<PAGE>
000 A000000 06/30/96
000 C000000 0000927972
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0.a
000 J000000 A
001 A000000 THE DLB FUND GROUP
001 B000000 811-08690
001 C000000 6172253800
002 A000000 ONE MEMORIAL DRIVE
002 B000000 CAMBRIDGE
002 C000000 MA
002 D010000 02142
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 Y
007 B000000 4
007 C010100 1
007 C020100 THE DLB FIXED INCOME FUND
007 C030100 N
007 C010200 2
007 C020200 THE DLB GLOBAL SMALL CAPITALIZATION FUND
007 C030200 N
007 C010300 3
007 C020300 THE DLB VALUE FUND
007 C030300 N
007 C010400 4
007 C020400 THE DLB MID CAPITALIZATION FUND
007 C030400 N
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
007 C011100 11
007 C011200 12
007 C011300 13
007 C011400 14
007 C011500 15
007 C011600 16
007 C011700 17
007 C011800 18
007 C011900 19
007 C012000 20
012 A00AA01 INVESTORS BANK & TRUST COMPANY
<PAGE>
012 B00AA01 85-720
012 C01AA01 BOSTON
012 C02AA01 MA
012 C03AA01 02111
013 A00AA01 DELOITTE & TOUCHE LLP
013 B01AA01 BOSTON
013 B02AA01 MA
013 B03AA01 02110
014 A00AA01 BABSON SECURITIES CORPORATION
014 B00AA01 8-47589
015 A00AA01 INVESTORS BANK & TRUST COMPANY
015 B00AA01 C
015 C01AA01 BOSTON
015 C02AA01 MA
015 C03AA01 02111
015 E01AA01 X
015 A00AA02 CITIBANK, N.A., BUENOS AIRES
015 B00AA02 S
015 C01AA02 X
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015 E04AA02 X
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015 B00AA03 S
015 C01AA03 X
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015 E04AA03 X
015 A00AA04 DELETE
015 A00AA05 CREDITANSTALT BANKVEREIN
015 B00AA05 S
015 C01AA05 X
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015 E04AA05 X
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015 C01AA08 X
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015 E04AA08 X
015 A00AA09 BARCLAYS BANK OF BOTSWANA LTD., GABORONE
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<PAGE>
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015 E04AA11 X
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015 A00AA13 STANDARD CHARTERED BANK, SHENZHEN
