SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 20
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 22
QUANTITATIVE GROUP OF FUNDS
(Exact Name of Registrant as Specified in Charter)
55 Old Bedford Road
Li
ncoln, Massachusetts 01773
(Address of Principal Executive Offices) (Zip Code)
(781) 259-1144
Registrant's Telephone Number, including Area Code
WILLARD L. UMPHREY, President
Quantitative Group of Funds
55 Old Bedford Road
Lincoln, Massachusetts 01773
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
QUANTITATIVE QUANTITATIVE GROUP OF FUNDS -------------------------------------------------------------------------------- QUANTITATIVE GROUP OF FUNDS 55 Old Bedford Road Lincoln, Massachusetts 01773 PROSPECTUS 800-331-1244 August 1, 1999 |
TABLE OF CONTENTS
Page
Fund Summary 2
Summary of Fees and Expenses 3
Financial Highlights 5
Investment Policies and Related Risks 7
Management of the Funds 9
How to Invest 11
How to Make Exchanges 14
How to Redeem 14
Calculation of Net Asset Value 16
Dividends, Distributions, and Taxation 16
Other Information 17
Financial Highlights 18
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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.
FUND SUMMARY
INVESTMENT SUMMARY
U.S. Equity Funds
Investment Objective
Quantitative Small Cap Fund ("Small Cap Fund") seeks maximum long-term capital appreciation.
Quantitative Mid Cap Fund ("Mid Cap Fund") seeks long-term growth of capital.
Quantitative Growth and Income Fund ("Growth and Income Fund") seeks long-term growth of capital and income.
Principal Investment Strategies
Under normal market conditions, each fund invests at least 65% of its total assets in common stocks. The Small Cap Fund will invest at least 65% of its assets in stocks of small-sized companies, generally with less than $1.5 billion in market capitalization. The Mid Cap Fund will invest at least 65% of its assets in stocks of mid-sized companies, generally between $1 billion and $5 billion in market capitalization and the Growth and Income Fund mainly buys stocks of large companies, generally greater than $5 billion in market capitalization, that are currently paying dividends. Each of the funds' advisors employs a "quantitative" investment approach to selecting investments. Investment advisors using this approach to investing rely on computer model and financial databases to assist in the stock selection process.
PRINCIPAL RISKS
The main risks that could adversely affect the value of one of the U.S. equity fund's shares and the total return on your investment include:
-- The risk that the stock price of one or more of the companies in a fund's portfolio will fall, or will fail to appreciate as anticipated by the fund's advisor. Many factors can adversely affect a stock's performance. This risk is greater for smaller companies that are the primary investment vehicles for the Small Cap Fund, which tend to be more vulnerable to adverse developments.
-- The risk that movements in the securities markets will adversely affect the price of a fund's investments, regardless of how well the companies in which a fund invests perform.
You can lose money by investing in the funds. The funds may not achieve their goals, and none of the individual funds are intended as complete investment programs. An investment in a fund is NOT a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
International Funds
Investment Objective
Quantitative International Equity Fund ("International Equity Fund") seeks long-term capital growth and income.
Quantitative Emerging Markets Fund ("Emerging Markets Fund") seeks long-term growth of capital.
Quantitative Foreign Value Fund ("Foreign Value Fund") seeks long-term capital growth and income.
Principal Investment Strategies
Under normal market conditions the International Equity Fund and the Foreign Value Fund invest at least 65% of their assets in common stocks of issuers that have their principal activities in foreign markets and may invest a portion of their assets in emerging markets. The Foreign Value Fund invests mainly in value stocks that the fund's advisor believes are currently undervalued compared to their true worth. The Emerging Markets Fund invests at least 65% of its assets in common stocks of issuers that have their principal activities in emerging markets. Each of the funds' advisors employs a "quantitative" investment approach to selecting investments. Investment advisors using this approach to investing rely on computer model and financial databases to assist in the stock selection process.
PRINCIPAL RISKS
The main risks that could adversely affect the value of one of the international funds' shares and the total return on your investment include the same risks as the U.S. equity funds and in addition:
-- Foreign markets, particularly emerging markets, can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, market or economic developments and can perform differently than the U.S. market. Emerging markets can be subject to greater social, economic, regulatory and political uncertainties and can be extremely volatile. An investment in the Emerging Markets Fund should be regarded as speculative and is subject to special risks that should be considered carefully by potential investors.
You can lose money by investing in the funds. The funds may not achieve their goals, and none of the individual funds are intended as complete investment programs. An investment in a fund is NOT a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
PERFORMANCE
The following bar charts and tables indicate some of the risks of investing in the funds by showing changes in the funds' performance over time. The tables also compare the funds' performance to a broad measure of market performance that reflects the type of securities in which the funds invest. Of course, past performance does not necessarily indicate how the funds will perform in the future. Because the chart and table reflect calendar year performance, the numbers will differ from those in the "Financial Highlights" table later in the Prospectus and in the funds' shareholder reports, which are based on the funds' fiscal year end of March 31.
The bar charts show changes in the annual total returns of the funds' Ordinary Shares for the past ten years, or a shorter period of time if a fund has not been in existence for ten years. There is no bar chart for the Foreign Value Fund because it began operations during 1998 and does not have a full calendar year of performance. Returns in the bar charts do not reflect the 1% deferred sales charge applicable to the Ordinary Shares of all the funds except for purchases in the Mid Cap Fund after August 1, 1996 not through reinvestment of dividends on shares purchased before such date, which are not subject to a deferred sales charge. The sales charge, if reflected,
would reduce the returns of the funds. Returns for Institutional Shares will differ from the Ordinary Share returns due to differences in expenses between the classes. The average annual total return tables following the bar charts reflect the deferred sales charge for all funds but the Mid Cap Fund. The average annual total return tables compare the funds to indexes that invest in comparable types of stocks. Unlike the funds, the indexes are not actively managed. Investment returns for the indexes assume the reinvestment of dividends paid on stocks comprising the indexes.
Quantitative Small Cap Fund
[CHART HERE]
The calendar year-to-date return of the Ordinary Shares of the fund as of 6/30/99 is -0.25%.
Best Quarter: Q4 1998: 18.88%
Worst Quarter: Q3 1998: -20.08%
Average Annual Total Returns
for the periods ended December 31, 1998
1 Year 5 Years Inception
--------------------------------------------------------------------------------
Ordinary Shares -0.63% 13.09% 19.10% (8/3/92)
Russell 2000 Index -2.55% 11.87% 14.44% (8/3/92)
Institutional Shares 1.01% 13.87% 16.40% (1/6/93)
Russell 2000 Index -2.55% 11.87% 13.12% (1/6/93)
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The Russell 2000 Index is comprised of the bottom two-thirds of the largest 3,000 publicly traded companies in the United States. It is widely recognized as representative of the general market for small company stocks.
Quantitative Mid Cap Fund
[CHART HERE]
The calendar year-to-date return of the Ordinary Shares of the fund as of 6/30/99 is 10.79%.
Best Quarter: Q4 1998: 20.78%
Worst Quarter: Q3 1998: -16.41%
Average Annual Total Returns
for the periods ended December 31, 1998
1 Year Inception
--------------------------------------------------------------------------------
Ordinary Shares 12.71% 25.28% (3/21/95)
S&P 400 Index 19.11% 24.75% (3/21/95)
Institutional Shares 12.92% 24.96% (4/17/95)
S&P 400 Index 19.11% 24.46% (4/17/95)
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The S&P 400 Index is comprised of stocks outside the large capitalization bias of the S&P 500, which are chosen by Standard & Poor's for their size and industry characteristics. It is widely recognized as representative of the general market for stocks with medium capitalizations.
Quantitative Growth and Income Fund
[CHART HERE]
The calendar year-to-date return of the Ordinary Shares of the fund as of 6/30/99 is 2.33%.
Best Quarter: Q4 1998: 23.07%
Worst Quarter: Q3 1990: -12.91%
QUANTITATIVE QUANTITATIVE GROUP OF FUNDS -------------------------------------------------------------------------------- |
Average Annual Total Returns
for the periods ended December 31, 1998
1 Year 5 Years 10 Years Inception
--------------------------------------------------------------------------------
Ordinary Shares 28.24% 21.77% 18.65% 17.24% (5/9/85)
S&P 500 Index 28.58% 24.06% 19.21% 18.44% (5/9/85)
Institutional Shares 30.18% 22.61% -- 18.62% (3/25/91)
S&P 500 Index 28.58% 24.06% 19.21% 19.68% (3/25/91)
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The S&P 500 Index is comprised of stocks chosen by Standard & Poors for their size and industry characteristics. It is widely recognized as representative of the general market for stocks in the United States.
Quantitative International Equity Fund
[CHART HERE]
The calendar year-to-date return of the Ordinary Shares of the fund as of 6/30/99 is -1.56%.
Best Quarter: Q4 1998: 18.71%
Worst Quarter: Q3 1990: -24.17%
Average Annual Total Returns
for the periods ended December 31, 1998
1 Year 5 Years 10 Years Inception
--------------------------------------------------------------------------------
Ordinary Shares 10.19% 5.19% 3.15% 3.77% (7/31/87)
EAFE Index 19.99% 9.19% 5.54% 7.29% (7/31/87)
Institutional Shares 11.85% -- -- 3.29% (8/25/94)
EAFE Index 19.99% 9.19% 5.54% 8.59% (8/25/94)
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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.
Quantitative Emerging Markets Fund
[CHART HERE]
The calendar year-to-date return of the Ordinary Shares of the fund as of 6/30/99 is 35.86%.
Best Quarter: Q2 1995: 9.94%
Worst Quarter: Q3 1998: -17.54%
Average Annual Total Returns
for the periods ended December 31, 1998
1 Year Inception
--------------------------------------------------------------------------------
Ordinary Shares -22.42% -10.81% (10/3/94)
EMF Index -23.22% -12.03% (10/3/94)
Institutional Shares -21.28% -11.30% (4/2/96)
EMF Index -23.22% -13.28% (4/2/96)
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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.
SUMMARY OF FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the funds.
Shareholder Fees (fees paid directly from your investment)
Ordinary Institutional
Shares Shares
Maximum Deferred Sales Charge (Load) Imposed on Purchases
(as a percentage of redemption proceeds) (Mid Cap Fund) None(1) None
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Maximum Deferred Sales Charge (Load) Imposed on Purchases (as a percentage of redemption proceeds) (all other funds) 1.00% None
(1) The deferred sales charge is not imposed on redemptions of Ordinary Shares of the Mid Cap Fund purchased on or after August 1, 1996, nor through reinvestment of dividends on shares purchased before such date.
