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. 21
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 23
QUANTITATIVE GROUP OF FUNDS d/b/a QUANT FUNDS
(Exact Name of Registrant as Specified in Charter)
55 Old Bedford Road
Lincoln, Massachusetts 01773
(Address of Principal Executive Offices) (Zip Code)
(781) 259-1144
Registrant's Telephone Number, including Area Code
WILLARD L. UMPHREY, President
Quant Funds
55 Old Bedford Road
Lincoln, Massachusetts 01773
(Name and Address of Agent for Service)
Copy to:
Mark P. Goshko, Esq.
KIRKPATRICK & LOCKHART, LLP
75 State Street
Boston, Massachusetts 02109
________________
It is proposed that this filing will become effective:
/_/ immediately upon filing pursuant to paragraph (b)
/X/ on August 1, 2000 pursuant to paragraph (b)
/_/ 75 days after filing pursuant to paragraph (a)(2)
/ / 60 days after filing pursuant to paragraph (a)(i)
/_/ on (date) pursuant to paragraph (a) of Rule 485
_________
Pursuant to Rule 24f-2, Registrant has registered an indefinite number of its
shares of beneficial interest under the Securities Act of 1933. The Rule
24f-2 Notice for the Registrant's fiscal year ended March 31, 2000 was filed
on July 3, 2000.
QUANT FUNDS
Cross Reference Sheet
Pursuant to Rule 495(a)
<TABLE>
<CAPTION>
<S> <C> <C>
Item No. Registration Statement Caption Caption in Prospectus
Part A
1. Cover Page................................................. Cover Page
2. Synopsis.....................................................Summary of Fees and Expenses
3. Condensed Financial Information............Financial Highlights
4. General Description of Registrant..........Investment Objectives and
Policies; Risk Considerations;
Portfolio Securities; Other
Investment Practices
5. Management of the Fund............................. Management of the Funds,
Prior Performance of the Portfolio Manager of the Foreign Value Fund
6. Capital Stock and Other Securities............. The Quant 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>
<TABLE>
<CAPTION>
<S> <C> <C>
Item No. Registration Statement Caption Caption in Statement of Additional
Information
Part B
10. Cover Page and Table of Contents. Cover Page
11. Fund History............ The Quant Group
12. Description of the Fund and its Investments Investment Objectives and
and Risks . Policies; Other Investment
Practices; Investment Restrictions of the Funds
13. Management of the Registrant.................. Management of the Funds
14. Control Persons and Principal Holders of Management of the Funds
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 Quant Group
18. Purchase, Redemption and Pricing of How to Invest; How to
Shares........................................ ..............Redeem; Calculation of Net
Asset Value
19. Taxation of the Fund..................................... Distributions; Taxation
20. Underwriter............................................... Distributor and Distribution Plan
21. Calculation of Performance Data.......... Performance Measures
22. Financial Statements............................... Financial Statements
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.
<PAGE>
[LOGO OF QUANTITATIVE GROUP]
AUGUST 1, 2000
U.S. EQUITY FUNDS
Quant Growth and Income Fund
Quant Mid Cap Fund
Quant Small Cap Fund
INTERNATIONAL EQUITY FUNDS
Quant Emerging Markets Fund
Quant Foreign Value Fund
Quant International Equity Fund
THESE SECURITIES HAVE NOT
BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION
PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
[LOGO OF QUANT FUNDS]
Quant Small Cap Fund
Quant Mid Cap Fund
Quant Growth and Income Fund
Quant International Equity Fund
Quant Emerging Markets Fund
Quant Foreign Value Fund
55 Old Bedford Road PROSPECTUS
Lincoln, Massachusetts 01773 August 1, 2000
1-800-331-1244
--------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
<S> <C>
Fund Summary 2
Summary of Fees and Expenses 5
Investment Policies and Related Risks 7
Management of the Funds 9
How to Invest 11
How to Make Exchanges 15
How to Redeem 15
Calculation of Net Asset Value 17
Dividends, Distributions, and Taxation 18
Other Information 19
Financial Highlights 19
</TABLE>
<PAGE>
[LOGO FOR QUANT FUNDS]
-------------------------------------------------------------------------------
FUND SUMMARY
Investment Summary
U.S. Equity Funds
Investment Objective
Quant Small Cap Fund ("Small Cap Fund") seeks maximum long-term capital appre-
ciation.
Quant Mid Cap Fund ("Mid Cap Fund") seeks long-term growth of capital.
Quant 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 $5 billion
in market capitalization. The Mid Cap Fund will invest at least 65% of its
total assets in stocks of mid-sized companies, generally between $1 billion
and $15 billion in market capitalization. The Growth and Income Fund mainly
invests in stocks of large companies, generally with greater than
$10 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 models and financial databases to assist in the stock selection
process. Each of the Funds is "non-diversified" under the Investment Company Act
which means that it may invest a higher percentage of its assets in a smaller
number of issuers.
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
F und's
portfolio will fall, or will fail to appreciate as anticipated by the
F und's advisor. Many factors can adversely affect a stock's
performance.
This risk may be accentuated to the extent that a "non-diversified" Fund
invests in a limited number of issuers. 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 F und's investments, regardless of how well the companies in
which a Fund invests perform.
You can lose money by investing in the F unds. The F unds 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
Quant International Equity Fund ("International Equity Fund") seeks long-term
capital growth and income.
Quant Emerging Markets Fund ("Emerging Markets Fund") seeks long-term growth
of capital.
Quant Foreign Value Fund ("Foreign Value Fund") seeks long-term capital growth
and income.
Principal Investment Strategies
Under normal market conditions, the International Equity Fund and the Foreign
Value Fund invest at least 65% of their total assets in common stocks of is-
suers 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 under-
valued compared to their true worth. The Emerging Markets Fund invests at
least 65% of its total 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 ad-
visors using this approach to investing rely on computer models and financial
databases to assist in the stock selection process. Each of the Funds is "non-
diversified" under the Investment Company Act which means that it may invest a
higher percentage of its assets in a smaller number of issuers.
2
<PAGE>
[LOGO OF QUANT FUNDS]
--------------------------------------------------------------------------------
Principal Risks
The main risks that could adversely affect the value of one of the interna-
tional Funds' shares and the total return on your investment include the same
issuer, diversification and market related risks as for 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, regu-
latory, market or economic developments and can perform differently than
the U.S. market. Emerging markets can be subject to greater social, econom-
ic, regulatory and political uncertainties and can be extremely volatile.
An investment in the Emerging Markets Fund should be regarded as specula-
tive 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 govern-
ment 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 fu-
ture. Because the chart and table reflect calendar year performance, the num-
bers 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. Returns in the bar charts do not reflect the
1% deferred sales charge applicable to the Ordinary Shares of all the Funds
(except for in the Mid Cap Fund as described below). The contingent deferred
sales charge, if reflected, would reduce the returns of the funds. Returns for
Institutional Shares will differ from the Ordinary Share returns due to differ-
ences 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 in-
dexes are not actively managed. Investment returns for the indexes assume the
reinvestment of dividends paid on stocks comprising the indexes.
Quant Small Cap Fund
[GRAPH]
93 28.87%
94 4.31%
95 34.96%
96 23.34%
97 7.21%
98 0.38%
99 32.02%
The calendar year-to-date return of the Ordinary Shares of the fund as of
6/30/2000 is 12.46%.
Best Quarter: Q4 1999: 32.35%
Worst Quarter: Q3 1998: -20.08%
Average Annual Total Returns for the periods ended December 31, 1999
<TABLE>
<CAPTION>
5
1 Year Years Inception
<S> <C> <C> <C>
Ordinary Shares 30.70% 18.54% 20.77% (8/3/92)
Russell 2000 Index 21.26% 16.69% 15.47% (8/3/92)
Institutional Shares 32.73% 19.37% 18.62% (1/6/93)
Russell 2000 Index 21.26% 16.69% 13.10% (1/6/93)
</TABLE>
The Russell 2000 Index is a market capitalization-weighted index of 2,000
small company stocks. It is widely recognized as representative of the general
market
for small company stocks.
3
<PAGE>
[LOGO OF QUANT FUNDS]
--------------------------------------------------------------------------------
Quant Mid Cap Fund
[GRAPH]
96 27.45%
97 28.63%
98 12.71%
99 30.88%
The calendar year-to-date return of the Ordinary Shares of the fund as of
6/30/2000 is 12.75%.
Best Quarter: Q1 2000: 28.47%
Worst Quarter: Q3 1998: -16.41%
Average Annual Total Returns for the periods ended December 31, 1999
<TABLE>
<CAPTION>
1 Year Inception
<S> <C> <C>
Ordinary Shares 30.88% 26.35% (3/20/95)
S&P 400 Index 14.72% 22.52% (3/20/95)
Institutional Shares 30.87% 26.19% (4/17/95)
S&P 400 Index 14.72% 20.27% (4/17/95)
</TABLE>
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 indus-
try characteristics. It is widely recognized as representative of the general
market for stocks with medium capitalizations.
Quant Growth and Income Fund
[GRAPH]
89 37.17%
90 -1.13%
91 27.99%
92 6.33%
93 11.87%
94 -0.66%
95 29.45%
96 18.81%
97 36.67%
98 29.54%
99 41.12%
The calendar year-to-date return of the Ordinary Shares of the fund as of
6/30/2000 is 2.42%.
Best Quarter: Q4 1999: 38.23%
Worst Quarter: Q3 1990: -12.91%
Average Annual Total Returns for the periods ended December 31, 1999
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years Inception
<S> <C> <C> <C> <C>
Ordinary Shares 39.71% 30.63% 18.98% 18.72% (5/6/85)
S&P 500 Index 21.04% 28.56% 18.21% 18.24% (5/6/85)
Institutional Shares 41.90% 31.54% -- 21.07% (3/25/91)
S&P 500 Index 21.04% 28.56% -- 18.37% (3/25/91)
</TABLE>
The S&P 500 Index is comprised of stocks chosen by Standard & Poor's for their
size and industry characteristics. It is widely recognized as representative of
the general market for stocks in the United States.
Quant International Equity Fund
[GRAPH]
89 17.24%
90 -28.22%
91 10.13%
92 -14.40%
93 32.50%
94 9.05%
95 3.40%
96 5.30%
97 -1.59%
98 11.31%
99 14.67%
The calendar year-to-date return of the Ordinary Shares of the fund as of
6/30/2000 is -7.26%.
Best Quarter: Q4 1998: 18.71%
Worst Quarter: Q3 1990: 24.17%
Average Annual Total Returns for the periods ended December 31, 1999
<TABLE>
<CAPTION>
5
1 Year Years 10 Years Inception
<S> <C> <C> <C> <C>
Ordinary Shares 13.53% 6.25% 2.91% 4.61% (7/31/87)
EAFE Index 26.96% 12.83% 7.01% 8.28% (7/31/87)
Institutional Shares 15.19% 6.94% -- 5.41% (8/25/94)
EAFE Index 26.96% 12.83% -- 10.05% (8/25/94)
</TABLE>
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.
4
<PAGE>
[LOGO OF QUANT FUNDS]
--------------------------------------------------------------------------------
Quant Emerging Markets Fund
[GRAPH]
95 -2.26%
96 8.75%
97 -9.30%
98 -21.64%
99 58.52%
The calendar year-to-date return of the Ordinary Shares of the fund as of
6/30/2000 is -8.40%.