015 B00AA13 S
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015 E04AA13 X
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015 C01AA14 X
015 D01AA14 COLOMBIA
015 E04AA14 X
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015 E04AA15 X
015 A00AA16 DELETE
015 A00AA17 DELETE
015 A00AA18 UNIBANK, A.S.
015 B00AA18 S
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015 E04AA18 X
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015 B00AA19 S
015 C01AA19 X
015 D01AA19 EGYPT
015 E04AA19 X
015 A00AA20 NATIONAL BANK OF EGYPT, CAIRO
015 B00AA20 S
015 C01AA20 X
015 D01AA20 EGYPT
015 E04AA20 X
015 A00AA21 EUROCLEAR CLEARANCE SYSTEM S.C.
015 B00AA21 S
015 C01AA21 X
<PAGE>
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015 E04AA21 X
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015 C01AA22 X
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015 E04AA22 X
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015 B00AA23 S
015 C01AA23 X
015 D01AA23 FRANCE
015 E04AA23 X
015 A00AA24 DELETE
015 A00AA25 DELETE
015 A00AA26 EUROCLEAR CLEARANCE SYSTEM S.C.
015 B00AA26 S
015 C01AA26 X
015 D01AA26 GERMANY
015 E04AA26 X
015 A00AA27 DEUTSCHE BANK A.G.
015 B00AA27 S
015 C01AA27 X
015 D01AA27 GERMANY
015 E04AA27 X
015 A00AA28 BARCLAYS BANK OF GHANA LTD., ACCRA
015 B00AA28 S
015 C01AA28 X
015 D01AA28 GHANA
015 E04AA28 X
015 A00AA29 CITIBANK, N.A. (GREECE) ATHENS
015 B00AA29 S
015 C01AA29 X
015 D01AA29 GREECE
015 E04AA29 X
015 A00AA30 STANDARD CHARTERED BANK, HONG KONG
015 B00AA30 S
015 C01AA30 X
015 D01AA30 HONG KONG
015 E04AA30 X
015 A00AA31 CITIBANK BUDAPEST RT.
015 B00AA31 S
015 C01AA31 X
015 D01AA31 HUNGARY
015 E04AA31 X
015 A00AA32 DELETE
015 A00AA33 STANDARD CHARTERED BANK, JAKARTA
015 B00AA33 S
015 C01AA33 X
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<PAGE>
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015 C01AA34 X
015 D01AA34 IRELAND
015 E04AA34 X
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015 B00AA35 S
015 C01AA35 X
015 D01AA35 ISRAEL
015 E04AA35 X
015 A00AA36 BANK LEUMI LE-ISRAEL, TEL AVIV
015 B00AA36 S
015 C01AA36 X
015 D01AA36 ISRAEL
015 E04AA36 X
015 A00AA37 CITIBANK, N.A., MILAN
015 B00AA37 S
015 C01AA37 X
015 D01AA37 ITALY
015 E04AA37 X
015 A00AA38 STANDARD CHARTERED BANK, TOKYO
015 B00AA38 S
015 C01AA38 X
015 D01AA38 JAPAN
015 E04AA38 X
015 A00AA39 CITIBANK, N.A., AMMAN
015 B00AA39 S
015 C01AA39 X
015 D01AA39 JORDAN
015 E04AA39 X
015 A00AA40 STANDARD CHARTERED BANK SEOUL
015 B00AA40 S
015 C01AA40 X
015 D01AA40 KOREA
015 E04AA40 X
015 A00AA41 EUROCLEAR CLEARANCE SYSTEM S.C.
015 B00AA41 S
015 C01AA41 X
015 D01AA41 LUXEMBOURG
015 E04AA41 X
015 A00AA42 STANDARD CHARTERED BANK OF MALAYSIA BERHAD
015 B00AA42 S
015 C01AA42 X
015 D01AA42 MALAYSIA
015 E04AA42 X
015 A00AA43 CHASE MANHATTAN, N.A.
015 B00AA43 S
015 C01AA43 X
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015 E04AA43 X
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<PAGE>
015 C01AA44 X
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015 E04AA44 X
015 A00AA45 BANCOMER, S.A.
015 B00AA45 S
015 C01AA45 X
015 D01AA45 MEXICO
015 E04AA45 X
015 A00AA46 CHASE MANHATTAN, N.A.
015 B00AA46 S
015 C01AA46 X
015 D01AA46 MOROCCO
015 E04AA46 X
015 A00AA47 BANQUE COMMERCIAL DU MAROC
015 B00AA47 S
015 C01AA47 X
015 D01AA47 MOROCCO
015 E04AA47 X
015 A00AA48 MEES PIERSON
015 B00AA48 S
015 C01AA48 X
015 D01AA48 NETHERLANDS
015 E04AA48 X
015 A00AA49 DELETE
015 A00AA50 NATIONAL AUSTRALIA BANK
015 B00AA50 S
015 C01AA50 X
015 D01AA50 NEW ZEALAND
015 E04AA50 X
015 A00AA51 EUROCLEAR CLEARANCE SYSTEM S.C.
015 B00AA51 S
015 C01AA51 X
015 D01AA51 NORWAY
015 E04AA51 X
015 A00AA52 CHRISTIANA BANK
015 B00AA52 S
015 C01AA52 X
015 D01AA52 NORWAY
015 E04AA52 X
015 A00AA53 STANDARD CHARTERED BANK, KARACHI
015 B00AA53 S
015 C01AA53 X
015 D01AA53 PAKISTAN
015 E04AA53 X
015 A00AA54 CITIBANK, N.A., LIMA
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015 C01AA54 X
015 D01AA54 PERU
015 E04AA54 X
015 A00AA55 STANDARD CHARTERED BANK, MANILA
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<PAGE>
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015 E04AA55 X
015 A00AA56 CITIBANK POLAND S.A., WARSAW
015 B00AA56 S
015 C01AA56 X
015 D01AA56 POLAND
015 E04AA56 X
015 A00AA57 CITIBANK PORTUGAL S.A., LISBON
015 B00AA57 S
015 C01AA57 X
015 D01AA57 PORTUGAL
015 E04AA57 X
015 A00AA58 STANDARD CHARTERED BANK, SINGAPORE
015 B00AA58 S
015 C01AA58 X
015 D01AA58 SINGAPORE
015 E04AA58 X
015 A00AA59 THE STANDARD BANK OF SOUTH AFRICA LIMITED
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015 C01AA59 X
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015 D01AA60 SPAIN
015 E04AA60 X
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015 A00AA62 STANDARD CHARTERED BANK, COLOMBO
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015 C01AA62 COLOMBO
015 D01AA62 SRI LANKA
015 E04AA62 X
015 A00AA63 SVENSKA HANDELSBANKEN S.C.
015 B00AA63 S
015 C01AA63 X
015 D01AA63 SWEDEN
015 E04AA63 X
015 A00AA64 DELETE
015 A00AA65 BANK LEU LTD.
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015 C01AA65 X
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015 E04AA65 X
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015 A00AA67 DELETE
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<PAGE>
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015 E04AA69 X
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015 E04AA70 X
015 A00AA71 BARCLAYS BANK PLC
015 B00AA71 S
015 C01AA71 X
015 D01AA71 UNITED KINGDOM
015 E04AA71 X
015 A00AA72 FIRST CHICAGO CLEARING CENTRE
015 B00AA72 S
015 C01AA72 X
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015 C01AA73 X
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015 E04AA73 X
015 A00AA74 BARCLAYS BANK PLC
015 B00AA74 S
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015 D01AA74 ZAMBIA
015 E04AA74 X
015 A00AA75 BARCLAYS BANK PLC
015 B00AA75 S
015 C01AA75 X
015 D01AA75 ZIMBABWE
015 E04AA75 X
015 A00AA76 CITIBANK N.A. QUITO
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015 C01AA77 X
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
076 000200 0.00
008 A000301 DAVID L BABSON & CO., INC.
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<PAGE>
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<PAGE>
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<PAGE>
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008 A000401 DAVID L. BABSON & CO., INC.