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
Small Cap Mid Cap Growth and International Emerging Markets Foreign
Fund Fund Income Fund Equity Fund Fund Value Fund
----------------------------------------------------------------------------------
Ordinary Shares
Management Fee 1.00% 1.00% .75% 1.00% .80% 1.00%
Distribution and Service (12b-1) Fees .50% .25% .50% .50% .50% .25%
Other Expenses* .44% .62% .42% .61% 1.28% 1.02%
Total Annual Fund Operating Expenses 1.94% 1.87% 1.67% 2.11% 2.58% 2.27%
Institutional Shares
Management Fee 1.00% 1.00% .75% 1.00% .80% 1.00%
Distribution and Service (12b-1) Fees None None None None None
None
Other Expenses* .44% .62% .42% .61% 1.28% 1.02%
Total Annual Fund Operating Expenses 1.44% 1.62% 1.17% 1.61% 2.08% 2.02%
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* The funds have an expense offset arrangement that reduces their custodian fee based upon the amount of cash maintained by the funds with the custodians. "Other expenses" in the table do not take into account these expense reductions, and are therefore higher than the actual expenses of the funds. The Manager has contractually agreed to limit the total operating expenses of the Small Cap, Growth and Income and International Equity Funds to 2.00% of their average net assets, without giving effect to custody credits, if applicable. The Manager also voluntarily has agreed to temporarily limit the total operating expenses of the Emerging Markets Funds to 2.25% of its average net assets, without giving effect to custody credits, if applicable. Expenses eligible for reimbursement under all applicable expense limitations do not include interest, taxes, brokerage commissions or extraordinary expenses, and for the International Equity Fund, international custody fees. As a result, total expenses may be higher than the expense limitation applicable for a fund. The Distributor voluntarily waived 12b-1 fees for the Mid Cap Fund for most of the fiscal year ending 1999, and the Transfer Agent voluntarily waived fees for the Foreign Value Fund for the fiscal period ending 1999. The agreement to voluntarily waive the above mentioned fees is subject to periodic review, and there is no guarantee that the Manager will continue to limit expenses of these Funds and that the Distributor and Transfer Agent will continue their respective fee waivers in the future. Expenses of the Mid Cap Fund, the Emerging Markets Fund, and the Foreign Value Fund in the table do not reflect the effects of these voluntary limitations. If the voluntary limitations were included, the total Fundsexpenses, net of custody credits, would have been as follows: Mid Cap Fund Ordinary -Shares: 1.65%,Mid Emerging Markets Fund Ordinary Shares: 2.24%, Emerging Markets Fund Institutional Shares: 1.74%, Foreign Value Fund Ordinary Shares: 1.90%, and Foreign Value Fund Institutional Expenses eligible for reimbursement under all applicable expense limitations do notinclude interest, taxes, brokerageShares: 1.70%. Long-term shareholders owning Ordinary Shares may pay more than the economic equivalent of the maximum front-end sales charges permitted by the National Association of Securities Dealers, Inc. The management fee paid to the Manager for managing the Small Cap Fund, the Mid Cap Fund, the International Equity Fund, and the Foreign Value Fund is higher than that paid by most other investment companies.
This Example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. Cap Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Ordinary Shares Institutional Shares
-------------------------------------------------- ------------------------------------------------
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
-----------------------------------------------------------------------------------------------------
Small Cap Fund $300 $719 $1163 $2399 $147 $456 $787 $1724
Mid Cap Fund $190 $588 $1111 $2190 $165 $511 $881 $1922
Growth and Income Fund $273 $637 $1025 $2115 $119 $372 $644 $1420
International Equity Fund $317 $770 $1249 $2574 $164 $508 $876 $1911
Emerging Markets Fund $364 $910 $1483 $3042 $213 $658 $1129 $2431
Foreign Value Fund $333 $818 $1329 $2736 $205 $633 $1087 $2348
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This example assumes that you do not redeem your shares at the end of the period:
Ordinary Shares Institutional Shares
-------------------------------------------------- ------------------------------------------------
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
-----------------------------------------------------------------------------------------------------
Small Cap Fund $197 $609 $1047 $2264 $147 $456 $787 $1724
Mid Cap Fund $190 $588 $1011 $2190 $165 $511 $881 $1922
Growth and Income Fund $170 $526 $ 907 $1976 $119 $372 $644 $1420
International Equity Fund $214 $661 $1134 $2441 $164 $508 $876 $1911
Emerging Markets Fund $261 $802 $1370 $2915 $211 $652 $1119 $2410
Foreign Value Fund $230 $709 $1215 $2605 $205 $633 $1087 $2348
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This Example does not reflect sales charges on reinvested dividends. If the sales charges were included, your costs would be higher.
INVESTMENT POLICIES AND RELATED RISKS
What are the funds' principal investment strategies and related risks?
U.S. Equity Funds
Quantitative Small Cap Fund
Quantitative Mid Cap Fund
Quantitative Growth and Income Fund
Under normal market conditions each fund invests at least 65% of its total assets in common stocks. The Small Cap Fund invests at least 65% of its assets in stocks of small-sized companies, generally with less than $1.5 billion in market capitalization. The Mid Cap Fund invests at least 65% of its assets in stocks of mid-sized companies, generally between $1 billion and $5 billion in market capitalization. The Growth and Income Fund mainly buys stocks of large companies, generally greater than $5 billion in market capitalization that are currently paying dividends.
International Funds
Quantitative International Equity Fund
Under normal market conditions the International Equity Fund invests at least 65% of its assets in common stocks of issuers that have their principal activities in foreign markets. The fund's investments will be diversified among securities of companies located in nine or more foreign countries. This diversification should enablehelp the fundto take advantage of differences between economic trends and the performance of the securities markets in various countries. The diversification also may reduce the effect of events in any one country on the fund's performance.
Quantitative Emerging Markets Fund
Under normal market conditions the Emerging Markets Fund invests at least 65% of its assets in common stocks of issuers that are located in emerging markets. The fund generally will be invested in issuers in eight or more emerging markets. An emerging market is broadly defined as one with low to middle per capita income. The classification system used by the World Bank and International Finance Corporation in determining the emerging markets of the world will be used to define the eligible universe of potential markets for investment.
Quantitative Foreign Value Fund
Under normal market conditions the Foreign Value Fund invests at least 65% of its assets in common stocks of issuers that have their principal activities in foreign markets. The fund mainly invests in value stocks that the fund's advisor believes are currently undervalued compared to their true worth. Generally, the Foreign Value Fund invests in Western Europe, Australia, and the larger capital markets in the Far East; however, the fund may also invest without limit in issuers in emerging markets.
All Funds
The funds currently operate under a "manager of managers" system. The manager selects advisors to execute the day-to-day investment strategy of the funds and monitors the advisor's performance. Each of the funds' advisors employs a "quantitative" investment approach to selecting investments. Investment advisors using this approach to investing rely on computer model and financial databases to assist in the stock selection process. Proprietary computer models are capable of rapidly ranking a large universe of eligible investments using an array of traditional factors applied in financial analysis, such as cash flow, earnings growth, and price to earnings ratios, as well as other non-traditional factors. With the benefit of these rankings, a fund's advisor constructs a portfolio of securities consistent with each individual fund's investment objectives. A description of the risks associated with each fund's main investment strategies follows.
Related Risks
COMMON STOCKS. Common stocks represent ownership interests in companies. The value of a company's stock may fall as a result of factors directly relating to that company, such as decisions made by its management or lower demand for the company's products or services. A stock's value may also fall because of factors affecting multiple companies in a number of different industries, such as increases in production costs. The value of a company's stock may also be affected by changes in financial market conditions that are relatively unrelated to the company or its industry, such as changes in interest rates or currency exchange rates. In addition, a company's stock generally pays dividends only after the company makes required payments to holders of its bonds and other debt. For this reason, the value of the stock will usually react more strongly than the bonds and other debt to actual or perceived changes in the company's financial condition or prospects.
GROWTH STOCKS. Each fund may invest in stocks of companies its advisor believes have earnings that are likely to grow faster than the economy as a whole. These growth stocks typically trade at higher multiples of current earnings than other stocks. Therefore, the values of growth stocks may be more sensitive to changes in current or expected earnings than the values of other stocks. If the fund's advisor's assessment of the prospects for the company's earnings growth is wrong, or if its judgment about how other investors will value the company's earnings growth is wrong, then the price of the company's stock may fall or not approach the value that the fund's advisor has placed on it.
VALUE STOCKS. Each fund may also invest in companies that are not expected to experience significant earnings growth, but whose stock the fund's advisor believes is undervalued compared to its true worth. These companies may have experienced adverse business developments or may be subject to special risks that have caused their stocks to be out of favor. If the fund's advisor's assessment of a company's prospects is wrong, or if other investors do not eventually recognize the value of the company, then the price of the company's stock may fall or may not approach the value that the fund's advisor has placed on it.
SMALLER COMPANIES. Each of the Small Cap Fund and the Mid Cap Fund invests a substantial portion of its assets in small and medium-sized companies, including companies with market capitalization of less than $5 billion. These companies are more likely than larger companies to have limited product lines, markets or financial resources, or to depend on a small, inexperienced management group. Stocks of these companies may trade less frequently and in limited volume, and their prices may fluctuate more than stocks of other companies. Stocks of these companies may therefore be more vulnerable to adverse developments than those of larger companies. There are no minimum market capitalizations for companies whose securities a fund may purchase.
FOREIGN INVESTMENTS. The International Funds may invest without limit in securities of foreign issuers. Foreign investments involve certain special risks, including:
-- Unfavorable changes in currency exchange rates: Foreign investments are
normally issued and traded in foreign currencies. As a result, their values
may be affected by changes in the exchange rates between particular foreign
currencies and the U.S.
dollar.
-- Political and economic developments: Foreign investments may be subject to the risks of seizure by a foreign government, imposition of restrictions on the exchange or transport of foreign currency, and tax increases.
-- Unreliable or untimely information: There may be less information publicly available about a foreign company than about most U.S. companies, and foreign companies are usually not subject to accounting, auditing and financial reporting standards and practices comparable to those in the United States.
-- Limited legal recourse: Legal remedies for investors such as the funds may be more limited than those available in the United States.
-- Limited markets: Certain foreign investments may be less liquid (harder to buy and sell) and more volatile than domestic investments, which means the funds may at times be unable to sell these investments at desirable prices. For the same reason, the funds may at times find it difficult to value their foreign investments.
-- Trading practices: Brokerage commissions and other fees are generally higher for foreign investments than for domestic investments. The procedures and rules for settling foreign transactions may also involve delays in payment, delivery or recovery of money or investments.
-- Lower yield: Common stocks of foreign companies have historically offered lower dividends than comparable U.S. companies. Foreign withholding taxes may further reduce the amount of income available to distribute to shareholders of the fund. The funds' yields are therefore expected to be lower than yields of most funds that invest mainly in common stocks of U.S. companies. Certain of these risks may also apply to some extent to U.S.-traded investments that are denominated in foreign currencies, investments in U.S. companies that are traded in foreign markets, or to investments in U.S. companies that have significant foreign operations.
-- Emerging markets: Investing in emerging markets involves risks in addition to and greater than those generally associated with investing in more developed foreign markets. The extent of foreign development, political stability, market depth, infrastructure and capitalization and regulatory oversight are generally less than in more developed markets. Emerging market economies can be subject to greater social, economic, regulatory and political uncertainties. All of these factors generally make emerging market securities more volatile and potentially less liquid than securities issued in more developed markets.