Best Quarter: Q2 1999: 23.67%
Worst Quarter: Q3 1998: -17.54%
Average Annual Total Returns for the periods ended December 31, 1999
<TABLE>
<CAPTION>
1 Year 5 Years Inception
<S> <C> <C> <C>
Ordinary Shares 56.94% 3.24% -0.52% (9/30/94)
EMF Index 66.41% 2.00% -0.61% (9/30/94)
Institutional Shares 59.23% -- 3.67% (4/2/96)
EMF Index 66.41% -- -0.26% (4/2/96)
</TABLE>
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.
Quant Foreign Value Fund
[GRAPH]
99 13.60%
The calendar year-to-date return of the Ordinary Shares of the fund as of
6/30/2000 is -1.37%.
Best Quarter: Q2 1999: 12.32%
Worst Quarter: Q3 1999: -3.62%
Average Annual Total Returns for the periods ended December 31, 1999
<TABLE>
<CAPTION>
1 Year Inception
<S> <C> <C>
Ordinary Shares 12.55% -1.52% (5/15/98)
EAFE Index 26.96% 19.76% (5/15/98)
Institutional Shares 13.92% 15.96% (12/18/98)
EAFE Index 26.96% 13.54% (12/18/98)
</TABLE>
--------------------------------------------------------------------------------
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)
<TABLE>
<CAPTION>
ORDINARY INSTITUTIONAL
SHARES SHARES
<S> <C> <C>
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
Redemption Fee (as a percentage of amount redeemed)
(Mid Cap Fund) 1.00%(2) None
</TABLE>
--------
(1) The deferred sales charge is not imposed on redemptions of Ordinary Shares
of the Mid Cap Fund purchased on or after August 1, 1996, nor through rein-
vestment of dividends on shares purchased before such date.
(2) Effective June 1, 2000, a redemption fee is imposed on redemptions from
the
Mid Cap Fund within the first 60 days after investment for accounts opened
online through the Quant Funds' web site. Unlike the deferred sales charge,
which is paid to U.S. Boston Capital Corporation, the funds' distributor
(the "Distributor"), this redemption fee is paid to the Mid Cap Fund.
5
<PAGE>
[LOGO OF QUANT FUNDS]
-------------------------------------------------------------------------------
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 Serv-
ice (12b-1) Fees .50% .25% .50% .50% .50% .25%
Other Expenses* .47% .67% .45% .68% 1.03% .81%
Total Annual Fund Oper-
ating Expenses 1.97% 1.92% 1.70% 2.18% 2.33% 2.06%
Institutional Shares
Management Fee 1.00% 1.00% .75% 1.00% .80% 1.00%
Distribution and Serv-
ice (12b-1) Fees None None None None None None
Other Expenses* .47% .67% .45% .68% 1.03% .81%
Total Annual Fund Oper-
ating Expenses 1.47% 1.67% 1.20% 1.68% 1.83% 1.81%
</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 custodi-
an. "Other expenses" in the table do not take into account these expense
reductions, and are therefore higher than the actual expenses of the funds.
Quantitative Advisors, Inc., the funds' manager (the "Manager"), has con-
tractually 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. This
agreement limits expenses at the fund level and not at the individual share
class level. Accordingly, the fees of any individual class may be higher
than the expense limitation because the expense limit calculation adds the
expenses of the different classes together and then divides that number by
the total average net assets of the Fund. 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, broker-
age commissions or extraordinary expenses, and for the International Equity
Fund, incremental custody fees. As a result, and as indicated above, 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 all
of the fiscal year ending 2000, and Quantitative Institutional Services a
division of Quantitative Advisors, Inc., the funds' transfer agent (the
"Transfer Agent"), voluntarily waived certain transfer agent fees through
December 31, 1999 for the Foreign Value Fund. The Distributor and Transfer
Agent are no longer waiving these fees. The agreement to voluntarily limit
the total expenses of the Emerging Markets fund is subject to periodic re-
view, and there is no guarantee that the Manager will continue to limit ex-
penses of the fund. The table shows expenses for the International Equity
Fund after the expense waiver. If the expense waiver for the International
Equity Fund had not been in effect, other expenses of the Fund would have
been 2.30% and 1.80% for the Ordinary and Institutional Shares, respective-
ly. 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 Interna-
tional Equity Fund, and the Foreign Value Fund is higher than that paid by
most other investment companies.
Example 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 as set forth in the table above. This Example assumes that
you redeem your shares at the end of each period. 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 $303 $728 $1178 $2431 $150 $465 $803 $1757
Mid Cap Fund $195 $603 $1037 $2243 $170 $526 $907 $1976
Growth and Income Fund $276 $646 $1041 $2147 $122 $381 $660 $1455
International Equity
Fund $324 $791 $1284 $2646 $171 $530 $913 $1987
Emerging Markets Fund $339 $836 $1359 $2796 $186 $576 $990 $2148
Foreign Value Fund $312 $755 $1224 $2523 $184 $569 $980 $2127
This Example assumes that you do not redeem your shares at the end
of the period:
<CAPTION>
Ordinary Shares Institutional Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Small Cap Fund $200 $618 $1062 $2296 $150 $465 $803 $1757
Mid Cap Fund $195 $603 $1037 $2243 $170 $526 $907 $1976
Growth and Income Fund $173 $536 $ 923 $2009 $122 $381 $660 $1455
International Equity
Fund $221 $682 $1169 $2513 $171 $530 $913 $1987
Emerging Markets Fund $236 $727 $1245 $2666 $186 $576 $990 $2148
Foreign Value Fund $209 $646 $1108 $2390 $184 $569 $980 $2127
</TABLE>
This Example does not reflect deferred sales charges on reinvested dividends.
If the deferred sales charges were included, your costs would be higher.
6
<PAGE>
[LOGO OF QUANT FUNDS]
--------------------------------------------------------------------------------
INVESTMENT POLICIES AND RELATED RISKS
What are the funds' principal investment strategies and related risks?
U.S. Equity Funds
Quant Small Cap Fund
Quant Mid Cap Fund
Quant Growth and Income Fund
Under normal market conditions, each fund invests at least 65% of its total as-
sets in common stocks. The Small Cap Fund invests at least 65% of its total as-
sets in stocks of small-sized companies, generally with less than $5 billion in
market capitalization. The Mid Cap Fund invests at least 65% of its total as-
sets in stocks of mid-sized companies, generally between $1 billion and $15
billion in market capitalization. The Growth and Income Fund mainly invests in
stocks of large companies, with generally greater than $10 billion in market
capitalization, that are currently paying dividends.
International Funds
Quant International Equity Fund
Under normal market conditions, the International Equity Fund invests at least
65% of its total assets in common stocks of issuers that have their principal
activities in foreign markets. The Fund's investments normally will include se-
curities of companies located in nine or more foreign countries. This should
help the Fund take advantage of differences between economic trends and the
performance of the securities markets in various countries. It also may reduce
the effect of events in any one country on the Fund's performance.
Quant Emerging Markets Fund
Under normal market conditions, the Emerging Markets Fund invests at least 65%
of its total assets in common stocks of issuers that are located in emerging
markets. The fund generally will be invested in issuers in eight or more emerg-
ing 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 Inter-
national Finance Corporation in determining the emerging markets of the world
will be used to define the eligible universe of potential markets for invest-
ment.
Quant Foreign Value Fund
Under normal market conditions, the Foreign Value Fund invests at least 65% of
its total assets in common stocks of issuers that have their principal activi-
ties 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 of the Far East; however, the Fund may also invest with-
out 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 advi-
sors using this approach to investing rely on computer models and financial da-
tabases 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-tra-
ditional factors. With the benefit of these rankings, a Fund's advisor con-
structs a portfolio of securities consistent with each individual fund's in-
vestment 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 fac-
tors 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 af-
fected by changes in financial market conditions
7
<PAGE>
[LOGO OF QUANT FUNDS]
-------------------------------------------------------------------------------
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 bonds and other debt to actual or per-
ceived changes in the company's financial condition or prospects.
Growth Stocks. Each Fund may invest in stocks of companies its advisor be-
lieves 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.
Value Stocks. Each Fund, and the Foreign Value Fund primarily, may 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 fa-
vor. 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, includ-
ing companies with market capitalization of less than $5 billion. These compa-
nies are more likely than larger companies to have limited product lines, mar-
kets or financial resources, or to depend on a small, inexperienced management
group. Stocks of these companies may trade less frequently and in limited vol-
ume, and their prices may fluctuate more than stocks of other companies.
Stocks of these companies may therefore be more vulnerable to adverse develop-
ments than those of larger companies. There are no minimum market capitaliza-
tions for companies whose securities a fund may purchase.
Foreign Investments. The International Funds may invest without limit in secu-
rities 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 for-
eign companies are usually not subject to accounting, auditing and finan-
cial 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 proce-
dures 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
8
<PAGE>
[LOGO OF QUANT FUND]
--------------------------------------------------------------------------------
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 de-
veloped foreign markets. The extent of foreign development, political sta-
bility, market depth, infrastructure and capitalization and regulatory
oversight are generally less than in more developed markets. Emerging mar-
ket economies can be subject to greater social, economic, regulatory and
political uncertainties including potential expropriation and confiscatory
taxation. All of these factors generally make emerging market securities
more volatile and potentially less liquid than securities issued in more
developed markets. Accordingly, at times, the Funds may find it even more
difficult to value their emerging markets investments than the Funds' other
international investments
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, deposi-
tory receipts, or repurchase agreements and may also implement other strategies
including selling securities short and entering into derivative transactions,
and therefore may be subject to other risks, as described in the Fund's State-
ment 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 condi-
tions. These strategies may cause the Fund to miss out on investment opportuni-
ties, and may prevent the Fund from achieving its objective.
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, Lin-
coln MA 01773, which handles the funds' business affairs. The Manager may, sub-
ject to the approval of the Trustees, choose the investments of the Funds it-
self or, subject to the approval by the Trustees, select subadvisors (the "Ad-
visors") to handle the day-to-day investments of the funds. The Manager cur-
rently employs Advisors to make the investment decisions and portfolio transac-
tions 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 ar-
rangements.
9
<PAGE>
[LOGO OF QUANT FUNDS]
-------------------------------------------------------------------------------
Quant Small Cap Fund
Quant 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 Manage-
ment Corporation, where he worked from 1989 to 1995.
Quant Growth and Income Fund
State Street Global Advisors, Two International Place, Boston, MA 02110, a
unit of State Street Bank and Trust Company ("State Street"), serves as Advi-
sor 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 in-
ception. The team at State Street presently responsible for the daily manage-
ment of the fund includes Venkat S. Chalasani, Jeffrey P. Davis, CFA, L. Emer-
son Tuttle, CFA and Edward Allinson, CFA. Mr. Chalasani is a Lead Porfolio
Manager with State Street and has been with State Street since 1997. Prior to
joining State Street, Mr. Chalasani was an account representative with HCL
Hewlett-Packard. Mr. Davis has been with State Street since 1992 and is cur-
rently Chief Investment Officer of the Fundamental Equity group. Mr. Tuttle
joined State Street in 1995 and currently heads the U.S. Large Cap team within
the Global Fundamental Strategies group. Mr. Allinson joined State Street in
1999 and is currently the Lead Portfolio Manager for the International Growth
Opportunities Strategy within the Global Fundamental Strategies Group. Prior
to joining State Street, Mr. Allinson was employed by Brown Brothers Harriman
("BBH") as a Senior Portfolio Manager, managing pension, endowment and mutual
fund assets. Prior to BBH, Mr. Allinson worked at First Pacific Securities
("First Pacific") as Assistant Director in Institutional Asian equity sales
and prior First Pacific, Mr. Allinson was a portfolio manager for Citibank's
Domestic Private Banking Group.