<PAGE>
008 B000401 A
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<PAGE>
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<PAGE>
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SIGNATURE RONALD E. GWOZDZ
TITLE PRESIDENT
This report is signed on behalf of the registrant in the City of Cambridge,
The Commonwealth of Massachusetts on August 28, 1996.
By: /s/ Ronald E. Gwozdz Witness: /s/ John V. Murphy
-------------------- --------------------
Ronald E. Gwozdz John V. Murphy
President Clerk
- --------------
<PAGE>
Exhibit Index
1. Management Contract between the Trust and David L. Babson & Co., Inc. (the
"Manager") on behalf of the DLB Global Bond Fund
2. Sub-Advisory Agreement between the Manager and Potomac Babson Incorporated
on behalf of the DLB Global Bond Fund
3. Management Contract between the Trust and the Manager on behalf of the DLB
Quantitative Equity Fund
4. Amendment No. 1 to Agreement and Declaration of Trust
MANAGEMENT CONTRACT
Management Contract executed as of May 16, 1996 between THE DLB FUND
GROUP, a Massachusetts business trust (the "Trust") on behalf of its DLB Global
Bond Fund (the "Fund"), and DAVID L. BABSON & CO., INC., a Massachusetts
corporation (the "Manager").
W I T N E S S E T H:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY MANAGER TO THE TRUST.
(a) Subject always to the control of the Trustees of the Trust and to
such policies as the Trustees may determine, the Manager will, at its expense,
(i) furnish continuously an investment program for the Fund and will make
investment decisions on behalf of the Fund and place all orders for the purchase
and sale of its portfolio securities and (ii) furnish office space and
equipment, provide bookkeeping and clerical services (excluding determination of
net asset value, shareholder accounting services and fund accounting services)
and pay all salaries, fees and expenses of officers and Trustees of the Trust
who are affiliated with the Manager. In the performance of its duties, the
Manager will comply with the provisions of the Agreement and Declaration of
Trust and By-laws of the Trust and the Fund's stated investment objective,
policies and restrictions.
(b) In placing orders for the portfolio transactions of the Fund, the
Manager will seek the best price and execution available, except to the extent
it may be permitted to pay higher brokerage commissions for brokerage and
research services as described below. In using its best efforts to obtain for
the Fund the most favorable price and execution available, the Manager shall
consider all factors it deems relevant, including, without limitation, the
overall net economic result to the Fund (involving price paid or received and
any commissions and other costs paid), the efficiency with which the transaction
is effected, the ability to effect the transaction at all where a large block is
involved, availability of the broker to stand ready to execute possibly
difficult transactions in the future and the financial strength and stability of
the broker. Subject to such policies as the Trustees may determine, the Manager
shall not be deemed to have acted unlawfully or to have breached any duty
created by this Contract or otherwise solely by reason of its having caused the
Fund to pay a broker or dealer that provides brokerage and research services to
the Manager an amount of commission for effecting a portfolio investment
transaction in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, if the Manager determines in good
faith that such amount of commission was reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Manager's overall
responsibilities with respect to the Fund
-1-
and to other clients of the Manager as to which the Manager exercises investment
discretion.
(c) Subject to the provisions of the Agreement and Declaration of Trust
of the Trust and the Investment Company Act of 1940, the Manager, at its
expense, may select and contract with investment consultants or sub-advisers
(the "Consultants" or "Sub-Advisers," as applicable) for the Fund. The Manager
will compensate any Consultant or Sub-Adviser of the Fund for its services to
the Fund. The Manager may terminate the services of the Consultant or
Sub-Adviser at any time in its sole discretion and shall at such time assume the
responsibilities of such Consultant or Sub-Adviser unless and until a successor
Consultant or Sub-Adviser is selected.
(d) The Manager shall not be obligated under this Contract to pay any
expenses of or for the Trust or of or for the Fund not expressly assumed by the
Manager pursuant to this Section 1 other than as provided in Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Trust may be a partner, shareholder, director, officer or
employee of, or be otherwise interested in, the Manager, and in any person
controlling, controlled by or under common control with the Manager, and that
the Manager and any person controlling, controlled by or under common control
with the Manager may have an interest in the Trust. It is also understood that
the Manager and persons controlling, controlled by or under common control with
the Manager have and may have advisory, management service, distribution or
other contracts with other organizations and persons, and may have other
interests and businesses.
3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.
The Fund will pay to the Manager as compensation for the Manager's
services rendered, for the facilities furnished and for the expenses borne by
the Manager pursuant to Section 1, a fee, computed and paid monthly at the
annual rate of .75% of the Fund's average daily net asset value. Such average
daily net asset value of the Fund shall be determined by taking an average of
all of the determinations of such net asset value during such month while this
Contract is in effect. Such fee shall be payable for each month within five (5)
business days after the end of such month.
In the event that expenses of the Fund for any fiscal year should
exceed the expense limitation on investment company expenses imposed by any
statute or regulatory authority of any jurisdiction in which shares of the Fund
are qualified for offer and sale, the compensation due the Manager for such
fiscal year shall be reduced by the amount of such excess by a reduction or
refund thereof. In the event that the expenses of the Fund exceed any expense
limitation which the Manager may, by written notice to the Trust, voluntarily
declare to be
-2-
effective with respect to the Fund, subject to such terms and conditions as the
Manager may prescribe in such notice, the compensation due the Manager shall be
reduced, and, if necessary, the Manager shall bear the Fund's expenses to the
extent required by such expense limitation.
