements described above would provide
shareholders with all information regarding a new Fund Manager or a material
change in a Fund Manager's Agreement to the same extent as would be set forth in
a proxy statement. Thus, investors would be in a position to make a fully
informed investment decision as the purchase, redemption or retention of Fund
shares.
These arrangements are consistent with the protection of investors because
they both permit the Trust to avoid the administrative burden and expense
associated with a formal proxy solicitation (which benefits all shareholders,
including those that might redeem their shares after review of an information
statement relating to a new Fund Manager or a material change in a Fund Manager
Agreement they did not favor) and provide full disclosure to investors,
permitting them to "vote with their feet," to the same extent as if a
shareholder vote had approved the new contract - the result in most if not all
such votes. In contrast, in the absence of the exemptive relief requested in
this Application, all shareholders would bear the higher expenses associated
with formal proxy solicitations that would provide no more meaningful disclosure
to shareholders -- including those shareholders who might redeem their shares
after shareholder approval of a new Fund Manager or a material change in a Fund
Manager Agreement they did not favor. Moreover, Applicants note that mutual
fund shareholders rarely if ever disapprove a proposed sub-advisory agreement
that is recommended by management and the board of directors or trustees of the
mutual fund.
Applicants' arrangements are sufficiently distinguishable from those of
most other investment companies so that the exemptive relief being requested
herein could not fairly be viewed as a precedent for similar relief for other
investment companies that employ advisers in a conventional way. As stated
above, the Adviser continuously monitors the performance of each Fund Manager
and from time to time may recommend the replacement of a particular Fund
Manager, or allocation of a portion of the assets of
13
<PAGE>
a particular Fund to an additional Fund Manager (should the Advisor choose to
employ multiple Fund Managers for a single Fund in the future). This "Manager of
Managers" approach distinguishes the Funds from the vast majority of other
investment companies which use internal management.
It is of course true that a sub-adviser to any registered investment
company must serve pursuant to a contract that may be terminated by the company
on not more than sixty days' notice. As a practical matter, however, persons
buying shares of a particular mutual fund normally do so with the understanding
that the fund's portfolio will be managed by the investment adviser and sub-
adviser (if any) named in the prospectus. Indeed in the usual case the identity
of the company or companies providing portfolio management is the primary basis
for choosing among funds with similar investment objectives and policies. Thus,
barring an extraordinary development, the advisory relationships described in a
fund's prospectus are expected to be permanent.
For this reason, it is unlikely that most other investment companies would
have any reason to apply for the type of exemptive order being sought by
Applicants. To the contrary, there would be compelling business reasons not to
do so. First, in the context of a conventional investment company, such an
application would suggest that the investment adviser contemplated frustrating
the expectations of the investors as to the fund's portfolio management. Second,
it could have a corrosive effect upon the investment adviser's relationship with
the sub-adviser as the sub-adviser might view the application as inconsistent
with the sub-adviser's assumption that its relationship with the fund would not
be terminated except in extraordinary circumstances.
In short, most of the mutual funds that employ sub-advisers do so under
circumstances that give them no reason to seek the type of exemptive relief
being sought by Applicants, and in fact give them good reasons not to seek such
relief. These considerations are sufficient to ensure that granting Applicants
the relief they seek will not lead to an excess of similar applications in the
future.
14
<PAGE>
The Trust currently has five Funds, with the registration statement for a
sixth Fund pending effectiveness. Since May 9, 1985, the commencement of
operations of the Trust, five changes in Fund Managers or material changes in
Fund Manager's Agreements were submitted for shareholder approval. Attached
hereto as Exhibit A is a table listing all meetings of the shareholders of the
Funds previously held or to be held for the purpose of approving a new Fund
Manager or material change in a Fund Manager's Agreement since commencement of
operations of the respective Funds. Each of these meetings would not have taken
place and shareholders would have been spared the expense and burden of repeat
proxy solicitations, while receiving all relevant information that would have
been included in a proxy statement, had the Order been in place. Shareholders
could then have made an immediate decision to hold or redeem their shares
without the delay associated with waiting for the completion of the proxy
solicitation, the calculation of votes, the communication of the results and the
determination by the shareholder of whether he or she regarded the result - in
all cases, the approval of the arrangements proposed - as favorable or
unfavorable.
The Adviser may wish to change the Fund Manager for a particular Fund for
any number of reasons. First, the Adviser may determine that a Fund Manager is
providing sub-standard performance over a period of time. In such a case, the
Fund Manager might be replaced by a new Fund Manager, or, if another Fund
Manager for a Fund with multiple Fund Managers (if the Advisor elects to use
this approach in the future) is deemed to have superior performance, the assets
managed by the under performing Fund Manager may be allocated to the superior
Fund Manager. A second reason may be that the individual employee responsible
for a Fund moves from employment with one Fund Manager to another, and the
Adviser deems it advisable to stay with that individual. A third reason for a
Fund Manager change may be when an entity undergoes a change in control that
causes the Fund Manager's Agreement to terminate, and which the Adviser believes
makes either advisable or inadvisable to
15
<PAGE>
continue the relationship (in either case a shareholder vote on a new contract
would be required by Section 15(a) of the Act). Change in control was the cause
of the most recent proxies of the Funds relating to Fund Managers. The fourth
category of change occurs with the Adviser decides to obtain further
diversification of a Fund by hiring an additional Fund Manager without
terminating any current Fund Manager. A final category of change is when, in the
view of the Adviser, a change in investment style (for example, from a value
manager to a growth manager) is warranted.
3 Consistent with the Purposes Fairly Intended by the Policy and
--------------------------------------------------------------
Provisions of the Act
---------------------
The purpose of the requirement that shareholders approve new advisory
contracts can be inferred readily. The identity of a registered investment
company's investment adviser, together with the company's fundamental investment
policies and objectives, is one of the main features distinguishing one
investment company from another. Clearly, the framers of the Act believed that
if an investment company is to be managed by an investment advisor different
from the one shareholders expected when they made their investment, the new
investment adviser should be approved by shareholders. The exemption being
requested herein would be fully consistent with this principle.
The primary party on which an investor in a Fund will rely will be the
Adviser. Indeed, the first page of the Trust's prospectus makes perfectly clear
that the Adviser is the primary service provider to the Fund, stating that the
Adviser "provides overall management and operational services to the Funds",
while the Fund Managers "are presently responsible for the day-to-day management
of each Fund". In addition, the Management of the Funds section on page 11 of
the prospectus expressly states that the Adviser "may ... select (Fund Managers)
to manage certain of the Funds". Shareholders therefore understand and expect
that the Adviser will change Fund Managers when appropriate, and, indeed, the
Funds pay the Adviser to do exactly that, eliminating the potential need for
shareholders to pay the
16
<PAGE>
expenses and to experience the delay associated with formal proxy solicitations
consistent with the purposes and provisions of the Act and the protection of
investors, particularly where the proxy solicitation provides no greater or more
meaningful information to investors than the use of the informal information
statement in the manner described herein. Moreover, whenever a Fund Manager is
added or a material change in a Fund Manager's Agreement is made, the relevant
Fund's prospectus would be supplemented before it is provided to new investors
to alert such investors of the change. The Fund would promptly notify all
shareholders of an affected Fund of the change through the information statement
to be mailed within ninety (90) days after the change. This arrangement is
consistent with--indeed, even more accommodative to timely notification to
shareholders than -- related strictures under the Act. For instance, in the
absence of the exemptive relief requested, the Board could determine to
terminate an existing Fund Manager's Agreement and immediately approve and
implement a new Agreement with a new Fund Manager. In that event, pursuant to
rule 15a-4 under the Act the new Fund Manager would be permitted to serve prior
to approval by shareholders for a period of 120 days provided that the
compensation to be received under the new Fund Manager's Agreement did not
exceed that under the terminated Fund Manager's Agreement. Further, providing
the informal information statement after a change in Fund Manager or a material
change in a Fund Manager's Agreement would permit the Adviser to respond
promptly to changed circumstances without leaving a Fund's assets in the hands
of a Fund Manager having diminished capabilities (because of loss of key
personnel or otherwise) or motivation (because of impending termination of its
Fund Manager's Agreement) to manage the assets diligently.
Finally, in the unlikely event that a shareholder of a Fund is concerned
about the selection of a particular Fund Manager by the Adviser, or a material
change in a Fund Manager's Agreement, each as approved by the Board, that
shareholder will be able to exchange his or her shares for shares of another
17
<PAGE>
Fund in the Trust with a Fund Manager the shareho1der deems adequate, without
the imposition of any additional charges; that shareholder may also choose to
redeem his or her shares. In either event, the ultimate outcome for the
dissatisfied shareholder would be no worse than if a vote were held and the new
Fund Manager approved -the result in most if not all circumstances - minus the
unnecessary expenses involved in a proxy vote. Therefore the requested
exemption, far from permitting shareholders' expectations to be frustrated
contrary to the purpose of the Act, would facilitate those expectations being
met.
D. Precedents for Relief
---------------------
Applicants note that substantially the same exemptions requested herein
have been granted recently. See M Fund, Inc., et al., Investment Company Act
--- ---------------------
Release Nos. 23246 (Jun. 9, 1998) (notice) and 23300 (Jul. 1, 1998) (order);
Jefferson Pilot Variable Fund, Inc. and Jefferson Pilot Advisory Corporation,
- ----------------------------------------------------------------------------
Investment Company Act Release Nos. 23242 (Jun. 5, 1998) (notice) and 23301
(Jul. 1, 1998) (order); Cypresstree Asset Management Corporation, Inc. and North
--------------------------------------------------------
American Funds, Investment Company Act Release Nos. 23169 (May 4, 1998) (notice)
- --------------
and 23231 (Jun. 1, 1998) (order); EQ Advisors Trust and EQ Financial
----------------------------------
Consultants, Inc., Investment Company Act Release Nos. 23093 (Mar. 30, 1998)
- -----------------
(notice) and 23128 (Apr. 24, 1998) (order); American Odyssey Funds, Inc., et
--------------------------------
al., Investment Company Act Release Nos. 23017 (Feb. 2, 1998) (notice) and 23060
(Mar. 5, 1998) (order); Saratoga Advantage Trust, et al., Investment Company Act
--------------------------------
Release Nos. 23000 (Jan. 14, 1998) (notice) and 23023 (Feb. 10, 1998) (order);
Growth Stock Portfolio, et al., Investment Company Act Release Nos. 22998 (Jan.
- ------------------------------
13, 1998) (notice) and 23025 (Feb. 10, 1998) (order); Advantus Capital
----------------
Management, Inc., et al., Investment Company Act Release Nos. 22991 (Jan. 5,
- ------------------------
1998) (notice) and 23008 (Jan. 27, 1998) (order); Harbor Fund
-----------
18
<PAGE>
and Harbor Capital Advisors, Inc., Investment Company Act Release Nos. 22832
- ---------------------------------
(Sep. 25, 1997) (notice) and 22863 (Oct. 21, 1997) (order); The Reserve
-----------
Private Equity Series, et al., Investment Company Act Release Nos. 22821 (Sep.
- -----------------------------
12, 1997) (notice) and 22844 (Oct. 8, 1997) (order); New England Funds Trust I,
---------------------------------
et al., Investment Company Act Release Nos. 22796 (Aug. 22, 1997) (notice) and
22824 (Sep. 17, 1997) (order); Masters' Select Investment Trust, et al.,
----------------------------------------
Investment Company Act Release Nos. 22669 (May 19, 1997) (notice) and 22706
(Jun. 13, 1997) (order); NASL Financial Services, Inc., et al., Investment
-------------------------------------
Company Act Release Nos. 22382 (Dec. 9, 1996) (notice) and 22429 (Dec. 31, 1996)
(order); The Victory Portfolios, et al., Investment Company Act Release Nos.
-----------------------------
22366 (Dec. 3, 1996) (notice) and 22432 (Dec. 31, 1996) (order); Calvert Social
--------------
Investment Fund, et al., Investment Company Act Release Nos. 22345 (Nov. 20,
- -----------------------
1996) (notice) and 22403 (Dec. 17, 1996) (order); Fremont Mutual Funds, Inc., et
------------------------------
al., Investment Company Act Release Nos. 22340 (Nov. 18, 1996) (notice) and
- ---
22402 (Dec. 16, 1996) (order); The Enterprise Group of Funds, Inc., et al.,
-------------------------------------------
Investment Company Act Release Nos. 22328 (Nov. 13, 1996) (notice) and 22388
(Dec. 10, 1996) (order); SunAmerica Series Trust, et al., Investment Company Act
-------------------------------
Release Nos. 22323 (Nov. 6, 1996) (notice) and 22364 (Dec. 3, 1996) (order); The
---
Target Portfolio Trust and Prudential Mutual Fund Management, Inc. Investment
- ------------------------------------------------------------------
Company Act Release Nos. 22139 (Aug. 13, 1996) (notice) and 22215 (Sep. 11,
1996) (order); Accessor Funds, Inc., et al., Investment Company Act Release Nos.
----------------------------
22129 (Aug. 9, 1996) (notice) and 22194 (Sep. 4, 1996) (order); American
--------
AAdvantage Funds, et al., Investment Company Act Release Nos. 21995 (May 30,
- ------------------------
1996) (notice) and 22040 (Jun. 25, 1996) (order); EAI Select Mangers Equity Fund
------------------------------
et al., Investment Company Act Release Nos. 21881 (Apr. 16, 1996) (notice) and
- ------
21938 (May 7, 1996) (order); SEI Institutional Managed Trust, et al., Investment
---------------------------------------
Company Act Release Nos. 21863 (Apr. 1, 1996) (notice) and 21921 (Apr. 29, 1996)
(order); Managed Accounts Services Portfolio Trust and Mitchell Hutchins Asset
---------------------------------------------------------------------
Management Inc., Investment Company Act Release Nos. 21590
- ---------------
19
<PAGE>
(Dec. 11, 1995) (notice) and 21666 (Jan. 11, 1996) (order); ESC Strategy Funds,
-------------------
Inc. et al., Investment Company Act Release Nos. 21458 (Oct. 27, 1995) (notice)
- -----------
and 21540 (Nov. 22, 1995) (order); Consulting Group Capital Markets Funds, et
------------------------------------------
al., Investment Company Act Release Nos. 21318 (Aug. 23, 1995) (notice) and
- ---
21366 (Sep. 19, 1995) (order); The Managers Funds, et al., Investment Company
--------------------------
Act Release Nos. 21354 (Sep. 13, 1995) (notice) and 21412 (Oct. 11, 1995)
(order); and Frank Russell Investment Company, et al., Investment Company Act
----------------------------------------
Release Nos. 21108 (Jun. 8, 1995) (notice) and 21169 (Jun. 28, 1995) (order).
The relief requested herein is identical in all substantive respects to the
relief from the shareholder voting requirement of Section 15(a) and Rule 18f-2
granted in the foregoing orders.
E. Procedural Matters
------------------
Pursuant to Rule 0-2(f) under the Act, Applicants state that their
addresses are as indicated on the cover page of this application. Applicants
further state that all written or other communications concerning this
Application should be directed to:
Mark A. Katzoff, Esq.
Quantitative Group of Funds
55 Old Bedford Road
Lincoln, Massachusetts 01773
(800)331-1244
With a copy to:
Joseph R. Fleming, Esq.
Dechert Price & Rhoads
10 Post Office Square, Suite 1230
Boston, MA 02109
(617) 728-7161
Applicants desire that the Commission issue an order pursuant to Rule 0-5
under the Act without a hearing being held.
20
<PAGE>
Each Applicant represents that the undersigned is authorized to file this
Application in the name and on behalf of the Applicant. The resolutions and
statements of authority required under Rule 0-2(c)(1) are attached hereto as
Exhibit B.
The verification required by Rule 0-2(d) under the Act are attached hereto
as Exhibit C.
F. Request for Order of Exemption
------------------------------
For the foregoing reasons, Applicants request that the Commission enter an
order pursuant to Section 6(c) of the Act granting the relief sought by this
Application. Applicants submit that the requested exemption is necessary or
appropriate in the public interest, consistent with the protection of investors,
and consistent with the purpose fairly intended by the policy and provisions of
the Act.