Quant International Equity Fund
Quant Emerging Markets Fund
Independence International Associates, Inc., 53 State Street, Boston, MA
02109, formerly Boston International Advisors, Inc. ("Independence Interna-
tional"), serves as Advisor to the International Equity Fund and the Emerging
Markets Fund. The firm presently has over $2 billion in assets under manage-
ment in international portfolios of pension and endowment funds, among others.
Brad Greenleaf manages the International Equity Fund. Mr. Greenleaf joined
Independence International in 1994 and works on asset allocation strategies for
developed and emerging markets. Dennis Fogarty manages the Emerging Markets
Fund. Mr. Fogarty joined Boston International Advisors, predecessor to Inde-
pendence International, in 1988 to work on asset allocation strategies for de-
veloped markets. Independence International is wholly owned by Independence
Investment Associates, Inc., a Delaware corporation.
Quant Foreign Value Fund
Polaris Capital Management, Inc., 125 Summer Street, Boston, MA 02110 ("Polar-
is"), 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.
Management and Advisory Fees
As compensation for services rendered, the funds pay, and did pay for fiscal
year 2000, 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
10
<PAGE>
[LOGO OF QUANT FUNDS]
--------------------------------------------------------------------------------
Growth and Income Fund. From this fee, the Manager pays the expenses of provid-
ing investment advisory services to the funds, including the fees of the Advi-
sors 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 re-
spect 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 to meet the above
expense limitation. 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 lim-
itation are exclusive of brokerage, interest, taxes and extraordinary expenses,
and are calculated gross of custody credits, if applicable. Extraordinary ex-
penses include, but are not limited to, the higher incremental costs of custody
associated with foreign securities, 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 reimburse-
ment 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. Extraordi-
nary expenses include, but are not limited to, litigation and indemnification
expenses. The agreement is subject to periodic review and there is no guarantee
that the Manager will continue to limit these expenses in the future.
HOW TO INVEST
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:
<TABLE>
<CAPTION>
Deferred
Fund Sales Charge 12b-1 Fee
---- ------------ ---------
<S> <C> <C>
Small Cap 1.00% 0.50%
Mid Cap 0.00%(1) 0.25%
Growth and Income 1.00% 0.50%
International Equity 1.00% 0.50%
Emerging Markets 1.00% 0.50%
Foreign Value 1.00% 0.25%
</TABLE>
--------
(1) The deferred sales charge is not imposed on redemptions of Ordinary Shares
of the Mid Cap Fund purchased on or after August 1, 1996, nor through rein-
vestment of dividends on shares purchased before such date. HOWEVER, effec-
tive June 1, 2000, a 1.00% redemption fee is imposed on redemptions from
the Mid Cap Fund within the first 60 days after investment if the invest-
ment account is opened online through the Quant Funds' web site. Unlike the
deferred sales charge, which is paid to U.S. Boston Capital Corporation,
the funds' distributor, the redemption fee will be paid to the Mid Cap
Fund.
Institutional Shares are available to limited classes of purchasers and are of-
fered 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 portfolios of
securities and each has the same rights, except that Ordinary Shares have ex-
clusive voting rights with respect to the Funds' 12b-1 Plan, which is described
below.
Classes of Shares
Ordinary Shares
The minimum initial investment is $500 per Fund for investments available to be
made through the Quant Funds' web site at http://www.quantfunds.com/ from June
1, 2000 through January 1, 2001. Otherwise, the minimum initial investment is
generally $2,500.
11
<PAGE>
[LOGO OF QUANT FUNDS]
-------------------------------------------------------------------------------
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 par-
ticipant 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 in-
vestors:
(i) benefit plans with at least $10,000,000 in plan assets and 200 partici-
pants, that either have a separate trustee vested with investment discre-
tion and certain limitations on the ability of plan beneficiaries to access
their plan investments without incurring adverse tax consequences or which
allow their participants to select among one or more investment options,
including the fund; (ii) banks and insurance companies purchasing shares
for their own account; (iii) a bank, trust company, credit union, savings
institution or other depository institution, its trust departments or com-
mon 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 Institu-
tional Share accounts.
Clients of certain securities dealers not affiliated with the Distributor of-
fering programs in which the client pays a separate fee to an advisor provid-
ing 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, nor 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 com-
mission 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 agreement
or the spouse or child of such employee. To qualify for the purchase of In-
stitutional 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.
12
<PAGE>
[LOGO OF QUANT FUNDS]
--------------------------------------------------------------------------------
Institutional Shares are not subject to any sales charges, including fees pur-
suant to the Funds' 12b-1 Plan. Investments in Institutional Shares require a
special Account Application. Please call 1-800-331-1244 or email us at
[email protected] for an Application.
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 to pay for the mar-
keting of Fund shares and for services provided to shareholders of the Funds'
Ordinary Shares as described above. 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 ex-
penses exceed the Distributor's fees, the funds are not required to reimburse
the Distributor for excess expenses; if the Distributor's fees exceed the ex-
penses of distribution, the Distributor may realize a profit.
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 re-
ceived by the fund. Orders received prior to the close of regular trading on
the New York Stock Exchange ("NYSE") (ordinarily 4:00 p.m., Eastern Standard
time), will receive that evening's closing price, unless such trade is placed
as a result of an online purchase through the Quant Funds' web site in which
case the trade will receive the price next determined after the money requested
from the customers' bank via the Automated Clearing House system are received
by the Funds' transfer agent. 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 17. 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, either in paper form or electronically at the Quant Funds' web
site www.quantfunds.com. If you wish to have telephone exchange or telephone
redemption privileges for your account, you must elect these options on the Ac-
count Application. You should carefully review the Application and particularly
consider the discussion in this Prospectus regarding the Funds' policies on ex-
changes 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, in-
cluding 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 Quant 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:
Quant 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.
Internet Transactions
Investors may open new accounts through the Quant Funds' web site. To utilize
this service, you will need a web browser (presently Netscape version 1.2 or
higher, or Internet Explorer version 2.0 or higher) and the ability to utilize
the Quant Funds' web site. Quant Funds will accept Internet purchase instruc-
tions only if the purchase price is paid to Quant Funds through debiting your
bank account. Quant Funds imposes a limit of $10,000 on Internet purchase
transactions and shareholders may only redeem shares purchased via the Quant
Funds web site in writing or by calling the Quant Funds shareholder service
line at 1-800-331-1244. Regardless of the method of redemption, for the first
90 days after the purchase of shares is made over the Internet, such shares
will be paid only via ACH to the same bank account from which the payment to
Quant Funds originated. If the bank account number changes during such 90 days,
the shareholder must provide the
13
<PAGE>
[LOGO OF QUANT FUNDS]
-------------------------------------------------------------------------------
Quant Funds with a signature guarantee letter of instruction from a bank or a
qualified broker/dealer changing the bank account number prior to such redemp-
tion. You may also download an application to open an account from the web
site, complete it by hand, and mail it to Quant Funds, along with a check.
Purchases made by check must wait 15 days prior to being liquidated, however,
such shares are not subject to the other restrictions noted above.
Quant Funds employs reasonable procedures to confirm that transactions entered
into over the Internet are genuine. These procedures include the use of alpha-
numeric passwords, secure socket layering, encryption and other precautions
reasonably designed to protect the integrity, confidentiality and security of
shareholder information. In order to enter into a transaction on the Quant
Funds' web site, you will need your Social Security Number and an alphanumeric
password. If Quant Funds follows these procedures, neither Quant Funds, its
affiliates nor any Fund will be liable for any loss, liability, cost or ex-
pense for following instructions communicated via the Internet that are rea-
sonably believed to be genuine or that follow Quant Funds' security proce-
dures. By entering into the user's agreement with Quant Funds to open an ac-
count through our web site, you lose certain rights if someone gives fraudu-
lent or unauthorized instructions to Quant Funds that result in a loss to you.
Automatic Investment Plan
You may participate in the Automatic Investment Plan for the Funds by complet-
ing 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, pay-
ment. 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 in-
vesting, 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 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.
Subsequent Investments
If you are buying additional shares in an existing account, you should iden-
tify 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 shel-
ter investment income and capital gains. Contributions to a retirement plan
also
14
<PAGE>
[LOGO OF QUANT FUNDS]
--------------------------------------------------------------------------------
may be tax deductible. Custodial retirement accounts, including Individual Re-
tirement 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.
Similarly, if you exchange ordinary shares of the Mid-Cap Fund for those of an-
other Fund, the new shares will be subject to the deferred sales charge. 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 identi-
fication 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). The Transfer Agent 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. The Transfer Agent will not accept requests for
redemptions that are subject to any special conditions or which specify a fu-
ture or past effective date, except for certain notices of redemptions exceed-
ing $250,000 (see Payment of Redemption Amount on page 16). Regardless of the
method of redemption, for the first 90 days after the purchase of shares is
made over the Internet, such shares will be paid only via ACH to the same bank
account from which the payment to Quant Funds originated. If the bank account
number changes during such 90 days, the shareholder must provide the Quant
Funds with a signature guaranteed letter of instruction from a bank or a quali-
fied broker/dealer changing the bank account number prior to such redemption.
Written Request for Redemption
You can redeem all or any portion of your shares by submitting a written re-
quest 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 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 associa-
tions, clearing agencies and savings associations. A notary public cannot pro-
vide a signature guarantee.
15
<PAGE>
[LOGO OF QUANT FUNDS]
-------------------------------------------------------------------------------
Shares may not be redeemed by facsimile request or by electronic mail. Re-
quests should be sent to:
Quant Funds
Attention: Transfer Agent
55 Old Bedford Road
Lincoln, Massachusetts 01773
Telephone Redemption
If you have elected the telephone redemption option on your Account Applica-
tion, 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 regu-
lar trading on the NYSE (ordinarily 4:00 p.m., 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 rea-
sonable procedures to confirm that instructions communicated by telephone are
genuine. It is the Funds' policy to require some form of personal identifica-
tion prior to acting upon instructions received by telephone, to provide writ-
ten 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 quar-
terly 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 im-
posed by the dealer or broker. Redemption requests received by the Distributor
from dealers or brokers will receive that evening's closing price if the re-
quests 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 Dis-
tributor 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 re-
deemed represent an investment made by check or through the automatic invest-
ment plan, the Funds reserve the right to hold the redemption check until mon-
ies have been collected by the fund from the customers' bank.
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 ex-
isting as well as future shareholders.
The Funds may suspend this right of redemption and may postpone payment for
more than seven days only when the NYSE is closed for other than customary
weekends and holidays, or if permitted by the rules of the Securities and Ex-
change 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 dur-
ing any other period permitted by order of the Securities and Exchange Commis-
sion. The Funds may also delay payment of redemption proceeds from
16
<PAGE>
[LOGO OF QUANT FUNDS]
--------------------------------------------------------------------------------
shares purchased by check until the check clears, which may take seven business
days or longer.