OTHER INVESTMENTS. In addition to the main investment strategies described above, each fund may also make other types of investments, such as investments in preferred stocks, convertible securities, fixed-income securities, ADRs, derivatives, or repurchase agreements and may also implement other strategies including selling securities short, and therefore may be subject to other risks, as described in the fund's Statement of Additional Information ("SAI").
ALTERNATIVE STRATEGIES. At times each fund's advisor may judge that market conditions make pursuing the fund's investment strategies inconsistent with the best interests of its shareholders. Each fund's advisor may then temporarily use alternative strategies that are mainly designed to limit the fund's losses. Although each fund's advisor has the flexibility to use these strategies, it may choose not to for a variety of reasons, even in very volatile market conditions. These strategies may cause the fund to miss out on investment opportunities, and may prevent the fund from achieving its objective.
CHANGES IN POLICIES. The Trustees may change each fund's objective, investment strategies and other policies without shareholder approval, except as otherwise indicated.
MANAGEMENT OF THE FUNDS
Under Massachusetts law, the management of the funds' business and affairs is the ultimate responsibility of the Board of Trustees of the funds.
The Manager and the Advisors
The funds are managed by Quantitative Advisors, Inc., 55 Old Bedford Road, Lincoln, MA 01773 (the "Manager"), which handles the funds' business affairs. The Manager may, subject to the approval of the Trustees, choose the investments of the funds itself or, subject to the approval by the Trustees, select subadvisors (the "Advisors") to handle the day-to-day investments of the funds. The Manager currently employs Advisors to make the investment decisions and portfolio transactions for all of the funds and supervises the Advisors' investment programs.
Day-to-day responsibility for investing the funds' assets currently is provided by the Advisors described below. The funds have received an exemptive order from the SEC that permits the Manager, subject to certain conditions, to enter into or amend an advisory contract without obtaining shareholder approval. With Trustee approval, the Manager may employ a new advisor for a fund, change the terms of the advisory contracts, or enter into new advisory contracts with the advisors. The Manager retains ultimate responsibility to oversee the Advisors and to recommend their hiring, termination, and replacement. Shareholders of a fund continue to have the right to terminate the advisory contract applicable to that Fund at any time by a vote of the majority of the outstanding voting securities of the fund. Shareholders will be notified of any advisor changes or other material amendments to an advisory contract that occur under these arrangements.
Quantitative Small Cap Fund
Quantitative Mid Cap Fund
Columbia Partners, LLC., Investment Management, 1775 Pennsylvania Ave., NW, Washington, DC 20006 ("Columbia Partners") serves as Advisor to the Small Cap Fund and the Mid Cap Fund. The firm presently has over $1 billion in assets under management for individual, pension plan and endowment accounts. Robert A. von Pentz, CFA has managed the Small Cap and Mid Cap Funds since July, 1996. Mr. von Pentz is a founder of Columbia Partners and previously served as chairman of the board and chief financial officer of Riggs Investment Management Corporation, where he worked from 1989 to 1995.
Quantitative Growth and Income Fund
State Street Global Advisors, 2 International Place, Boston, MA 02110, a unit of State Street Bank and Trust Company ("State Street"), serves as Advisor to the Growth and Income Fund. State Street is a wholly owned subsidiary of State Street Boston Corporation, a publicly owned bank holding company. State Street manages over $150 billion in assets for employee benefit plans, endowment funds and individuals. The Growth and Income Fund has been managed continuously by the Matrix Equity Group at State Street since the fund's inception. The team at State Street presently responsible for the daily management of the fund includes Steven M. Esielonis, Douglas T. Holmes, CFA, and Charles Babin, CFA. Mr. Esielonis has served as a Vice President at State Street since 1992. Mr. Holmes, Senior Vice President at State Street, has worked at State Street since 1984. Mr. Babin joined State Street as a Managing Director in 1996. Prior to that time, he was a Senior Vice President at Natwest Investment Management from 1995 to 1996 and the President and Managing Director of BRS Capital Management from 1987-1995.1987 to 1995.
Quantitative International Equity Fund
Quantitative Emerging Markets Fund
Independence International Associates, Inc., 53 State Street, Boston, MA 02109, formerly Boston International Advisors, Inc. ("Independence International"), serves as Advisor to the International Equity Fund and the Emerging Markets Fund. The firm presently has over $2 billion in assets under management in international portfolios of pension and endowment funds, among others. Norman H. Meltz and Dennis Fogerty manage both the International Equity Fund and Emerging Markets Fund. Mr. Meltz has been involved since the inception of each fund in the development and application of the funds' investment strategies. Independence International is wholly owned by Independence Investment Associates, Inc., a Delaware corporation.
Quantitative Foreign Value Fund
Polaris Capital Management, Inc., 125 Summer Street, Boston, MA 02110 ("Polaris") serves as Advisor to the Foreign Value Fund. The firm presently has over $50 million in assets under management for institutional clients and wealthy individuals. The Foreign Value Fund is managed by Bernard R. Horn, Jr. Prior to founding Polaris in 1995, Mr. Horn worked as a portfolio manager at Horn & Company, Freedom Capital Management Corporation, and MDT Advisers, Inc.
Management and Advisory Fees
As compensation for services rendered, the funds pay, and did pay for fiscal year 1999, the Manager a monthly fee at the annual rate of: 1% of the average daily net asset value of the Small Cap Fund, Mid Cap Fund, the International Equity Fund, and the Foreign Value Fund (this fee is higher than that paid by most other investment companies); 0.80% of the average daily net asset value of the Emerging Markets Fund; and 0.75% of the average daily net asset value of the Growth and Income Fund. From this fee, the Manager pays the expenses of providing investment advisory services to the funds, including the fees of the Advisors of the individual funds, if applicable. The Manager waived its fees as necessary consistent with the expense limitations discussed below.
The Manager is contractually obligated to reduce its compensation paid with respect to the Small Cap Fund, Growth and Income Fund, and International Equity Fund to the extent that a fund's total expenses exceed 2% of average net asset value for any fiscal year. The funds' Distribution Agreement calls for U.S. Boston Capital Corporation ("Distributor"), the Funds' Distributor, to reduce its fee similarly after the Manager's fee has been eliminated. The Manager has also agreed to assume expenses of those Funds if necessary in order to reduce its total expenses to no more than 2% of average net asset value for any fiscal year. Fund expenses subject to this limitation are exclusive of brokerage, interest, taxes and extraordinary expenses, and are calculated gross of custody credits, if applicable. Extraordinary expenses include, but are not limited to, the higher incremental costs of custody associated with foreign securities, litigation and indemnification expenses. The Distributor would not be required to reduce its compensation to the extent it is committed to make payments to non-affiliated entities for services in connection with the distribution of a fund's shares. The Distributor, and in some cases the Manager, may make ongoing payments to brokerage firms, financial institutions (including banks) and others that facilitate the administration and servicing of shareholder accounts.
The Manager may voluntarily agree to limit the total operating expenses of a fund for a period of time by waiving fees or reimbursing a fund for an expense that it would otherwise incur. In such cases, the Manager may seek reimbursement from the fund if the fund's total operating expenses fall below that limit prior to the end of the funds' fiscal year. The Manager voluntarily has agreed to waive fees or assume certain operating expenses of the Emerging Markets Funds in order to reduce the total expenses of the fund to no more than 2.25% of the fund's average net asset value. Expenses eligible for reimbursement do not include interest, taxes, brokerage commissions, or extraordinary expenses, and expenses are calculated gross of custody credits, if applicable. Extraordinary expenses include, but are not limited to, the higher incremental costs of custody associated with foreign securities, litigation and indemnification expenses. The agreement is subject to periodic review and there is no guarantee that the Manager will continue to limit these expenses in the future.
The funds have received an exemptive order from the SEC that permits the Manager, subject to certain conditions, to enter into or amend an Advisory Contract without obtaining shareholder approval. With Trustee approval, the Manager may employ a new Advisor for a fund, change the terms of the Advisory Contracts, or enter into new Advisory Contracts with the Advisors. The Manager retains ultimate responsibility to oversee the Advisors and to recommend their hiring, termination, and replacement. Shareholders of a fund continue to have the right to terminate the Advisory Contract applicable to that fund at any time by a vote of the majority of the outstanding voting securities of the fund. Shareholders will be notified of any Advisor changes or other material amendments to an Advisory Contract that occurs under these arrangements.
HOW TO INVEST
Classes of Shares
The funds offer two classes of shares: Ordinary Shares and Institutional Shares. Ordinary Shares are available to all purchasers and are subject to a 12b-1 fee and in some cases a deferred sales charge as set forth below:
Deferred 12b-1
Fund Sales Charge Fee
---------------------- ------------ -------
Small Cap 1.00% 0.50%
Mid Cap 0.00% 0.25%
Growth & Income 1.00% 0.50%
International Equity 1.00% 0.50%
Emerging Markets 1.00% 0.50%
Foreign Value 1.00% 0.25%
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Institutional Shares are available to limited classes of purchasers and are offered on a no-load basis. See How to Redeem Payment of Redemption Amount on page 15. Both classes of shares represent interests in the same
portfolios of securities and each has the same rights, except that Ordinary Shares have exclusive voting rights with respect to the funds' 12b-1 Plan, which is described below.
Distributor and Distribution Plan
U.S. Boston Capital Corporation ("Distributor") is the principal distributor of the funds' shares.
The funds have adopted a distribution plan under Rule 12b-1 ofto pay for the marketing of fund shares and for services provided to shareholders of the funds' Ordinary Shares. These annual distribution and service fees are 0.50% of average net assets for Ordinary Shares of the Small Cap Fund, Growth and Income Fund, International Equity Fund, and Emerging Markets Fund and 0.25% of the average netasset valueassets of Ordinary Shares of the Mid Cap Fund and the Foreign Value Fund, and are paid out of the assets of these classes. Over time, these fees will increase the cost of your shares and may cost you more than paying other types of sales charges. The fee is not directly tied to the Distributor's expenses. If expenses exceed the Distributor's fees, the funds are not required to reimburse the Distributor for excess expenses; if the Distributor's fees exceed the expenses of distribution, the Distributor may realize a profit.
Ordinary Shares
The minimum initial investment is generally $2,500. However, you may make a minimum investment of $1,000 if you:
-- participate in the funds' Automatic Investment Plan;
-- open a Uniform Gifts/Transfers to Minors account; or
-- open an Individual Retirement Account ("IRA") or an account under similar plan established under the Employee Retirement Income Security Act of 1974, or for any pension, profit sharing or other employee benefit plan or participant therein, whether or not the plan is qualified under Section 401 of the Internal Revenue Code, including any plan established under the Self-Employed Individuals Tax Retirement Act of 1962 (HR-10).
The funds or the Distributor, at their discretion, may waive these minimums.
You may make subsequent purchases in any amount, although the funds or the Distributor, at their discretion, reserve the right to impose a minimum at any time.