If the Manager shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT.
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment; and this Contract shall not be amended
unless such amendment is approved at a meeting by the affirmative vote of a
majority of the outstanding shares of the Fund, and by the vote, cast in person
at a meeting called for the purpose of voting on such approval, of a majority of
the Trustees of the Trust who are not interested persons of the Trust or of the
Manager.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and shall
remain in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 4)
until terminated as follows:
(a) Either party hereto may at any time terminate this
Contract by not more than sixty days' written notice delivered or
mailed by registered mail, postage prepaid, to the other party, or
(b) If (i) the Trustees of the Trust or the shareholders by
the affirmative vote of a majority of the outstanding shares of the
Fund, and (ii) a majority of the Trustees of the Trust who are not
interested persons of the Trust or of the Manager, by vote cast in
person at a meeting called for the purpose of voting on such approval,
do not specifically approve at least annually the continuance of this
Contract, then this Contract shall automatically terminate at the close
of business on the second anniversary of its execution, or upon the
expiration of one year from the effective date of the last such
continuance, whichever is later; provided, however, that if the
continuance of this Contract is submitted to the shareholders of the
Fund for their approval and such shareholders fail to approve such
continuance of this Contract as provided herein, the Manager may
continue to serve hereunder in a manner consistent with the Investment
Company Act of 1940 and the rules and regulations thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of
a majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
-3-
Termination of this Contract pursuant to this Section 5 shall be
without the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of a majority
of the outstanding shares" of the Fund means the affirmative vote, at a duly
called and held meeting of shareholders, (a) of the holders of 67% or more of
the shares of the Fund present (in person or by proxy) and entitled to vote at
such meeting, if the holders of more than 50% of the outstanding shares of the
Fund entitled to vote at such meeting are present in person or by proxy, or (b)
of the holders of more than 50% of the outstanding shares of the Fund entitled
to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person,"
"control," "interested person" and "assignment" shall have their respective
meanings defined in the Investment Company Act of 1940 and the rules and
regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act; and the phrase
"specifically approve at least annually" shall be construed in a manner
consistent with the Investment Company Act of 1940 and the rules and regulations
thereunder.
7. NONLIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross negligence on
the part of the Manager, or reckless disregard of its obligations and duties
hereunder, the Manager shall not be subject to any liability to the Trust, or to
any shareholder of the Trust, for any act or omission in the course of, or
connected with, rendering services hereunder.
8. INITIALS "DLB."
The Manager owns the initials "DLB" and such initials may be used by
the Trust only with the consent of the Manager. The Manager consents to the use
by the Trust of the name "The DLB Fund Group" or any other name embodying the
initials "DLB", in such forms as the Manager shall in writing approve, but only
on condition and so long as (i) this Contract shall remain in full force and
effect and (ii) the Trust shall fully perform, fulfill and comply with all
provisions of this Contract expressed herein to be performed, fulfilled or
complied with by it. No such name shall be used by the Trust at any time or in
any place or for any purposes or under any conditions except as in this section
provided. The foregoing authorization by the Manager to the Trust to use said
initials as part of a business or name is not exclusive of the right of the
Manager itself to use, or to authorize others to use, the same; the Trust
acknowledges and agrees that as between the Manager and the Trust, the Manager
has the exclusive right so to use, or authorize others to use, said initials and
the Trust agrees to take such action as may reasonably be requested by the
Manager to give full effect to the provisions of this section (including,
without limitation, consenting to such use of said
-4-
initials). Without limiting the generality of the foregoing, the Trust agrees
that, upon any termination of this Contract by either party or upon the
violation of any of its provisions by the Trust, the Trust will, at the request
of the Manager made within six months after the Manager has knowledge of such
termination or violation, use its best efforts to change the name of the Trust
so as to eliminate all reference, if any, to the initials "DLB" and will not
thereafter transact any business in a name containing the initials "DLB" in any
form or combination whatsoever, or designate itself as the same entity as or
successor to an entity of such name, or otherwise use the initials "DLB" or any
other reference to the Manager. Such covenants on the part of the Trust shall be
binding upon it, its trustees, officers, stockholders, creditors and all other
persons claiming under or through it.
9. EXERCISE OF VOTING RIGHTS.
Except as instructed otherwise by the Trustees of the Trust, the
Manager shall at its discretion exercise or procure the exercise of any voting
right attaching to investments of the Fund.
10. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as Trustees and not individually and that the obligations
of this instrument are not binding upon any of the Trustees or shareholders
individually but are binding only upon the assets and property of the Fund.
-5-
IN WITNESS WHEREOF, THE DLB FUND GROUP and DAVID L. BABSON & CO., INC.
have each caused this instrument to be signed in duplicate on its behalf by its
duly authorized representative, all as of the day and year first above written.
THE DLB FUND GROUP
By_______________________________
Title:
DAVID L. BABSON & CO., INC.
By_______________________________
Title:
-6-
THE DLB GLOBAL BOND FUND
SUB-ADVISORY AGREEMENT
Sub-Advisory Agreement executed as of May 16, 1996 between DAVID L.