QUANTITATIVE GROUP OF FUNDS.
By:______________________
Mark A. Katzoff
Clerk
QUANTITATIVE ADVISORS, INC.
By:______________________
Mark A. Katzoff
Assistant Clerk
Dated: August 20, 1998
21
<PAGE>
EXHIBIT A
------- -
Set forth below is a table listing all meetings of public shareholders of
the Funds previously held or scheduled to be held for the purpose of approving a
new Fund Manager or a material change in a Fund Manager's Agreement since
commencement of operations of the Trust (May 9, 1985).
<TABLE>
<CAPTION>
Quantitative Group of Funds
Meeting Date Fund Fund Manager's Agreement Approvals
- ------------ ---- ---- --------- --------- ---------
<S> <C> <C>
April 2, 1990 Quantitative International Boston International Advisors, Inc.
Equity Fund*
October 28, 1998 Quantitative International Independence International Associates, Inc.
Equity Fund
October 28, 1998 Quantitative Emerging Independence International Associates, Inc.
Markets Fund**
October 28, 1998 Quantitative Small Cap Columbia Partners, LLC, Investment Management.
Fund***
October 28, 1998 Quantitative Mid Cap Columbia Partners, LLC, Investment Management.
Fund****
</TABLE>
*then called the Boston Foreign Growth and Income Series
**then called the Quantitative Foreign Frontier Fund
***then called the Quantitative Numeric Fund
****then called the Quantitative Numeric II Fund
22
<PAGE>
EXHIBIT B
---------
CLERK'S CERTIFICATE
-------------------
The undersigned, being duly elected Clerk of Quantitative Group of Funds,
Inc.(the "Fund"), a business trust organized under the laws of Massachusetts,
hereby certifies that (1) the attached resolutions are true and correct copies
of the resolutions adopted by the Board of the Fund at a meeting of the Board
held on February 13, 1998, at which meeting a quorum was at all times present
and voting; and (ii) these resolutions have not been amended, modified or
superseded in any way as of the date of this Certificate.
IN WITNESS WHEREOF, I have set my hand this day of August 20, 1998.
___________________
Mark A. Katzoff
Clerk
23
<PAGE>
RESOLVED: That the President, Vice President or Clerk of the Fund be, and each
of them hereby is, authorized and directed to complete, execute and file with
the Securities and Exchange Commission in the name of and on behalf of the Fund,
an Exemptive Application requesting relief from certain requirements of Section
15(a) and Rule 18f-2 of the Investment Company Act of 1940, and any and all
exhibits and documents relating thereto, with such changes, additions and
deletions as the officer or officers executing such application, on advice of
counsel, may deem necessary or appropriate.
24
<PAGE>
ASSISTANT CLERK'S CERTIFICATE
------------------------------
The undersigned, being duly elected Assistant Clerk of Quantitative
Advisors, Inc. ("Quantitative Advisors"), a corporation organized under the laws
of Massachusetts hereby certifies that (i) the attached resolutions are true and
correct copies of the resolutions adopted by the Board of Quantitative Advisors
at a regular meeting of the Board held on April 7, 1998, at which meeting a
quorum was at all times present and voting; and (ii) these resolutions have not
been amended, modified or superseded in any way as on the date of this
Certificate.
IN WITNESS WHEREOF, I have set my hand this 20th day of August, 1998.
___________________
Mark A. Katzoff
Assistant Clerk
25
<PAGE>
RESOLVED: That the President, Vice President, Clerk or Assistant Clerk of the
Company be, and each of them hereby is, authorized and directed to complete,
execute and file with the Securities and Exchange Commission in the name of and
on behalf of the Fund, an Exemptive Application requesting relief from certain
requirements of Section 15(a) and Rule 18f-2 of the Investment Company Act of
1940, and any and all exhibits and documents relating thereto, with such
changes, additions and deletions as the officer or officers executing such
application, on advice of counsel, may deem necessary or appropriate.
26
<PAGE>
EXHIBIT C
------- -
Commonwealth of Massachusetts )
) ss:
County of Middlesex )
The undersigned, being duly sworn, deposes and says that he has duly
executed the attached Amended Application dated August 20, 1998 for and on
behalf of Quantitative Group of Funds (the "Fund"), a Massachusetts business
trust, that he is the Clerk of the Fund; and that all action by shareholders,
directors, and other bodies necessary to authorize deponent to execute and file
such instrument has been taken. Deponent further says that he is familiar with
such instrument and the contents thereof, and that the facts therein set forth
are true to the best of his knowledge, information and belief.
__________________________
Mark A. Katzoff
Subscribed and sworn to before me a Notary Public this 20th day of August, 1998
_______________________
Notary Public
My Commission expires
27
<PAGE>
Commonwealth of Massachusetts )
) ss:
County of Middlesex )
The undersigned, being duly sworn, deposes and says that he has duly
executed the attached Amended Application dated August 20, 1998 for and on
behalf of Quantitative Advisors, Inc. (the "Advisor"), a Massachusetts
corporation, that he is the Assistant Clerk of the Advisor and that all action
by shareholders, directors1 and other bodies necessary to authorize deponent to
execute and file such instrument has been taken. Deponent further says that he
is familiar with such instrument and the contents thereof, and that the facts
therein set forth are true to the best of his knowledge, information and belief.
__________________________
Mark A. Katzoff
Subscribed and sworn to before me a Notary Public this 20th day of August, 1998.
_______________________
Notary Public
My Commission expires
28
<PAGE>
EXHIBIT D
---------
SECURITIES AND EXCHANGE COMMISSION
REL.No. IC-___________; 812-11144
-----------------
Quantitative Group of Funds and Quantitative Advisors, Inc.
Date; 1998
-------------------------
Agency: Securities and Exchange Commission (the "SEC")
- --------
Action: Notice of Application for Exemption under the Investment Company Act of
- -------
1940, as amended (the "Act").
Applicants: Quantitative Group of Funds. ("Quantitative Group" or the "Fund")
- -----------
(including any existing or future series thereof) and Quantitative Advisors,
Inc. ("Quantitative Advisors" or the "Adviser") (collectively referred to as the
"Applicants").
Relevant Act Sections: Exemptions requested under section 6(c) of the Act from
- ---------------------
the provisions of section 15(a) and rule 18f-2 thereunder.
Summary of Application: Applicants seek a conditional order permitting the
- ----------------------
Adviser to enter into or amend subadvisory agreements without receiving
shareholder approval.
Hearing or Notification of Hearing: If no hearing is ordered, the Application
- ----------------------------------
will be granted. Any interested person may request a hearing on this Application
or ask to be notified if a hearing is ordered.
Hearing or Notification of Hearing: If no hearing is ordered, the Application
- ----------------------------------
will be granted. Any interested person may request a hearing on this Application
or ask to be notified if a hearing is ordered. Any requests must be received by
the SEC by 5:30 p.m. on ____________ 1998. Request a hearing in writing, giving
the nature of your interest, the reason for the request, and the issues you
contest. Serve the Applicants with the request, either personally or by mail,
and also send it to the Secretary of the SEC, along with proof of service by
affidavit or, for lawyers, by certificate requesting information of the date
29
<PAGE>
of a hearing by writing to the Secretary of the SEC, Secretary, SEC, 450 Fifth
Street, N.W., Washington, D.C. 20549. Each of the Applicants c/o Mark A.
Katzoff. Esq., Quantitative Group of Funds., 55 Old Bedford Road, Lincoln, MA
01773.
For Further Information Contact: [To be provided by the SEC].
- --- ---------------------------
Supplementary Information: Following is a summary of the Application. The
- -------------------------
complete Application is available for a fee from the SEC's Public Reference
Branch.
Applicant's Representations
- ---------------------------
1. Factual Background. Quantitative Group is an open-end, management
------------------
investment company organized as a Massachusetts business trust and currently
composed of six separate investment Funds (each, a "Fund," and collectively, the
"Funds"). Each Fund is professionally managed by the Adviser. Each Fund
benefits from discretionary advisory services provided by one or more separate
unaffiliated registered investment advisers (each, a "Fund Manager," and
collectively, the "Fund Managers") which are identified, retained and
compensated by the Adviser.
The Funds have each entered into an investment adviser's agreement
(each an "Adviser's Agreement" and collectively, the "Adviser's Agreements")
with the Adviser, which has entered into a Fund Manager's Agreement (a "Fund
Manager's Agreement") with each Fund Manager to the Funds. It is the Adviser's
responsibility under the Adviser's Agreements to select Fund Managers subject to
the review and approval of the Board of Trustees of the relevant Fund (the
"Board" or the "Trustees"), and to review their continued performance. A Fund
may be managed by a single Fund Manager or may be allocated by the Adviser
between or among two or more Fund Managers, although at present only one Fund
Manager manages each Fund. The oversight and management services provided by
Quantitative Advisors include (i) supervising the Fund Managers' compliance with
state and federal regulations, including the Act, (ii) evaluating the Fund
Managers' performance, (iii) analyzing the composition of the
30
<PAGE>
investment portfolios of each Fund of the Trust and preparing reports thereon
for the Board or any committee of the Board, (iv) evaluating each Fund's
performance in comparison to similar mutual funds and other market information,
(v) conducting searches, upon a request of the Board, for a replacement for any
Fund Manager then serving the respective Fund, and (vi) preparing presentations
to shareholders which analyze each Fund's overall investment program and
performance. The Funds pay the Adviser a fee for its services that is based on
the value of the average daily net assets of each Fund. In turn, the Adviser
pays the fee of each Fund Manager. The Funds pay no fees directly to any Fund
Manager
2. Relief Requested
----------------
Applicants request exemption from Section 15(a) of the Act and Rule
18f-2 thereunder, to permit the Adviser to enter into new or amended contracts
with Fund Managers to the Funds without obtaining shareholder approval therefor,
including new Fund Manager's Agreements necessitated because the prior Fund
Manager's Agreements were terminated as a result of an "assignment" (as defined
in Section 2(a)(4) of the Act).
3. Applicant's Conditions. In order to protect against the abuse
-----------------------
that Section 15 addresses and that may arise under arrangements such as those
proposed in this Application -- the transfer of responsibility for management of
a Fund's assets without Fund shareholders' acquiescence -- Applicants agree to
the imposition of the conditions enumerated below to the granting of the
exemptive order requested (the "Order"). The conditions proposed are intended to
ensure that Fund shareholders receive adequate disclosure about Fund Managers,
permitting them to "vote with their feet" on the Adviser's decision to appoint a
new Adviser or to change the terms of an Advisory Agreement
31
<PAGE>
a. The Adviser will provide general management and administrative
services to the Funds, including overall supervisory responsibility for the
general management and investment of the Funds' securities portfolios and,
subject to review and approval by each Board with respect to its respective
Funds, will (i) set the Funds' overall investment strategies; (ii) select Fund
Managers; (iii) monitor and evaluate the performance of Fund Managers; (iv)
allocate and, when appropriate, reallocate a Fund's assets among its Fund
Managers in those cases where a Fund has more than one Fund Manager; and (v)
implement procedures reasonably designed to ensure that the Fund Managers comply
with the relevant Fund's investment objectives, policies, and restrictions.
b. Before a Fund may rely on the Order requested hereby, the
operation of the Fund in the manner described in this Application will be
approved by a majority of its outstanding voting securities, as defined in the
Act, or, in the case of a new Fund whose public shareholders purchased shares on
the basis of a prospectus containing the disclosure contemplated by condition
(d) below, by the sole shareholder before offering of shares of such Fund to the
public.
c. Each Fund will furnish to its shareholders all information about
a new Fund Manager or Fund Manager's Agreement for one of its Funds that would
be included in a proxy statement. Such information will include disclosure as to
level of fees to be paid to the Adviser and each Fund Manager of the Fund and
any change in such information caused by the addition of a new Fund Manager or
any proposed material change in a Fund Manager's Agreement. Each Fund will meet
this condition by providing its shareholders with an informal information
statement complying with the provisions of Regulation 14C under the Exchange Act
and Schedule 14C thereunder. With respect to a newly retained Fund Manager, or a
change in a Fund Manager's Agreement, this information statement will be
provided to shareholders of the Fund a maximum of ninety (90) days after the
addition of the new Fund Manager or the implementation of any change in a Fund
Manager's Agreement. The information statement will
32
<PAGE>
also meet the requirements of Schedule 14A.
d. Each Fund will disclose in its prospectuses the existence,
substance and effect of the Order granted pursuant to the Application. In
addition, each Fund will hold itself out to the public as employing the "manager
of managers" approach described in the application The prospectus and any sales
materials or other shareholder communications relating to a Fund will
prominently disclose that the Adviser has ultimate responsibility for the
investment performance of the Fund due to its responsibility to oversee Fund
Managers and recommend their hiring, termination, and replacement.
e. No director, trustee or officer of the Funds or director or
officer of the Adviser will own directly or indirectly (other than through a
pooled investment vehicle that is not controlled by any such director, trustee
or officer) any interest in any Fund Manager except for (i) ownership of
interests in the Adviser or any entity that controls, is controlled by or is
under common control with the Adviser; or (ii) ownership of less than 1% of the
outstanding securities of any class of equity or debt of a publicly traded
company that is either a Fund Manager or any entity that controls, is controlled
by or is under common control with a Fund Manager.
f. The Adviser will not enter into a Fund Manager's Agreement with
any Fund Manager that is an affiliated person, as defined in Section 2(a)(3) of
the Act, of the Adviser or the Funds other than by reason of serving as Fund
Manager to one or more Funds ("Affiliated Fund Manager") without such agreement,
including the compensation to be paid thereunder being approved by the
shareholders of the applicable Fund.
g. At all times, a majority of the members of the Board will be
persons each of whom is not an "interested person" of the respective Fund as
defined in Section 2(a)(19) of the Act
33
<PAGE>
("Independent Trustees"), and the nomination of new or additional Independent
Trustees will be placed within the discretion of the then existing Independent
Trustees.
4. Applicants' Legal Analysis.
--------------------------
Applicants submit that the requested shareholder voting exemption meets the
standards of Section 6(c) of the Act.
Any Contracts between the Adviser and the Fund would remain subject to the
shareholder voting requirements of Section 15(a) of the Act, Rule 18f-2 under
the Act and related proxy disclosure requirements of Rule 20a-1 under the Act.
This exemption would permit the Adviser more efficiently to perform the
functions the Funds are paying it to perform: that is, selecting Fund Managers,
monitoring their performance, and making whatever changes in the roster of Fund
Managers the Adviser deems appropriate, subject to the approval of the Board. To
require that shareholders approve each new Fund Manager would not only result in
unnecessary administrative expense to the Funds, but could result in harmful
delays in executing changes in Fund Managers that the Adviser and the Board have
determined are necessary. It is in order to avoid the aforementioned expenses
and delays that Applicants are requesting relief from Section 15(a) of the Act
and Rule 18f-2 thereunder, an arrangement, Applicants contend, that would be
necessary or appropriate in the public interest, as required under Section 6(c)
of the Act.
Primary responsibility for management of the Funds including, in
particular, selection and supervision of the Fund Managers -- is vested in the
Adviser, subject to oversight by the Board. The Adviser's contracts with the
Funds will remain fully subject to the requirements of Section 15(a) of the Act
and Rule 18f-2 thereunder, including the requirements for shareholder voting.
Applicants believe it is consistent with the protection of investors, pursuant
to the requirements of Section 6(c) of the Act, to
34
<PAGE>
vest the selection and supervision of Fund Managers in the Adviser given the
advisory structure of the Funds, as well as the Adviser's significant experience
and expertise in selecting Fund Managers. Significantly, the Funds' prospectuses
disclose information concerning the identity, ownership, qualifications and
compensation of the Fund Managers in full compliance with Form N-1A. Further,
the information statements described above would provide shareholders with all
information regarding a new Fund Manager or a material change in a Fund
Manager's Agreement to the same extent as would be set forth in a proxy
statement.