Institutional Shares
Institutional Shares of a fund generally are available in minimum investments of $1,000,000 or more. You may only purchase Institutional Shares, subject to the $1,000,000 minimum, if you fall under one of the following classes of investors:
(i) benefit plans with at least $10,000,000 in plan assets and 200 participants, that either have a separate trustee vested with investment discretion and certain limitations on the ability of plan beneficiaries to access their plan investments without incurring adverse tax consequences or which allow their participants to select among one or more investment options, including the Fund;fund; (ii) banks and insurance companies purchasing shares for their own account; (iii) a bank, trust company, credit union, savings institution or other depository institution, its trust departments or common trust funds purchasing for non-discretionary customers or accounts; (iv) certain fee paid registered investment advisors not affiliated with the Manager or Distributor purchasing on behalf of their clients; and (v) investors who hold Institutional Shares purchasing for existing Institutional Share accounts.
Clients of certain securities dealers not affiliated with the Distributor offering programs in which the client pays a separate fee to an advisor providing financial management or consulting services, including WRAP fee programs may purchase Institutional Shares subject to a minimum initial investment of $250,000 in the aggregate at the investment management level and/or $100,000 at the individual client level. The securities dealers offering WRAP fees or similar programs may charge a separate fee for purchases and redemptions of Institutional Shares. Neither the fund, the Manager, nor the Distributor receives any part of the fees charged to clients of such securities dealers or financial advisors.
The following classes of investors may also purchase Institutional Shares and are not subject to the minimum initial investment requirement:
(i) any state, county, city, or any instrumentality, department, authority, or agency of these entities or any trust, pension, profit-sharing or other benefit plan for the benefit of the employees of these entities which is prohibited by applicable investment laws from paying a sales charge or commission when it purchases shares of any registered investment management company; and (ii) officers, partners, trustees or directors and employees of the funds, the funds' affiliated corporations, or of the funds' Advisors and their affiliated corporations (a "Fund Employee"), the spouse or child of a Fund Employee, a Fund Employee acting as custodian for a minor child, any trust, pension, profit-sharing or other benefit plan for the benefit of a Fund Employee or spouse and maintained by one of the above entities, the employee of a broker-dealer with whom the Distributor has a sales
agreement or the spouse or child of such employee. To qualify for the purchase of Institutional Shares, Fund Employees and other persons listed in section (ii) must provide Quantitative Institutional Services, the funds' Transfer Agent, with a letter stating that the purchase is for their own investment purposes only and that the shares will not be resold except to the funds.
Institutional Shares are not subject to any sales charges, including fees pursuant to the funds' 12b-1 Plan. Investments in Institutional Shares require a special Account Application. Please call 1-800-331-1244 for an Application.
Making an Initial Investment
You may purchase shares of each class of a fund at the per share net asset value of shares of such class next determined after your purchase order is received by the fund. Orders received prior to the close of regular trading on the New York Stock Exchange ("NYSE") (ordinarily 4:00 p.m., Eastern Standard time), will receive that evening's closing price. The funds will accept orders for purchases of shares on any day on which the NYSE is open. See Calculation of Net Asset Value on page 16. The offering of shares of the funds, or of any particular fund, may be suspended from time to time, and the funds reserve the right to reject any specific order.
You must provide the fund with a completed Account Application for all initial investments. If you wish to have telephone exchange or telephone redemption privileges for your account, you must elect these options on the Account Application. You should carefully review the Application and particularly consider the discussion in this Prospectus regarding the funds' policies on exchanges of fund shares and processing of redemption requests. Some accounts, including IRA accounts, require a special Account Application. See Investment Through Tax Deferred Retirement Plans on page 14. For further information, including assistance in completing an Account Application, call the funds' toll-free number 1-800-331-1244. Shares may not be purchased by facsimile request or by electronic mail.
Investments by Check
You may purchase shares of the funds by sending a check payable to Quantitative Group of Funds specifying the name(s) of the fund(s) and amount(s) of investment(s), together with the appropriate Account Application (in the case of an initial investment) to:
Quantitative Group of Funds
Attention: Transfer Agent
55 Old Bedford Road
Lincoln, Massachusetts 01773
If you buy shares with a check that does not clear, your account may be subject to extra charges to cover collection costs.
Automatic Investment Plan
You may participate in the Automatic Investment Plan for the funds by completing the appropriate section of the Account Application and enclosing a minimum investment of $1,000 per fund. You must also authorize an automatic withdrawal of at least $100 per fund from your checking, NOW or similar account each month to purchase shares of a fund. You may cancel the Plan at any time, but your request must be received five business days before the next automatic withdrawal (generally the 20th of each month) to become effective for that withdrawal. Requests received fewer than five business days before a scheduled withdrawal will take effect with the next scheduled withdrawal. The funds or the Transfer Agent may terminate the Automatic Investment Plan at any time.
Investments by Wire
If you wish to buy shares by wire, please contact the Transfer Agent at 1-800-331-1244 or your dealer or broker for wire instructions. For new accounts, you must provide a completed Account Application before, or at the time of, payment. To ensure that a wire is credited to the proper account, please specify your name, the name(s) of the fund(s) and class of shares in which you are investing, and your account number. A bank may charge a fee for wiring funds.
Investments through Brokers
Ordinary Shares may be purchased through any securities dealer with whom the Distributor has a sales agreement. Orders received by the Distributor from dealers or brokers will receive that evening's closing price if the orders were received by the dealer or broker prior to the close of regular trading on the New York Stock Exchange ("NYSE") (ordinarily 4:00 p.m., Eastern Standard time) and are transmitted to and received by the Distributor prior to its close of business that day.
Exchange of Securities for Shares of the Fund
At the discretion of the Manager and relevant Advisors, you may purchase shares of a fund in exchange for securities of certain companies, consistent with the fund's investment objectives. Additional information regarding this option is contained in the Statement of Additional Information.
Subsequent Investments
If you are buying additional shares in an existing account, you should identify the fund and your account number. If you do not specify the fund, we will return your check to you. If you wish to make additional investments in more than one fund, you should provide your account numbers and identify the amount to be invested in each fund. You may pay for all purchases with a single check.
Investments through Tax-Deferred Retirement Plans
Retirement plans offer you a number of benefits, including the chance to shelter investment income and capital gains. Contributions to a retirement plan also may be tax deductible. Custodial retirement accounts, including Individual Retirement Accounts (IRAs), Rollover IRAs, Roth IRAs, Simplified Employee Pension Plans (SEP-IRAs), and 403(b) Accounts for employees of tax exempt institutions (including schools, hospitals and charitable organizations) require a special Account Application. Please call 1-800-331-1244 for assistance. State Street Bank and Trust Company acts as custodian for the funds' tax-deferred accounts. Custodial accounts are subject to specific fees. You may open other types of tax-deferred accounts, including accounts established by a Plan Sponsor under Section 401(k) of the Internal Revenue Code for employee benefit plans, using the attached Account Application.
HOW TO MAKE EXCHANGES
You can exchange all or a portion of your shares between funds within the same class, subject to the applicable minimum. You may not exchange from one class of shares to another class of shares of the same or a different fund. There is no fee for exchanges. However, if you exchange shares of a fund subject to the deferred sales charge for the no-load Ordinary Shares of the Mid Cap Fund, you will be assessed the deferred sales charge upon redemption from the fund group. The exchange privilege is available only in states where shares of the fund being acquired may legally be sold. Individual funds may not be registered in each state. You should be aware that exchanges may produce a gain or loss, as the case may be, for tax purposes.
You can make exchanges in writing or by telephone, if applicable. Exchanges must be made between accounts that have the same name, address and tax identification number. Exchanges will be made at the per share net asset value of shares of such class next determined after the exchange request is received in good order by the fund. If exchanging by telephone, you must call prior to the close of regular trading on the NYSE (ordinarily 4:00 p.m., Eastern Standard time). We will only honor a telephone exchange if you have elected the telephone exchange option on your Account Application. Shares may not be exchanged by facsimile request or by electronic mail.
HOW TO REDEEM
You can directly redeem shares of a fund by written request, by telephone and by automatic withdrawal. Redemptions will be made at the per share net asset value of such shares next determined after the redemption request is received in good order by the fund. The Transfer Agent will accept redemption requests only on days the NYSE is open. We will not accept requests for redemption that are subject to any special conditions or which specify a future or past effective date, except for certain notices of redemptions exceeding $250,000 (see Payment of Redemption Amount on page 15).
Written Request for Redemption
You can redeem all or any portion of your shares by submitting a written request for redemption signed by each registered owner of the shares exactly as the shares are registered. The request must clearly identify the account number and the number of shares or the dollar amount to be redeemed.
If you redeem more than $10,000, or request that the redemption proceeds be paid to someone other than the shareholder of record, or sent to an address other than the address of record, your signature must be signature guaranteed. The use of signature guarantees is designed to protect both you and the funds from the possibility of fraudulent requests for redemption. The Transfer Agent has adopted standards and procedures pursuant to which signature guarantees in proper form generally will be accepted from domestic banks, brokers, dealers, credit unions, national securities exchanges, registered securities associations, clearing agencies and savings associations. A notary public cannot provide a signature guarantee. Shares may not be redeemed by facsimile request or by electronic mail. Requests should be sent to:
Quantitative Group of Funds
Attention: Transfer Agent
55 Old Bedford Road
Lincoln, Massachusetts 01773
Telephone Redemption
If you have elected the telephone redemption option on your Account Application, you can redeem your shares by calling the Transfer Agent at 1-800-331-1244 provided that you have not changed your address of record within the last thirty days. You must make your redemption request prior to the close of regular trading on the NYSE (ordinarily 4:00 p.m.,
Eastern Standard time). Once you make a telephone redemption request, you may not cancel it. The funds, the Manager, the Distributor, and the Transfer Agent will not be liable for any loss or damage for acting in good faith on exchange or redemption instructions received by telephone reasonably believed to be genuine. The funds employ reasonable procedures to confirm that instructions communicated by telephone are genuine. It is the funds' policy to require some form of personal identification prior to acting upon instructions received by telephone, to provide written confirmation of all transactions effected by telephone, and to mail the proceeds of telephone redemptions only to the redeeming shareholder's address of record.
Automatic Withdrawal Plan
If you have a minimum of $10,000 in your account, you may request withdrawal of a specified dollar amount (a minimum of $100) on either a monthly or quarterly basis. You may establish an Automatic Withdrawal Plan by completing the Automatic Withdrawal Form, which is available by calling 1-800-331-1244. You may stop your Automatic Withdrawal Plan at any time. Additionally, the funds or the Transfer Agent may choose to stop offering the Automatic Withdrawal Plan.
Redemption through Brokers
You may sell shares back to the funds through selected dealers or brokers. You should contact your securities broker or dealer for appropriate instructions and for information concerning any transaction or service fee that may be imposed by the dealer or broker. Redemption requests received by the Distributor from dealers or brokers will receive that evening's closing price if the requests are received by the dealer or broker from its customer prior to 4:00 p.m., Eastern Standard time, and are transmitted to and received by the Distributor prior to its close of business that day.
