November 27, 2000
Dear Quant International Equity Fund Shareholder:
On September 7, 2000, the Board of Trustees of Quant Funds
approved the termination of the Advisory Contract with
Independence International Associates, Inc. and approved a new
Advisory Contract with State Street Bank and Trust to serve as
the manager of the International Equity Fund, effective October
1, 2000.
As a matter of regulatory compliance, we send you the enclosed
information statement that describes the management structure of
Quant Funds, ownership of State Street Bank and Trust, as well as
the terms of the Advisory Contract with State Street Bank and
Trust. We believe that this change in manager will benefit the
shareholders of the International Equity Fund.
Please feel free to call us at (800) 331-1244 should you have any
questions on the enclosed information statement. We thank you
for your continued interest in Quant Funds.
Sincerely,
/s/ Willard L. Umphrey
Willard L. Umphrey
President
QUANT FUNDS
QUANT INTERNATIONAL EQUITY FUND
55 Old Bedford Road
Lincoln, Massachusetts 01773
____________________
INFORMATION STATEMENT
____________________
This information statement is being provided to the
shareholders of the International Equity Fund (the "International
Equity Fund") of Quant Funds. This information statement is in
lieu of a proxy statement, pursuant to the terms of an exemptive
order Quant Funds has received from the Securities and Exchange
Commission. The exemptive order permits Quant Funds' manager,
Quantitative Advisors ("QA" or the "Manager") subject to certain
conditions, to enter into or amend a contract with a sub advisor
("Advisor") to manage the holdings in the Funds' portfolios
("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.
This information statement will be mailed on or about
November 27, 2000.
Quant Funds
The International Equity Fund is one of six investment
portfolios (individually a "Fund", collectively "the Funds") of
Quant Funds. Quant Funds entered into an investment management
agreement with QA, dated January 1, 1999, revised to provide for
payment to QA by Quant Funds of a management fee effective
January 31, 1999 (the "Management Agreement"). Pursuant to the
Management Agreement with Quant Funds, QA provides the following
services to each Fund of Quant Funds: (i) manages, supervises and
conducts the affairs and business of the Fund and matters
incidental thereto; (ii) except to the extent that any such
facilities are provided for any series of the Fund by its
Advisor, 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. For providing these services, QA is paid by each Fund
a fee (the "Management Fee") equal on an annual basis to a
percentage of the Fund's average daily net asset value. The
International Equity Fund pays QA a Management Fee equal on an
annual basis to 1.00% of the International Equity Fund's average
daily net asset value. QA is responsible for paying any fees
to the Advisor pursuant to its individual Advisory Contracts.
For the fiscal year ended March 31, 2000, the International
Equity Fund paid QA $217,370.
QA recommends Advisors for the Funds to the Board of
Trustees based upon its continuing quantitative and qualitative
evaluation of the Advisors' skills in managing assets pursuant to
specific investment styles and strategies. Short-term investment
performance, by itself, is not a significant factor in selecting
or terminating an Advisor and QA does not expect to recommend
frequent changes of Advisors. The Advisors do not provide any
services to the Funds except portfolio investment management.
The Advisory Contract
QA entered into an initial Advisory Contract with
Independence International Associates, Inc. ("Independence") on
July 30, 1987 as amended from time to time (the "Former
Agreement"), who agreed to serve as the International Equity
Fund's Advisor. For the fiscal year ended March 31, 2000, QA had
paid Independence $108,684 pursuant to the terms of the Former
Agreement, as reentered into on January 31, 1999. Such fee was
paid from the proceeds of the 1.00% Management Fee paid by the
Fund to QA.
At a meeting held on September 7, 2000, the Board of
Trustees, including a majority of the independent Trustees,
approved the termination of the Former Agreement and approved a
new Advisory Agreement with State Street Global Advisors a unit
of State Street Bank and Trust ("State Street"), which became
effective October 1, 2000 (the "New Agreement").