Applicants submit that under this policy, investors will be in a
position to make a fully informed investment decision as to the purchase,
redemption or retention of Fund shares. These arrangements are consistent with
the protection of investors because they both permit the Funds to avoid the
administrative burden and expense associated with a formal proxy solicitation
(which benefits all shareholders, including those that might redeem their shares
after review of an information statement relating to a new Fund Manager or a
material change in a Fund Manager's Agreement they did not favor) and provide
disclosure to investors, permitting them to "vote with their feet." In contrast,
in the absence of the exemptive relief requested in this Application, all
shareholders would bear the higher expenses associated with formal proxy
solicitations that would provide no more meaningful disclosure to shareholders
- -- including those shareholders who might redeem their shares after shareholder
approval of a new Fund Manager or a material change in a Fund Manager's
Agreement they did not favor.
Finally, pursuant to Section 6(c) the shareholder voting exemption is
consistent with the purposes fairly intended by the policy and provisions of the
Act. The purpose of the requirement that shareholders approve new advisory
contracts can be inferred readily. The identity of a registered investment
company's investment adviser, together with the company's fundamental investment
policies and objectives, is one of the main features distinguishing one
investment company from another. Clearly,
35
<PAGE>
the framers of the Act believed that if an investment company is to be managed
by an investment adviser different from the one shareholders expected when they
made their investment, the new investment adviser should he approved by
shareholders The exemption being requested herein would be fully consistent with
this principle.
Shareholders understand and expect that the Adviser will change Fund
Managers when appropriate, and, indeed, the Funds pay the Adviser to do exactly
that. Eliminating the potential need for shareholders to pay the expenses and
to experience the delay associated with formal proxy solicitations is consistent
with the purposes and provisions of the Act and the protection of investors,
particularly where the proxy solicitations provides no greater or more
meaningful information to investors than the use of the informal information
statement in the manner described herein.
Whenever a Fund Manager is added or a material change in a Fund Manager's
Agreement is made, the relevant Fund's prospectus would be supplemented before
it is provided to new investors to alert such investors of the change. The Fund
would notify promptly all shareholders of an affected Fund of the change through
the information statement to be mailed within ninety (90) days after the change.
This arrangement is consistent with -- indeed, even more accommodative to timely
notification to shareholders than -- related strictures under the Act. For
instance, in the absence of the exemptive relief requested, either Board could
determine to terminate an existing Fund Manager's Advisory Agreement and
immediately approve and implement a new Agreement with a new Fund Manager. In
that event, pursuant to Rule 15a-4 under the Act, the new Fund Manager would be
permitted to serve prior to approval by shareholders for a period of 120 days
provided that the compensation to be received under the new Fund Manager's
Agreement did not exceed that under the terminated Fund Manager's Agreement.
36
<PAGE>
In the unlikely event that a shareholder of a Fund is concerned about the
selection of a particular Fund Manager by the Adviser, or a material change in a
Fund Manager's Agreement, each as approved by the Board, that shareholder will
be able to exchange his or her shares for shares of another Fund with a Fund
Manager the shareholder deems adequate, without the imposition of any additional
charges; that shareholder may also choose to redeem his or her shares, subject
to a redemption fee imposed on the Ordinary shares of certain Funds. In either
event, the ultimate outcome for the dissatisfied shareholder would be no worse
than if a vote were held and the new Fund Manager approved -- the result in
most, if not all, circumstances -- minus the unnecessary expenses involved in a
proxy vote. Therefore, the requested exemption, far from permitting
shareholders' expectations to be frustrated contrary to the purpose of the Act,
would facilitate those expectations being met.
For the Commission by the Division of Investment Management, pursuant to
delegated authority.
Jonathan G. Katz Secretary
__________ 1998
37
<PAGE>
EXHIBIT 32
As filed with the Securities and Exchange Commission
on October __, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
In the matter of
QUANTITATIVE GROUP OF FUNDS
and
QUANTITATIVE ADVISORS, INC.
55 Old Bedford Road
Lincoln, Massachusetts 01773
AMENDMENT NO. 2 TO APPLICATION FOR AN ORDER OF
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
SECTION 6(c) OF THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED, EXEMPTING APPLICANTS FROM CERTAIN
REQUIREMENTS OF SECTION 15(a) THEREOF AND RULE I8f-2
THEREUNDER
File No. 812-11144
Page One of 37 Pages
------------
1
<PAGE>
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
__________________________________X
In the Matter of )
)
QUANTITATIVE GROUP OF FUNDS )
: ) AMENDMENT NO. 2 TO APPLICATION
and ) PURSUANT TO SECTION 6(c) OF THE
) INVESTMENT COMPANY ACT OF 1940, AS
QUANTITATIVE ADVISORS, INC. ) AMENDED, FOR AN ORDER OF
) EXEMPTION FROM CERTAIN
55 Old Bedford Road ) REQUIREMENTS OF SECTION 15(a)
Lincoln, MA 01733 ) THEREOF AND RULE 18f-2.
) THEREUNDER
File No. 812-11144 )
__________________________________X
Communications regarding this application should be directed to:
Mark A. Katzoff, Esq.
QUANTITATIVE GROUP OF FUNDS.
55 Old Bedford Road
Lincoln, Massachusetts 01773
(800) 331-1244
with a copy to:
Joseph R. Fleming, Esq.
DECHERT PRICE & RHOADS
10 Post Office Square, Suite 1230
Boston, MA 02109
(617) 728-7161
I Background
----------
A The Trust
---------
Quantitative Group of Funds (the "Trust") is an open-end, management
investment company organized as a Massachusetts business trust and currently
composed of six separate series
2
<PAGE>
(each, a "Fund," and collectively, the "Funds"). Each Fund is managed as though
it were a separate mutual fund issuing its own shares. The Trust is registered
as an investment company under the Investment Company Act of 1940, as amended
(the "Act").
The investment adviser to the Trust, Quantitative Advisors, Inc.
("Quantitative Advisors" or the "Adviser"), selects sub-advisers (each a "Fund
Manager." and collectively, the "Fund Managers") to provide investment advice
for the Funds. The Funds and their respective Fund Managers are identified in
the discussion on page 6 below. The Adviser and the Fund Managers are each
registered as investment advisers under the Investment Advisers Act of 1940.
The Trust and the Adviser are collectively referred to in this Application
as "Applicants". Applicants seek the relief requested with respect to the Trust,
the Funds, and any series of the Trust organized in the future and for any open-
end management investment company in the future advised by the Adviser or by a
person controlling, controlled by, or under common control (within the meaning
of section 2(a)(9) of the Act) with the Adviser, provided that such investment
company operates in substantially the same manner as the Trust and complies with
the conditions to the order requested as is set forth below in Section II. B.
All existing investment companies that currently intend to rely on the order
have been named as applicants, and any other existing or future investment
companies that subsequently rely on the order will comply with the terms and
conditions of the application.
B. Advisor Services and Compensation
---------------------------------
Quantitative Advisors is wholly owned by officers and trustees of the
Trust. Quantitative Advisors has entered into an investment adviser agreement
(the "Adviser Agreement" ) with the Trust and is responsible for conducting all
operations of the Trust except those operations contracted to its transfer agent
and custodian and certain other service providers. The Adviser Agreement
obligates Quantitative Advisors to provide investment advisory services to the
Funds, to furnish the Trust with
3
<PAGE>
certain administrative, clerical, bookkeeping and statistical services, office
space and facilities, and to pay the compensation, if any, of the officers of
the Trust.
Quantitative Advisors has in turn entered into an agreement with each Fund
Manager (each, a "Fund Manager's Agreement" and collectively the "Fund Manager's
Agreements"). The Fund Manager's Agreements are substantially the same in all
material respects, except for the names of the Fund Managers and the rates of
compensation, which are a portion of the management fee that is paid by each
Fund to Quantitative Advisors and which Quantitative Advisors pays to the Fund
Managers.
It is the Advisor's responsibility under the Adviser Agreement to select,
subject to the review and approval of the Board of Trustees of each Fund (the
"Board"), Fund Managers who have distinguished themselves by able performance in
their respective areas of expertise, and to review their continued performance.
The oversight and management services provided by Quantitative Advisors include
(i) supervising the Fund Managers' compliance with state and federal
regulations, including the Act, (ii) evaluating the Fund Managers' performance,
(iii) analyzing the composition of the investment portfolios of each Fund and
preparing reports thereon for the Board or any committee of the Board, (iv)
calculating each Fund's performance in comparison to similar mutual funds and
other market information, (v) conducting searches, upon a request of the Board,
for a replacement for any Fund Manager then serving the respective Fund, and
(vi) preparing presentations to shareholders that analyze each Fund's overall
investment program and performance. Furthermore, under the terms of the Advisory
Contracts with the Fund Managers, the Adviser has the authority to terminate the
contracts without prior approval by the Board. However, the Advisor has never
exercised this right without first discussing the matter with the Board. The
Board is kept fully apprised of actions of this type contemplated by the
Adviser, and all such actions are subject to review by the Board. The Advisory
Contracts may also be terminated at any time by the Board or by the vote of a
majority of the Fund's outstanding voting
4
<PAGE>
securities.
The Funds' prospectus has consistently described the Advisor's oversight
function. "The Funds are managed by [the Advisor], which provides overall
management and administration of the Funds. Under the terms of the management
agreement, the [Advisor] may, subject to the approval of the Trustees, manage
the Funds itself or, subject to the approval by the Trustees and the
shareholders, select [Fund Managers] to manage certain of the Funds. In the
latter case, the [Advisor] monitors the [Fund Managers'] investment program and
results, reviews brokerage matters, oversees compliance by the Funds with
various federal and state statutes and carries out the directives of the
Trustees." The Funds have employed an Advisor/Fund Manager structure since their
inception in 1985. The Advisor monitors the performance of the Fund Managers on
a daily basis and reports quarterly to the Board regarding their performance,
including their relative performance to appropriate benchmarks and peer groups.
The Manager periodically reviews investment strategies with the Fund Managers
and from time to time has made recommendations to the Fund Managers regarding
changes to those strategies.
In selecting Fund Managers, the Advisor considers a number of different
criteria, including the nature of the strategy employed by the Fund Manager, the
performance of the Fund Manager in strategies with investment objectives similar
to those used by the Funds, and the Fund Manager's reputation in the investment
community. In choosing between otherwise equally qualified candidates, the
Advisor may also consider the Fund Manager's ability to participate in the
marketing of the Funds. While not directly related to the Fund Manager's primary
responsibility of selecting investments for a Fund, the Advisor believes that
employing a Fund Manager who takes an active role in assisting to market a Fund
may benefit shareholders by facilitating the accumulation of assets in the Fund.
This both makes it easier for the Fund Manager to fully employ its investment
strategy and has the
5
<PAGE>
potential to lower costs to shareholders as assets increase. To locate and
evaluate Fund Managers, the Advisor has employed personal contacts and manager
databases, as well as discussions with prospective Fund Managers and their
existing clients. In determining whether an existing Fund Manager should be
terminated, the Advisor primarily focuses on the relative performance of the
Fund Manager.
6
<PAGE>
C Fund Manager Services And Compensation
--------------------------------------
The Adviser performs the management, supervisory, and administrative
functions for the Funds, and the Fund Managers serve in a sub-advisory capacity
to the respective Funds. Subject to the supervision and direction of the Adviser
and, ultimately, the Board, each Fund Manager's responsibilities are limited to
furnishing the Fund advice with respect to the investment and reinvestment of
the assets of the Fund in accordance with investment objectives, restrictions
and limitations of the Fund set forth in the Trust's Registration Statement on
Form N-IA, and to direct securities transactions pursuant to such investment
advice. A Fund may be managed by a single Fund Manager or may be allocated by
the Adviser between or among more than one Fund Manager. Currently, no Fund has
more than a single Fund Manager. None of the Fund Managers is an affiliated
person of the Adviser within the meaning of Section 2(a)(3) of the Act.
The Fund Managers of the individual Funds are as follows:
Quantitative Small Cap Fund: The Fund Manager of the Quantitative Small Cap
- ---------------------------
Fund is currently Columbia Partners, LLC, Investment Management. The
Quantitative Small Cap Fund was formerly called the Quantitative Numeric Fund.
Quantitative Mid Cap Fund: The Fund Manager of the Quantitative Mid Cap Fund
- -------------------------
currently is Columbia Partners, LLC, Investment Management. The Quantitative Mid
Cap Fund was formerly called the Quantitative Numeric II Fund.
Quantitative Growth and Income Fund: The Fund Manager of the Quantitative Growth
- -----------------------------------
and Income Fund currently is State Street Global Advisors.
Quantitative International Equity Fund: The Fund Manager of the Quantitative
- --------------------------------------
International Equity Fund is currently Independence International Associates,
Inc.
Quantitative Emerging Markets Fund: The Fund Manager of the Quantitative
- ----------------------------------
Emerging Markets Fund
7
<PAGE>
currently is Independence International Associates, Inc. The Quantitative Small
Cap Fund was formerly called the Quantitative Numeric Fund.
Quantitative Foreign Value Fund. The Fund Manager of the Quantitative Foreign
- -------------------------------
Value Fund currently is Polaris Capital Management, Inc.
II. Discussion
-----------
Applicants request that the Commission grant an exemption from Section
15(a) of the Act and Rule 18f-2 thereunder to permit the Adviser to enter into
or make material changes to Fund Manager's Agreements with the Adviser, without
obtaining shareholder approval therefor. The Adviser Agreement between the
Adviser and the Funds would in all cases be subject to the shareholder voting
requirements of Section 15(a). For the reasons set forth below, Applicants
respectfully submit that the requested exemptions would be in accordance with
the standards of Section 6(c) of the Act.
A. Relevant Legal Provisions
-------------------------
1. Section 15(a) of the Act
------------------------
Section 15(a) of the Act provides, in part, that;
It shall be unlawful for any person to serve or act as investment
advisor of a registered investment company, except pursuant to a
written contract, which contract. whether with such registered
company or with an investment adviser of such registered company,
has been approved by the vote of a majority of the outstanding
voting securities of such registered company....
2. Rule 18f-2 under the Act
------------------------
Rule l8f-2 under the Act provides, in relevant part, that
(c)(1) With respect to the submission of an investment advisory
contract to the holders of the outstanding voting securities of a
series company for the approval required by Section 15(a) of the
Act, such matter shall be deemed to be effectively acted upon with
respect to any class or series of securities of such
8
<PAGE>
company if a majority of the outstanding voting securities of such
class or series vote for the approval of such matter,
notwithstanding (A) that such matter has not been approved by the
holders of a majority of the outstanding voting securities of any
other class or series affected by such matter, and (B) that such
matter has not been approved by the vote of a majority of the
outstanding voting securities of such company....
Rule l8f-2 further provides that:
(c)(2) If any class or series of securities of a series company
fails to approve an investment advisory contract in the manner
required by subparagraph (1) of this paragraph, the investment
adviser of such company may continue to serve or act in such
capacity for the period of time pending such required approval of
such contract, of a new contract with the same or different
adviser, or other definitive action; provided that the
compensation received by such investment adviser during such
period is equal to no more than its actual costs incurred in
furnishing investment advisory services to such class or series or
the amount it would have received under the advisory contract,
whichever is less.
3. Section 6(c) of the Act
-----------------------
Section 6(c) of the Act provides, in part, that;
The Commission ... by order upon application, may conditionally or
unconditionally exempt any person or any class or classes of
persons... from any provisions of (the Act] or of any rule or
regulation thereunder, if and to the extent that such exemption is
necessary or appropriate in the public interest and consistent
with tile protection of investors and the purposes fairly intended
by the policy and provisions of (the Act).
B. Exemptions Requested and Conditions Imposed
-------------------------------------------
Applicants request that the Commission grant an exemption from Section
15(a) of the Act and Rule 18f-2 thereunder to permit the Adviser to enter into
new or amended contracts with Fund Managers without obtaining shareholder
approval therefor, including new Fund Manager's Agreements necessitated because
the prior Fund Manager's Agreements were terminated as a result of an
"assignment" (as defined in Section 2(a)(4) of the Act). In order to protect
against the abuse that Section 15 addresses, and that may arise under
arrangements such as those proposed in this Application -- the transfer of
responsibility for management of a Fund's assets without Fund shareholders'
acquiescence --
9
<PAGE>
Applicants agree to the imposition of the conditions enumerated below to the
granting of the exemptive order requested (the "Order"). The conditions proposed
are intended to ensure that Fund shareholders receive adequate disclosure about
the Fund Managers, permitting them to "vote with their feet" on the Adviser's
decision to appoint a new Fund Manager or to change the terms of a Fund
Manager's agreement.