Payment of Redemption Amount
The funds will generally send redemption proceeds, less a deferred sales charge of 1% for Ordinary Shares where applicable, within three business days of the execution of a redemption request. However, if the shares to be redeemed represent an investment made by check or through the automatic investment plan, the funds reserve the rightnot to honorhold the redemption requestcheck untilthe monies have been collected by the fund from the customers' bank.
Except as noted below, a deferred sales charge amounting to 1% of the value of the shares redeemed will be withheld from the redemption proceeds of Ordinary Shares and paid to the Distributor. The deferred sales charge is also imposed when you transfer your shares from an account maintained with the fund that is subject to the deferred sales charge to an account maintained by a broker-dealer that is not subject to the deferred sales charge due to one of the exceptions cited below. Ordinary Shares of the Mid Cap Fund purchased after August 1, 1996 are generally not subject to the deferred sales charge. Special rules apply to exchanges into the Mid Cap Fund (see How to Make Exchanges on page 14). Ordinary Shares of the Mid Cap Fund purchased before August 1, 1996 (the "Pre-August Shares") remain subject to a 1% deferred sales charge. Additional shares acquired by reinvestment of dividends and capital gains paid on Pre-August shares are also subject to the 1% deferred sales charge on Pre-August Shares. Because of this deferred sales charge, prospective investors should purchase Ordinary Shares only as a long-term investment. The deferred sales charge is not imposed in the case of: (i) Institutional Shares; (ii) involuntary redemptions imposed by the fund; (iii) redemptions of shares tendered for exchange; (iv) redemptions of shares held by contributory plans qualified under Section 401(k) of the Internal Revenue Code; and (v) redemptions of shares held in omnibus accounts maintained by no transaction fee ("NTF") programs of certain broker-dealers pursuant to a written agreement between the broker-dealer and the fund, the Manager and/or the Distributor. However, the deferred sales charge will be imposed on redemptions of shares maintained by NTF programs held for fewer than 31 calendar days. In addition, the deferred sales charge will not be imposed on redemptions of Ordinary Shares made by Fund Employees and related persons qualified to purchase Institutional Shares.
Redemptions in Excess of $250,000
The funds have reserved the right to pay redemption proceeds by a distribution in-kind of portfolio securities (rather than cash). In the event that a fund makes an in-kind distribution, you could incur the brokerage and transaction charges when converting the securities to cash. The funds do not expect to make in-kind distributions, and if they do, the funds will pay, during any 90-day day period, your redemption proceeds in cash up to either $250,000 or 1% of the fund's net assets, whichever is less.
The funds will pay all of your redemption proceeds in cash if you provide the funds with at least 30 days' notice before you plan to redeem. You must specify the dollar amount or number of shares to be redeemed and the date of the transaction, a minimum of 30 days after receipt of the instruction by the funds. You may make the instruction by telephone if you have telephone redemption privileges; otherwise, your request must be in writing with all signatures guaranteed. If you make a request and subsequently cancel it, subsequent redemption requests may not all be paid in cash unless the subsequent request is at least 90 days after the date of the prior canceled redemption request.
CALCULATION OF NET ASSET VALUE
Net asset value ("NAV") for one fund share is the value of that share's portion of all of the net assets in the fund. NAV per share of each class of shares of a fund will be determined as of close of market on the NYSE on each day on which the NYSE is open for trading. A fund calculates its NAV by adding the value of the fund's investments, cash, and other assets, subtracting its liabilities, and then dividing the result by the number of shares outstanding.
The funds' assets are valued primarily on the basis of market quotations. For certain foreign securities, where no sales have been reported, the fund may value such securities at the last reported bid price. Securities quoted in foreign currencies are translated into U.S. dollars using current exchange rates. If a fund holds securities listed primarily on a foreign exchange that trades on days that the fund is not open for business, the value of your shares may change on days when you cannot buy or sell shares.
Securities and assets, including any restricted securities, will be valued at their fair value Trustees.following procedures approved by the Trustees for which market prices are not readily available.
DIVIDENDS, DISTRIBUTIONS, AND TAXATION
Dividends and Distributions
Each fund's policy is to pay at least annually as dividends substantially all of its net investment income and to distribute annually substantially all of its net realized capital gains, if any, after giving effect to any available capital loss carryover. Normally, distributions are made once a year in December.
Unless you elect otherwise, all distributions will be automatically reinvested in additional shares of the fund you own. You may also elect to have dividends, capital gains, or both paid in cash. All distributions, whether received in shares or cash, are taxable and must be reported by you on Federal income tax returns.
Taxation
The following discussion is very general. You are urged to consult your tax adviser regarding the effect that an investment in the funds may have on your particular tax situation.
Taxability of Distributions.
You will normally have to pay federal income taxes, and any state or local taxes, on the distributions you receive from the funds, whether you take the distributions in cash or reinvest them in additional shares. Distributions designated as capital gain dividends are taxable as long-term capital gains. If a portion of a fund's income consists of dividends paid by U.S. corporations, a portion of the dividends paid by the fund may be eligible for the dividends received deduction for corporate shareholders. Other distributions are generally taxable as ordinary income. The fund expects that the majority of its distributions will be designated as capital gains, however the proportion of such distributions may vary. Some dividends paid in January may be taxable as if they had been paid the previous December.
The Form 1099 that is mailed to you every January details your distributions and how they are treated for federal taxpurposes.
purposes. Fund distributions will reduce the fund's net asset value per share. Therefore, if you buy shares shortly before the record date of a distribution, you may pay the full price for the shares and then effectively receive a portion of the purchase price back as a taxable distribution.
If you are neither a citizen nor a resident of the U.S., the funds will withhold U.S. federal income tax at the rate of 30% on taxable dividends and other payments that are subject to such withholding. You may be able to arrange for a lower withholding rate under an applicable tax treaty if you supply the appropriate documentation required by the funds. The funds are also required in certain circumstances to apply backup withholding at the rate of 31% on taxable dividends and redemption proceeds paid to any shareholder (including a shareholder who is neither a citizen nor a resident of the U.S.) who does not furnish to the fund certain information and certifications or who is otherwise subject to backup withholding. Backup withholding will not, however, be applied to payments that have been subject to 30% withholding. Prospective investors should read the funds' Account Application for additional information regarding backup withholding of federal income tax.
Taxability of Transactions.
When you redeem, sell or exchange shares, it is generally considered a taxable event for you. Depending on the purchase price and the sale price of the shares you redeem, sell or exchange, you may have a gain or a loss on the transaction. You are responsible for any tax liabilities generated by your transaction.
Further information relating to tax consequences is contained in the Statement of Additional Information. Fund distributions also may be subject to state, local and foreign taxes.
OTHER INFORMATION
Year 2000 Issues
The funds could be adversely affected if the computer systems used by the thefunds' Advisors or Manager and the funds' other service providers do not properly process and calculatecompanies in which the funds investdo not properly process date-related information relating to the end of this century and the beginning of the next. While year 2000-related computer problems could have a negative effect on a fund, both in its operations and in its investments, the funds' advisors and manager are working to avoid such problems and to obtain assurances from service providers that they are taking similar steps. No assurances, though, can be provided that the fund will not be adversely impacted by these matters. Additionally, companies in which the funds invest may be negatively affected by year 2000 issues and foreign companies may be more likely to be affected than domestic companies.
Provision of Annual and Semi-annual Reports
To avoid sending duplicate copies of materials to households, only one copy of the funds' annual and semi-annual report will be mailed to shareholders having the same residential address on the fund's records. However, any shareholder may contact the funds (see back cover for address and phone number) to request that copies of these reports be sent personally to that shareholder free of charge.
FINANCIAL HIGHLIGHTS
The following per share financial information for the Small Cap Fund, Mid Cap Fund, Growth and Income Fund, International Equity Fund, Emerging Markets Fund and Foreign Value Fund has been audited by PricewaterhouseCoopers LLP independent accountants, whose report thereon is incorporated by reference in the Statement of Additional Information. This condensed financial information should be read in conjunction with the related financial statements and notes thereto as incorporated by reference in the Statement of Additional Information.
You can learn more about the funds in the following documents:
For more information about the Quantitative Group of Funds, the funds' Statement of Additional Information (SAI) and annual and semi-annual reports to shareholders include additional information about the funds. The SAI, and the auditor's report and financial statements included in the funds' most recent annual report to shareholders, are incorporated by reference into this prospectus, which means they are part of this prospectus for legal purposes. The funds' annual report discusses the market conditions and investment strategies that significantly affected each funds' performance during its last fiscal year. You may get free copies of these materials, request other information about the funds, or make shareholder inquiries, by contacting your financial advisor or the Quantitative Group of Fund's web site, www.quantfunds.com, or by calling toll-free at 1-800-331-1244.
Investment Company Act file 811-3790
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.