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 ex-
ceptions cited below. Ordinary Shares of the Mid Cap Fund purchased after Au-
gust 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 15). Ordinary Shares of the Mid Cap Fund purchased before August 1, 1996
(the "Pre-August Shares") remain subject to a 1% deferred sales charge. Addi-
tional 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-Au-
gust 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) in-
voluntary 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") pro-
grams 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
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.
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. A Fund calculates its NAV by adding the
value of the Fund's investments, cash, and other assets, subtracting its lia-
bilities, and then dividing the result by the number of shares outstanding.
Net asset value per share of each class of shares of a Fund will be determined
as of the close of market on the NYSE (ordinarily 4:00 p.m., Eastern Standard
time) 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 ex-
changes that 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.
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 for-
eign currencies are translated
17
<PAGE>
[LOGO OF QUANT FUNDS]
-------------------------------------------------------------------------------
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, for which market prices are not readily available in-
cluding any restricted securities, will be valued at their fair value follow-
ing procedures approved by the Trustees.
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 Decem-
ber.
Unless you elect otherwise, all distributions will be automatically reinvested
in additional shares of the Fund you own. You may also elect to have divi-
dends, capital gains, or both paid in cash. All distributions, whether re-
ceived 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.
Taxation 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. corpora-
tions, 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. Each Fund expects that the majority
of its distributions will be designated as capital gains, however the propor-
tion 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 tax purposes. Fund distributions will re-
duce 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 with-
hold 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 ap-
propriate documentation required by the funds. The Funds are also required in
certain circumstances to apply backup withholding at the rate of 31% on tax-
able 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 ap-
plied to payments that have been subject to 30% withholding. Prospective in-
vestors should read the funds' Account Application for additional information
regarding backup withholding of federal income tax.
Taxation 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.
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.
18
<PAGE>
[LOGO OF QUANT FUNDS]
--------------------------------------------------------------------------------
OTHER INFORMATION
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.
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 indepen-
dent accountants, whose report thereon is incorporated by reference into 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 Informa-
tion.
19
<PAGE>
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Income from
Investment Operations(a) Distributions
Net Asset Net Net Realized Dividends Distributions
Value at Investment and Unrealized Total from from Net from Net Asset
Beginning Income Gain (Loss) Investment Investment Realized Total Value End Total
of Period (Loss)(b)(c) on Securities Operations Income Capital Gains Distributions of Period Return(d)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Small Cap
Ordinary Shares
Year Ended March
31, 2000 $14.60 (0.24) 10.46 10.22 -- -- -- $24.82 70.00 %
Year Ended March
31, 1999 $17.80 (0.15) (3.05) (3.20) -- -- -- $14.60 (17.98)%
Year Ended March
31, 1998 $15.04 (0.23) 5.60 5.37 (0.16) (2.45)(h) (2.61) $17.80 37.79 %
Year Ended March
31, 1997 $18.91 0.16 (g) 0.77 0.93 -- (4.80) (4.80) $15.04 1.72 %
Year Ended March
31, 1996 $15.81 (0.21) 5.54 5.33 -- (2.23) (2.23) $18.91 34.25 %
Institutional
Shares
Year Ended March
31, 2000 $15.17 (0.15) 10.90 10.75 -- -- -- $25.92 70.86 %
Year Ended March
31, 1999 $18.40 (0.08) (3.15) (3.23) -- -- -- $15.17 (17.55)%
Year Ended March
31, 1998 $15.55 (0.15) 5.79 5.64 (0.34) (2.45)(h) (2.79) $18.40 38.44 %
Year Ended March
31, 1997 $19.33 0.08 (g) 0.94 1.02 -- (4.80) (4.80) $15.55 2.21 %
Year Ended March
31, 1996 $16.05 (0.12) 5.63 5.51 -- (2.23) (2.23) $19.33 34.89 %
Mid Cap
Ordinary Shares
Year Ended March
31, 2000 $15.46 (0.19) 10.74 10.55 -- (1.33) (1.33) $24.68 71.41 %
Year Ended March
31, 1999 $16.05 (0.11) (0.09) (0.20) -- (0.39) (0.39) $15.46 (1.08)%
Year Ended March
31, 1998 $13.44 (0.08) 6.06 5.98 -- (3.37) (3.37) $16.05 46.76 %
Year Ended March
31, 1997 $13.20 0.09 2.29 2.38 (0.14) (2.00) (2.14) $13.44 17.47 %
Year Ended March
31, 1996 $10.12 0.06 3.27 3.33 (0.01) (0.24) (0.25) $13.20 33.01 %
Institutional
Shares
Year Ended March
31, 2000 $15.65 (0.19) 11.08 10.89 -- (1.33) (1.33) $25.21 72.81 %
Year Ended March
31, 1999 $16.24 (0.10) (0.10) (0.20) -- (0.39) (0.39) $15.65 (1.07)%
Year Ended March
31, 1998 $13.55 (0.06) 6.12 6.06 -- (3.37) (3.37) $16.24 47.01 %
Year Ended March
31, 1997 $13.20 0.11 2.27 2.38 (0.03) (2.00) (2.03) $13.55 17.51 %
April 17, 1995*
to March 31,
1996 $10.27 0.10 3.09 3.19 (0.02) (0.24) (0.26) $13.20 31.12 %
Growth and In-
come
Ordinary Shares
Year Ended March
31, 2000 $21.26 (0.25) 10.21 9.96 -- (5.34) (5.34) $25.88 51.46 %
Year Ended March
31, 1999 $20.85 (0.08) 2.82 2.74 -- (2.33) (2.33) $21.26 13.67 %
Year Ended March
31, 1998 $15.22 0.00 7.61 7.61 (0.05) (1.93) (1.98) $20.85 51.52 %
Year Ended March
31, 1997 $14.57 0.08 2.53 2.61 (0.10) (1.86) (1.96) $15.22 17.97 %
Year Ended March
31, 1996 $13.72 0.12 2.89 3.01 (0.13) (2.03) (2.16) $14.57 22.17 %
Institutional
Shares
Year Ended March
31, 2000 $21.37 (0.14) 10.33 10.19 -- (5.34) (5.34) $26.22 52.32 %
Year Ended March
31, 1999 $20.84 0.03 2.83 2.86 -- (2.33) (2.33) $21.37 14.27 %
Year Ended March
31, 1998 $15.24 0.10 7.60 7.70 (0.17) (1.93) (2.10) $20.84 52.18 %
Year Ended March
31, 1997 $14.58 0.15 2.55 2.70 (0.18) (1.86) (2.04) $15.24 18.62 %
Year Ended March
31, 1996 $13.72 0.20 2.89 3.09 (0.20) (2.03) (2.23) $14.58 22.75 %
International
Equity
Ordinary Shares
Year Ended March
31, 2000 $11.37 (0.04) 1.50 1.46 (0.34)(i) (0.49) (0.83) $12.00 12.93 %
Year Ended March
31, 1999 $11.97 0.01 (0.58) (0.57) (0.03)(i) -- (0.03) $11.37 (4.78)%
Year Ended March
31, 1998 $11.03 0.07 1.30 1.37 (0.17)(i) (0.26)(j) (0.43) $11.97 12.95 %
Year Ended March
31, 1997 $10.70 0.01 0.40 0.41 (0.08) -- (0.08) $11.03 3.82 %
Year Ended March
31, 1996 $10.06 0.00 0.67 0.67 (0.03) -- (0.03) $10.70 6.63 %
<CAPTION>
Ratios and Supplemental Data
Ratio of Expenses to Average
Net Assets(e)(f)
Net Assets Net Investment
End of Including Income (Loss)
Period Excluding Custody to Average Net Portfolio
(000's) Credits Gross Credits Assets(c)(e) Turnover(e)
<S> <C> <C> <C> <C> <C> <C>
Small Cap
Ordinary Shares
Year Ended March
31, 2000 $74,289 1.97% 1.97% 1.96% (1.30)% 145.00%
Year Ended March
31, 1999 $47,605 1.94% 1.94% 1.94% (0.99)% 113.00%
Year Ended March
31, 1998 $66,876 1.90% 1.96% 1.89% (1.33)% 135.00%
Year Ended March
31, 1997 $57,135 1.97% 2.03% 1.90% 0.90 %(g) 393.00%
Year Ended March
31, 1996 $71,618 1.97% 1.97% 1.88% (1.17)% 324.00%
Institutional
Shares
Year Ended March
31, 2000 $ 6,501 1.47% 1.47% 1.46% (0.80)% 145.00%
Year Ended March
31, 1999 $ 4,680 1.44% 1.44% 1.44% (0.49)% 113.00%
Year Ended March
31, 1998 $ 6,286 1.41% 1.47% 1.40% (0.86)% 135.00%
Year Ended March
31, 1997 $ 9,207 1.47% 1.52% 1.40% 0.41 %(g) 393.00%
Year Ended March
31, 1996 $42,803 1.47% 1.47% 1.38% (0.67)% 324.00%
Mid Cap
Ordinary Shares
Year Ended March
31, 2000 $19,921 1.67% 1.92% 1.67% (1.03)% 153.00%
Year Ended March
31, 1999 $12,617 1.65% 1.87% 1.65% (0.72)% 168.00%
Year Ended March
31, 1998 $15,484 1.57% 1.97% 1.57% (0.52)% 128.00%
Year Ended March
31, 1997 $ 8,733 1.19% 2.19% 1.11% 0.62 % 162.00%
Year Ended March
31, 1996 $ 6,025 2.34% 2.62% 1.92% 0.46 % 181.00%
Institutional
Shares
Year Ended March
31, 2000 $ 986 1.67% 1.67% 1.67% (1.04)% 153.00%
Year Ended March
31, 1999 $ 557 1.62% 1.62% 1.62% (0.69)% 168.00%
Year Ended March
31, 1998 $ 823 1.40% 1.72% 1.40% (0.35)% 128.00%
Year Ended March
31, 1997 $ 361 1.44% 2.01% 1.27% 0.77 % 162.00%
April 17, 1995*
to March 31,
1996 $ 4,621 2.02% 2.51% 1.66% 0.87 % 181.00%
Growth and In-
come
Ordinary Shares
Year Ended March
31, 2000 $96,477 1.70% 1.70% 1.66% (1.08)% 78.00%
Year Ended March
31, 1999 $70,874 1.67% 1.67% 1.62% (0.36)% 97.00%
Year Ended March
31, 1998 $66,397 1.69% 1.69% 1.65% (0.01)% 72.00%
Year Ended March
31, 1997 $43,266 1.73% 1.73% 1.70% 0.50 % 98.00%
Year Ended March
31, 1996 $41,353 1.73% 1.73% 1.64% 0.81 % 152.00%
Institutional
Shares
Year Ended March
31, 2000 $ 2,354 1.20% 1.20% 1.16% (0.60)% 78.00%
Year Ended March
31, 1999 $ 4,607 1.17% 1.17% 1.12% 0.14 % 97.00%
Year Ended March
31, 1998 $ 3,724 1.19% 1.19% 1.14% 0.50 % 72.00%
Year Ended March
31, 1997 $ 1,532 1.24% 1.24% 1.21% 0.99 % 98.00%
Year Ended March
31, 1996 $ 1,888 1.24% 1.24% 1.15% 1.31 % 152.00%
International
Equity
Ordinary Shares
Year Ended March
31, 2000 $19,491 2.18% 2.30% 2.13% (0.35)% 78.00%
Year Ended March
31, 1999 $21,956 2.11% 2.11% 2.08% 0.12 % 128.00%
Year Ended March
31, 1998 $32,182 2.18% 2.18% 2.03% 0.62 % 61.00%
Year Ended March
31, 1997 $27,410 2.20% 2.23% 2.15% 0.10 % 135.00%
Year Ended March
31, 1996 $27,402 2.15% 2.15% 2.09% (0.04)% 43.00%
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--Continued
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Income from
Investment Operations(a) Distributions
Net Asset Net Net Realized Dividends Distributions