Applicants agree that any order granting the requested relief shall be subject
to the following conditions:
a. The Advisor will provide general management and administrative services
to the Funds, including overall supervisory responsibility for the general
management and investment of the Fund's securities portfolios, and, subject to
review and approval by each Board with respect to its respective Funds, will (i)
set the Funds' overall investment strategies; (ii) select Fund Managers; (iii)
monitor and evaluate the performance of Fund Managers; (iv) allocate and, when
appropriate, reallocate a Fund's assets among its Fund Managers in those cases
where the Advisor decides to select more than one Fund Manager for a particular
Fund; and (v) ensure that the Fund Managers comply with the relevant Fund's
investment objectives, policies, and restrictions.
b. Before a Fund may rely on the Order requested hereby, the operation of
the Fund in the manner described in this Application will be approved by a
majority of its outstanding voting securities, as defined in the Act, or, in the
case of a new Fund whose public shareholders purchased shares on the basis of a
prospectus containing the disclosure contemplated by condition (d) below, by the
sole shareholder before offering of shares of such Fund to the public.
c. Within 90 days of the hiring of a new Fund Manager, each Fund will
furnish to its shareholders all information about the new Fund Manager or Fund
Manager Agreement that would be
10
<PAGE>
included in a proxy statement, including any change in the disclosure required
by the addition of a new Fund Manager. The information will include disclosure
as to the level of fees to be paid to the Adviser and each Fund Manager. Each
fund will meet this condition by providing shareholders, within 90 days of the
hiring of a Fund Manager, with an information statement meeting the requirements
of Regulation 14C and Schedule 14C under the Exchange Act. The information
statement will also meet the requirements of Item 22 of Schedule 14A under the
Exchange Act.
d. Each Fund will disclose in its prospectuses the existence, substance and
effect of the Order granted pursuant to this Application. In addition, each Fund
will hold itself out to the public as employing the "manager of managers"
approach described in the application. The prospectus relating to a Fund will
prominently disclose that the Adviser has ultimate responsibility for the
investment performance of the Fund due to its responsibility to oversee Fund
Managers and recommend their hiring, termination, and replacement.
e. No director, trustee or officer of the Funds or director or officer of
the Adviser will own directly or indirectly (other than through a pooled
investment vehicle that is not controlled by any such director, trustee or
officer) any interest in any Fund Manager except for (i) ownership of interests
in the Adviser or any entity that controls, is controlled by or is under common
control with the Adviser, or (ii) ownership of less than 1% of the outstanding
securities of any class of equity or debt of a publicly-traded company that is
either a Fund Manager or any entity that controls, is controlled by or is under
common control with a Fund Manager
f. The Adviser will not enter into a Fund Manager's Agreement with any Fund
Manager that is an affiliated person, as defined in Section 2(a)(3) of the Act,
of the Adviser or the Funds other
11
<PAGE>
than by reason of serving as Fund Manager to one or more Funds ("Affiliated Fund
Manager") without such agreement, including the compensation to he paid
thereunder, being approved by the shareholders of the applicable Fund.
g. At all times, a majority of the members of the Board will be persons
each of whom is not an "interested person" of the respective Fund as defined in
Section 2(a)(19) of the Act ("Independent Trustee"), and the nomination of new
or additional Independent Trustees will be placed within the discretion of the
then existing Independent Trustees.
h. When a Fund Manager change is proposed for a Fund with an Affiliated
Fund Manager, the Board, including a majority of the Independent Trustees, will
make a separate finding. reflected in the Board's minutes, that such change is
in the best interests of the Fund and its shareholders and does not involve a
conflict of interest from which the Adviser or the Affiliated Fund Manager
derives an inappropriate advantage.
C. The Requested Exemptions Meet the standards of Section 6(c) of the Act
----------------------------------------------------------------------
1. Necessary or Appropriate in the Public Interest
-----------------------------------------------
As stated earlier, any contract between the Adviser and the Trust would
remain subject to the shareholder voting requirements of Section 15(a) of the
Act, Rule 18f-2 under the Act and related proxy disclosure requirements of Rule
20a-1 under the Act. Applicants are not seeking any exemptive relief with
respect to such contracts. Rather, Applicants are requesting that the Adviser be
permitted to enter into new or amended contracts with Fund Managers without
seeking shareholder approval. This
12
<PAGE>
exemption would permit the Adviser more efficiently to perform the functions the
Funds are paying it to perform: that is, selecting Fund Managers, monitoring
their performance, and making whatever changes in the roster of Fund Managers
the Adviser deems appropriate, subject to the approval of the Board. To require
that shareholders approve each new Fund Manager would not only result in
unnecessary administrative expense to the Funds, but could result in harmful
delays in executing changes in Fund Managers that the Adviser and the Board have
determined are necessary. To the extent this occurred, shareholders of the Funds
would be receiving less satisfactory service than would otherwise be the case,
and their expectations would be frustrated.
It is in order to avoid the aforementioned expenses and delays that
Applicants are requesting relief from Section 15(a) of the Act and Ru1e 18f-2
thereunder.
2. Consistent with the Protection of Investors
-------------------------------------------
Primary responsibility for management of the Funds -- including in
particular the selection and supervision of the Fund Managers - is vested in the
Adviser, subject to oversight by the Board. The Advisor Agreement with the Trust
will remain fully subject to the requirements of Section 15(a) of the Act and
Rule 18f-2 thereunder, including the requirements for shareholder voting.
Applicants believe it is consistent with the protection of investors to vest the
selection and supervision of Fund Managers in the Adviser given the advisory
structure of the Trust, as well as the Adviser's significant experience and
experience in selecting Fund Managers. It is submitted that, within this
structure and in view of such experience and expertise, the Adviser is in a
better position to make an informed selection of a Fund Manager than individual
investors. Significantly, the Trust's prospectus discloses information
concerning the identity, ownership, qualifications and compensation of the Fund
Managers in full compliance with
13
<PAGE>
Form N-1A. Further, the information statements described above would provide
shareholders with all information regarding a new Fund Manager or a material
change in a Fund Manager's Agreement to the same extent as would be set forth in
a proxy statement. Thus, investors would be in a position to make a fully
informed investment decision as the purchase, redemption or retention of Fund
shares.
These arrangements are consistent with the protection of investors because
they both permit the Trust to avoid the administrative burden and expense
associated with a formal proxy solicitation (which benefits all shareholders,
including those that might redeem their shares after review of an information
statement relating to a new Fund Manager or a material change in a Fund Manager
Agreement they did not favor) and provide full disclosure to investors,
permitting them to "vote with their feet," to the same extent as if a
shareholder vote had approved the new contract - the result in most if not all
such votes. In contrast, in the absence of the exemptive relief requested in
this Application, all shareholders would bear the higher expenses associated
with formal proxy solicitations that would provide no more meaningful disclosure
to shareholders -- including those shareholders who might redeem their shares
after shareholder approval of a new Fund Manager or a material change in a Fund
Manager Agreement they did not favor. Moreover, Applicants note that mutual
fund shareholders rarely if ever disapprove a proposed sub-advisory agreement
that is recommended by management and the board of directors or trustees of the
mutual fund.
Applicants' arrangements are sufficiently distinguishable from those of
most other investment companies so that the exemptive relief being requested
herein could not fairly be viewed as a precedent for similar relief for other
investment companies that employ advisers in a conventional way. As stated
above, the Adviser continuously monitors the performance of each Fund Manager
and from time to time may recommend the replacement of a particular Fund
Manager, or allocation of a portion of the assets of
14
<PAGE>
a particular Fund to an additional Fund Manager (should the Advisor choose to
employ multiple Fund Managers for a single Fund in the future). This "Manager of
Managers" approach distinguishes the Funds from the vast majority of other
investment companies which use internal management.
It is of course true that a sub-adviser to any registered investment
company must serve pursuant to a contract that may be terminated by the company
on not more than sixty days' notice. As a practical matter, however, persons
buying shares of a particular mutual fund normally do so with the understanding
that the fund's portfolio will be managed by the investment adviser and sub-
adviser (if any) named in the prospectus. Indeed in the usual case the identity
of the company or companies providing portfolio management is the primary basis
for choosing among funds with similar investment objectives and policies. Thus,
barring an extraordinary development, the advisory relationships described in a
fund's prospectus are expected to be permanent.
The Trust currently has six Funds. Since May 9, 1985, the commencement of
operations of the Trust, five changes in Fund Managers or material changes in
Fund Manager's Agreements were submitted for shareholder approval. Attached
hereto as Exhibit A is a table listing all meetings of the shareholders of the
Funds previously held or to be held for the purpose of approving a new Fund
Manager or material change in a Fund Manager's Agreement since commencement of
operations of the respective Funds. Each of these meetings would not have taken
place and shareholders would have been spared the expense and burden of repeat
proxy solicitations, while receiving all relevant information that would have
been included in a proxy statement, had the Order been in place. Shareholders
could then have made an immediate decision to hold or redeem their shares
without the delay associated with waiting for the completion of the proxy
solicitation, the calculation of votes, the communication of the results and the
determination by the shareholder of whether he or she regarded the result - in
all cases, the approval of the arrangements proposed - as favorable or
unfavorable.
15
<PAGE>
The Adviser may wish to change the Fund Manager for a particular Fund for
any number of reasons. First, the Adviser may determine that a Fund Manager is
providing sub-standard performance over a period of time. In such a case, the
Fund Manager might be replaced by a new Fund Manager, or, if another Fund
Manager for a Fund with multiple Fund Managers (if the Advisor elects to use
this approach in the future) is deemed to have superior performance, the assets
managed by the under performing Fund Manager may be allocated to the superior
Fund Manager. A second reason may be that the individual employee responsible
for a Fund moves from employment with one Fund Manager to another, and the
Adviser deems it advisable to stay with that individual. A third reason for a
Fund Manager change may be when an entity undergoes a change in control that
causes the Fund Manager's Agreement to terminate, and which the Adviser believes
makes either advisable or inadvisable to continue the relationship (in either
case a shareholder vote on a new contract would be required by Section 15(a) of
the Act). Change in control was the cause of the most recent proxies of the
Funds relating to Fund Managers. The fourth category of change occurs with the
Adviser decides to obtain further diversification of a Fund by hiring an
additional Fund Manager without terminating any current Fund Manager. A final
category of change is when, in the view of the Adviser, a change in investment
style (for example, from a value manager to a growth manager) is warranted.
3 Consistent with the Purposes Fairly Intended by the Policy and
--------------------------------------------------------------
Provisions of the Act
---------------------
The purpose of the requirement that shareholders approve new advisory
contracts can be inferred readily. The identity of a registered investment
company's investment adviser, together with the company's fundamental investment
policies and objectives, is one of the main features distinguishing one
investment company from another. Clearly, the framers of the Act believed that
if an investment company is to be managed by an investment advisor different
from the one shareholders expected when
16
<PAGE>
they made their investment, the new investment adviser should be approved by
shareholders. The exemption being requested herein would be fully consistent
with this principle.
The primary party on which an investor in a Fund will rely will be the
Adviser. Indeed, the first page of the Trust's prospectus makes perfectly clear
that the Adviser is the primary service provider to the Fund, stating that the
Adviser "provides overall management and operational services to the Funds",
while the Fund Managers "are presently responsible for the day-to-day management
of each Fund". In addition, the Management of the Funds section on page 11 of
the prospectus expressly states that the Adviser "may ... select (Fund Managers)
to manage certain of the Funds". Shareholders therefore understand and expect
that the Adviser will change Fund Managers when appropriate, and, indeed, the
Funds pay the Adviser to do exactly that, eliminating the potential need for
shareholders to pay the expenses and to experience the delay associated with
formal proxy solicitations consistent with the purposes and provisions of the
Act and the protection of investors, particularly where the proxy solicitation
provides no greater or more meaningful information to investors than the use of
the informal information statement in the manner described herein. Moreover,
whenever a Fund Manager is added or a material change in a Fund Manager's
Agreement is made, the relevant Fund's prospectus would be supplemented before
it is provided to new investors to alert such investors of the change. The Fund
would promptly notify all shareholders of an affected Fund of the change through
the information statement to be mailed within ninety (90) days after the change.
This arrangement is consistent with--indeed, even more accommodative to timely
notification to shareholders than -- related strictures under the Act. For
instance, in the absence of the exemptive relief requested, the Board could
determine to terminate an existing Fund Manager's Agreement and immediately
approve and implement a new Agreement with a new Fund Manager. In that event,
pursuant to rule 15a-4 under the Act the new Fund Manager would be permitted to
serve prior to approval by shareholders for a period of 120 days provided
17
<PAGE>
that the compensation to be received under the new Fund Manager's Agreement did
not exceed that under the terminated Fund Manager's Agreement. Further,
providing the informal information statement after a change in Fund Manager or a
material change in a Fund Manager's Agreement would permit the Adviser to
respond promptly to changed circumstances without leaving a Fund's assets in the
hands of a Fund Manager having diminished capabilities (because of loss of key
personnel or otherwise) or motivation (because of impending termination of its
Fund Manager's Agreement) to manage the assets diligently.
Finally, in the unlikely event that a shareholder of a Fund is concerned
about the selection of a particular Fund Manager by the Adviser, or a material
change in a Fund Manager's Agreement, each as approved by the Board, that
shareholder will be able to exchange his or her shares for shares of another
Fund in the Trust with a Fund Manager the shareho1der deems adequate, without
the imposition of any additional charges; that shareholder may also choose to
redeem his or her shares. In either event, the ultimate outcome for the
dissatisfied shareholder would be no worse than if a vote were held and the new
Fund Manager approved -the result in most if not all circumstances - minus the
unnecessary expenses involved in a proxy vote. Therefore the requested
exemption, far from permitting shareholders' expectations to be frustrated
contrary to the purpose of the Act, would facilitate those expectations being
met.
D. Precedents for Relief
---------------------
Applicants note that substantially the same exemptions requested herein
have been granted recently. See M Fund, Inc., et al., Investment Company Act
-------------------------
Release Nos. 23246 (Jun. 9, 1998) (notice) and 23300 (Jul. 1, 1998) (order);
Jefferson Pilot Variable Fund, Inc. and Jefferson Pilot Advisory
- ----------------------------------------------------------------
18
<PAGE>
Corporation, Investment Company Act Release Nos. 23242 (Jun. 5, 1998) (notice) a
- -----------
(Jul. 1, 1998) (order); Cypresstree Asset Management Corporation, Inc. and North
--------------------------------------------------------
American Funds, Investment Company Act Release Nos. 23169 (May 4, 1998) (notice)
- --------------
and 23231 (Jun. 1, 1998) (order); EQ Advisors Trust and EQ Financial
----------------------------------
Consultants, Inc., Investment Company Act Release Nos. 23093 (Mar. 30, 1998)
- -----------------
(notice) and 23128 (Apr. 24, 1998) (order); American Odyssey Funds, Inc., et
--------------------------------
al., Investment Company Act Release Nos. 23017 (Feb. 2, 1998) (notice) and 23060
(Mar. 5, 1998) (order); Saratoga Advantage Trust, et al., Investment Company Act
--------------------------------
Release Nos. 23000 (Jan. 14, 1998) (notice) and 23023 (Feb. 10, 1998) (order);
Growth Stock Portfolio, et al., Investment Company Act Release Nos. 22998 (Jan.