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
Income from
Investment Operations (e) Distributions
----------------------------------------------------------- ---------------------------
Net Asset Net Realized Dividends Dividends
Value at Net and Unrealized Total from from Net in excess of
Beginning Investment Gain (Loss) Investment Investment Net Investment
of Period Income (a) on Securities Operations Income Income
Small Cap
-----------------------------------------------------------------------------------------
Ordinary Shares
Year Ended March 31, 1995 $ 15.33 (0.20) 1.67 1.47 --- ---
Year Ended March 31, 1996 $ 15.81 (0.21) 5.54 5.33 --- ---
Year Ended March 31, 1997 $ 18.91 0.16 (f) 0.77 0.93 --- ---
Year Ended March 31, 1998 $ 15.04 (0.23) 5.60 5.37 (0.16) ---
Year Ended March 31, 1999 $ 17.80 (0.15) (3.05) (3.20) --- ---
Institutional Shares
Year Ended March 31, 1995 $ 15.46 (0.13) 1.71 1.58 --- ---
Year Ended March 31, 1996 $ 16.05 (0.12) 5.63 5.51 --- ---
Year Ended March 31, 1997 $ 19.33 0.08 (f) 0.94 1.02 --- ---
Year Ended March 31, 1998 $ 15.55 (0.15) 5.79 5.64 (0.34) ---
Year Ended March 31, 1999 $ 18.40 (0.08) (3.15) (3.23) --- ---
Mid Cap
Ordinary Shares
Oct. 3, 1994** to March 31, 1995 $ 10.00 0.05 0.07 0.12 --- ---
Year Ended March 31, 1996 $ 10.12 0.06 3.27 3.33 (0.01) ---
Year Ended March 31, 1997 $ 13.20 0.09 2.29 2.38 (0.14) ---
Year Ended March 31, 1998 $ 13.44 (0.08) 6.06 5.98 --- ---
Year Ended March 31, 1999 $ 16.05 (0.11) (0.09) (0.20) --- ---
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Income from
Investment Operations (e) Distributions
----------------------------------------------------------- ---------------------------
Net Asset Net Realized Dividends Dividends
Value at Net and Unrealized Total from from Net in excess of
Beginning Investment Gain (Loss) Investment Investment Net Investment
of Period Income (a) on Securities Operations Income Income
Small Cap
-----------------------------------------------------------------------------------------
Institutional Shares
April 17, 1995** to March 31, 1996 $ 10.27 0.10 3.09 3.19 (0.02) ---
Year Ended March 31, 1997 $ 13.20 0.11 2.27 2.38 (0.03) ---
Year Ended March 31, 1998 $ 13.55 (0.06) 6.12 6.06 --- ---
Year Ended March 31, 1999 $ 16.24 (0.10) (0.10) (0.20) --- ---
Growth and Income
Ordinary Shares
Year Ended March 31, 1995 $ 13.85 0.14 1.44 1.58 (0.18) ---
Year Ended March 31, 1996 $ 13.72 0.12 2.89 3.01 (0.13) ---
Year Ended March 31, 1997 $ 14.57 0.08 2.53 2.61 (0.10) ---
Year Ended March 31, 1998 $ 15.22 0.00 7.61 7.61 (0.05) ---
Year Ended March 31, 1999 $ 20.85 (0.08) 2.82 2.74 --- ---
Institutional Shares
Year Ended March 31, 1995 $ 13.86 0.21 1.44 1.65 (0.23) ---
Year Ended March 31, 1996 $ 13.72 0.20 2.89 3.09 (0.20) ---
Year Ended March 31, 1997 $ 14.58 0.15 2.55 2.70 (0.18) ---
Year Ended March 31, 1998 $ 15.24 0.10 7.60 7.70 (0.17) ---
Year Ended March 31, 1999 $ 20.84 0.03 2.83 2.86 --- ---
-------------------------------------------------------------------------------------
Distributions Distributions Net Assets
from in excess of Net Asset End of
Realized Realized Total Value End Total Period
Capital Gains Capital Gains Distributions of Period Return (c) (000's)
-------------------------------------------------------------------------------------
Small Cap
Ordinary Shares
Year Ended March 31, 1995 (0.99) --- (0.99) $ 15.81 10.24 % $ 53,920
Year Ended March 31, 1996 (2.23) --- (2.23) $ 18.91 34.25 % $ 71,618
Year Ended March 31, 1997 (4.80) --- (4.80) $ 15.04 1.72 % $ 57,135
Year Ended March 31, 1998 (2.45) (g) --- (2.61) $ 17.80 37.79 % $ 66,876
Year Ended March 31, 1999 --- --- --- $ 14.60 (17.98)% $ 47,605
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-------------------------------------------------------------------------------------
Distributions Distributions Net Assets
from in excess of Net Asset End of
Realized Realized Total Value End Total Period
Capital Gains Capital Gains Distributions of Period Return (c) (000's)
-------------------------------------------------------------------------------------
Institutional Shares
Year Ended March 31, 1995 (0.99) --- (0.99) $ 16.05 10.88 % $ 47,044
Year Ended March 31, 1996 (2.23) --- (2.23) $ 19.33 34.89 % $ 42,803
Year Ended March 31, 1997 (4.80) --- (4.80) $ 15.55 2.21 % $ 9,207
Year Ended March 31, 1998 (2.45) (g) --- (2.79) $ 18.40 38.44 % $ 6,286
Year Ended March 31, 1999 --- --- --- $ 15.17 (17.55)% $ 4,680
Mid Cap
Ordinary Shares
Oct. 3, 1994** to March 31, 1995 --- --- --- $ 10.12 1.20 % $ 420
Year Ended March 31, 1996 (0.24) --- (0.25) $ 13.20 33.01 % $ 6,025
Year Ended March 31, 1997 (2.00) --- (2.14) $ 13.44 17.47 % $ 8,733
Year Ended March 31, 1998 (3.37) --- (3.37) $ 16.05 46.76 % $ 15,484
Year Ended March 31, 1999 (0.39) --- (0.39) $ 15.46 (1.08)% $ 12,617
Institutional Shares
April 17, 1995** to March 31, 1996 (0.24) --- (0.26) $ 13.20 31.12 % $ 4,621
Year Ended March 31, 1997 (2.00) --- (2.03) $ 13.55 17.51 % $ 361
Year Ended March 31, 1998 (3.37) --- (3.37) $ 16.24 47.01 % $ 823
Year Ended March 31, 1999 (0.39) --- (0.39) $ 15.65 (1.07)% $ 557
Growth and Income
Ordinary Shares
Year Ended March 31, 1995 (1.56) --- (1.72) $ 13.72 12.71 % $ 37,048
Year Ended March 31, 1996 (2.03) --- (2.16) $ 14.57 22.17 % $ 41,353
Year Ended March 31, 1997 (1.86) --- (1.96) $ 15.22 17.97 % $ 43,266
Year Ended March 31, 1998 (1.93) --- (1.98) $ 20.85 51.52 % $ 66,397
Year Ended March 31, 1999 (2.33) --- (2.33) $ 21.26 13.67 % $ 70,874
Institutional Shares
Year Ended March 31, 1995 (1.56) --- (1.79) $ 13.72 13.29 % $ 1,975
Year Ended March 31, 1996 (2.03) --- (2.23) $ 14.58 22.75 % $ 1,888
Year Ended March 31, 1997 (1.86) --- (2.04) $ 15.24 18.62 % $ 1,532
Year Ended March 31, 1998 (1.93) --- (2.10) $ 20.84 52.18 % $ 3,724
Year Ended March 31, 1999 (2.33) --- (2.33) $ 21.37 14.27 % $ 4,607
|
Ratios and Supplemental Data
---------------------------------------------------------------------
Ratio of Ratio of Ratio of Net
Operating Operating Investment
Expenses Expenses Income (Loss)
to Average Net of to Average Portfolio
Net Assets Custody Net Assets Turnover
Credits
to Average
Net Assets(d)
-------------------------------------------------------------------
Small Cap
Ordinary Shares
Year Ended March 31, 1995 1.84 % 1.84 % (1.31)% 320.00 %
Year Ended March 31, 1996 1.97 % 1.88 % (1.17)% 324.00 %
Year Ended March 31, 1997 1.97 % 1.90 % 0.90 % (l) 393.00 %
Year Ended March 31, 1998 1.90 % 1.89 % (1.33)% 135.00 %
Year Ended March 31, 1999 1.94 % 1.94 % (0.99)% 113.00 %
Institutional Shares
Year Ended March 31, 1995 1.36 % 1.36 % (0.62)% 320.00 %
Year Ended March 31, 1996 1.47 % 1.38 % (0.67)% 324.00 %
Year Ended March 31, 1997 1.47 % 1.40 % 0.41 % (l) 393.00 %
Year Ended March 31, 1998 1.41 % 1.40 % (0.66)% 135.00 %
Year Ended March 31, 1999 1.44 % 1.44 % (0.49)% 113.00 %
Mid Cap
Ordinary Shares
Oct. 3, 1994** to March 31, 1995 --- % --- % 1.50 % 0.00 %
Year Ended March 31, 1996 2.34 % 1.92 % 0.48 % 181.00 %
Year Ended March 31, 1997 1.19 % 1.11 % 0.62 % 162.00 %
Year Ended March 31, 1998 1.57 % 1.57 % (0.52)% 128.00 %
Year Ended March 31, 1999 1.65 % 1.65 % (0.72)% 168.00 %
Institutional Shares
April 17, 1995** to March 31, 1996 2.02 % (b) 1.66 % 0.67 % 181.00 %
|
Ratios and Supplemental Data
---------------------------------------------------------------------
Ratio of Ratio of Ratio of Net
Operating Operating Investment
Expenses Expenses Income (Loss)
to Average Net of to Average Portfolio
Net Assets Custody Net Assets Turnover
Credits
to Average
Net Assets(d)
-------------------------------------------------------------------
Year Ended March 31, 1997 1.44 % 1.27 % 0.77 % 162.00 %
Year Ended March 31, 1998 1.40 % 1.40 % (0.35)% 128.00 %
Year Ended March 31, 1999 1.62 % 1.62 % (0.69)% 168.00 %
Growth and Income
Ordinary Shares
Year Ended March 31, 1995 1.69 % 1.60 % 1.01 % 121.00 %
Year Ended March 31, 1996 1.73 % 1.64 % 0.61 % 152.00 %
Year Ended March 31, 1997 1.73 % 1.70 % 0.50 % 96.00 %
Year Ended March 31, 1998 1.69 % 1.65 % (0.01)% 72.00 %
Year Ended March 31, 1999 1.67 % 1.62 % (0.36)% 97.00 %
Institutional Shares
Year Ended March 31, 1995 1.23 % 1.23 % 1.48 % 121.00 %
Year Ended March 31, 1996 1.24 % 1.15 % 1.31 % 152.00 %
Year Ended March 31, 1997 1.24 % 1.21 % 0.99 % 96.00 %
Year Ended March 31, 1998 1.19 % 1.14 % 0.50 % 72.00 %
Year Ended March 31, 1999 1.17 % 1.12 % 0.14 % 97.00 %
|
FINANCIAL HIGHLIGHTS - Continued
(For a share outstanding throughout each period)
Income from
Investment Operations (e) Distributions
----------------------------------------------------------------------------------------
Net Asset Net Realized Dividends Dividends
Value at Net and Unrealized Total from from Net in excess of
Beginning Investment Gain (Loss) Investment Investment Net Investment
of Period Income (a) on Securities Operations Income Income
----------------------------------------------------------------------------------------
International Equity
Ordinary Shares
Year Ended March 31, 1995 $ 10.18 (0.03) 0.04 0.01 (0.13) ---
Year Ended March 31, 1996 $ 10.06 0.00 0.67 0.67 (0.03) ---
|
FINANCIAL HIGHLIGHTS - Continued
(For a share outstanding throughout each period)
Income from
Investment Operations (e) Distributions
----------------------------------------------------------------------------------------
Net Asset Net Realized Dividends Dividends
Value at Net and Unrealized Total from from Net in excess of
Beginning Investment Gain (Loss) Investment Investment Net Investment
of Period Income (a) on Securities Operations Income Income
----------------------------------------------------------------------------------------
Year Ended March 31, 1997 $ 10.70 0.01 0.40 0.41 (0.08) ---
Year Ended March 31, 1998 $ 11.03 0.07 1.30 1.37 (0.11) (0.06)
Year Ended March 31, 1999 $ 11.97 0.01 (0.58) (0.57) (0.02) (0.01)
Institutional Shares
August 25, 1994** to March 31, 1995 $ 11.00 0.01 (0.73) (0.72) (0.18) ---
Year Ended March 31, 1996 $ 10.10 0.04 0.66 0.70 (0.07) ---
Year Ended March 31, 1997 $ 10.73 0.06 0.41 0.47 (0.10) ---
Year Ended March 31, 1998 $ 11.10 0.14 1.28 1.42 (0.20) (0.11)
Year Ended March 31, 1999 $ 11.95 0.06 (0.58) (0.52) (0.03) (0.01)
Emerging Markets