The New Agreement between QA and State Street relating to
the International Equity Fund is nearly identical to the Former
Agreement with Independence except for a change to the method of
calculating the fees paid to the Advisor. The duties to be
performed under this New Agreement are the same, and the standard
of care of the agreement is identical to the other Advisory
Agreements with the other Advisors of Quant Funds. The form of
the New Agreement with State Street is attached to this
information statement as Exhibit A. This Agreement will remain
in effect until October 1, 2001 and will continue thereafter for
one year terms subject to annual approval by the Board of
Trustees.
State Street makes investment decisions and continuously
reviews, supervises, and administers the International Equity
Fund's investment program with respect to these assets. State
Street is independent of QA and discharges its responsibilities
subject to QA's and the Board of Trustees' supervision and in a
manner consistent with the International Equity Fund's investment
objective, policies and limitations.
Advisory Fees. The fees paid to the Advisor of a Fund are
based on the average daily total net assets of the Fund. For a
complete discussion of the fees paid to Advisors, see "Advisory
Fees" in the Funds' Statement of Additional Information, dated
August 1, 2000.
Under the Former Agreement, QA paid Independence a fee of
0.50% monthly based on the average daily total net assets of the
Fund. The New Agreement restructures the fee paid to State
Street. The new fee is computed and paid monthly at the annual
rate of 0.50% of the first $30 million, 0.40% of amounts in
excess of $30 million but up to $100 million and 0.35% of amounts
in excess of $100 million of the average daily total net assets,
with an annual minimum of $75,000. As stated above in the
"Advisory Contract" section of this Information Statement, the
Advisory Fee is paid from the Management Fee paid to the Manager
and is not paid directly from the Fund itself. Therefore, while
the New Agreement may result in a higher Advisory Fee being paid
to the Advisor of the Fund than the Former Agreement, this would
not be an added expense to the Fund since the Fund is contracted
to pay only the 1.00% Management Fee to the Manager and the
Manager is responsible for paying the Advisory Fee.
Information on State Street
The following is a description of State Street that is based
on information provided by State Street. State Street is not
affiliated with QA.
STATE STREET BANK AND TRUST
State Street Global Advisors
Two International Place
Boston, MA 02110
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. Mr. Edward Allinson, CFA
is managing the International Equity Fund. Mr. Allinson is a
principal at State Street and is the Lead Portfolio Manager for
the International Growth Opportunities Strategy within the Global
Fundamental Strategies group. Prior to joining State Street in
1999, Mr. Allinson worked at Brown Brothers Harmon as a Senior
Portfolio Manager, at First Pacific Securities as an Assistant
Director in Institutional Asian equity sales and as a portfolio
manager at Citibank's Domestic Private Banking Group. 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.
State Street, the investment manager of State Street
Corporation, uses quantitative and traditional techniques to
manage $729 billion in investment programs and portfolios for
institutional and individual investors. Globally, State Street
has full investment operations in Hong Kong, Tokyo, Singapore,
London, Paris, Montreal, Munich and Sydney. It also has offices
in Brussels, Dubai, Guangzhou, Moscow, Prague, Santiago, Toronto,
Vienna, Zurich and Montpellier, France. In addition to Boston,
State Street has offices across the United States in Georgia,
Illinois, Florida, Connecticut, New Hampshire, New York and
California.
Board of Directors' Recommendation
The Board of Directors of Quant Funds consists of:
Name Position
Robert M. Trustee
Armstrong
John M. Bulbrook Trustee
Edward E. Burrows Trustee
Joseph J. Caruso Trustee
Leon Okurowski* Trustee, Vice President,
Treasurer
Willard L. President, Chairman,
Umphrey* Trustee
Ron Zwanziger Trustee
*interested
person
In approving the New Agreement, the Board of Trustees, at an
in-person meeting held on September 7, 2000, considered a number
of factors, including (i) the nature, quality and extent of the
services furnished by Independence to the International Equity
Fund and those proposed by State Street; (ii) Independence's and
State Street's investment approach and in particular the
performance that Independence has achieved for the International
Equity Fund and State Street's performance of its international
equity funds; (iii) the structure of Independence and its ability
to continue to provide services to the International Equity Fund;
(iv) the effect of the proposed change in manager of the
International Equity Fund; (v) that the fees payable under the
New Agreement to State Street will in all likelihood be equal to
the fees that would have been paid under the Former Agreement;
(vi) comparative data to other funds as to investment
performance, investment management fees and as to expense ratios,
and (vii) that the terms of the two agreements are otherwise
nearly identical.