BABSON & CO., INC. (the "Manager") and POTOMAC BABSON INCORPORATED (the "Sub-
Adviser").
W I T N E S S E T H:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY THE SUB-ADVISER TO THE MANAGER.
(a) Subject always to the control of the Trustees of The DLB Fund Group
(the "Trust"), a Massachusetts business trust, and to such policies as the
Trustees or the Manager, as the case may be, may determine, the Sub-Adviser
will, at its expense, (i) furnish continuously an investment program for the DLB
Global Bond Fund (the "Fund") and will make investment decisions on behalf of
the Fund and place all orders for the purchase and sale of its portfolio
securities and (ii) furnish office space and equipment and provide bookkeeping
and clerical services (excluding determination of net asset value, shareholder
accounting services and fund accounting services). In the performance of its
duties, the Sub-Adviser will comply with the provisions of the Agreement and
Declaration of Trust and By-laws of the Trust and the Fund's stated investment
objective, policies and restrictions.
(b) In placing orders for the portfolio transactions of the Fund, the
Sub-Adviser will seek the best price and execution available, except to the
extent it may be permitted to pay higher brokerage commissions for brokerage and
research services as described below. In using its best efforts to obtain for
the Fund the most favorable price and execution available, the Sub-Adviser shall
consider all factors it deems relevant, including, without limitation, the
overall net economic result to the Fund (involving price paid or received and
any commissions and other costs paid), the efficiency with which the transaction
is effected, the ability to effect the transaction at all where a large block is
involved, availability of the broker to stand ready to execute possibly
difficult transactions in the future and the financial strength and stability of
the broker. Subject to such policies as the Trustees or the Manager, as the case
may be, may determine, the Sub-Adviser shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of its having caused the Fund to pay a broker or dealer that
provides brokerage and research services to the Sub- Adviser an amount of
commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction, if the Sub-Adviser determines in good faith that such amount
of commission was reasonable in relation to the value of the brokerage and
research services provided by such
-1-
broker or dealer, viewed in terms of either that particular transaction or the
Sub-Adviser's overall responsibilities with respect to the Fund and to other
clients of the Sub-Adviser as to which the Sub-Adviser exercises investment
discretion.
(c) The Sub-Adviser shall not be obligated under this Agreement to pay
any expenses of or for the Trust or of or for the Fund not expressly assumed by
the Sub-Adviser pursuant to this Section 1 other than as provided in Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Trust may be a partner, shareholder, director, officer or
employee of, or be otherwise interested in, the Sub-Adviser, and in any person
controlling, controlled by or under common control with the Sub-Adviser, and
that the Sub-Adviser and any person controlling, controlled by or under common
control with the Sub-Adviser may have an interest in the Trust. It is also
understood that the Sub-Adviser and persons controlling, controlled by or under
common control with the Sub-Adviser have and may have advisory, management
service, distribution or other contracts with other organizations and persons,
and may have other interests and businesses; provided, however, that without the
prior consent of the Manager, neither the Sub- Adviser nor any of its affiliates
shall undertake to act as investment adviser or subadviser for any U.S.
registered investment company that has substantially similar investment policies
to the Fund.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE SUB-ADVISER.
The Manager will pay to the Sub-Adviser as compensation for the
Sub-Adviser's services rendered, for the facilities furnished and for the
expenses borne by the Sub-Adviser pursuant to Section 1, a fee, computed and
paid monthly at the annual rate of .65% of the Fund's average daily net asset
value. Such average daily net asset value of the Fund shall be determined by
taking an average of all of the determinations of such net asset value during
such month while this Agreement is in effect. Such fee shall be payable for each
month within five (5) business days after the end of such month.
In the event that expenses of the Fund for any fiscal year should
exceed the expense limitation on investment company expenses imposed by any
statute or regulatory authority of any jurisdiction in which shares of the Trust
are qualified for offer and sale, the compensation due the Sub-Adviser for such
fiscal year shall be reduced by the amount of such excess by a reduction or
refund thereof. In the event that the expenses of the Fund exceed any expense
limitation which the Sub-Adviser may, by written notice to the Manager,
voluntarily declare to be effective with respect to the Fund, subject to such
terms and conditions as the Sub-Adviser may prescribe in such notice, the
compensation due the Sub-Adviser shall be reduced, and, if necessary, the
Sub-Adviser shall bear the Fund's expenses to the extent required by such
expense limitation.
-2-
If the Sub-Adviser shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS AGREEMENT; AMENDMENTS OF THIS
AGREEMENT.
This Agreement shall automatically terminate, without the payment of
any penalty, in the event of its assignment or in the event that the Management
Contract between the Manager and the Trust relating to the Fund shall have
terminated for any reason; and this Agreement shall not be amended unless such
amendment is approved at a meeting by the affirmative vote of a majority of the
outstanding shares of the Fund, and by the vote, cast in person at a meeting
called for the purpose of voting on such approval, of a majority of the Trustees
of the Trust who are not interested persons of the Trust or of the Manager or of
the Sub-Adviser.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT.