- ------------------------------
13, 1998) (notice) and 23025 (Feb. 10, 1998) (order); Advantus Capital
----------------
Management, Inc., et al., Investment Company Act Release Nos. 22991 (Jan. 5,
- ------------------------
1998) (notice) and 23008 (Jan. 27, 1998) (order); Harbor Fund and Harbor Capital
------------------------------
Advisors, Inc., Investment Company Act Release Nos. 22832 (Sep. 25, 1997)
- --------------
(notice) and 22863 (Oct. 21, 1997) (order); The Reserve Private Equity Series,
----------------------------------
et al., Investment Company Act Release Nos. 22821 (Sep. 12, 1997) (notice) and
- ------
22844 (Oct. 8, 1997) (order); New England Funds Trust I, et al., Investment
---------------------------------
Company Act Release Nos. 22796 (Aug. 22, 1997) (notice) and 22824 (Sep. 17,
1997) (order); Masters' Select Investment Trust, et al., Investment Company Act
----------------------------------------
Release Nos. 22669 (May 19, 1997) (notice) and 22706 (Jun. 13, 1997) (order);
NASL Financial Services, Inc., et al., Investment Company Act Release Nos. 22382
- -------------------------------------
(Dec. 9, 1996) (notice) and 22429 (Dec. 31, 1996) (order); The Victory
-----------
Portfolios, et al., Investment Company Act Release Nos. 22366 (Dec. 3, 1996)
- ------------------
(notice) and 22432 (Dec. 31, 1996) (order); Calvert Social Investment Fund, et
----------------------------------
al., Investment Company Act Release Nos. 22345 (Nov. 20, 1996) (notice) and
- ----
22403 (Dec. 17, 1996) (order); Fremont Mutual Funds, Inc., et al., Investment
----------------------------------
Company Act Release Nos. 22340 (Nov. 18, 1996) (notice) and 22402 (Dec. 16,
1996) (order); The Enterprise Group of Funds, Inc., et al., Investment Company
-------------------------------------------
Act Release Nos. 22328 (Nov. 13, 1996) (notice) and 22388 (Dec. 10, 1996)
(order);
19
<PAGE>
SunAmerica Series Trust, et al., Investment Company Act Release Nos.
- -------------------------------
22323 (Nov. 6, 1996) (notice) and 22364 (Dec. 3, 1996) (order); The Target
----------
Portfolio Trust and Prudential Mutual Fund Management, Inc. Investment Company
- -----------------------------------------------------------
Act Release Nos. 22139 (Aug. 13, 1996) (notice) and 22215 (Sep. 11, 1996)
(order); Accessor Funds, Inc., et al., Investment Company Act Release Nos. 22129
----------------------------
(Aug. 9, 1996) (notice) and 22194 (Sep. 4, 1996) (order); American AAdvantage
-------------------
Funds, et al., Investment Company Act Release Nos. 21995 (May 30, 1996) (notice)
- --------------
and 22040 (Jun. 25, 1996) (order); EAI Select Mangers Equity Fund et al.,
-------------------------------------
Investment Company Act Release Nos. 21881 (Apr. 16, 1996) (notice) and 21938
(May 7, 1996) (order); SEI Institutional Managed Trust, et al., Investment
---------------------------------------
Company Act Release Nos. 21863 (Apr. 1, 1996) (notice) and 21921 (Apr. 29, 1996)
(order); Managed Accounts Services Portfolio Trust and Mitchell Hutchins Asset
---------------------------------------------------------------------
Management Inc., Investment Company Act Release Nos. 21590 (Dec. 11, 1995)
- ---------------
(notice) and 21666 (Jan. 11, 1996) (order); ESC Strategy Funds, Inc. et al.,
-------------------------------
Investment Company Act Release Nos. 21458 (Oct. 27, 1995) (notice) and 21540
(Nov. 22, 1995) (order); Consulting Group Capital Markets Funds, et al.,
----------------------------------------------
Investment Company Act Release Nos. 21318 (Aug. 23, 1995) (notice) and 21366
(Sep. 19, 1995) (order); The Managers Funds, et al., Investment Company Act
--------------------------
Release Nos. 21354 (Sep. 13, 1995) (notice) and 21412 (Oct. 11, 1995) (order);
and Frank Russell Investment Company, et al., Investment Company Act Release
----------------------------------------
Nos. 21108 (Jun. 8, 1995) (notice) and 21169 (Jun. 28, 1995) (order). The
relief requested herein is identical in all substantive respects to the relief
from the shareholder voting requirement of Section 15(a) and Rule 18f-2 granted
in the foregoing orders.
E. Procedural Matters
------------------
Pursuant to Rule 0-2(f) under the Act, Applicants state that their
addresses are as indicated on the cover page of this application. Applicants
further state that all written or other communications
20
<PAGE>
concerning this Application should be directed to:
Mark A. Katzoff, Esq.
Quantitative Group of Funds
55 Old Bedford Road
Lincoln, Massachusetts 01773
(800)331-1244
With a copy to:
Joseph R. Fleming, Esq.
Dechert Price & Rhoads
10 Post Office Square, Suite 1230
Boston, MA 02109
(617) 728-7161
Applicants desire that the Commission issue an order pursuant to Rule 0-5
under the Act without a hearing being held.
Each Applicant represents that the undersigned is authorized to file this
Application in the name and on behalf of the Applicant. The resolutions and
statements of authority required under Rule 0-2(c)(1) are attached hereto as
Exhibit B.
The verification required by Rule 0-2(d) under the Act are attached hereto
as Exhibit C.
F. Request for Order of Exemption
------------------------------
For the foregoing reasons, Applicants request that the Commission enter an
order pursuant to Section 6(c) of the Act granting the relief sought by this
Application. Applicants submit that the requested exemption is necessary or
appropriate in the public interest, consistent with the protection of investors,
and consistent with the purpose fairly intended by the policy and provisions of
the Act.
QUANTITATIVE GROUP OF FUNDS.
By:
-------------------------
21
<PAGE>
Mark A. Katzoff
Clerk
QUANTITATIVE ADVISORS, INC.
By:
-------------------------
Mark A. Katzoff
Assistant Clerk
Dated: August 20, 1998
22
<PAGE>
EXHIBIT A
---------
Set forth below is a table listing all meetings of public shareholders of
the Funds previously held or scheduled to be held for the purpose of approving a
new Fund Manager or a material change in a Fund Manager's Agreement since
commencement of operations of the Trust (May 9, 1985).
<TABLE>
<CAPTION>
Quantitative Group of Funds
Meeting Date Fund Fund Manager's Agreement Approvals
- ------------ ---- ----------------------------------
<C> <C> <S>
April 2, 1990 Quantitative International Boston International Advisors, Inc.
Equity Fund*
October 28, 1998 Quantitative International Independence InternationalAssociates, Inc.
Equity Fund
October 28, 1998 Quantitative Emerging Independence InternationalAssociates, Inc.
Markets Fund**
October 28, 1998 Quantitative Small Cap Columbia Partners, LLC, Investment
Fund*** Management.
October 28, 1998 Quantitative Mid Cap Columbia Partners, LLC, Investment
Fund**** Management.
</TABLE>
*then called the Boston Foreign Growth and Income Series
**then called the Quantitative Foreign Frontier Fund
***then called the Quantitative Numeric Fund
****then called the Quantitative Numeric II Fund
23
<PAGE>
EXHIBIT B
---------
CLERK'S CERTIFICATE
-------------------
The undersigned, being duly elected Clerk of Quantitative Group of Funds,
Inc.(the "Fund"), a business trust organized under the laws of Massachusetts,
hereby certifies that (1) the attached resolutions are true and correct copies
of the resolutions adopted by the Board of the Fund at a meeting of the Board
held on February 13, 1998, at which meeting a quorum was at all times present
and voting; and (ii) these resolutions have not been amended, modified or
superseded in any way as of the date of this Certificate.
IN WITNESS WHEREOF, I have set my hand this day of August 20, 1998.
___________________
Mark A. Katzoff
Clerk
24
<PAGE>
RESOLVED: That the President, Vice President or Clerk of the Fund be, and each
of them hereby is, authorized and directed to complete, execute and file with
the Securities and Exchange Commission in the name of and on behalf of the Fund,
an Exemptive Application requesting relief from certain requirements of Section
15(a) and Rule 18f-2 of the Investment Company Act of 1940, and any and all
exhibits and documents relating thereto, with such changes, additions and
deletions as the officer or officers executing such application, on advice of
counsel, may deem necessary or appropriate.
25
<PAGE>
ASSISTANT CLERK'S CERTIFICATE
------------------------------
The undersigned, being duly elected Assistant Clerk of Quantitative
Advisors, Inc. ("Quantitative Advisors"), a corporation organized under the laws
of Massachusetts hereby certifies that (i) the attached resolutions are true and
correct copies of the resolutions adopted by the Board of Quantitative Advisors
at a regular meeting of the Board held on April 7, 1998, at which meeting a
quorum was at all times present and voting; and (ii) these resolutions have not
been amended, modified or superseded in any way as on the date of this
Certificate.
IN WITNESS WHEREOF, I have set my hand this 20th day of August, 1998.
___________________
Mark A. Katzoff
Assistant Clerk
26
<PAGE>
RESOLVED: That the President, Vice President, Clerk or Assistant Clerk of the
Company be, and each of them hereby is, authorized and directed to complete,
execute and file with the Securities and Exchange Commission in the name of and
on behalf of the Fund, an Exemptive Application requesting relief from certain
requirements of Section 15(a) and Rule 18f-2 of the Investment Company Act of
1940, and any and all exhibits and documents relating thereto, with such
changes, additions and deletions as the officer or officers executing such
application, on advice of counsel, may deem necessary or appropriate.
27
<PAGE>
EXHIBIT C
---------
Commonwealth of Massachusetts )
) ss:
County of Middlesex )
The undersigned, being duly sworn, deposes and says that he has duly
executed the attached Amended Application dated August 20, 1998 for and on
behalf of Quantitative Group of Funds (the "Fund"), a Massachusetts business
trust, that he is the Clerk of the Fund; and that all action by shareholders,
directors, and other bodies necessary to authorize deponent to execute and file
such instrument has been taken. Deponent further says that he is familiar with
such instrument and the contents thereof, and that the facts therein set forth
are true to the best of his knowledge, information and belief.
--------------------
Mark A. Katzoff
Subscribed and sworn to before me a Notary Public this 20th day of August, 1998
_______________________
Notary Public
My Commission expires
28
<PAGE>
Commonwealth of Massachusetts )
) ss:
County of Middlesex )
The undersigned, being duly sworn, deposes and says that he has duly
executed the attached Amended Application dated August 20, 1998 for and on
behalf of Quantitative Advisors, Inc. (the "Advisor"), a Massachusetts
corporation, that he is the Assistant Clerk of the Advisor and that all action
by shareholders, directors1 and other bodies necessary to authorize deponent to
execute and file such instrument has been taken. Deponent further says that he
is familiar with such instrument and the contents thereof, and that the facts
therein set forth are true to the best of his knowledge, information and belief.
--------------------
Mark A. Katzoff
Subscribed and sworn to before me a Notary Public this 20th day of August, 1998.
_______________________
Notary Public
My Commission expires
29
<PAGE>
EXHIBIT D
---------
SECURITIES AND EXCHANGE COMMISSION
REL .No. IC- ; 812-11144
----------- ---------
Quantitative Group of Funds and Quantitative Advisors,, Inc.
Date; 1998
-------------------------
Agency: Securities and Exchange Commission (the "SEC")
- -------
Action: Notice of Application for Exemption under the Investment Company Act of
- -------
1940, as amended (the "Act").
Applicants: Quantitative Group of Funds. ("Quantitative Group" or the "Fund")
- -----------
(including any existing or future series thereof) and Quantitative Advisors,
Inc. ("Quantitative Advisors" or the "Adviser") (collectively referred to as the
"Applicants").
Relevant Act Sections: Exemptions requested under section 6(c) of the Act from
- ---------------------
the provisions of section 15(a) and rule 18f-2 thereunder.
Summary of Application: Applicants seek a conditional order permitting the
- ----------------------
Adviser to enter into or amend subadvisory agreements without receiving
shareholder approval.
Hearing or Notification of Hearing: If no hearing is ordered, the Application
- ----------------------------------
will be granted Any interested person may request a hearing on this Application
or ask to be notified if a hearing is ordered.
Hearing or Notification of Hearing: If no hearing is ordered, the Application
- ----------------------------------
will be granted. Any interested person may request a hearing on this Application
or ask to be notified if a hearing is ordered. Any requests must be received by
the SEC by 5:30 p.m. on ____________ 1998. Request a hearing in writing, giving
the nature of your interest, the reason for the request, and the issues you
contest. Serve the Applicants with the request, either personally or by mail,
and also send it to the Secretary of the SEC, along with proof of service by
affidavit or, for lawyers, by certificate requesting information of the date
30
<PAGE>
of a hearing by writing to the Secretary of the SEC, Secretary, SEC, 450 Fifth
Street, N.W., Washington, D.C. 20549. Each of the Applicants c/o Mark A.
Katzoff. Esq., Quantitative Group of Funds., 55 Old Bedford Road, Lincoln, MA
01773.
For Further Information Contact: [To be provided by the SEC].
- --- ---------------------------
Supplementary Information: Following is a summary of the Application. The
- -------------------------
complete Application is available for a fee from the SEC's Public Reference
Branch.
Applicant's Representations
- ---------------------------
1. Factual Background. Quantitative Group is an open-end, management
------------------
investment company organized as a Massachusetts business trust and currently
composed of six separate investment Funds (each, a "Fund," and collectively. the
"Funds"). Each Fund is professionally managed by the Adviser. Each Fund benefits
from discretionary advisory services provided by one or more separate
unaffiliated registered investment advisers (each, a "Fund Manager," and
collectively, the "Fund Managers") which are identified, retained and
compensated by the Adviser.
The Funds have each entered into an investment adviser's agreement
(each an "Adviser's Agreement" and collectively, the "Adviser's Agreements")
with the Adviser, which has entered into a Fund Manager's Agreement (a "Fund
Manager's Agreement") with each Fund Manager to the Funds. It is the Adviser's
responsibility under the Adviser's Agreements to select Fund Managers subject to
the review and approval of the Board of Trustees of the relevant Fund (the
"Board" or the "Trustees"), and to review their continued performance. A Fund
may be managed by a single Fund Manager or may be allocated by the Adviser
between or among two or more Fund Managers, although at present only one Fund
Manager manages each Fund. The oversight and management services provided by
Quantitative Advisors include (i) supervising the Fund Managers' compliance with
state and federal regulations, including the Act, (ii) evaluating the Fund
Managers' performance, (iii) analyzing the composition of the
31
<PAGE>
investment portfolios of each Fund of the Trust and preparing reports thereon
for the Board or any committee of the Board, (iv) evaluating each Fund's
performance in comparison to similar mutual funds and other market information,
(v) conducting searches, upon a request of the Board, for a replacement for any
Fund Manager then serving the respective Fund, and (vi) preparing presentations
to shareholders which analyze each Fund's overall investment program and
performance. The Funds pay the Adviser a fee for its services that is based on
the value of the average daily net assets of each Fund. In turn, the Adviser
pays the fee of each Fund Manager. The Funds pay no fees directly to any Fund
Manager
2. Relief Requested
----------------
Applicants request exemption from Section 15(a) of the Act and Rule
18f-2 thereunder, to permit the Adviser to enter into new or amended contracts
with Fund Managers to the Funds without obtaining shareholder approval therefor,
including new Fund Manager's Agreements necessitated because the prior Fund
Manager's Agreements were terminated as a result of an "assignment" (as defined
in Section 2(a)(4) of the Act).