Value at Investment and Unrealized Total from from Net from Net Asset
Beginning Income Gain (Loss) Investment Investment Realized Total Value End Total
of Period (Loss)(b)(c) on Securities Operations Income Capital Gains Distributions of Period Return(d)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
International Equity--Continued
Institutional
Shares
Year Ended March
31, 2000 $11.39 0.02 1.49 1.51 (0.41)(i) (0.49) (0.90) $12.00 13.33 %
Year Ended March
31, 1999 $11.95 0.06 (0.58) (0.52) (0.04)(i) -- (0.04) $11.39 (4.34)%
Year Ended March
31, 1998 $11.10 0.14 1.28 1.42 (0.31)(i) (0.26)(j) (0.57) $11.95 13.50 %
Year Ended March
31, 1997 $10.73 0.06 0.41 0.47 (0.10) -- (0.10) $11.10 4.38 %
Year Ended March
31, 1996 $10.10 0.04 0.66 0.70 (0.07) -- (0.07) $10.73 6.95 %
Emerging Markets
Ordinary Shares
Year Ended March
31, 2000 $ 6.59 (0.01) 2.83 2.82 (0.02)(k) -- (0.02) $ 9.39 42.73 %
Year Ended March
31, 1999 $ 7.70 0.07 (1.11) (1.04) (0.07)(l) -- (0.07) $ 6.59 (13.40)%
Year Ended March
31, 1998 $ 9.24 (0.04) (1.50) (1.54) -- -- -- $ 7.70 (16.67)%
Year Ended March
31, 1997 $ 8.38 (0.04) 0.90 0.86 -- -- -- $ 9.24 10.26 %
Year Ended March
31, 1996 $ 7.24 (0.07) 1.21 1.14 -- -- -- $ 8.38 15.75 %
Institutional
Shares
Year Ended March
31, 2000 $ 6.64 0.04 2.85 2.89 (0.05)(k) -- (0.05) $ 9.48 43.55 %
Year Ended March
31, 1999 $ 7.76 0.09 (1.11) (1.02) (0.10)(l) -- (0.10) $ 6.64 (12.93)%
Year Ended March
31, 1998 $ 9.27 0.02 (1.53) (1.51) -- -- -- $ 7.76 (16.29)%
April 2, 1996*
to March 31,
1997 $ 8.49 0.01 0.80 0.81 (0.03) -- (0.03) $ 9.27 9.54 %
Foreign Value
Ordinary Shares
Year Ended March
31, 2000 $ 8.36 0.04 0.97 1.01 (0.32)(m) -- (0.32) $ 9.05 12.17 %
May 15, 1998* to
March 31, 1999 $10.00 0.02 (1.64) (1.62) (0.02)(m) -- (0.02) $ 8.36 (16.16)%
Institutional
Shares
Year Ended March
31, 2000 $ 8.37 0.12 0.91 1.03 (0.34)(m) -- (0.34) $ 9.06 12.37 %
December 18,
1998* to March
31, 1999 $ 8.43 0.06 (0.12) (0.06) -- -- -- $ 8.37 (0.71)%
<CAPTION>
Ratios and Supplemental Data
Ratio of Expenses to Average
Net Assets(e)(f)
Net Assets Net Investment
End of Including Income (Loss)
Period Excluding Custody to Average Net Portfolio
(000's) Credits Gross Credits Assets(c)(e) Turnover(e)
<S> <C> <C> <C> <C> <C> <C>
International Equity--Continued
Institutional
Shares
Year Ended March
31, 2000 $ 172 1.68% 1.80% 1.63% 0.14 % 78.00%
Year Ended March
31, 1999 $ 1,895 1.61% 1.61% 1.58% 0.62 % 128.00%
Year Ended March
31, 1998 $ 1,728 1.68% 1.69% 1.54% 1.19 % 61.00%
Year Ended March
31, 1997 $ 1,760 1.69% 1.75% 1.64% 0.51 % 135.00%
Year Ended March
31, 1996 $ 1,241 1.65% 1.65% 1.59% 0.38 % 43.00%
Emerging Markets
Ordinary Shares
Year Ended March
31, 2000 $12,767 2.33% 2.33% 2.33% (0.07)% 31.00%
Year Ended March
31, 1999 $ 8,442 2.32% 2.58% 2.24% 1.03 % 49.00%
Year Ended March
31, 1998 $ 9,241 2.69% 2.69% 2.57% (0.43)% 52.00%
Year Ended March
31, 1997 $10,052 2.68% 2.68% 2.56% (0.47)% 8.00%
Year Ended March
31, 1996 $ 7,736 2.74% 2.74% 2.59% (0.84)% 9.00%
Institutional
Shares
Year Ended March
31, 2000 $ 2,796 1.83% 1.83% 1.83% 0.52 % 31.00%
Year Ended March
31, 1999 $ 1,447 1.82% 2.08% 1.74% 1.36 % 49.00%
Year Ended March
31, 1998 $ 1,002 2.19% 2.19% 2.07% 0.24 % 52.00%
April 2, 1996*
to March 31,
1997 $ 1,212 2.01% 2.17% 1.89% 0.13 % 8.00%
Foreign Value
Ordinary Shares
Year Ended March
31, 2000 $13,595 1.90% 2.06% 1.90% 0.40 % 30.00%
May 15, 1998* to
March 31, 1999 $ 7,478 1.99% 2.13% 1.90% 0.19 % 22.00%
Institutional
Shares
Year Ended March
31, 2000 $ 1,204 1.61% 1.77% 1.61% 1.67 % 30.00%
December 18,
1998* to March
31, 1999 $ 401 1.72% 1.86% 1.70% 0.75 % 22.00%
</TABLE>
* Commencement of Operations
(a) Per share numbers have been calculated using the average shares method.
(b) Reflects expense waivers/reimbursements and reductions in effect during
the period. See "Management of the Funds."
(c) Net investment income (loss) per share and the ratio of net investment in-
come (loss) to average net assets reflect net investment income prior to
certain reclassifications for federal income or excise taxes.
(d) Total Return does not include the one time redemption fee of 1% for the
Ordinary Shares. Effective August 1, 1996 Mid Cap Ordinary Shares are no
longer subject to the redemption fee 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. See Note 3 to the
Financial Statements.
(e) Periods less than one year are annualized.
(f) Ratio of expenses to average net assets shows:
Excluding Credits (total expenses less fees waivers and reimbursements by
the investment advisor, if any).
Gross (total expenses not taking into account fee waivers and reimburse-
ments by the investment advisor or custody earnings credits, if any).
Including Credits (expenses less fee waivers and reimbursements by the in-
vestment advisor and reduced by custody earnings credits, if any).
(g) 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.
(h) Distributions from realized capital gains include distributions in excess
of realized capital gains of $0.03 per share.
(i) Distributions from net investment income includes distributions in excess
of current net income of $0.34, $0.01 and $0.06 per share for Ordinary
Shares, and $0.41, $0.01 and $0.11 per share for Institutional Shares dur-
ing the fiscal years ended March 31, 2000, 1999 and 1998, respectively.
(j) Distributions from realized capital gains include distributions in excess
of realized capital gains of $0.05 per share.
(k) Distributions from net investment income includes distributions in excess
of current net investment income of $0.02 per share for Ordinary Shares
and $0.05 per share for Institutional Shares.
(l) Distributions from net investment income includes a return of capital of
$0.02 per share for Ordinary Shares and $0.03 per share for Institutional
Shares.
(m) Distribution from net investment income includes distributions in excess
of current net investment income of $0.02 and $0.01 for Ordinary Shares,
and $0.02 and $(-) for Institutional Shares for the years ended March 31,
2000 and 1999, respectively.
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
Quant Funds
55 Old Bedford Road
Lincoln, MA 01773
1-800-331-1244
www.quantfunds.com
Manager
Quantitative Advisors, Inc.
55 Old Bedford Road
Lincoln, MA 01773
Advisors
Columbia Partners, LLC, Investment Management State Street Global Advisors
1775 Pennsylvania Avenue, N.W. 2 International Place
Washington, D.C. 20006 Boston, MA 02110
Independence International Associates, Inc. Polaris Capital Management, Inc.
53 State Street 125 Summer Street
Boston, MA 02109 Boston, MA 02110
Distributor
U.S. Boston Capital Corporation
55 Old Bedford Road
Lincoln, MA 01773
Custodian
State Street Kansas City
801 Pennsylvania Avenue
Kansas City, MO 64105
Transfer Agent
Quantitative Institutional Services, a division of
Quantitative Advisors, Inc.
55 Old Bedford Road
Lincoln, MA 01773
Independent Accountants
PricewaterhouseCoopers LLP
1055 Broadway, 10th Floor
Kansas City, MO 64105
<PAGE>
You can learn more about the Funds in the following documents:
For more information about the Quant 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 auditors' 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 their last fiscal years. You may get
free copies of these materials, request other information about the Funds', or
make shareholder inquiries, by contacting your financial advisor or by accessing
the Quant Funds' web site, www.quantfunds.com, or by calling toll-free at 1-800-
331-1244.
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.
Investment Company Act File #811-3790
[LOGO OF QUANTITATIVE GROUP]
QUANT FUNDS
55 Old Bedford Road
Lincoln, MA 01773
voice 800-331-1244
fax 781-259-1166
www.quantfunds.com
Distributed by U.S. Boston Capital Corp.
<PAGE>
QUANT GROUP OF FUNDS
Statement of Additional Information
August 1, 2000
U.S. Equity Funds
International Funds
Quant Small Cap Fund Quant International
Equity Fund
Quant Mid Cap Fund Quant
Emerging Markets Fund
Quant Growth and Income Fund Quant 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 Quant 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, 2000, and should be read in
conjunction with the Prospectus. This Statement
incorporates by reference information from the Trust's
Annual Report dated March 31, 2000. Investors may obtain
a free copy of the Prospectus and/or the Annual Report by
writing Quant Funds, 55 Old Bedford Road, Lincoln, MA
01773 or by calling 1-800-331-1244.
TABLE OF CONTENTS
PAGE
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..................................................
........................................................................ 15
CALCULATION OF NET ASSET VALUE.................................
..................................................... 15
DISTRIBUTIONS..................................................
.............................................................. 16
TAXATION.......................................................
...............................................................
16
OTHER INVESTMENT PRACTICES.....................................
............................................ 19
INVESTMENT RESTRICTIONS OF THE FUNDS...........................
...................................................... 25
PERFORMANCE MEASURES...........................................
...................................................................26
THE QUANT GROUP................................................
.............................................................31
EXPERTS........................................................
............................................................... 32
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 meet
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.
Trustees and Officers
Position
with Position
with
Distrib
utor, U.S. Manager,
Position Boston
Capital Quantitative
Name, Address+ and Age with Fund
Principal Occupation** Corporation Advisors, Inc.