This Agreement shall become effective upon its execution, and shall
remain in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
(a) Either party hereto may at any time terminate this
Agreement by not more than sixty days' written notice delivered or
mailed by registered mail, postage prepaid, to the other parties, or
(b) If (i) the Trustees of the Trust or the shareholders by
the affirmative vote of a majority of the outstanding shares of the
Fund, and (ii) a majority of the Trustees of the Trust who are not
interested persons of the Trust, the Manager or of the Sub- Adviser, by
vote cast in person at a meeting called for the purpose of voting on
such approval, do not specifically approve at least annually the
continuance of this Agreement, then this Agreement shall automatically
terminate at the close of business on the second anniversary of its
execution, or upon the expiration of one year from the effective date
of the last such continuance, whichever is later; provided, however,
that if the continuance of this Agreement is submitted to the
shareholders of the Fund for their approval and such shareholders fail
to approve such continuance of this Agreement as provided herein, the
Sub-Adviser may continue to serve hereunder in a manner consistent with
the Investment Company Act of 1940 (the "1940 Act") and the rules and
regulations thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of
a majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Agreement pursuant to this Section 5 shall be
without the payment of any penalty.
-3-
6. CERTAIN INFORMATION.
The Sub-Adviser shall promptly notify the Manager in writing of the
occurrence of any of the following events: (a) the Sub-Adviser shall fail to be
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended from time to time, and under the laws of any jurisdiction in which
the Sub-Adviser is required to be registered as an investment adviser in order
to perform its obligations under this Agreement or any other agreement
concerning the provision of investment advisory services to the Trust, (b) the
Sub-Adviser shall be disqualified from serving as investment adviser to the Fund
pursuant to Section 9 of the 1940 Act, or otherwise, (c) the Sub-Adviser shall
have been served or otherwise have notice of any action, suit, proceeding or
inquiry or investigation, at law or in equity, before or by any court, public
board or body, involving the affairs of the Trust, (d) there is a change in
control of the Sub-Adviser or any parent of the Sub-Adviser within the meaning
of the 1940 Act or (e) there is a material adverse change in the business or
financial position of the Sub- Adviser.
7. CERTAIN DEFINITIONS.
For the purposes of this Agreement, the "affirmative vote of a majority
of the outstanding shares" of the Fund means the affirmative vote, at a duly
called and held meeting of shareholders, (a) of the holders of 67% or more of
the shares of the Fund present (in person or by proxy) and entitled to vote at
such meeting, if the holders of more than 50% of the outstanding shares of the
Fund entitled to vote at such meeting are present in person or by proxy, or (b)
of the holders of more than 50% of the outstanding shares of the Fund entitled
to vote at such meeting, whichever is less.
For the purposes of this Agreement, the terms "affiliated person",
"control," "interested person" and "assignment" shall have their respective
meanings defined in the 1940 Act and the rules and regulations thereunder,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under said Act; and the phrase "specifically approve at
least annually" shall be construed in a manner consistent with the 1940 Act and
the rules and regulations thereunder.
8. NONLIABILITY OF THE SUB-ADVISER.
In the absence of willful misfeasance, bad faith or gross negligence on
the part of the Sub-Adviser, or reckless disregard of its obligations and duties
hereunder, the Sub-Adviser shall not be subject to any liability to the Trust,
or to any shareholder of the Trust, for any act or omission in the course of, or
connected with, rendering services hereunder.
-4-
9. EXERCISE OF VOTING RIGHTS.
Except as instructed otherwise by the Trustees of the Trust or the
Manager, the Sub- Adviser shall at its discretion exercise or procure the
exercise of any voting right attaching to investments of the Fund.
10. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as Trustees and not individually and the obligations of
this instrument are not binding upon any of the Trustees or shareholders
individually but are binding only upon the assets and property of the Fund.
-5-
IN WITNESS WHEREOF, David L. Babson & Co., Inc. and Potomac Babson
Incorporated have each caused this instrument to be signed in duplicate on its
behalf by its duly authorized representative, all as of the day and year first
above written.
DAVID L. BABSON & CO., INC.
By_______________________________
Title:
POTOMAC BABSON INCORPORATED
By_______________________________
Title:
Accepted and agreed to as of the day and year first above written:
THE DLB FUND GROUP,
on behalf of the
DLB Global Bond Fund
By________________________
Title:
-6-
MANAGEMENT CONTRACT
Management Contract executed as of May 16, 1996 between THE DLB FUND
GROUP, a Massachusetts business trust (the "Trust") on behalf of its DLB
Quanitative Equity Fund (the "Fund"), and DAVID L. BABSON & CO., INC., a
Massachusetts corporation (the "Manager").
W I T N E S S E T H:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY MANAGER TO THE TRUST.
(a) Subject always to the control of the Trustees of the Trust and to
such policies as the Trustees may determine, the Manager will, at its expense,
(i) furnish continuously an investment program for the Fund and will make
investment decisions on behalf of the Fund and place all orders for the purchase
and sale of its portfolio securities and (ii) furnish office space and
equipment, provide bookkeeping and clerical services (excluding determination of
net asset value, shareholder accounting services and fund accounting services)
and pay all salaries, fees and expenses of officers and Trustees of the Trust
who are affiliated with the Manager. In the performance of its duties, the
Manager will comply with the provisions of the Agreement and Declaration of
Trust and By-laws of the Trust and the Fund's stated investment objective,
policies and restrictions.