3. Applicant's Conditions. In order to protect against the abuse that
----------------------
Section 15 addresses and that may arise under arrangements such as those
proposed in this Application -- the transfer of responsibility for management of
a Fund's assets without Fund shareholders' acquiescence -- Applicants agree to
the imposition of the conditions enumerated below to the granting of the
exemptive order requested (the "Order"). The conditions proposed are intended to
ensure that Fund shareholders receive adequate disclosure about Fund Managers,
permitting them to "vote with their feet" on the Adviser's decision to appoint a
new Adviser or to change the terms of an Advisory Agreement
32
<PAGE>
a. The Adviser will provide general management and administrative
services to the Funds, including overall supervisory responsibility for the
general management and investment of the Funds' securities portfolios and,
subject to review and approval by each Board with respect to its respective
Funds, will (i) set the Funds' overall investment strategies; (ii) select Fund
Managers; (iii) monitor and evaluate the performance of Fund Managers; (iv)
allocate and, when appropriate, reallocate a Fund's assets among its Fund
Managers in those cases where a Fund has more than one Fund Manager; and (v)
implement procedures reasonably designed to ensure that the Fund Managers comply
with the relevant Fund's investment objectives, policies, and restrictions.
b. Before a Fund may rely on the Order requested hereby, the
operation of the Fund in the manner described in this Application will be
approved by a majority of its outstanding voting securities, as defined in the
Act, or, in the case of a new Fund whose public shareholders purchased shares on
the basis of a prospectus containing the disclosure contemplated by condition
(d) below, by the sole shareholder before offering of shares of such Fund to the
public.
c. Each Fund will furnish to its shareholders all information about a
new Fund Manager or Fund Manager's Agreement for one of its Funds that would be
included in a proxy statement. Such information will include disclosure as to
level of fees to be paid to the Adviser and each Fund Manager of the Fund and
any change in such information caused by the addition of a new Fund Manager or
any proposed material change in a Fund Manager's Agreement. Each Fund will meet
this condition by providing its shareholders with an informal information
statement complying with the provisions of Regulation 14C under the Exchange Act
and Schedule 14C thereunder. With respect to a newly retained Fund Manager, or a
change in a Fund Manager's Agreement, this information statement will be
provided to shareholders of the Fund a maximum of ninety (90) days after the
addition of the new Fund Manager or the implementation of any change in a Fund
Manager's Agreement. The information statement will
33
<PAGE>
also meet the requirements of Schedule 14A.
d. Each Fund will disclose in its prospectuses the existence,
substance and effect of the Order granted pursuant to the Application. In
addition, each Fund will hold itself out to the public as employing the "manager
of managers" approach described in the application The prospectus and any sales
materials or other shareholder communications relating to a Fund will
prominently disclose that the Adviser has ultimate responsibility for the
investment performance of the Fund due to its responsibility to oversee Fund
Managers and recommend their hiring, termination, and replacement.
e. No director, trustee or officer of the Funds or director or officer
of the Adviser willown directly or indirectly (other than through a pooled
investment vehicle that is not controlled by any such director, trustee or
officer) any interest in any Fund Manager except for (i) ownership of interests
in the Adviser or any entity that controls, is controlled by or is under common
control with the Adviser; or (ii) ownership of less than 1% of the outstanding
securities of any class of equity or debt of a publicly traded company that is
either a Fund Manager or any entity that controls, is controlled by or is under
common control with a Fund Manager.
f. The Adviser will not enter into a Fund Manager's Agreement with any
Fund Manager that is an affiliated person, as defined in Section 2(a)(3) of the
Act, of the Adviser or the Funds other than by reason of serving as Fund Manager
to one or more Funds ("Affiliated Fund Manager") without such agreement,
including the compensation to be paid thereunder being approved by the
shareholders of the applicable Fund.
g. At all times, a majority of the members of the Board will be
persons each of whom is not an "interested person" of the respective Fund as
defined in Section 2(a)(19) of the Act
34
<PAGE>
("Independent Trustees"), and the nomination of new or additional Independent
Trustees will be placed within the discretion of the then existing Independent
Trustees.
4. Applicants' Legal Analysis.
--------------------------
Applicants submit that the requested shareholder voting exemption meets the
standards of Section 6(c) of the Act.
Any Contracts between the Adviser and the Fund would remain subject to the
shareholder voting requirements of Section 15(a) of the Act, Rule 18f-2 under
the Act and related proxy disclosure requirements of Rule 20a-1 under the Act.
This exemption would permit the Adviser more efficiently to perform the
functions the Funds are paying it to perform: that is, selecting Fund Managers,
monitoring their performance, and making whatever changes in the roster of Fund
Managers the Adviser deems appropriate, subject to the approval of the Board. To
require that shareholders approve each new Fund Manager would not only result in
unnecessary administrative expense to the Funds, but could result in harmful
delays in executing changes in Fund Managers that the Adviser and the Board have
determined are necessary. It is in order to avoid the aforementioned expenses
and delays that Applicants are requesting relief from Section 15(a) of the Act
and Rule 18f-2 thereunder, an arrangement, Applicants contend, that would be
necessary or appropriate in the public interest, as required under Section 6(c)
of the Act.
Primary responsibility for management of the Funds including, in
particular, selection and supervision of the Fund Managers -- is vested in the
Adviser, subject to oversight by the Board. The Adviser's contracts with the
Funds will remain fully subject to the requirements of Section 15(a) of the Act
and Rule 18f-2 thereunder, including the requirements for shareholder voting.
Applicants believe it is consistent with the protection of investors, pursuant
to the requirements of Section 6(c) of the Act, to
35
<PAGE>
vest the selection and supervision of Fund Managers in the Adviser given the
advisory structure of the Funds, as well as the Adviser's significant experience
and expertise in selecting Fund Managers. Significantly, the Funds' prospectuses
disclose information concerning the identity, ownership, qualifications and
compensation of the Fund Managers in full compliance with Form N-1A. Further,
the information statements described above would provide shareholders with all
information regarding a new Fund Manager or a material change in a Fund
Manager's Agreement to the same extent as would be set forth in a proxy
statement.
Applicants submit that under this policy, investors will be in a position
to make a fully informed investment decision as to the purchase, redemption or
retention of Fund shares. These arrangements are consistent with the protection
of investors because they both permit the Funds to avoid the administrative
burden and expense associated with a formal proxy solicitation (which benefits
all shareholders, including those that might redeem their shares after review of
an information statement relating to a new Fund Manager or a material change in
a Fund Manager's Agreement they did not favor) and provide disclosure to
investors, permitting them to "vote with their feet." In contrast, in the
absence of the exemptive relief requested in this Application, all shareholders
would bear the higher expenses associated with formal proxy solicitations that
would provide no more meaningful disclosure to shareholders -- including those
shareholders who might redeem their shares after shareholder approval of a new
Fund Manager or a material change in a Fund Manager's Agreement they did not
favor.
Finally, pursuant to Section 6(c) the shareholder voting exemption is
consistent with the purposes fairly intended by the policy and provisions of the
Act. The purpose of the requirement that shareholders approve new advisory
contracts can be inferred readily. The identity of a registered investment
company's investment adviser, together with the company's fundamental investment
policies and objectives, is one of the main features distinguishing one
investment company from another. Clearly,
36
<PAGE>
the framers of the Act believed that if an investment company is to be managed
by an investment adviser different from the one shareholders expected when they
made their investment, the new investment adviser should he approved by
shareholders The exemption being requested herein would be fully consistent with
this principle.
Shareholders understand and expect that the Adviser will change Fund
Managers when appropriate, and, indeed, the Funds pay the Adviser to do exactly
that. Eliminating the potential need for shareholders to pay the expenses and
to experience the delay associated with formal proxy solicitations is consistent
with the purposes and provisions of the Act and the protection of investors,
particularly where the proxy solicitations provides no greater or more
meaningful information to investors than the use of the informal information
statement in the manner described herein.
Whenever a Fund Manager is added or a material change in a Fund Manager's
Agreement is made, the relevant Fund's prospectus would be supplemented before
it is provided to new investors to alert such investors of the change. The Fund
would notify promptly all shareholders of an affected Fund of the change through
the information statement to be mailed within ninety (90) days after the change.
This arrangement is consistent with -- indeed, even more accommodative to timely
notification to shareholders than -- related strictures under the Act. For
instance, in the absence of the exemptive relief requested, either Board could
determine to terminate an existing Fund Manager's Advisory Agreement and
immediately approve and implement a new Agreement with a new Fund Manager. In
that event, pursuant to Rule 15a-4 under the Act, the new Fund Manager would be
permitted to serve prior to approval by shareholders for a period of 120 days
provided that the compensation to be received under the new Fund Manager's
Agreement did not exceed that under the terminated Fund Manager's Agreement.
37
<PAGE>
In the unlikely event that a shareholder of a Fund is concerned about the
selection of a particular Fund Manager by the Adviser, or a material change in a
Fund Manager's Agreement, each as approved by the Board, that shareholder will
be able to exchange his or her shares for shares of another Fund with a Fund
Manager the shareholder deems adequate, without the imposition of any additional
charges; that shareholder may also choose to redeem his or her shares, subject
to a redemption fee imposed on the Ordinary shares of certain Funds. In either
event, the ultimate outcome for the dissatisfied shareholder would be no worse
than if a vote were held and the new Fund Manager approved - the result in most,
if not all, circumstances-minus the unnecessary expenses involved in a proxy
vote. Therefore, the requested exemption, far from permitting shareholders'
expectations to be frustrated contrary to the purpose of the Act, would
facilitate those expectations being met.
For the Commission by the Division of Investment Management, pursuant to
delegated authority.
Jonathan G. Katz Secretary
__________ 1998
38
<PAGE>
EXHIBIT 33
As filed with the Securities and Exchange Commission
on January __, 1999
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
In the matter of
QUANTITATIVE GROUP OF FUNDS
and
QUANTITATIVE ADVISORS, INC.
55 Old Bedford Road
Lincoln, Massachusetts 01773
AMENDMENT NO. 3 TO APPLICATION FOR AN ORDER OF
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
SECTION 6(c) OF THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED, EXEMPTING APPLICANTS FROM C(Pounds)RTAIN
REQUIREMENTS OF SECTION 15(a) THEREOF AND RULE I8f-2
THEREUNDER
File No. 812-11144
Page One of 29 Pages
--
1
<PAGE>
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
- ----------------------------------X
In the Matter of )
)
QUANTITATIVE GROUP OF FUNDS )
) AMENDMENT NO. 3 TO APPLICATION
and ) PURSUANT TO SECTION 6(c) OF THE
) INVESTMENT COMPANY ACT OF 1940, AS
QUANTITATIVE ADVISORS, INC. ) AMENDED, FOR AN ORDER OF
) EXEMPTION FROM CERTAIN
55 Old Bedford Road ) REQUIREMENTS OF SECTION 15(a)
Lincoln, MA 01733 ) THEREOF AND RULE 18f-2.
) THEREUNDER
File No. 812-11144 )
- ----------------------------------X
Communications regarding this application should be directed to:
Mark A. Katzoff, Esq.
QUANTITATIVE GROUP OF FUNDS.
55 Old Bedford Road
Lincoln, Massachusetts 01773
(800) 331-1244
with a copy to:
Joseph R. Fleming, Esq.
DECHERT PRICE & RHOADS
10 Post Office Square, Suite 1230
Boston, MA 02109
(617) 728-7161
I Background
----------
A The Trust
---------
Quantitative Group of Funds (the "Trust") is an open-end, management
investment company organized as a Massachusetts business trust and currently
composed of six separate series
2
<PAGE>
(each, a "Fund," and collectively, the "Funds"). Each Fund is managed as though
it were a separate mutual fund issuing its own shares. The Trust is registered
as an investment company under the Investment Company Act of 1940, as amended
(the "Act").
The investment adviser to the Trust, Quantitative Advisors, Inc.
("Quantitative Advisors" or the "Adviser"), selects sub-advisers (each a "Fund
Manager." and collectively, the "Fund Managers") to provide investment advice
for the Funds. The Funds and their respective Fund Managers are identified in
the discussion on page 6 below. The Adviser and the Fund Managers are each
registered as investment advisers under the Investment Advisers Act of 1940.
The Trust and the Adviser are collectively referred to in this
Application as "Applicants". Applicants seek the relief requested with respect
to the Trust, the Funds, and any series of the Trust organized in the future and
for any open-end management investment company in the future advised by the
Adviser or by a person controlling, controlled by, or under common control
(within the meaning of section 2(a)(9) of the Act) with the Adviser, provided
that such investment company operates in substantially the same manner as the
Trust and complies with the conditions to the order requested as is set forth
below in Section II. B. All existing investment companies that currently intend
to rely on the order have been named as applicants, and any other existing or
future investment companies that subsequently rely on the order will comply with
the terms and conditions of the application.
B. Advisor Services and Compensation
---------------- --- ------------
Quantitative Advisors is wholly owned by officers and trustees of the
Trust. Quantitative Advisors has entered into an investment adviser agreement
(the "Adviser Agreement" ) with the Trust and is responsible for conducting all
operations of the Trust except those operations contracted to its transfer agent
and custodian and certain other service providers. The Adviser Agreement
obligates Quantitative Advisors to provide investment advisory services to the
Funds, to furnish the Trust with
3
<PAGE>
certain administrative, clerical, bookkeeping and statistical services, office
space and facilities, and to pay the compensation, if any, of the officers of
the Trust.
Quantitative Advisors has in turn entered into an agreement with each
Fund Manager (each, a "Fund Manager's Agreement" and collectively the "Fund
Manager's Agreements"). The Fund Manager's Agreements are substantially the same
in all material respects, except for the names of the Fund Managers and the
rates of compensation, which are a portion of the management fee that is paid by
each Fund to Quantitative Advisors and which Quantitative Advisors pays to the
Fund Managers.
It is the Advisor's responsibility under the Adviser Agreement to
select, subject to the review and approval of the Board of Trustees of each Fund
(the "Board"), Fund Managers who have distinguished themselves by able
performance in their respective areas of expertise, and to review their
continued performance. The oversight and management services provided by
Quantitative Advisors include (i) supervising the Fund Managers' compliance with
state and federal regulations, including the Act, (ii) evaluating the Fund
Managers' performance, (iii) analyzing the composition of the investment
portfolios of each Fund and preparing reports thereon for the Board or any
committee of the Board, (iv) calculating each Fund's performance in comparison
to similar mutual funds and other market information, (v) conducting searches,
upon a request of the Board, for a replacement for any Fund Manager then serving
the respective Fund, and (vi) preparing presentations to shareholders that
analyze each Fund's overall investment program and performance. Furthermore,
under the terms of the Advisory Contracts with the Fund Managers, the Adviser
has the authority to terminate the contracts without prior approval by the
Board. However, the Advisor has never exercised this right without first
discussing the matter with the Board. The Board is kept fully apprised of
actions of this type contemplated by the Adviser, and all such actions are
subject to review by the Board. The Advisory Contracts may also be terminated
at any time by the Board or by the vote of a majority of the Fund's outstanding
voting
4
<PAGE>
securities.
The Funds' prospectus has consistently described the Advisor's
oversight function. "The Funds are managed by [the Advisor], which provides
overall management and administration of the Funds. Under the terms of the
management agreement, the [Advisor] may, subject to the approval of the
Trustees, manage the Funds itself or, subject to the approval by the Trustees
and the shareholders, select [Fund Managers] to manage certain of the Funds. In
the latter case, the [Advisor] monitors the [Fund Managers'] investment program
and results, reviews brokerage matters, oversees compliance by the Funds with
various federal and state statutes and carries out the directives of the
Trustees." The Funds have employed an Advisor/Fund Manager structure since
their inception in 1985. The Advisor monitors the performance of the Fund
Managers on a daily basis and reports quarterly to the Board regarding their
performance, including their relative performance to appropriate benchmarks and
peer groups. The Manager periodically reviews investment strategies with the
Fund Managers and from time to time has made recommendations to the Fund
Managers regarding changes to those strategies.
In selecting Fund Managers, the Advisor considers a number of
different criteria, including the nature of the strategy employed by the Fund
Manager, the performance of the Fund Manager in strategies with investment
objectives similar to those used by the Funds, and the Fund Manager's reputation
in the investment community. In choosing between otherwise equally qualified
candidates, the Advisor may also consider the Fund Manager's ability to
participate in the marketing of the Funds. While not directly related to the
Fund Manager's primary responsibility of selecting investments for a Fund, the
Advisor believes that employing a Fund Manager who takes an active role in
assisting to market a Fund may benefit shareholders by facilitating the
accumulation of assets in the Fund. This both makes it easier for the Fund
Manager to fully employ its investment strategy and has the
5
<PAGE>
potential to lower costs to shareholders as assets increase. To locate and
evaluate Fund Managers, the Advisor has employed personal contacts and manager
databases, as well as discussions with prospective Fund Managers and their
existing clients. In determining whether an existing Fund Manager should be
terminated, the Advisor primarily focuses on the relative performance of the
Fund Manager.