Ordinary Shares
August 8, 1994** to March 31, 1995 $ 10.00 (0.05) (2.71) (2.76) --- ---
Year Ended March 31, 1996 $ 7.24 (0.07) 1.21 1.14 --- ---
Year Ended March 31, 1997 $ 8.38 (0.04) 0.90 0.86 --- ---
Year Ended March 31, 1998 $ 9.24 (0.04) (1.50) (1.54) --- ---
Year Ended March 31, 1999 $ 7.70 0.07 (1.11) (1.04) (0.07) (h) ---
Institutional Shares
April 2,1996** to March 31, 1997 $ 8.49 0.01 0.80 0.81 (0.03) ---
Year Ended March 31, 1998 $ 9.27 0.02 (1.53) (1.51) --- ---
Year Ended March 31, 1999 $ 7.76 0.09 (1.11) (1.02) (0.10) (h) ---
Foreign Value
Ordinary Shares
May 15, 1998** to March 31, 1999 $ 10.00 0.02 (1.64) (1.62) (0.01) (0.01)
Institutional Shares
December 18, 1998** to March 31, 1999 $ 8.43 0.06 (0.12) (0.06) --- ---
|
Distributions
-----------------------------------------------------------------------------
Distributions Distributions
excess of from Net Asset
Investment Realized Total Value End Total
Capital Gains Capital Gains Distributions of Period Return (c)
-----------------------------------------------------------------------------
International Equity
Ordinary Shares
Year Ended March 31, 1995 --- --- (0.13) $ 10.06 0.07 %
Year Ended March 31, 1996 --- --- (0.03) $ 10.70 6.63 %
Year Ended March 31, 1997 --- --- (0.08) $ 11.03 3.82 %
Year Ended March 31, 1998 (0.21) (0.05) (0.43) $ 11.97 12.95 %
Year Ended March 31, 1999 --- --- (0.03) $ 11.37 (4.78)%
Institutional Shares
August 25, 1994** to March 31, 1995 --- --- (0.18) $ 10.10 (6.57)%
Year Ended March 31, 1996 --- --- (0.07) $ 10.73 6.95 %
Year Ended March 31, 1997 --- --- (0.10) $ 11.10 4.38 %
Year Ended March 31, 1998 (0.21) (0.05) (0.57) $ 11.95 13.50 %
Year Ended March 31, 1999 --- --- (0.04) $ 11.39 (4.34)%
Emerging Markets
Ordinary Shares
August 8, 1994** to March 31, 1995 --- --- --- $ 7.24 (27.60)%
Year Ended March 31, 1996 --- --- --- $ 8.38 15.75 %
Year Ended March 31, 1997 --- --- --- $ 9.24 10.26 %
Year Ended March 31, 1998 --- --- --- $ 7.70 (16.67)%
Year Ended March 31, 1999 --- --- (0.07) $ 6.59 (13.40)%
Institutional Shares
April 2,1996** to March 31, 1997 --- --- (0.03) $ 9.27 9.54 %
Year Ended March 31, 1998 --- --- --- $ 7.76 (16.29)%
Year Ended March 31, 1999 --- --- (0.10) $ 6.64 (12.93)%
Foreign Value
Ordinary Shares
May 15, 1998** to March 31, 1999 --- --- (0.02) $ 8.36 (16.16)%
Institutional Shares
December 18, 1998** to March 31, 1999 --- --- --- $ 8.37 (0.71)%
|
Ratios and Supplemental Data
------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Net
Net Assets Operating Operating Investment
End of Expenses Expenses Income (Loss)
Period to Average Net of to Average Portfolio
(000's) Net Assets Custody Net Assets Turnover
Credits
to Average
Net Assets (d)
------------------------------------------------------------------------------------
International Equity
Ordinary Shares
Year Ended March 31, 1995 $ 27,657 1.91 % 1.91 % (0.20) % 45.49 %
Year Ended March 31, 1996 $ 27,402 2.15 % 2.09 % (0.04) % 43.03 %
Year Ended March 31, 1997 $ 27,410 2.20 % 2.15 % 0.10 % 135.03 %
Year Ended March 31, 1998 $ 32,182 2.18 % 2.03 % 0.62 % 51.03 %
Year Ended March 31, 1999 $ 21,956 2.11 % 2.08 % 0.12 % 128.03 %
Institutional Shares
August 25, 1994** to March 31, 1995 $ 3,052 1.66 % (b) 1.56 % (b) 0.13 % (b) 45.49 % (b)
Year Ended March 31, 1996 $ 1,241 1.65 % 1.59 % 0.38 % 43.03 %
Year Ended March 31, 1997 $ 1,760 1.69 % 1.64 % 0.31 % 135.03 %
Year Ended March 31, 1998 $ 1,728 1.68 % 1.54 % 1.19 % 81.00 %
Year Ended March 31, 1999 $ 1,895 1.61 % 1.58 % 0.62 % 128.03 %
Emerging Markets
Ordinary Shares
August 8, 1994** to March 31, 1995 $ 4,259 2.54 % (b) 2.54 % (b) (1.03) % (b) 10.72 % (b)
Year Ended March 31, 1996 $ 7,736 2.74 % 2.59 % (0.84) % 9.03 %
Year Ended March 31, 1997 $ 10,052 2.68 % 2.56 % (0.47) % 9.07 %
Year Ended March 31, 1998 $ 9,241 2.69 % 2.57 % (0.43) % 52.02 %
Year Ended March 31, 1999 $ 8,442 2.32 % 2.24 % 1.03 % 49.00 %
Institutional Shares
April 2,1996** to March 31, 1997 $ 1,212 2.01 % (b) 1.59 % (b) 0.13 % (b) 8.00 % (b)
Year Ended March 31, 1998 $ 1,002 2.19 % 2.07 % 0.24 % 52.00 %
Year Ended March 31, 1999 $ 1,447 1.82 % 1.74 % 1.36 % 49.00 %
Foreign Value
Ordinary Shares
May 15, 1998** to March 31, 1999 $ 7,478 1.99 % (b) 1.90 % (b) 0.19 % (b) 22.00 % (b)
Institutional Shares
December 18, 1998** to March 31, 1999 $ 401 1.72 % (b) 1.70 % (b) 0.75 % (b) 22.00 % (b)
|
** Commencement of Operations
(a) Reflects expense waivers/reimbursements and reductions in effect during the period. See Note 3 to the Financial Statements. As a result of such waivers/reimbursements and reductions, expenses of the Small Cap Ordinary Shares for the periods ended March 31, 1998, 1997, and 1996 reflect a reduction of $0.01, $0.02 and $0.02 per share; expenses of the Small Cap Institutional Shares for the periods ended March 31, 1998, 1997 and 1996 reflect a reduction of $0.01,$0.02 and $0.02 per share; expenses of the Mid Cap Ordinary Shares for the periods ended March 31, 1999, 1998, 1997, 1996 and 1995 reflect a reduction of $0.03, $0.07, $0.15, $0.23 and $0.76 per share; expenses of the Mid Cap Institutional Shares for the periods ended March 31, 1998, 1997, and 1996 reflects a reduction of $0.06, $0.10 and $0.11 per share; expenses of the Growth and Income Ordinary Shares for the periods ended March 31, 1997 and 1996 reflect a reduction of $0.01 and $0.01 per share; expenses of the Growth and Income Institutional Shares for the periods ended March 31,1997 and 1996 reflect a reduction of $0.01 and $0.01 per share; expenses of the International Equity Ordinary Shares for the periods ended March 31, 1998, 1997, 1996 and 1995 reflect a reduction of $---, $0.01 $0.01 and $0.01 per share respectively; expenses of the International Equity Institutional Shares for the periods ended March 31, 1998, 1997, 1996, and 1995 reflect a reduction of $ ---, $0.02, $0.01 and $0.01 per share; expenses of the Emerging Markets Ordinary Shares for the periods ended March 31, 1999, 1997, 1996 and 1995 reflect a reduction of
$0.02, $0.01, $0.01 and $0.02 per share; expenses of the Emerging Markets Institutional Shares for the periods ended March 31, 1999 and 1997 reflects a reduction of $0.02 and $0.02 per share; expenses of the Foreign Value Ordinary Shares for the period ended March 31, 1999 reflect a reduction of $0.01 per share, and expenses of the Foreign Value Institutional Shares for the period ending March 31, 1999 reflect a reduction of $ 0.01 per share.
(b) Annualized
(c) Total Return does not include the one time deferred sales charge of 1% for the Ordinary Shares. See Note 3 to the financial statements. Effective August 1, 1996 Mid Cap Ordinary Shares are no longer subject to the deferred sales charge of 1%.
The total return would have been lower if certain fees had not been waived or if custodial fees had not been reduced by credits allowed by the custodian.
(d) Expense ratios for the years ended March 31, 1999, March 31, 1998, March 31, 1997 and March 31, 1996 are shown gross of custody credits (Note 3) in accordance with SEC regulations. These credits are generated by interest earned on uninvested cash balances maintained by the Funds, and are used to offset custodial expenses of the Fund. This column shows the Funds' expense ratios net of such credits,
(e) Per share numbers have been calculated using the average shares method.
(f) Net investment income per share and the net investment income ratio would have been lower without a certain investment strategy followed by the subadvisor during the fiscal year ended March 31, 1997.
(g) Represents $ 2.42 per share of distributions from realized capital gains and $ 0.03 per share of a return of capital.
(h) Represents $ 0.05 per share of distributions from net investment income and $ 0.02 per share of a return of capital for Ordinary Shares and $0.07 per share of distributions from net investment income and $ 0.03 per share of a return of capital for Institutional Shares.
QUANTITATIVE GROUP OF FUNDS
August 1, 1999
--------------
U.S. Equity Funds International Funds
----------------- -------------------
Quantitative Small Cap Fund Quantitative International Equity Fund
Quantitative Mid Cap Fund Quantitative Emerging Markets Fund
Quantitative Growth and Income Fund Quantitative Foreign Value Fund
|
This Statement of Additional Information ("Statement") contains information which may be of interest to investors but which is not included in the Prospectus of Quantitative Group of Funds (the "Trust"). This Statement is not a Prospectus and is only authorized for distribution when accompanied by the Prospectus of the Trust dated August 1, 1999, and should be read in conjunction with the Prospectus. This Statement incorporates by reference information from the Trust's Annual Report dated March 31, 1999. Investors may obtain a free copy of the Prospectus and/or the Annual Report by writing Quantitative Group of Funds, 55 Old Bedford Road, Lincoln, MA 01773 or by calling 1-800-331-1244.
TABLE OF CONTENTS
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.................................................... 14
|
CALCULATION OF NET ASSET VALUE................................... 15 DISTRIBUTIONS.................................................... 16 TAXATION......................................................... 16 OTHER INVESTMENT PRACTICES....................................... 24 INVESTMENT RESTRICTIONS OF THE FUNDS............................. 24 PERFORMANCE MEASURES............................................. 26 THE QUANTITATIVE GROUP........................................... 31 EXPERTS.......................................................... 31 |
INVESTMENT OBJECTIVES AND POLICIES
The Funds are series of an open-end, management investment company. The Funds are nondiversified. The investment objectives and policies of the Funds are summarized in the text of the Prospectus following the captions Fund Summary and Investment Policies and Related Risks. There is no assurance that those objectives will be achieved. This Statement contains certain additional information about those objectives and policies. Capitalized terms used in this Statement but not defined herein have the same meaning as in the Prospectus.