ROBERT M. ARMSTRONG Trustee President, Alumni CareerNo
ne None
Age: 61
Services, Inc. (consulting firm);
formerly Associate,
Keystone Associates
(career management);
Director of Alumni Career
Services, Harvard
University,
Graduate School of
Business Administration;
Director of Concord-
Carlisle
Community
JOHN M. BULBROOK Trustee CEO,
Treasurer and Director, None None
Age: 58 John M.
Bulbrook
Insurance Agency, Inc.
EDWARD E. BURROWS TrusteeIndependent
consulting None None
Age: 67 actuary
- employee benefit
plans;
formerly Vice President
and
Director of Actuarial Services,
Mintz,
Levin, Cohn, Ferris,
Glovsky
and Popeo, PC
(law
firm/consulting);
formerly
President, The Pentad
Corporation (employee benefit
consultants and actuaries).
JOSEPH J. CARUSO TrusteePrincipal, Bantam
Group, Inc. None None
Age: 57
FREDERICK S. MARIUS Clerk,P
resident, General Counsel, President and Preside
nt and Age: 36 Executive U.S.
Boston Capital General Counsel General Counsel
Vice
President Corporation
LEON OKUROWSKI* Trustee,
Director and Vice President, Director and Director
and
Age: 57 Vice
President, U.S. Boston Capital Vice
President Treasurer
Treasurer
Corporation
WILLARD L. UMPHREY* President,
Director, U.S. Boston Director Director
Age: 59
Chairman, Capital Corporation
Trustee
RON ZWANZIGER Trustee Chairman
and Chief None None
Age: 46 Executi
ve Officer,
Inverness Medical
Technology, Inc.
+The mailing address of each of the officers and
Trustees is 55 Old Bedford Road, Lincoln, Massachusetts
01773.
*Messrs. Umphrey and Okurowski are "interested
persons" (as defined in the Investment Company Act of
1940) of the Funds, the Manager or an Advisor.
**The principal occupations of the officers and
Trustees for the last five years have been with the
employers shown above, although in some cases they have
held different positions with such employers, 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,
2000, the Funds paid Trustees' fees aggregating $28,000.
The following Compensation Table provides, in tabular
form, the following data:
Column (1) All Trustees who receive compensation from the
Trust.
Column (2) Aggregate compensation received by a Trustee
from all series of the Trust.
Columns (3) and (4) Pension or retirement benefits
accrued or proposed to be paid by the Trust. The Trust
does not pay its Trustees such benefits.
Column (5) Total compensation received by a Trustee from
the Trust plus compensation received from all funds
managed by the Manager for which a Trustee serves. As
there are no such funds other than the series of the
Trust, this figure is identical to column (2).
Compensation Table
for the fiscal year ended March 31, 2000
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, Age from the Trust
Expenses Retirement
Paid to Trustee
Robert M. Armstrong, $4,000
N/A N/A $4,000
Trustee
Edward A. Bond, Jr. $2,000
N/A N/A $2,000
Trustee
John M Bulbrook, $4,000
N/A N/A $4,000
Trustee
Joseph J. Caruso,
Trustee $2,000 N/A N/A $2,000
Edward E. Burrows, $4,000
N/A N/A $4,000
Trustee
Leon Okurowski, $4,000
N/A N/A $4,000
Trustee
Willard L. Umphrey, $4,000
N/A N/A $4,000
Trustee
Ron Zwanziger, $4,000 N/A
N/A $4,000
Trustee,
The Trust's Agreement and Declaration of Trust
provides that the Funds will indemnify their Trustees and
officers against liabilities and expenses incurred in
connection with the litigation in which they may be
involved because of their offices with the Funds, except
if it is determined in the manner specified in the
Agreement and Declaration of Trust that they have not
acted in good faith in the reasonable belief that their
actions were in the best interests of the Funds or that
such indemnification would relieve any officer or Trustee
of any liability to the Funds or their shareholders by
reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of his or her duties.
The Funds, at their expense, will provide liability
insurance for the benefit of their Trustees and officers.
Messrs. Umphrey and Okurowski, as officers of the
Manager and the Distributor, will benefit from the
management and distribution fees paid or allowed by the
Funds.
At June 30, 2000, the officers and Trustees as a group
owned in the aggregate 0.16% of the outstanding Ordinary
Shares of the Small Cap Fund, 9.90% of the outstanding
Institutional Shares of the Small Cap Fund, 1.26% of the
outstanding Ordinary Shares of the Mid Cap Fund, 21.10%
of the outstanding Institutional Shares of the Mid Cap
Fund, 0.25% of the outstanding Ordinary Shares of the
Growth and Income Fund, 17.71% of the outstanding
Institutional Shares of the Growth and Income Fund, 0.49%
of the outstanding Ordinary Shares of the International
Equity Fund, 17.66% of the outstanding Institutional
Shares of the International Equity Fund, 0.22% of the
outstanding Ordinary Shares of the Emerging Markets Fund,
8.70% of the outstanding Institutional Shares of the
Emerging Markets Fund, 0.96% of the outstanding Ordinary
Shares of the Foreign Value Fund, and 37.09% 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:
Name and Address
% of Outstanding Institutional Shares
The John Dickson Home
1701 Pennsylvania Avenue, N.W.
Washington, DC 20006 14.72%
National Postal Forum
3998 Fair Ridge Drive
Fairfax, VA 22033 11.89%
PFPC FBO LPL 10.81%
USB Corporation
55 Old Bedford Road
Lincoln, MA 01773 10.73%
Temple Preservation Foundation
1773- 16th Street
Washington, DC 20009 7.97%
U.S. Boston Corp. PSRP A/C W.L. Umphrey
55 Old Bedford Road
Lincoln, MA 01773 7.51%
The Henry and Annie Hurt Home for the Blind
1701 Pennsylvania Ave, N.W.
Suite 1000
Washington, DC 20006 6.77%
On the same date, each of the following persons owned 5%
or more of the then outstanding Ordinary Shares of the
Mid Cap Fund:
Name and Address
% of Outstanding Ordinary Shares
Mr. George H. Howell
107 Dudley Road
Wayland, MA 01778 6.98%
On the same date, each of the following persons owned 5%
or more of the then outstanding Institutional Shares of
the Mid Cap Fund:
Name and Address
% of Outstanding Institutional Shares
USB Corporation
55 Old Bedford Road
Lincoln, MA 01773 30.62%
Ms. Lawrie Okurowski
50 Musterfield Road
Concord, MA 01742 13.27%
Mr. James E. and Ms. Sandra G. Jones
9 Stone Creek Park
Owensboro, KY 4230312
.79%
State Street Bank and Trust Custodian for Marsha W.
Vaughan IRA
2122 Harpoon Drive
Stafford, VA 22554 8.53%
State Street Bank and Trust Custodian for Marlys
Bernal
2801 Baxley Hollow Ct.
Herndon, VA 20171 7.32%
U.S. Boston Corporation PSRP A/C Leon Okurowski
55 Old Bedford Road
Lincoln, MA 01773 6.72%
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:
Name and Address
% of Outstanding Institutional Shares
USB Corporation
55 Old Bedford Road
Lincoln, MA 01773 31.57%
NSCC FSI/Fund/Serv Omnibus Account
55 Old Bedford Road
Lincoln, MA 01773 23.12%
Leon Okurowski
50 Musterfield Road
Concord, MA 01742 9.36%
On the same date, the following person owned 5% or more
of the then outstanding Institutional Shares of the
International Equity Fund:
Name and Address
% of Outstanding Institutional Shares
USB Corporation 57.94%
55 Old Bedford Road
Lincoln, MA 01773
National Financial Services Corp.
P.O. Box 3908
New York, NY 10008 24.38%
Leon Okurowski
50 Musterfield Road
Concord, MA 01742 13.14%
On the same date, the following person owned 5% or more
of the then outstanding Institutional Shares of the
Emerging Markets Fund:
Name and Address
% of Outstanding Institutional Shares
Strafe & Co., FBO Mason Crickard
P.O. Box 160
Westerville, OH 43086-0160 27.13%
Strafe & Co., FBO James Duncan
P.O. Box 160
Westerville, OH 43086-0160
21.84%
Strafe & Co., FBO Daywood Foundation
P.O. Box 160
Westerville, OH 43086-0160 9.12%
U.S. Boston Corp. PSRP A/C W.L. Umphrey
55 Old Bedford Road
Lincoln, MA 01773 8.70%
Strafe & Co., FBO 1st Presby.
P.O. Box 160
Westerville, OH 43086-0160 5.29%
On the same date, each of the following persons owned 5%
or more of the then outstanding Ordinary Shares of the
Foreign Value Fund:
Name and Address
% of Outstanding Institutional Shares
Lowell Anesthesiology Service - PSRP
60 East Street, Suite 1300
Metheun, MA 01844 5.17%
On the same date, each of the following persons owned 5%
or more of the then outstanding Institutional Shares of
the Foreign Value Fund:
Name and Address
% of Outstanding Institutional Shares
Virginia M. Kaneb Management Trust
Paul F. Beatty, Trustee
c/o Sullivan & Worcester
One Post Office Square
Boston, MA 02109
47.54%
U.S. Boston Corp. PSRP A/C W.L. Umphrey
55 Old Bedford Road
Lincoln, MA 01773 37.09%
Bernard R. and Lorraine B. Horn, Jr.
99 Beaver Road
Reading, MA 01867 8.26%
National Financial Services Corp.
P.O. Box 3908
New York, NY 10008 6.11%
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.
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, 2000, 1999,
and 1998, the Manager received fees of $614,633,
$595,869, and $712,299, respectively. For services
rendered to the Mid Cap Fund during the fiscal years
ended March 31, 2000, 1999, and 1998, the Manager
received fees of $ 150,343, $148,620, and $122,800,
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, 2000, 1999,
and 1998, the Manager received fees of $601,110,
$527,997, and $425,583, respectively. For services
rendered to the International Equity Fund during the
fiscal years ended March 31, 2000, 1999, and 1998, the
Manager received fees of $217,370, $276,103, and
$311,008, respectively. For services rendered to the
Emerging Markets Fund during the fiscal years ended March
31, 2000, 1999, and 1998, the Manager received fees of
$107,302, $73,465, and $86,261, respectively. For
services rendered to the Foreign Value Fund during the
fiscal year ended March 31, 2000, and 1999, the Manager
received fees of $121,504, and $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 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 - (i) 0.35% of
the aggregate average daily net asset value of the
Fund for assets in the Fund up to $35 million (ii)
0.40% of the aggregate average daily net asset value
of the Fund for assets in the Fund over $35 million
and up to $200 million and (iii) 0.50% of the
aggregate average daily net asset value of the Fund
for assets over $200 million; and Emerging Markets
Fund - 0.40% of average daily total net assets.