The Board discussed the recent performance of the
International Equity Fund. The Board discussed the historical
performance of State Street as an International portfolio manager
and determined that State Street would better manage the Fund,
due to their expansive international presence and historical
performance in managing international funds.
Description of QA
QA 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.
The Board of Trustees and officers of Quant Funds both
individually and as a group, own less than one percent of the
International Equity Fund's Ordinary outstanding shares and
17.66% of the International Equity Fund's Institutional
outstanding shares. None of the Trustees or officers of Quant
Funds owns any percentage of State Street.
In addition to Investment Management Services as described
above, QA also provides transfer agent, registrar and dividend
disbursing agent services to Quant Funds pursuant to a Transfer
Agency and Services Agreement between QA and Quant Funds (the
"Transfer Agency Agreement"). QA also provides certain
administrative and record keeping services under the Transfer
Agency Agreement. For providing these services, QA receives (i)
a fee equal to 0.16% of the average daily net assets of each Fund
of Quant Funds. QA is also reimbursed by Quant Funds for certain
out-of-pocket expenses including postage, taxes, wire transfer
fees, stationery and telephone expenses and for other services
requested by the Trustees. For the fiscal year ended March 31,
2000, QA received $49,407 from the International Equity Fund for
all services pursuant to the Transfer Agency Agreement.
Control Persons and Principal Holders of Securities
As of October 31, 2000, the control persons and principal
holders of the International Equity Fund were:
Name and Address % of Outstanding Institutional Shares
USB Corporation 58.35%
55 Old Bedford Road
Lincoln, MA 01773
National Financial Services Corp.
P.O. Box 3908
New York, NY 10008 24.15%
Leon Okurowski
50 Musterfield Road
Concord, MA 01742 13.01%
Fund Transactions and Brokerage
Subject to the general supervision of the Board of Trustees,
QA and the Advisor are responsible for the International Equity
Fund's portfolio transactions. Generally, securities are
purchased for the International Equity Fund for investment income
and/or capital appreciation and not for short-term trading
profits. However, the International Equity Fund may dispose of
securities without regard to the time they have been held when
such action, for defensive or other purposes, appears advisable
to QA or the Advisor.
Subject to the arrangements and provisions described below,
the Advisor of the International Equity Fund usually makes the
selection of a broker or dealer to execute portfolio
transactions. The Management Agreement and the Advisory
Agreement provide, in substance and subject to specific
directions from Quant Funds' Board of Trustees and officers of
QA, that in executing portfolio transactions and selecting
brokers or dealers, the principal objective is to seek the best
net price and execution. Securities will ordinarily be purchased
from the markets where they are primarily traded, and the Advisor
will consider all factors it deems relevant in assessing the best
net price and execution for any transaction, including the
breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any (for the
specific transaction and on a continuing basis).
In addition, the Advisory Agreement authorizes QA (while
exercising investment discretion) and the Advisor, in selecting
brokers to execute a particular transaction and in evaluating the
best net price and execution, to consider the "brokerage and
research services" (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934, as amended) provided to
the International Equity Fund, QA and/or to the Advisor (or their
affiliates). QA (while exercising investment discretion) and the
Advisor are authorized to cause the International Equity Fund to
pay a commission to a broker who provides such brokerage and
research services for executing a portfolio transaction which is
in excess of the amount of commission another broker would have
charged for effecting that transaction. QA (while exercising
investment discretion) or the Advisor must determine in good
faith that the commission was reasonable in relation to the value
of the brokerage and research services provided, viewed in terms
of that particular transaction or in terms of all the accounts
over which QA or the Advisor exercises investment discretion.