6
<PAGE>
C Fund Manager Services And Compensation
--------------------------------------
The Adviser performs the management, supervisory, and administrative
functions for the Funds, and the Fund Managers serve in a sub-advisory capacity
to the respective Funds. Subject to the supervision and direction of the Adviser
and, ultimately, the Board, each Fund Manager's responsibilities are limited to
furnishing the Fund advice with respect to the investment and reinvestment of
the assets of the Fund in accordance with investment objectives, restrictions
and limitations of the Fund set forth in the Trust's Registration Statement on
Form N-IA, and to direct securities transactions pursuant to such investment
advice. A Fund may be managed by a single Fund Manager or may be allocated by
the Adviser between or among more than one Fund Manager. Currently, no Fund has
more than a single Fund Manager. None of the Fund Managers is an affiliated
person of the Adviser within the meaning of Section 2(a)(3) of the Act.
The Fund Managers of the individual Funds are as follows:
Quantitative Small Cap Fund: The Fund Manager of the Quantitative Small Cap
- ---------------------------
Fund is currently Columbia Partners, LLC, Investment Management. The
Quantitative Small Cap Fund was formerly called the Quantitative Numeric Fund.
Quantitative Mid Cap Fund: The Fund Manager of the Quantitative Mid Cap Fund
- -------------------------
currently is Columbia Partners, LLC, Investment Management. The Quantitative Mid
Cap Fund was formerly called the Quantitative Numeric II Fund.
Quantitative Growth and Income Fund: The Fund Manager of the Quantitative Growth
- -----------------------------------
and Income Fund currently is State Street Global Advisors.
Quantitative International Equity Fund: The Fund Manager of the Quantitative
- --------------------------------------
International Equity Fund is currently Independence International Associates,
Inc.
Quantitative Emerging Markets Fund: The Fund Manager of the Quantitative
- ----------------------------------
Emerging Markets Fund
7
<PAGE>
currently is Independence International Associates, Inc. The Quantitative Small
Cap Fund was formerly called the Quantitative Numeric Fund.
Quantitative Foreign Value Fund. The Fund Manager of the Quantitative Foreign
- -------------------------------
Value Fund currently is Polaris Capital Management, Inc.
II. Discussion
----------
Applicants request that the Commission grant an exemption from Section
15(a) of the Act and Rule 18f-2 thereunder to permit the Adviser to enter into
or make material changes to Fund Manager's Agreements with the Adviser, without
obtaining shareholder approval therefor. The Adviser Agreement between the
Adviser and the Funds would in all cases be subject to the shareholder voting
requirements of Section 15(a). For the reasons set forth below, Applicants
respectfully submit that the requested exemptions would be in accordance with
the standards of Section 6(c) of the Act.
A. Relevant Legal Provisions
-------------- ----------
1. Section 15(a) of the Act
------------------------
Section 15(a) of the Act provides, in part, that;
It shall be unlawful for any person to serve or act as investment
advisor of a registered investment company, except pursuant to a
written contract, which contract. whether with such registered
company or with an investment adviser of such registered company,
has been approved by the vote of a majority of the outstanding
voting securities of such registered company....
2. Rule 18f-2 under the Act
------------------------
Rule l8f-2 under the Act provides, in relevant part, that
(c)(1) With respect to the submission of an investment advisory
contract to the holders of the outstanding voting securities of a
series company for the approval required by Section 15(a) of the
Act, such matter shall be deemed to be effectively acted upon
with respect to any class or series of securities of such
8
<PAGE>
company if a majority of the outstanding voting securities of
such class or series vote for the approval of such matter,
notwithstanding (A) that such matter has not been approved by the
holders of a majority of the outstanding voting securities of any
other class or series affected by such matter, and (B) that such
matter has not been approved by the vote of a majority of the
outstanding voting securities of such company....
Rule l8f-2 further provides that:
(c)(2) If any class or series of securities of a series company
fails to approve an investment advisory contract in the manner
required by subparagraph (1) of this paragraph, the investment
adviser of such company may continue to serve or act in such
capacity for the period of time pending such required approval of
such contract, of a new contract with the same or different
adviser, or other definitive action; provided that the
compensation received by such investment adviser during such
period is equal to no more than its actual costs incurred in
furnishing investment advisory services to such class or series
or the amount it would have received under the advisory contract,
whichever is less.
3. Section 6(c) of the Act
-----------------------
Section 6(c) of the Act provides, in part, that;
The Commission ... by order upon application, may conditionally
or unconditionally exempt any person or any class or classes of
persons... from any provisions of (the Act] or of any rule or
regulation thereunder, if and to the extent that such exemption
is necessary or appropriate in the public interest and consistent
with tile protection of investors and the purposes fairly
intended by the policy and provisions of (the Act).
B. Exemptions Requested and Conditions Imposed
-------------------------------------------
Applicants request that the Commission grant an exemption from Section
15(a) of the Act and Rule 18f-2 thereunder to permit the Adviser to enter into
new or amended contracts with Fund Managers without obtaining shareholder
approval therefor, including new Fund Manager's Agreements necessitated because
the prior Fund Manager's Agreements were terminated as a result of an
"assignment" (as defined in Section 2(a)(4) of the Act). In order to protect
against the abuse that Section 15 addresses, and that may arise under
arrangements such as those proposed in this Application -- the transfer of
responsibility for management of a Fund's assets without Fund shareholders'
acquiescence --
9
<PAGE>
Applicants agree to the imposition of the conditions enumerated below to the
granting of the exemptive order requested (the "Order"). The conditions proposed
are intended to ensure that Fund shareholders receive adequate disclosure about
the Fund Managers, permitting them to "vote with their feet" on the Adviser's
decision to appoint a new Fund Manager or to change the terms of a Fund
Manager's agreement.
Applicants agree that any order granting the requested relief shall be subject
to the following conditions:
a. The Advisor will provide general management and administrative
services to the Funds, including overall supervisory responsibility for the
general management and investment of the Fund's securities portfolios, and,
subject to review and approval by each Board with respect to its respective
Funds, will (i) set the Funds' overall investment strategies; (ii) select Fund
Managers; (iii) monitor and evaluate the performance of Fund Managers; (iv)
allocate and, when appropriate, reallocate a Fund's assets among its Fund
Managers in those cases where the Advisor decides to select more than one Fund
Manager for a particular Fund; and (v) ensure that the Fund Managers comply with
the relevant Fund's investment objectives, policies, and restrictions.
b. Before a Fund may rely on the Order requested hereby, the operation of
the Fund in the manner described in this Application will be approved by a
majority of its outstanding voting securities, as defined in the Act, or, in the
case of a new Fund whose public shareholders purchased shares on the basis of a
prospectus containing the disclosure contemplated by condition (d) below, by the
sole shareholder before offering of shares of such Fund to the public.
c. Within 90 days of the hiring of a new Fund Manager, each Fund will
furnish to its shareholders all information about the new Fund Manager or Fund
Manager Agreement that would be
10
<PAGE>
included in a proxy statement, including any change in the disclosure required
by the addition of a new Fund Manager. The information will include disclosure
as to the level of fees to be paid to the Adviser and each Fund Manager. Each
fund will meet this condition by providing shareholders, within 90 days of the
hiring of a Fund Manager, with an information statement meeting the requirements
of Regulation 14C and Schedule 14C under the Exchange Act. The information
statement will also meet the requirements of Item 22 of Schedule 14A under the
Exchange Act.
d. Each Fund will disclose in its prospectuses the existence, substance
and effect of the Order granted pursuant to this Application. In addition,
each Fund will hold itself out to the public as employing the "manager of
managers" approach described in the application. The prospectus relating to a
Fund will prominently disclose that the Adviser has ultimate responsibility for
the investment performance of the Fund due to its responsibility to oversee Fund
Managers and recommend their hiring, termination, and replacement.
e. No director, trustee or officer of the Funds or director or officer of
the Adviser will own directly or indirectly (other than through a pooled
investment vehicle that is not controlled by any such director, trustee or
officer) any interest in any Fund Manager except for (i) ownership of interests
in the Adviser or any entity that controls, is controlled by or is under common
control with the Adviser, or (ii) ownership of less than 1% of the outstanding
securities of any class of equity or debt of a publicly-traded company that is
either a Fund Manager or any entity that controls, is controlled by or is under
common control with a Fund Manager
f. The Adviser will not enter into a Fund Manager's Agreement with any
Fund Manager that is an affiliated person, as defined in Section 2(a)(3) of the
Act, of the Adviser or the Funds other
11
<PAGE>
than by reason of serving as Fund Manager to one or more Funds ("Affiliated Fund
Manager") without such agreement, including the compensation to he paid
thereunder, being approved by the shareholders of the applicable Fund.
g. At all times, a majority of the members of the Board will be persons
each of whom is not an "interested person" of the respective Fund as defined in
Section 2(a)(19) of the Act ("Independent Trustee"), and the nomination of new
or additional Independent Trustees will be placed within the discretion of the
then existing Independent Trustees.
h. When a Fund Manager change is proposed for a Fund with an Affiliated
Fund Manager, the Board, including a majority of the Independent Trustees, will
make a separate finding. reflected in the Board's minutes, that such change is
in the best interests of the Fund and its shareholders and does not involve a
conflict of interest from which the Adviser or the Affiliated Fund Manager
derives an inappropriate advantage.
C. The Requested Exemptions Meet the standards of Section 6(c) of the Act
----------------------------------------------------------------------
1. Necessary or Appropriate in the Public Interest
-----------------------------------------------
As stated earlier, any contract between the Adviser and the Trust would
remain subject to the shareholder voting requirements of Section 15(a) of the
Act, Rule 18f-2 under the Act and related proxy disclosure requirements of Rule
20a-1 under the Act. Applicants are not seeking any exemptive relief with
respect to such contracts. Rather, Applicants are requesting that the Adviser be
permitted to enter into new or amended contracts with Fund Managers without
seeking shareholder approval. This
12
<PAGE>
exemption would permit the Adviser more efficiently to perform the functions the
Funds are paying it to perform: that is, selecting Fund Managers, monitoring
their performance, and making whatever changes in the roster of Fund Managers
the Adviser deems appropriate, subject to the approval of the Board. To require
that shareholders approve each new Fund Manager would not only result in
unnecessary administrative expense to the Funds, but could result in harmful
delays in executing changes in Fund Managers that the Adviser and the Board have
determined are necessary. To the extent this occurred, shareholders of the Funds
would be receiving less satisfactory service than would otherwise be the case,
and their expectations would be frustrated.
It is in order to avoid the aforementioned expenses and delays that
Applicants are requesting relief from Section 15(a) of the Act and Ru1e 18f-2
thereunder.
2. Consistent with the Protection of Investors
-------------------------------------------
Primary responsibility for management of the Funds -- including in
particular the selection and supervision of the Fund Managers - is vested in the
Adviser, subject to oversight by the Board. The Advisor Agreement with the Trust
will remain fully subject to the requirements of Section 15(a) of the Act and
Rule 18f-2 thereunder, including the requirements for shareholder voting.
Applicants believe it is consistent with the protection of investors to vest the
selection and supervision of Fund Managers in the Adviser given the advisory
structure of the Trust, as well as the Adviser's significant experience and
experience in selecting Fund Managers. It is submitted that, within this
structure and in view of such experience and expertise, the Adviser is in a
better position to make an informed selection of a Fund Manager than individual
investors. Significantly, the Trust's prospectus discloses information
concerning the identity, ownership, qualifications and compensation of the Fund
Managers in full compliance with
13
<PAGE>
Form N-1A. Further, the information statements described above would provide
shareholders with all information regarding a new Fund Manager or a material
change in a Fund Manager's Agreement to the same extent as would be set forth in
a proxy statement. Thus, investors would be in a position to make a fully
informed investment decision as the purchase, redemption or retention of Fund
shares.
These arrangements are consistent with the protection of investors because
they both permit the Trust to avoid the administrative burden and expense
associated with a formal proxy solicitation (which benefits all shareholders,
including those that might redeem their shares after review of an information
statement relating to a new Fund Manager or a material change in a Fund Manager
Agreement they did not favor) and provide full disclosure to investors,
permitting them to "vote with their feet," to the same extent as if a
shareholder vote had approved the new contract - the result in most if not all
such votes. In contrast, in the absence of the exemptive relief requested in
this Application, all shareholders would bear the higher expenses associated
with formal proxy solicitations that would provide no more meaningful disclosure
to shareholders -- including those shareholders who might redeem their shares
after shareholder approval of a new Fund Manager or a material change in a Fund
Manager Agreement they did not favor. Moreover, Applicants note that mutual
fund shareholders rarely if ever disapprove a proposed sub-advisory agreement
that is recommended by management and the board of directors or trustees of the
mutual fund.
Applicants' arrangements are sufficiently distinguishable from those of
most other investment companies so that the exemptive relief being requested
herein could not fairly be viewed as a precedent for similar relief for other
investment companies that employ advisers in a conventional way. As stated
above, the Adviser continuously monitors the performance of each Fund Manager
and from time to time may recommend the replacement of a particular Fund
Manager, or allocation of a portion of the assets of
14
<PAGE>
a particular Fund to an additional Fund Manager (should the Advisor choose to
employ multiple Fund Managers for a single Fund in the future). This "Manager of
Managers" approach distinguishes the Funds from the vast majority of other
investment companies which use internal management.
It is of course true that a sub-adviser to any registered investment
company must serve pursuant to a contract that may be terminated by the company
on not more than sixty days' notice. As a practical matter, however, persons
buying shares of a particular mutual fund normally do so with the understanding
that the fund's portfolio will be managed by the investment adviser and sub-
adviser (if any) named in the prospectus. Indeed in the usual case the identity
of the company or companies providing portfolio management is the primary basis
for choosing among funds with similar investment objectives and policies. Thus,
barring an extraordinary development, the advisory relationships described in a
fund's prospectus are expected to be permanent.
The Trust currently has six Funds. Since May 9, 1985, the commencement of
operations of the Trust, five changes in Fund Managers or material changes in
Fund Manager's Agreements were submitted for shareholder approval. Attached
hereto as Exhibit A is a table listing all meetings of the shareholders of the
Funds previously held or to be held for the purpose of approving a new Fund
Manager or material change in a Fund Manager's Agreement since commencement of
operations of the respective Funds. Each of these meetings would not have taken
place and shareholders would have been spared the expense and burden of repeat
proxy solicitations, while receiving all relevant information that would have
been included in a proxy statement, had the Order been in place. Shareholders
could then have made an immediate decision to hold or redeem their shares
without the delay associated with waiting for the completion of the proxy
solicitation, the calculation of votes, the communication of the results and the
determination by the shareholder of whether he or she regarded the result - in
all cases, the approval of the arrangements proposed - as favorable or
unfavorable.
15
<PAGE>
The Adviser may wish to change the Fund Manager for a particular Fund for
any number of reasons. First, the Adviser may determine that a Fund Manager is
providing sub-standard performance over a period of time. In such a case, the
Fund Manager might be replaced by a new Fund Manager, or, if another Fund
Manager for a Fund with multiple Fund Managers (if the Advisor elects to use
this approach in the future) is deemed to have superior performance, the assets
managed by the under performing Fund Manager may be allocated to the superior
Fund Manager. A second reason may be that the individual employee responsible
for a Fund moves from employment with one Fund Manager to another, and the
Adviser deems it advisable to stay with that individual. A third reason for a
Fund Manager change may be when an entity undergoes a change in control that
causes the Fund Manager's Agreement to terminate, and which the Adviser believes
makes either advisable or inadvisable to continue the relationship (in either
case a shareholder vote on a new contract would be required by Section 15(a) of
the Act). Change in control was the cause of the most recent proxies of the
Funds relating to Fund Managers. The fourth category of change occurs with the
Adviser decides to obtain further diversification of a Fund by hiring an
additional Fund Manager without terminating any current Fund Manager. A final
category of change is when, in the view of the Adviser, a change in investment
style (for example, from a value manager to a growth manager) is warranted.