For services rendered during the fiscal year
ended March 31, 2000, 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 - 0.319%; 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, 2000, 1999, and 1998, the applicable Advisor
received fees of $307,314, $297,934, and $357,261,
respectively. For services rendered to the Mid Cap
Fund during the fiscal years ended March 31, 2000,
1999, and 1998, the applicable advisor received fees
of $60,136, $59,448, and $49,266, respectively. For
services rendered to the Growth and Income Fund during
the fiscal years ended March 31, 2000, 1999, and 1998,
the applicable Advisor received fees of $255,442,
$226,254, and $185,739, respectively. For services
rendered to the International Equity Fund during the
fiscal years ended March 31, 2000, 1999, and 1998, the
applicable Advisor received fees of $108,684,
$138,052, and $155,972, respectively. For services
rendered to the Emerging Markets Fund during the
fiscal years ended March 31, 2000, 1999, and 1998, the
applicable Advisor received fees of $53,650, $36,733,
and $43,257, respectively. For services rendered to
the Foreign Value Fund during the fiscal year ended
March 31, 2000, and 1999, the applicable Advisor
received fees of $42,526, and $17,537.
Quantitative Small Cap Fund
Quantitative Mid Cap Fund
Columbia Partners, L.L.C., Investment Management, 1701
Pennsylvania Ave., NW, Washington, DC 20006 ("Columbia
Partners") serves as Advisor to the Small Cap Fund and
the Mid Cap Fund. 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, Two 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 Venkat S. Chalasani, Jeffrey P. Davis, CFA,
L. Emerson Tuttle, CFA, and Edward Allinson, CFA. Mr.
Chalasani is a principal of State Street and is the Lead
Portfolio Manager of the Global Growth Opportunities
Equity Strategy. He also works on the investment
strategy team for the Global Fundamental Strategies
group. From 1997 - 1998 Mr. Chalasani was a State Street
Executive Fellow. Prior to joining State Street, Mr.
Chalasani worked for HCL Hewlett-Packard as an Account
Executive. Mr. Davis is a principal at State Street and
Chief Investment Officer of the Fundamental Equity Group.
Prior to State Street, Mr. David was a Managing Director
at Schooner Asset Management. Mr. Tuttle is a principal
of State Street and heads the U.S. Large Cap team within
the Global Fundamental Strategies group. Prior to State
Street, Mr. Tuttle worked at Baybank Norfolk County Trust
Company. 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 ewuity 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.
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. Bradford Greenleaf and
Dennis Fogerty manage the International Equity Fund and
Emerging Markets
Funds respectively. Independence International is wholly
owned by Independence Investment Associates, Inc., a
Delaware corporation. John Hancock Mutual Life Insurance
Co., John Hancock Financial Services, Inc., Mark Charles
Lapman and Bradford Scot Greenleaf are control persons of
Independence International Associates, Inc.
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 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.
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, 2000, the
Funds' paid to the Distributor fees pursuant to the
Plan: Small Cap Fund - $283,272; Growth and Income
Fund - $385,662; International Equity Fund - $101,984;
Emerging Markets Fund - $57,568; and Foreign Value
Fund - $29,650 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 Mid Cap and Foreign Value Fund.
The Mid Cap Fund waived all 12b-1 fees for the entire
year. However, effective June 1, 2000, the Mid Cap
Fund has removed its voluntary waiver of 12b-1 fees.
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
State Street - Kansas City, formerly known as
Investors Fiduciary Trust Company, ("Custodian") is the
custodian of each 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 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 and sale
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 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, 1998,
March 31, 1999 and March 31, 2000 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal Year Ended March 31,
Fund 1998 1999 2000
Small Cap Fund $272,199 $221,371 $289,546
Mid Cap Fund 44,701 58,392
55,701
Growth and Income Fund 63,665 94,378
78,476
International Equity Fund 74,654
74,831 26,550
Emerging Markets Fund 39,223 35,435
27,209
Foreign Value Fund -- 34,047
28,422
</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
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 for accounts
serviced by the dealer based upon the service
agreement between the Fund and the Broker.
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, by wire, or by online ACH
transactions, 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. 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)
Simple 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. Simple
IRAs are traditional IRA accounts established pursuant to
an employer-sponsored Simple IRA plan; different
contributions limits apply to Simple 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 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 a
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 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 affected by telephone and only mail the
proceeds of telephone redemptions to the redeeming
shareholder's address of record.
The Transfer Agent will assess a $15.00 fee for
overnight delivery or to wire the proceeds of a
redemption. Such fee will be subtracted from the net
redemption amount.
CALCULATION OF NET ASSET VALUE
Portfolio securities are valued each business day at
the last reported sale price up to the close of the New
York Stock Exchange (ordinarily 4:00 p.m., Eastern
Standard Time). If there is no such reported sale, the
securities are valued at the last reported price. Short-
term investments that mature in 60 days or less are
valued at amortized cost. The International Equity,
Emerging Markets and Foreign Value Funds may invest in
securities listed on foreign exchanges that 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 quoted in foreign
currencies are translated into U.S. dollars, based upon
the prevailing exchange rate on each business day. Other
assets and securities for which no quotations are readily
available are valued at fair value as determined in good
faith using procedures approved by the Funds' Trustees
(the "Trustees").
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 that 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 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.
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 that occur between the
time a Fund accrues receivables or liabilities
denominated in a foreign currency, and the time the Fund
actually collects such receivables or pays such
liabilities, generally are treated as ordinary income or
ordinary loss. Similarly, on disposition of debt
securities denominated in a foreign currency and on
disposition of certain options futures, and forward
contracts, gains or losses attributable to fluctuations
in the value of foreign currency between the date of
acquisition of the security or contract and the date of
disposition also are treated as ordinary gain or loss.
These gains or losses, referred to under the Code as
"section 988" gains or losses, may increase or decrease
the amount of a Fund's investment company taxable income
to be distributed to its shareholders as ordinary income.
Upon the sale or other disposition of shares of a
Fund, a shareholder may realize a capital gain or loss
which may be 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 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 total 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.
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.
Depository Receipts. Each Fund may invest in
American Depository Receipts (ADRs), European Depository
Receipts (EDRs) and Global Depository Receipts (GDRs).
ADRs, EDRs and GDRs are certificates evidencing ownership
of shares of a foreign issuer. These certificates are
issued by depository banks and generally trade on an
established market in the United States or elsewhere.
The underlying shares are held in trust by a custodian
bank or similar financial institution in the issuer's
home country. The depository bank may not have physical
custody of the underlying securities at all times and may
charge fees for various services, including forwarding
dividends and interest and corporate actions. ADRs are
alternatives to directly purchasing the underlying
foreign securities in their national markets and
currencies. However, ADRs continue to be subject to many
of the risks associated with investing directly in
foreign securities. These risks include foreign exchange
risk as well as the political and economic risks of the
underlying issuer's country. ADRs, EDRs and GDRs may be
sponsored or unsponsored. Unsponsored receipts are
established without the participation of the issuer.
Unsponsored receipts differ from receipts sponsored by an
issuer in that they may involve higher expenses, they may
not pass-through voting or other shareholder rights, and
they may be less liquid.
Foreign Currency Transactions. A forward foreign
currency exchange contract involves an obligation to
purchase or sell a specific currency at a future date,
which may be any fixed number of days from the date of
the contract agreed upon by the parties, at a price set
at the time of the contract. These contracts are
principally traded in the inter-bank market conducted
directly between currency traders (usually large
commercial banks) and their customers. A forward
contract generally has no deposit requirement, and no
commissions are charged at any stage for trades.
Since investments in foreign companies will usually
involve currencies of foreign countries, and since the
International Equity, Foreign Value, and Emerging Markets
Funds may temporarily hold funds in bank deposits in
foreign currencies during the completion of investment
programs, the value of the assets of the Funds as
measured in U.S. dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates
and exchange control regulations, and the Funds may incur
costs in connection with conversions between various
currencies. Each Fund will conduct its foreign currency
exchange transactions either on a spot (i.e., cash) basis
at the spot rate prevailing in the foreign currency
exchange market, or through entering into forward
contracts to purchase or sell foreign currencies. The
Funds will generally not enter into a forward contract
with a term of greater than one year. The Funds'
Custodian will place cash or liquid debt securities into
a segregated account of the series in an amount equal to
the value of the Funds' total assets committed to the
consummation of forward foreign currency exchange
contracts. If the value of the securities placed in the
segregated account declines, additional cash or
securities will be placed in the account on a daily basis
so that the value of the account will equal the amount of
the Funds' commitments with respect to such contracts.
The International Equity, Foreign Value, and Emerging
Markets Funds will generally enter into forward foreign
currency exchange contracts under two circumstances.
First, when a Fund enters into a contract for the
purchase or sale of a security denominated in a foreign
currency, it may desire to "lock in" the U.S. dollar
price of the security. By entering into a forward
contract for the purchase or sale, for a fixed amount of
U.S. dollars, of the amount of foreign currency involved
in the underlying security transactions, the Fund will
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. 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 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.
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
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.
Illiquid Securities. Securities which do not trade
on stock exchanges or in the over the counter market, or
have restrictions on when and how they may be sold, are
generally considered to be "illiquid." An illiquid
security is one that a Fund may have difficulty, or may
even be legally precluded from, selling at any particular
time. The Funds may invest in illiquid securities,
including restricted securities and other investments
that are not readily marketable. A Fund will not purchase
any such security if the purchase would cause the Fund to
invest more than 15% of its net assets, measured at the
time of purchase, in illiquid securities. Repurchase
agreements maturing in more than seven days are
considered illiquid for purposes of this restriction.
The principal risk of investing in illiquid
securities is that a Fund may be unable to dispose of
them at the time desired or at a reasonable price. In
addition, in order to resell a restricted security, a
Fund might have to bear the expense and incur the delays
associated with registering the security with the SEC,
and otherwise obtaining listing on a securities exchange
or in the over the counter market.
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.