(b) In placing orders for the portfolio transactions of the Fund, the
Manager will seek the best price and execution available, except to the extent
it may be permitted to pay higher brokerage commissions for brokerage and
research services as described below. In using its best efforts to obtain for
the Fund the most favorable price and execution available, the Manager shall
consider all factors it deems relevant, including, without limitation, the
overall net economic result to the Fund (involving price paid or received and
any commissions and other costs paid), the efficiency with which the transaction
is effected, the ability to effect the transaction at all where a large block is
involved, availability of the broker to stand ready to execute possibly
difficult transactions in the future and the financial strength and stability of
the broker. Subject to such policies as the Trustees may determine, the Manager
shall not be deemed to have acted unlawfully or to have breached any duty
created by this Contract or otherwise solely by reason of its having caused the
Fund to pay a broker or dealer that provides brokerage and research services to
the Manager an amount of commission for effecting a portfolio investment
transaction in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, if the Manager determines in good
faith that such amount of commission was reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer, viewed in
terms of either
-1-
that particular transaction or the Manager's overall responsibilities with
respect to the Fund and to other clients of the Manager as to which the Manager
exercises investment discretion.
(c) Subject to the provisions of the Agreement and Declaration of Trust
of the Trust and the Investment Company Act of 1940, the Manager, at its
expense, may select and contract with investment consultants or sub-advisers
(the "Consultants" or "Sub-Advisers," as applicable) for the Fund. The Manager
will compensate any Consultant or Sub-Adviser of the Fund for its services to
the Fund. The Manager may terminate the services of the Consultant or
Sub-Adviser at any time in its sole discretion and shall at such time assume the
responsibilities of such Consultant or Sub-Adviser unless and until a successor
Consultant or Sub-Adviser is selected.
(d) The Manager shall not be obligated under this Contract to pay any
expenses of or for the Trust or of or for the Fund not expressly assumed by the
Manager pursuant to this Section 1 other than as provided in Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Trust may be a partner, shareholder, director, officer or
employee of, or be otherwise interested in, the Manager, and in any person
controlling, controlled by or under common control with the Manager, and that
the Manager and any person controlling, controlled by or under common control
with the Manager may have an interest in the Trust. It is also understood that
the Manager and persons controlling, controlled by or under common control with
the Manager have and may have advisory, management service, distribution or
other contracts with other organizations and persons, and may have other
interests and businesses.
3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.
The Fund will pay to the Manager as compensation for the Manager's
services rendered, for the facilities furnished and for the expenses borne by
the Manager pursuant to Section 1, a fee, computed and paid monthly at the
annual rate of .75% of the Fund's average daily net asset value. Such average
daily net asset value of the Fund shall be determined by taking an average of
all of the determinations of such net asset value during such month while this
Contract is in effect. Such fee shall be payable for each month within five (5)
business days after the end of such month.
In the event that expenses of the Fund for any fiscal year should
exceed the expense limitation on investment company expenses imposed by any
statute or regulatory authority of any jurisdiction in which shares of the Fund
are qualified for offer and sale, the compensation due the Manager for such
fiscal year shall be reduced by the amount of such excess by a reduction or
refund thereof. In the event that the expenses of the Fund exceed any expense
limitation which the Manager may, by written notice to the Trust, voluntarily
declare to be
-2-
effective with respect to the Fund, subject to such terms and conditions as the
Manager may prescribe in such notice, the compensation due the Manager shall be
reduced, and, if necessary, the Manager shall bear the Fund's expenses to the
extent required by such expense limitation.
If the Manager shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT.
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment; and this Contract shall not be amended
unless such amendment is approved at a meeting by the affirmative vote of a
majority of the outstanding shares of the Fund, and by the vote, cast in person
at a meeting called for the purpose of voting on such approval, of a majority of
the Trustees of the Trust who are not interested persons of the Trust or of the
Manager.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and shall
remain in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 4)
until terminated as follows:
(a) Either party hereto may at any time terminate this
Contract by not more than sixty days' written notice delivered or
mailed by registered mail, postage prepaid, to the other party, or
(b) If (i) the Trustees of the Trust or the shareholders by
the affirmative vote of a majority of the outstanding shares of the
Fund, and (ii) a majority of the Trustees of the Trust who are not
interested persons of the Trust or of the Manager, by vote cast in
person at a meeting called for the purpose of voting on such approval,
do not specifically approve at least annually the continuance of this
Contract, then this Contract shall automatically terminate at the close
of business on the second anniversary of its execution, or upon the
expiration of one year from the effective date of the last such
continuance, whichever is later; provided, however, that if the
continuance of this Contract is submitted to the shareholders of the
Fund for their approval and such shareholders fail to approve such
continuance of this Contract as provided herein, the Manager may
continue to serve hereunder in a manner consistent with the Investment
Company Act of 1940 and the rules and regulations thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of
a majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
-3-
Termination of this Contract pursuant to this Section 5 shall be
without the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of a majority
of the outstanding shares" of the Fund means the affirmative vote, at a duly
called and held meeting of shareholders, (a) of the holders of 67% or more of
the shares of the Fund present (in person or by proxy) and entitled to vote at
such meeting, if the holders of more than 50% of the outstanding shares of the
Fund entitled to vote at such meeting are present in person or by proxy, or (b)
of the holders of more than 50% of the outstanding shares of the Fund entitled
to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person,"
"control," "interested person" and "assignment" shall have their respective
meanings defined in the Investment Company Act of 1940 and the rules and
regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act; and the phrase
"specifically approve at least annually" shall be construed in a manner
consistent with the Investment Company Act of 1940 and the rules and regulations
thereunder.
7. NONLIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross negligence on
the part of the Manager, or reckless disregard of its obligations and duties
hereunder, the Manager shall not be subject to any liability to the Trust, or to
any shareholder of the Trust, for any act or omission in the course of, or
connected with, rendering services hereunder.
8. INITIALS "DLB."
The Manager owns the initials "DLB" and such initials may be used by
the Trust only with the consent of the Manager. The Manager consents to the use
by the Trust of the name "The DLB Fund Group" or any other name embodying the
initials "DLB", in such forms as the Manager shall in writing approve, but only
on condition and so long as (i) this Contract shall remain in full force and
effect and (ii) the Trust shall fully perform, fulfill and comply with all
provisions of this Contract expressed herein to be performed, fulfilled or
complied with by it. No such name shall be used by the Trust at any time or in
any place or for any purposes or under any conditions except as in this section
provided. The foregoing authorization by the Manager to the Trust to use said
initials as part of a business or name is not exclusive of the right of the
Manager itself to use, or to authorize others to use, the same; the Trust
acknowledges and agrees that as between the Manager and the Trust, the Manager
has the exclusive right so to use, or authorize others to use, said initials and
the Trust agrees to take such action as may reasonably be requested by the
Manager to give full effect to the provisions of this section (including,
without limitation, consenting to such use of said
-4-
initials). Without limiting the generality of the foregoing, the Trust agrees
that, upon any termination of this Contract by either party or upon the
violation of any of its provisions by the Trust, the Trust will, at the request
of the Manager made within six months after the Manager has knowledge of such
termination or violation, use its best efforts to change the name of the Trust
so as to eliminate all reference, if any, to the initials "DLB" and will not
thereafter transact any business in a name containing the initials "DLB" in any
form or combination whatsoever, or designate itself as the same entity as or
successor to an entity of such name, or otherwise use the initials "DLB" or any
other reference to the Manager. Such covenants on the part of the Trust shall be
binding upon it, its trustees, officers, stockholders, creditors and all other
persons claiming under or through it.
9. EXERCISE OF VOTING RIGHTS.
Except as instructed otherwise by the Trustees of the Trust, the
Manager shall at its discretion exercise or procure the exercise of any voting
right attaching to investments of the Fund.
10. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as Trustees and not individually and that the obligations
of this instrument are not binding upon any of the Trustees or shareholders
individually but are binding only upon the assets and property of the Fund.
-5-
IN WITNESS WHEREOF, THE DLB FUND GROUP and DAVID L. BABSON & CO., INC.
have each caused this instrument to be signed in duplicate on its behalf by its
duly authorized representative, all as of the day and year first above written.
THE DLB FUND GROUP
By_______________________________
Title:
DAVID L. BABSON & CO., INC.
By_______________________________
Title:
-6-
THE DLB FUND GROUP
AMENDMENT NO. 1
AGREEMENT AND DECLARATION OF TRUST
The undersigned, being at least a majority of the Trustees of The DLB
Fund Group, a Massachusetts business trust, created and existing under an
Agreement and Declaration of Trust dated August 1, 1994 (the "Agreement"), a
copy of which is on file in the Office of the Secretary of State of The
Commonwealth of Massachusetts, do hereby direct that this Amendment No.1 be
filed with the Secretary of State of The Commonwealth of Massachusetts and do
hereby amend to read in its entirety the first sentence of Section 6 of Article
III of the Agreement as follows:
"Without limiting the authority of the Trustees set forth in Section 5,
inter alia, to establish and designate any further Series or Classes or
to modify the rights and preferences of any Series or Classes, the "DLB
Fixed Income Fund", the "DLB Global Small Capitalization Fund", the
"DLB Value Fund", the "DLB Mid Capitalization Fund", the "DLB
Quantitative Equity Fund" and the "DLB Global Bond Fund" shall be, and
hereby are, established and designated as separate Series of the
Trust."
The foregoing amendment shall become effective as of the time it is
filed with the Secretary of State of The Commonwealth of Massachusetts.
-1-
IN WITNESS WHEREOF, we have hereunto set our hands for ourselves and
our successors and assigns this 16th day of May, 1996.
/s/Richard E. Gwozdz
Ronald E. Gwozdz
/s/Charles E. Hugel
Charles E. Hugel
/s/Richard A. Nenneman
Richard A. Nenneman
/s/Richard J. Phelps
Richard J. Phelps
/s/Peter C. Thompson
Peter C. Thompson
Peter C. Schliemann
-2-
COMMONWEALTH OF MASSACHUSETTS )
) ss:
COUNTY OF MIDDLESEX )
Then personally appeared before me each of the above-named Trustees and
acknowledged the foregoing instrument to be their free act and deed.
Dated: May 16, 1996 /s/Maureen A. Madden
--------------------
Notary Public
My Commission Expires:
-3-