In addition, if requested by the International Equity Fund,
QA (when exercising investment discretion) and the Advisor may
enter into transactions giving rise to brokerage commissions with
brokers who provide brokerage, research or other services to the
International Equity Fund or QA so long as the Advisor believes
in good faith that the broker can be expected to obtain the best
price on a particular transaction and the International Equity
Fund determines that the commission cost is reasonable in
relation to the total quality and reliability of the brokerage
and research services made available to the International Equity
Fund, or to QA for the benefit of its clients for which it
exercises investment discretion, notwithstanding that another
account may be a beneficiary of such service or that another
broker may be willing to charge the International Equity Fund a
lower commission on the particular transaction.
QA does not expect the International Equity Fund ordinarily
to effect a significant portion of its total brokerage business
with brokers affiliated with QA or the Advisor. However, the
Advisor may affect portfolio transactions for the International
Equity Fund with a broker affiliated with the Advisor, as well as
with brokers affiliated with other Advisors, subject to the above
considerations regarding obtaining the best net price and
execution.
Affiliated broker/dealers
Advisor Broker/Dealer
Quantitative Investment U.S. Boston Capital
Advisors, Inc. d/b/a Corporation
Quantitative Advisors
The International Equity Fund effected no portfolio transactions
with brokers affiliated with the Advisors for the Funds for the
fiscal year ended March 31, 2000.
Additional Information
Quant Funds is not required to hold annual meetings of
shareholders and, therefore, it cannot be determined when the
next meeting of shareholders will be held. Shareholder proposals
to be considered for inclusion in the proxy statement for the
next meeting of shareholders must be submitted a reasonable time
before the proxy statement is mailed. Whether a proposal
submitted will be included in the proxy statement will be
determined in accordance with applicable state and federal law.
Copies of the most recent annual and semi-annual reports are
available without charge. To obtain a copy, call or write
Quantitative Advisors at 55 Old Bedford Road, Lincoln, MA 01773
(800) 331-1244.
By Order of the Board of
Trustees,
Frederick S. Marius
Clerk
Dated: November 27, 2000
EXHIBIT A
ADVISORY CONTRACT
Advisory Contract ("Contract") dated as of _____________,
2000, between QUANTITATIVE INVESTMENT ADVISORS d/b/a QUANTITATIVE
ADVISORS, INC., a Delaware corporation (the "Manager") and STATE
STREET GLOBAL ADVISORS, A DIVISION OF 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 d/b/a Quant Funds, a
Massachusetts business trust (the "Trust"), and the Manager, the
Advisor, at its expense, will furnish continuously an investment
program for the Quant 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 Internal Revenue Code of 1986, as
amended (the "Code"), relating to regulated investment companies
and all Rules and Regulations thereunder; the Insider Trading and
Securities Fraud Enforcement Act of 1988; and such other laws as
may be applicable to its activities as Advisor to the Fund and
(2) use its best efforts to manage the Fund so that the Fund will
qualify, and continue to qualify, as a regulated investment
company under Subchapter M of the Code and regulations issued
thereunder. The Advisor shall make its officers and employees
available to the Manager or Trustees from time-to-time at
reasonable times to review investment policies of the Fund and to
consult with the Manager or Trustees regarding the investment
affairs of the Fund.