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 1999 (April 1, 1998 to March 31,
1999) and 2000 (April 1, 1999 to March 31, 2000) were
as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1999 2000
Small Cap Fund 113% 145%
Mid Cap Fund 168% 153%
Growth and Income Fund 97% 78%
International Equity Fund 128% 78%
Emerging Markets Fund 49% 31%
Foreign Value Fund 22% 30%
</TABLE>
INVESTMENT RESTRICTIONS OF THE FUNDS
As fundamental policies, which may not be changed
without "a vote of the majority of the outstanding voting
securities" of a Fund (as defined below), a Fund will not
take any of the following actions:
(1) purchase any security if as a result a Fund
would then hold more than 10% of any class of securities
of an issuer (taking all common stock issues of an issuer
as a single class, all preferred stock issues as a single
class, and all debt issues as a single class) or more
than 10% of the outstanding voting securities of an
issuer;
(2) purchase any security if as a result any Fund
would then have more than 10% of the value of its net
assets (taken at current value) invested in any of the
following types of investment vehicles: in securities of
companies (including predecessors) less than three years
old, in securities which are not readily marketable, in
securities which are subject to legal or contractual
restrictions on resale ("restricted securities") and in
repurchase agreements which have a maturity longer than
seven (7) days, provided, however, that no Fund may
invest more than 15% of its assets in illiquid
securities;
(3) make short sales of securities or maintain a
short position, if, for the Mid Cap Fund, as a result
the value of all securities sold short would exceed 25%
of the Fund's net assets; or, for all other Funds, unless
at all times when a short position is open the particular
Fund owns an equal amount of such securities or
securities convertible into, or exchangeable without
payment of any further consideration for, securities of
the same issue as, and equal in amount to, the securities
sold short, and unless not more than 10% of the Fund's
net assets (taken at current value) is held as collateral
for such sales at any one time. Such sales of securities
subject to outstanding options would not be made. A Fund
may maintain short positions in a stock index by selling
futures contracts on that index.;
(4) issue senior securities, borrow money or
pledge its assets except that a Fund may borrow from a
bank for temporary or emergency purposes in amounts not
exceeding 10% (taken at the lower of cost or current
value) of its total assets (not including the amount
borrowed) and pledge its assets to secure such
borrowings. A Fund will not purchase any additional
portfolio securities so long as its borrowings amount to
more than 5% of its total assets. (For purposes of this
restriction, collateral arrangements with respect to the
writing of covered call options and options on index
futures and collateral arrangements with respect to
margin for a stock index future are not deemed to be a
pledge of assets and neither such arrangements nor the
purchase or sale of stock index futures or the purchase
of related options are deemed to be the issuance of a
senior security.);
(5) purchase or retain securities of any company
if, to the knowledge of the Funds, officers and Trustees
of the Funds or of the Manager or of the Advisor of the
particular Funds who individually own more than 1/2 of 1%
of the securities of that company together own
beneficially more than 5% of such securities;
(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 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>
<S> <C> <C> <C>
Year Ended 5 Years Ended 10 Years Ended
March 31, 2000 March 31, 2000 March 31, 2000Since Inception
Small Cap Fund
Ordinary Shares 68.30% 21.03% __ 22.59% (8/3/92)
Institutional Shares 70.86% 21.87%
__ 20.61% (1/6/93)
Mid Cap Fund
Ordinary Shares 71.41% 31.20% __ 31.29% (3/20/95)
Institutional Shares 72.81% __
__ 31.41% (4/17/95)
Growth and Income Fund
Ordinary Shares 49.94% 30.06% 20.15% 18.88% (5/6/85)
Institutional Shares 52.32% 30.99%
__ 21.29% (3/25/91)
International Equity Fund
Ordinary Shares 11.80% 5.89% 3.40%
4.24% (7/31/87)
Institutional Shares 13.33% 6.55%
__ 4.55% (8/25/94)
Emerging Markets Fund
Ordinary Shares 41.31% 5.16% __ (
0.52)% (9/30/94)
Institutional Shares 43.55% __
__ 3.47% (4/2/96)
Foreign Value Fund
Ordinary Shares 11.05% __ __ ( 3.73)% (5/15/98)
Institutional Shares 12.37%__ __
__ 8.88% (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 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, 1999, 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.
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.
MUTUAL FUNDS MAGAZINE, INC. publishes mutual fund
rankings and is distributed monthly. Mutual Funds
Magazine's proprietary All-Star Ratings reflect
historical risk-adjusted performance through a specific
date and are subject to change. Overall ratings are
calculated from the fund's total return, with load-
adjustments if applicable, relative to the volatility of
its price fluctuations, over a minimum of two years and a
maximum of ten years. Separate All-Star Ratings are also
calculated for 1-, 3-, 5- and 10-year periods, as
applicable. For all periods, the 20% of funds with the
highest risk-adjusted returns receive Five Stars; the
next highest 20% receive Four Stars, the next highest 20%
receive Three Stars, etc.
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.
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.
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.
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 that may, without shareholder
approval, be divided into an unlimited number of series
of such shares and an unlimited number of classes of
shares of any such series. Shares are presently divided
into six series of shares, the Funds, 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,
2000 incorporated by reference in this Statement of
Additional Information have been so included in reliance
upon the report of PricewaterhouseCoopers LLP, 1055
Broadway, 10th Floor, Kansas City, MO 64105 independent
accountants, given on the authority of that firm as
experts in accounting and auditing.
<PAGE>
Part C Other Information
Item 23. Exhibits
(a) Amended and Restated Agreement and Declaration of
Trust, dated April 2, 1990 (1)
(1) Amendment 1, Dated July 18, 1993, To the Agreement And
Declaration of Trust, Dated April 2, 1990 (1)
(b) Amended and Restated By-Laws, Dated April 2, 1990 (1)
(1) Amendment 1, Dated July 19, 1993, To the Bylaws Dated
April 2, 1990 (1)
(c) (1) Portions of Agreement and Declaration of Trust
Relating to Shareholders' Rights (1)
(2) Portions of By-Laws Relating to Shareholders'
Rights (1)
(d) (1) Management Contract Between Quantitative Group of
Funds and Quantitative Advisors, Inc., Dated January 31,
1999 -- Exhibit 1
(2) Advisory Contract Between Quantitative Advisors,
Inc. and Columbia Partners, L.L.C., Dated January
31, 1999-Mid Cap Fund (1)
(3) Advisory Contract Between Quantitative Advisors,
Inc. and Columbia Partners, L.L.C., Dated January
31, 1999-Small Cap Fund (1)
(4) Advisory Contract Between Quantitative Advisors,
Inc. and Independence International Associates,
Inc., Dated January 31, 1999-Emerging Markets Fund
(1)
(5) Advisory Contract Between Quantitative Advisors,
Inc. and Independence International Associates,
Inc., Dated January 31, 1999-International Equity
Fund (1)
(6) Advisory Contract Between Quantitative Advisors,
Inc. and Polaris Capital Management, Inc., Dated
January 31, 1999-Foreign Value Fund (1)
(e) Distribution Agreement Dated May 6, 1994 (1)
(1) Amendment to Distribution Agreement Dated May 6, 1994
(1)
(2) Amendment to Distribution Agreement Dated May 15, 1994
(1)
(3) Amendment to Distribution Agreement Dated May 18, 1998
(1)
(4) Form of Specimen Ordinary Share Selling Agreement
(Fully Disclosed Accounts) (1)
(5) Form of Specimen Ordinary and Institutional Share
Selling Agreement (Fully Disclosed Accounts) (1)
(f) Not applicable.
(g) Custodian and Investment Accounting Agreement with
Investors Fiduciary Trust Company, Dated January 18, 1998
(1)
(1) First Amendment to the Custodian and Investment
Accounting Agreement with Investors Fiduciary Trust Company,
Dated March 1, 1998 (1)
(h) (1) Transfer Agent and Service Agreement, Dated October
31, 1989 (1)
(2) Limited Agency Agreement for Transfer Agency
Services (1)
(i) Opinion and Consent of Dechert, Price & Rhoads (1)
(j) Consent of Independent Accountants -- Exhibit 3
(k) Not applicable.
(l) Not applicable.
(m) (1) Distribution Plan, Dated April 2, 1990 (1)
(2) Form of Specimen Ordinary and Institutional
Share Servicing Agreement (1)
(3) Form of Specimen Ordinary Share Service
Agreement - NTF (1)
(4) Form of Specimen Ordinary Share Service
Agreement (Undisclosed) (1)
(5) Financial Data Schedule for Ordinary Shares (1)
(6) Financial Data Schedule for Institutional Shares
(1)
(n) (1) Rule 18f-3 Plan Amendment 1(1)
(2) Rule 18f-3 Plan Amendment 2 (1)
(3) Rule 18f-3 Plan Amendment 3(1)
(o) Code of Ethics, Dated April 2000 -- Exhibit 4
(1) Previously filed with Post-Effective Amendment No. 20 to
the Registration Statement on July 30, 2000 and incorporated
by reference herein.
Item 24. Persons Controlled by or under common control with
the Company.
No person is presently controlled by or under common control
with the Company.
Item 25. Indemnification
Indemnification provisions for officers, directors and
employees of the Company are set forth in Article VIII,
Sections one through three of the Amended and Restated
Agreement and Declaration of Trust, and are hereby
incorporated by reference. See Item 23 (a) (1) above.
Under this Declaration of Trust, directors and officers will
be indemnified to the fullest extent permitted to directors
by the Massachusetts General Corporation Law, subject only
to such limitations as may be required by the Investment
Company Act of 1940, as amended, and the rules thereunder.
Under the Investment Company Act of 1940, directors and
officers of the Company cannot be protected against
liability to the Fund or its shareholders to which they
would be subject because of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties of
their office. The Company also maintains liability
insurance policies covering its directors and officers.
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.
Name Business and other connections
Willard L. Umphrey: President/Treasurer/Clerk/Director,
U.S. Boston Insurance
Director Agency, Inc.; Director, U.S. Boston
Capital Corporation;
President/Treasurer/Director, 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, Inverness Medical
Technology Services, 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, d/b/a Quant
Funds.
Leon Okurowski: Director/President, U.S. Boston
Corporation, USB
Clerk Corporation and U.S. Boston Asset
Management
Treasurer Corporation; Vice
President/Treasurer/Clerk/Director,
Director Waterfront Parking Corporation; Vice
President/Treasurer/Director, U.S.
Boston Capital Corporation; Vice
President, U.S. Boston Insurance Agency,
Inc.; Director/Treasurer, AB&T, Inc.;
Director, 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, d/b/a Quant
Funds.
Frederick S. Marius President/General Counsel, U.S. Boston
Capital
President Corporation; Executive Vice
President/Clerk, Quantitative Group of
Funds, d/b/a Quant Funds
The principal business address of each U.S. Boston affiliate
named above is Lincoln North, 55 Old Bedford Road, Lincoln,
Massachusetts 01773. The principal business address of AB&T
is 200 Franklin Street, Boston, Massachusetts 02109.
Item 27. Principal Underwriters
(a) Not applicable.
(b) The directors and officer of the Registrant's principal
underwriter are:
Positions and Positions and
Offices with Offices with
Name Underwriter Registrant
Carol A. Higgins Clerk None
Leon Okurowski Vice President, Vice President,
Treasurer
Treasurer and and Trustee
Director
Willard L. Umphrey Director President, Chairman
And Trustee
Frederick S. Marius President Executive Vice
President
And Clerk
The principal business address of each person listed above
is Lincoln North, 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.
55 Old Bedford Road
Lincoln, MA 01773
State Street Global Advisors
225 Franklin Street, 3rd Floor
Boston, MA 02110
Independence International Associates, Inc.
53 State Street, 38th Floor
Boston, MA 02109
Columbia Partners, L.L.C.
1775 Pennsylvania Avenue, N.W., 10th Floor
Washington, D.C. 20006
Polaris Capital Management, Inc
125 Summer Street
Boston, MA 02110
Registrant's custodian:
State Street - Kansas City
801 Pennsylvania Avenue
Kansas City, MO 64105
Registrant's transfer agent:
Quantitative Institutional Services, Inc., a
division of Quantitative Advisors, Inc.
55 Old Bedford Road
Lincoln, MA 01773
Item 29. Management Services
Not applicable.
Item 30. Undertakings
Not applicable.
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Company
certifies that it meets all the requirements for
effectiveness of this Registration Statement under Rule
485(b) under the Securities Act and has duly caused this
post-effective amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the town of
Lincoln, County of Middlesex, and Commonwealth of
Massachusetts, on the 31st day of July, 2000.
Attest: Quantitative Group of Funds d/b/a
Quant Funds
/s/ Kristina I. Tuholski /s/ Frederick S. Marius
Kristina I. Tuholski, Assistant Clerk Frederick S.
Marius, Executive Vice President
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed below by the
following persons in the capacities and on the date
indicated.
/s/ Robert M. Armstrong
Trustee
/s/ John M. Bulbrook
Trustee
/s/ Edward A. Burrows
Trustee
/s/ Joseph J. Caruso
Trustee
/s/ Leon Okurowski
Trustee
/s/ Willard L. Umphrey
Trustee
/s/ Ron Zwanziger
Trustee
By: /s/ Frederick S. Marius
Frederick S. Marius
Attorney in Fact