3 Consistent with the Purposes Fairly Intended by the Policy and
--------------------------------------------------------------
Provisions of the Act
- ---------------------
The purpose of the requirement that shareholders approve new advisory
contracts can be inferred readily. The identity of a registered investment
company's investment adviser, together with the company's fundamental investment
policies and objectives, is one of the main features distinguishing one
investment company from another. Clearly, the framers of the Act believed that
if an investment company is to be managed by an investment advisor different
from the one shareholders expected when
16
<PAGE>
they made their investment, the new investment adviser should be approved by
shareholders. The exemption being requested herein would be fully consistent
with this principle.
The primary party on which an investor in a Fund will rely will be the
Adviser. Indeed, the first page of the Trust's prospectus makes perfectly clear
that the Adviser is the primary service provider to the Fund, stating that the
Adviser "provides overall management and operational services to the Funds",
while the Fund Managers "are presently responsible for the day-to-day management
of each Fund". In addition, the Management of the Funds section on page 11 of
the prospectus expressly states that the Adviser "may ... select (Fund Managers)
to manage certain of the Funds". Shareholders therefore understand and expect
that the Adviser will change Fund Managers when appropriate, and, indeed, the
Funds pay the Adviser to do exactly that, eliminating the potential need for
shareholders to pay the expenses and to experience the delay associated with
formal proxy solicitations consistent with the purposes and provisions of the
Act and the protection of investors, particularly where the proxy solicitation
provides no greater or more meaningful information to investors than the use of
the informal information statement in the manner described herein. Moreover,
whenever a Fund Manager is added or a material change in a Fund Manager's
Agreement is made, the relevant Fund's prospectus would be supplemented before
it is provided to new investors to alert such investors of the change. The Fund
would promptly notify all shareholders of an affected Fund of the addition of a
Fund Manager through the information statement to be mailed within ninety (90)
days after a Fund Manager is added. This arrangement is consistent with --
indeed, even more accommodative to timely notification to shareholders than --
related strictures under the Act. For instance, in the absence of the exemptive
relief requested, the Board could determine to terminate an existing Fund
Manager's Agreement and immediately approve and implement a new Agreement with a
new Fund Manager. In that event, pursuant to rule 15a-4 under the Act the new
Fund Manager would be permitted to serve prior to
17
<PAGE>
approval by shareholders for a period of 120 days provided that the compensation
to be received under the new Fund Manager's Agreement did not exceed that under
the terminated Fund Manager's Agreement. Further, providing the informal
information statement after a change in Fund Manager would permit the Adviser to
respond promptly to changed circumstances without leaving a Fund's assets in the
hands of a Fund Manager having diminished capabilities (because of loss of key
personnel or otherwise) or motivation (because of impending termination of its
Fund Manager's Agreement) to manage the assets diligently.
Finally, in the unlikely event that a shareholder of a Fund is concerned
about the selection of a particular Fund Manager by the Adviser, or a material
change in a Fund Manager's Agreement, each as approved by the Board, that
shareholder will be able to exchange his or her shares for shares of another
Fund in the Trust with a Fund Manager the shareho1der deems adequate, without
the imposition of any additional charges; that shareholder may also choose to
redeem his or her shares. In either event, the ultimate outcome for the
dissatisfied shareholder would be no worse than if a vote were held and the new
Fund Manager approved - the result in most if not all circumstances - minus the
unnecessary expenses involved in a proxy vote. Therefore the requested
exemption, far from permitting shareholders' expectations to be frustrated
contrary to the purpose of the Act, would facilitate those expectations being
met.
D. Precedents for Relief
---------------------
Applicants note that substantially the same exemptions requested herein
have been granted recently. See M Fund, Inc., et al., Investment Company Act
--- ---------------------
Release Nos. 23246 (Jun. 9, 1998) (notice) and 23300 (Jul. 1, 1998) (order);
Jefferson Pilot Variable Fund, Inc. and Jefferson Pilot Advisory
- ----------------------------------------------------------------
18
<PAGE>
Corporation, Investment Company Act Release Nos. 23242 (Jun. 5, 1998)
- -----------
(notice) and 23301 (Jul. 1, 1998) (order); Cypresstree Asset Management
----------------------------
Corporation, Inc. and North American Funds, Investment Company Act Release
- ------------------------------------------
Nos. 23169 (May 4, 1998) (notice) and 23231 (Jun. 1, 1998) (order); EQ Advisors
-----------
Trust and EQ Financial Consultants, Inc., Investment Company Act Release Nos.
- ----------------------------------------
23093 (Mar. 30, 1998)(notice) and 23128 (Apr. 24, 1998) (order); American
--------
Odyssey Funds, Inc., et al., Investment Company Act Release Nos. 23017
- ---------------------------
(Feb. 2, 1998) (notice) and 23060 (Mar. 5, 1998) (order); Saratoga Advantage
------------------
Trust, et al., Investment Company Act Release Nos. 23000 (Jan. 14, 1998)
- ------------
(notice) and 23023 (Feb. 10, 1998) (order); Growth Stock Portfolio, et al.,
------------------------------
Investment Company Act Release Nos. 22998 (Jan. 13, 1998) (notice) and 23025
(Feb. 10, 1998) (order); Advantus Capital Management, Inc., et al., Investment
----------------------------------------
Company Act Release Nos. 22991 (Jan. 5, 1998) (notice) and 23008 (Jan. 27,
1998) (order); Harbor Fund and Harbor Capital Advisors, Inc., Investment
---------------------------------------------
Company Act Release Nos. 22832 (Sep. 25, 1997)(notice) and 22863 (Oct. 21,
1997) (order); The Reserve Private Equity Series, et al., Investment Company
----------------------------------------
Act Release Nos. 22821 (Sep. 12, 1997) (notice) and 22844 (Oct. 8, 1997)
(order); New England Funds Trust I, et al., Investment Company Act Release
---------------------------------
Nos. 22796 (Aug. 22, 1997) (notice) and 22824 (Sep. 17, 1997) (order); Masters'
--------
Select Investment Trust, et al., Investment Company Act Release Nos. 22669
- -------------------------------
(May 19, 1997) (notice) and 22706 (Jun. 13, 1997) (order); NASL Financial
--------------
Services, Inc., et al., Investment Company Act Release Nos. 22382
- ----------------------
(Dec. 9, 1996) (notice) and 22429 (Dec. 31, 1996) (order); The Victory
-----------
Portfolios, et al., Investment Company Act Release Nos. 22366 (Dec. 3, 1996)
- ------------------
(notice) and 22432 (Dec. 31, 1996) (order); Calvert Social Investment Fund, et
----------------------------------
al., Investment Company Act Release Nos. 22345 (Nov. 20, 1996) (notice) and
- ----
22403 (Dec. 17, 1996) (order); Fremont Mutual Funds, Inc., et al., Investment
----------------------------------
Company Act Release Nos. 22340 (Nov. 18, 1996) (notice) and 22402 (Dec. 16,
1996) (order); The Enterprise Group of Funds, Inc., et al., Investment Company
-------------------------------------------
Act Release Nos. 22328 (Nov. 13, 1996) (notice) and 22388 (Dec. 10, 1996)
(order);
19
<PAGE>
SunAmerica Series Trust, et al., Investment Company Act Release Nos. 22323
- -------------------------------
(Nov. 6, 1996) (notice) and 22364 (Dec. 3, 1996) (order); The Target
----------
Portfolio Trust and Prudential Mutual Fund Management, Inc. Investment Company
- -----------------------------------------------------------
Act Release Nos. 22139 (Aug. 13, 1996) (notice) and 22215 (Sep. 11, 1996)
(order); Accessor Funds, Inc., et al., Investment Company Act Release Nos. 22129
----------------------------
(Aug. 9, 1996) (notice) and 22194 (Sep. 4, 1996) (order); American AAdvantage
-------------------
Funds, et al., Investment Company Act Release Nos. 21995 (May 30, 1996) (notice)
- --------------
and 22040 (Jun. 25, 1996) (order); EAI Select Mangers Equity Fund et al.,
-------------------------------------
Investment Company Act Release Nos. 21881 (Apr. 16, 1996) (notice) and 21938
(May 7, 1996) (order); SEI Institutional Managed Trust, et al., Investment
---------------------------------------
Company Act Release Nos. 21863 (Apr. 1, 1996) (notice) and 21921 (Apr. 29, 1996)
(order); Managed Accounts Services Portfolio Trust and Mitchell Hutchins Asset
---------------------------------------------------------------------
Management Inc., Investment Company Act Release Nos. 21590 (Dec. 11, 1995)
- ---------------
(notice) and 21666 (Jan. 11, 1996) (order); ESC Strategy Funds, Inc. et al.,
-------------------------------
Investment Company Act Release Nos. 21458 (Oct. 27, 1995) (notice) and 21540
(Nov. 22, 1995) (order); Consulting Group Capital Markets Funds, et al.,
----------------------------------------------
Investment Company Act Release Nos. 21318 (Aug. 23, 1995) (notice) and 21366
(Sep. 19, 1995) (order); The Managers Funds, et al., Investment Company Act
--------------------------
Release Nos. 21354 (Sep. 13, 1995) (notice) and 21412 (Oct. 11, 1995) (order);
and Frank Russell Investment Company, et al., Investment Company Act Release
----------------------------------------
Nos. 21108 (Jun. 8, 1995) (notice) and 21169 (Jun. 28, 1995) (order). The
relief requested herein is identical in all substantive respects to the relief
from the shareholder voting requirement of Section 15(a) and Rule 18f-2 granted
in the foregoing orders.
E. Procedural Matters
------------------
Pursuant to Rule 0-2(f) under the Act, Applicants state that their
addresses are as indicated on the cover page of this application. Applicants
further state that all written or other communications
20
<PAGE>
concerning this Application should be directed to:
Mark A. Katzoff, Esq.
Quantitative Group of Funds
55 Old Bedford Road
Lincoln, Massachusetts 01773
(800)331-1244
With a copy to:
Joseph R. Fleming, Esq.
Dechert Price & Rhoads
10 Post Office Square, Suite 1230
Boston, MA 02109
(617) 728-7161
Applicants desire that the Commission issue an order pursuant to Rule 0-5
under the Act without a hearing being held.
Each Applicant represents that the undersigned is authorized to file this
Application in the name and on behalf of the Applicant. The resolutions and
statements of authority required under Rule 0-2(c)(1) are attached hereto as
Exhibit B.
The verification required by Rule 0-2(d) under the Act are attached hereto
as Exhibit C.
21
<PAGE>
F. Request for Order of Exemption
------------------------------
For the foregoing reasons, Applicants request that the Commission enter an
order pursuant to Section 6(c) of the Act granting the relief sought by this
Application. Applicants submit that the requested exemption is necessary or
appropriate in the public interest, consistent with the protection of investors,
and consistent with the purpose fairly intended by the policy and provisions of
the Act.
QUANTITATIVE GROUP OF FUNDS.
By:
-------------------------
Mark A. Katzoff
Clerk
QUANTITATIVE ADVISORS, INC.
By:
------------------------
Mark A. Katzoff
Assistant Clerk
Dated: January 4, 1999
22
<PAGE>
EXHIBIT A
---------
Set forth below is a table listing all meetings of public shareholders of
the Funds previously held or scheduled to be held for the purpose of approving a
new Fund Manager or a material change in a Fund Manager's Agreement since
commencement of operations of the Trust (May 9, 1985).
Quantitative Group of Funds
<TABLE>
<CAPTION>
Meeting Date Fund Fund Manager's Agreement Approvals
- ------------ ---- ----------------------------------
<S> <C> <C>
April 2, 1990 Quantitative International Boston International Advisors, Inc.
Equity Fund*
October 28, 1996 Quantitative International Independence International Associates, Inc.
Equity Fund
October 28, 1996 Quantitative Emerging Independence International Associates, Inc.
Markets Fund**
October 28, 1996 Quantitative Small Cap Columbia Partners, LLC, Investment
Fund*** Management.
October 28, 1996 Quantitative Mid Cap Columbia Partners, LLC, Investment
Fund**** Management.
</TABLE>
* then called the Boston Foreign Growth and Income Series
** then called the Quantitative Foreign Frontier Fund
*** then called the Quantitative Numeric Fund
**** then called the Quantitative Numeric II Fund
23
<PAGE>
EXHIBIT B
---------
CLERK'S CERTIFICATE
-------------------
The undersigned, being duly elected Clerk of Quantitative Group of Funds,
Inc.(the "Fund"), a business trust organized under the laws of Massachusetts,
hereby certifies that (1) the attached resolutions are true and correct copies
of the resolutions adopted by the Board of the Fund at a meeting of the Board
held on February 13, 1998, at which meeting a quorum was at all times present
and voting; and (ii) these resolutions have not been amended, modified or
superseded in any way as of the date of this Certificate.
IN WITNESS WHEREOF, I have set my hand this day of January 4, 1999.
--------------------------
Mark A. Katzoff
Clerk
24
<PAGE>
RESOLVED: That the President, Vice President or Clerk of the Fund be, and each
of them hereby is, authorized and directed to complete, execute and file with
the Securities and Exchange Commission in the name of and on behalf of the Fund,
an Exemptive Application requesting relief from certain requirements of Section
15(a) and Rule 18f-2 of the Investment Company Act of 1940, and any and all
exhibits and documents relating thereto, with such changes, additions and
deletions as the officer or officers executing such application, on advice of
counsel, may deem necessary or appropriate.
25
<PAGE>
ASSISTANT CLERK'S CERTIFICATE
-----------------------------
The undersigned, being duly elected Assistant Clerk of Quantitative
Advisors, Inc. ("Quantitative Advisors"), a corporation organized under the laws
of Massachusetts hereby certifies that (i) the attached resolutions are true and
correct copies of the resolutions adopted by the Board of Quantitative Advisors
at a regular meeting of the Board held on April 7, 1998, at which meeting a
quorum was at all times present and voting; and (ii) these resolutions have not
been amended, modified or superseded in any way as on the date of this
Certificate.
IN WITNESS WHEREOF, I have set my hand this 4h day of January, 1999.
--------------------------
Mark A. Katzoff
Assistant Clerk
26
<PAGE>
RESOLVED: That the President, Vice President, Clerk or Assistant Clerk of the
Company be, and each of them hereby is, authorized and directed to complete,
execute and file with the Securities and Exchange Commission in the name of and
on behalf of the Fund, an Exemptive Application requesting relief from certain
requirements of Section 15(a) and Rule 18f-2 of the Investment Company Act of
1940, and any and all exhibits and documents relating thereto, with such
changes, additions and deletions as the officer or officers executing such
application, on advice of counsel, may deem necessary or appropriate.
27
<PAGE>
EXHIBIT C
---------
Commonwealth of Massachusetts )
) ss:
County of Middlesex )
The undersigned, being duly sworn, deposes and says that he has duly
executed the attached Amended Application dated January 4, 1999 for and on
behalf of Quantitative Group of Funds (the "Fund"), a Massachusetts business
trust, that he is the Clerk of the Fund; and that all action by shareholders,
directors, and other bodies necessary to authorize deponent to execute and file
such instrument has been taken. Deponent further says that he is familiar with
such instrument and the contents thereof, and that the facts therein set forth
are true to the best of his knowledge, information and belief.
--------------------------
Mark A. Katzoff
Subscribed and sworn to before me a Notary Public this 4th day of January, 1999.
- ---------------------
Notary Public
My Commission expires
28
<PAGE>
Commonwealth of Massachusetts )
) ss:
County of Middlesex )
The undersigned, being duly sworn, deposes and says that he has duly
executed the attached Amended Application dated January 4, 1999 for and on
behalf of Quantitative Advisors, Inc. (the "Advisor"), a Massachusetts
corporation, that he is the Assistant Clerk of the Advisor and that all action
by shareholders, directors and other bodies necessary to authorize deponent to
execute and file such instrument has been taken. Deponent further says that he
is familiar with such instrument and the contents thereof, and that the facts
therein set forth are true to the best of his knowledge, information and belief.
--------------------------
Mark A. Katzoff
Subscribed and sworn to before me a Notary Public this 4th day of January, 1999.
- ---------------------
Notary Public
My Commission expires
29