(b) The Advisor, at its expense, will (1) furnish all
necessary investment and management facilities, including
salaries of personnel, required for it to execute its duties
hereunder, (2) keep records relating to the purchase, sale or
current status of portfolio securities, (3) provide clerical
personnel and equipment necessary for the efficient rendering of
investment advice to the Fund, (4) furnish to the Manager such
reports and records regarding the Fund and the Advisor as the
Manager or Trustees shall from time-to-time request, and, (5)
upon reasonable notice, review written references to the Advisor,
or its methodology, whether in a Prospectus, Statement of
Additional Information, sales material or otherwise. The Advisor
shall have no obligation with respect to the determination of the
Fund's net asset value, except to provide the Trust's custodian
with information as to the securities held in the Fund's
portfolio. The Advisor shall not be obligated to provide
shareholder accounting services.
(c) The Advisor shall place all orders for the purchase and
sale of portfolio investments for the Fund's account with brokers
or dealers selected by the Advisor. In the selection of such
brokers or dealers and the placing of such orders, the Advisor
shall use its best efforts to obtain for the Fund the 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 that 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 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 first $30 million, 0.40% of
amounts in excess of $30 million but less than $100 million and
0.35% of amounts in excess of $100 million of average daily total
net assets, with an annual minimum of $75,000. 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 September 1, 2000 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 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 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 is 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, which fact should have
been made known or provided by the Advisor to the Manager. With
respect to any claim for which an Indemnified Party is entitled
to indemnity hereunder, the Advisor shall assume the reasonable
expenses and costs (including any reasonable attorneys' fees and
costs) of the Indemnified Party of investigating and/or defending
any claim asserted or threatened by any party, subject always to
the Advisor first receiving a written undertaking from the
Indemnified Party to repay any amounts paid on its behalf in the
event and to the extent of any subsequent determination that the
Indemnified Party was not entitled to indemnification hereunder
with respect of such claim.
11. USE OF NAME.
It is understood that the name of the Fund (as it may be
changed from time to time while the Advisor provides services
pursuant to this Contract) or any derivative thereof or logo
associated with that name is the valuable property of the Trust
and/or its affiliates, and that the Advisor has the right to use
such name (or derivative or logo) only with the approval of the
Manager and only so long as the Advisor is Advisor to the Trust
and/or the Fund. Upon termination of this Contract the Advisor
shall forthwith cease to use such name (or derivative or logo).
12. GOVERNING LAW.
This Contract shall be governed by, and construed and
enforced in accordance with, the substantive laws of The
Commonwealth of Massachusetts without regard to its principles of
conflicts of laws, except to the extent such laws shall be
preempted by the Investment Company Act of 1940 or by other
applicable laws.
13. INDEPENDENT CONTRACTOR.
Advisor shall for all purposes of this Contract be deemed to
be an independent contractor and, except as otherwise expressly
provided herein, shall have no authority to act for, bind or
represent the Fund in any way or otherwise be deemed to be an
agent of the Fund. Likewise, the Fund, the Manager and their
affiliates, agents and employees shall not be deemed agents of
the Advisor and shall have no authority to bind the Advisor.
14. MISCELLANEOUS.
(a) The captions of this Contract are included for
convenience only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
(b) In the event that the Advisor or Manager is or
becomes a party to any action or proceedings in respect of which
indemnification may be sought hereunder, the party seeking
indemnification shall promptly notify the other party thereof.
The party from whom indemnification is sought shall not be liable
hereunder for any settlement of any action or claim effected
without its written consent, which consent shall not be
reasonably withheld.
(c) This Contract may be executed in one or more
counterparts, all of which taken together shall be deemed to
constitute one and the same instrument.
IN WITNESS WHEREOF, QUANTITATIVE INVESTMENT ADVISORS, INC
d/ba QUANTITATIVE ADVISORS, INC. and STATE STREET GLOBAL
ADVISORS, A DIVISION OF 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 INVESTMENT ADVISORS,
INC. d/b/a QUANTITATIVE ADVISORS,
INC.
By___________________________
Frederick S. Marius
President
STATE STREET GLOBAL ADVISORS, A
DIVISION OF STATE STREET BANK AND
TRUST COMPANY
By__________________________
Timothy B. Harbert
Executive Vice President