MANAGEMENT OF THE FUNDS
The Trustees are responsible for protecting the interests of shareholders. The Trustees met periodically throughout the year to oversee the Funds' activities, review contractual arrangements with companies that provide services to the Funds and review the Funds' performance. The majority of the trustees are otherwise not affiliated with the Funds.
Position with Position with
Quantitative Distribution, U.S.
Corporation Manager,
Trustees and Officers Position Boston capital
--------------------- with Fund Principal
Name, Address+ and Age Occupation** Corporation Advisors, Inc.
---------------------- ------------ ----------- -------------
ROBERT M. ARMSTRONG Trustee Associate, Keystone None
None
Age: 59 Associates (career
management); formerly
President, Alumni Career
Services, Inc. (consulting firm);
Director of Alumni Career
Services, Harvard University,
Graduate School of
Business Administration
EDWARD A. BOND, JR. Trustee President, Bond Brothers Inc. None
None
Age: 42 (general contractors).
JOHN M. BULBROOK Trustee President, John M. Bulbrook None
None
Age: 58 Insurance Agency, Inc.
EDWARD E. BURROWS Trustee Independent consulting None
None
Age: 66 actuary - employee benefit
plans; formerly Vice President
and Director of Actuarial Services,
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, PC
(law firm/consulting);
formerly President, The Pentad
|
Corporation (employee benefit
consultants and actuaries).
FREDERICK S. MARIUS President President, General Counsel President
Clerk,
Age: 35
Executive U.S. Boston Capital General Counsel General Vice President
Corporation
LEON OKUROWSKI* Trustee, Director and Vice President, Director
Director
Age: 57
U.S. Boston Capital Treasurer Vice President Director and Vice President,
Corporation Treasurer
WILLARD L. UMPHREY* Director President, Director and Director,
Chairman, Treasurer, U.S. and Treasurer
Age: 59
RON ZWANZIGER* Trustee Director, President, and
None
Age: 44 Chief Executive Officer,
Selfcare, Inc.
|
+The mailing address of each of the officers and Trustees is 55 Old Bedford Road, Lincoln, Massachusetts 01773.
*Messrs. Umphrey, Okurowski and Zwanziger are "interested persons" (as defined in the Investment Company Act of 1940) of the Funds, the Manager or an Advisor.
**The principal occupations of the officers and Trustees for the last five years have been with the employers shown above, although in some cases they have held different positions with such employers, with the exception of Mr. Marius who was employed by Putnam Investments, Inc. from 1992 to 1999 as in-house counsel and who joined U.S. Boston Capital Corp. and Quantitative Advisors, Inc. in 1999.
Each Trustee receives an annual fee of $4,000. For services rendered during the fiscal year ended March 31, 1999, the Funds paid Trustees' fees aggregating $28,000.
The following Compensation Table provides, in tabular form, the following data:
Column (1) All Trustees who receive compensation from the Trust.
Column (2) Aggregate compensation received by a Trustee from all series of the
Trust.
Columns (3) and (4) Pension or retirement benefits accrued or proposed to be
paid by the Trust. The Trust does not pay its Trustees such benefits.
Column (5) Total compensation received by a Trustee from the Trust plus
compensation received from all funds managed by the Manager for which a Trustee
serves. As there are no such funds other than the series of the Trust, this
figure is identical to column (2).
Compensation Table for the fiscal year ended March 31, 1999
Pension or
Total
Retirement Estimated
Compensation
Aggregate Benefits Accrued Annual Benefits From
the Trust
Name of Person, Compensation As Part of Fund Upon and
Fund Complex
Position from the Trust Expenses Retirement Paid to
Trustee
Robert M. Armstrong, $4,000 N/A N/A
$4,000
Trustee, 59
Edward A. Bond, Jr. $4,000 N/A N/A
$4,000
Trustee, 42
John M Bulbrook, $4,000 N/A N/A
$4,000
Trustee, 58
Edward E. Burrows, $4,000 N/A N/A
$4,000
Trustee, 66
Leon Okurowski, $4,000 N/A N/A
$4,000
Trustee, 57
Willard L. Umphrey, $4,000 N/A N/A
$4,000
Trustee, 59
Ron Zwanziger, $4,000 N/A N/A
$4,000
Trustee,
|
The Trust's Agreement and Declaration of Trust provides that the Funds will indemnify their Trustees and officers against liabilities and expenses incurred in connection with the litigation in which they may be
involved because of their offices with the Funds, except if it is determined in the manner specified in the Agreement and Declaration of Trust that they have not acted in good faith in the reasonable belief that their actions were in the best interests of the Funds or that such indemnification would relieve any officer or Trustee of any liability to the Funds or their shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of his or her duties. The Funds, at their expense, will provide liability insurance for the benefit of their Trustees and officers.
Messrs. Umphrey and Okurowski, as officers of the Manager and the Distributor, will benefit from the management and distribution fees paid or allowed by the Funds and from brokerage commissions received by U.S. Boston Capital Corporation in connection with the purchase and sale of the Funds' portfolio securities.
At July 21, 1999, the officers and Trustees as a group owned in the aggregate .90% of the outstanding Ordinary Shares of the Small Cap Fund, 12.17% of the outstanding Institutional Shares of the Small Cap Fund, 0.23% of the outstanding Ordinary Shares of the Mid Cap Fund, 51.17% of the outstanding Institutional Shares of the Mid Cap Fund, 0.40% of the outstanding Ordinary Shares of the Growth and Income Fund, 26.87% of the outstanding Institutional Shares of the Growth and Income Fund, 0.40% of the outstanding Ordinary Shares of the International Equity Fund, 1.7% of the outstanding Institutional Shares of the International Equity Fund, 2.6% of the outstanding Ordinary Shares of the Emerging Markets Fund, 1% of the outstanding Institutional Shares of the Emerging Markets Fund, 5.10% of the outstanding Ordinary Shares of the Foreign Value Fund, and 0% of the outstanding Institutional Shares of the Foreign Value Fund. On the same date, each of the following persons owned 5% or more of the then outstanding Institutional Shares of the Small Cap Fund:
Name and Address % of Outstanding Institutional Shares ---------------- ------------------------------------- Charles Schwab & Co., Inc. 5.33% 101 Montgomery Street San Francisco, CA 94104 Pershing Division of Donaldson, Lufkin & Jenrette 17.57% P.O. Box 2052 Jersey City, NJ 07303 The John Dickson Home 14.35% 1701 Pennsylvania Avenue, N.W. Washington, DC 20006 National Postal Forum 11.59% 3998 Fair Ridge Drive Fairfax, VA 22033 U.S. Boston Corporation 10.61% 55 Old Bedford Road Lincoln, MA 01773 Temple Preservation Foundation 7.77% 1773- 16th Street Washington, DC 20009 |
Name and Address % of Outstanding Institutional Shares ---------------- ------------------------------------- The Henry and Annie Hurt Home for the Blind 6.60% 1701 Pennsylvania Ave, N.W. Suite 1000 Washington, DC 20006 |
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 ---------------- -------------------------------- Dover Instrument Corporation 11.05% P.O. Box 200 Westboro, MA 01581 Mr. George H. Howell 6.38% 107 Dudley Road Wayland, MA 01778 |
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 ---------------- ------------------------------------- U.S. Boston Corporation 33.62% 55 Old Bedford Road Lincoln, MA 01773 Mr. James E. and Ms. Sandra G. Jones 13.60% 9 Stone Creek Park Owensboro, KY 42303 Ms. Lawrie Okurowski 10.44% 50 Musterfield Road Concord, MA 01742 State Street Bank and Trust Custodian for 9.08% Marsha W. Vaughan IRA 2122 Harpoon Drive Stafford, VA 22554 State Street Bank and Trust Custodian for 7.78% Marlys Bernal 2801 Baxley Hollow Ct. Herndon, VA 20171 U.S. Boston Corporation PSRP A/C Leon Okurowski 7.10% 55 Old Bedford Road Lincoln, MA 01773 |
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 ---------------- ------------------------------------- Dover Instrument Corporation 54.21% P.O. Box 200 Westboro, MA 01581 U.S. Boston Corporation 15.89% 55 Old Bedford Road Lincoln, MA 01773 Charles Schwab & Co., Inc. 7.02% 101 Montgomery Street San Francisco, CA 94104 |
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 ---------------- ------------------------------------- Dover Instrument Corporation 89.82% P. O. Box 200 Westboro, MA 01581 U.S. Boston Corp. 5.95% 55 Old Bedford Road Lincoln, MA 01773 |
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. 97.81% P.O. Box 160 Westerville, OH 43086-0160 |
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 ---------------- ------------------------------------- Dermatology Associates of Concord, Inc. Profit 6.13% Sharing Retirement Plan 290 Baker Road Concord, MA 01742 |
Lowell Anesthesiology Service - PSRP 5.25% 60 East Street, Suite 1300 Metheun, MA 01844 |
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 ---------------- ------------------------------------- David Jaffin 83.58% 230 Park Avenue New York, NY 10169 National Financial Services Corp. 16.37% P.O. Box 3908 New York, NY 10008 |
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, 1999, 1998, and 1997, the Manager received fees of $595,869, $712,299, and $916,777, respectively. For services rendered to the Mid Cap Fund during the fiscal years ended March 31, 1999, 1998, and 1997, the Manager received fees of $148,620, $122,800, and $96,688, respectively, a portion of which were waived by the Manager. For services rendered to the Growth and Income Fund during the fiscal years ended March 31, 1999, 1998, and 1997, the Manager received fees of $527,997, $425,583, and $334,461, respectively. For services rendered to the International Equity Fund during the fiscal years ended March 31, 1999, 1998, and 1997, the Manager received fees of $276,103, $311,008, and $287,461, respectively. For services rendered to the Emerging Markets Fund during the fiscal years ended March 31, 1999, 1998, and 1997, the Manager received fees of $73,465, $86,261, and $77,271, respectively. For services rendered to the Foreign Value Fund during the fiscal year ended March 31, 1999, the Manager received fees of $50,130. Such fees were rebated by the Manager to the extent required to comply with its contractual undertaking to assume certain expenses of the Small Cap Fund, the Growth and Income Fund, and the International Equity Fund (including the Manager's compensation) in excess of 2.00% of such Fund's average net assets and such fees were also waived by the Manager to the extent required to comply with its voluntary undertaking to assume certain expenses of the Emerging Markets Fund in excess of 2.25%, respectively, of such Funds' average net assets.
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 - 0.35% of the first $30 million and 0.50% of amounts in excess of $30 million of average daily total net assets; and Emerging Markets Fund - 0.40% of average daily total net assets.
For services rendered during the fiscal year ended March 31, 1999, the Manager paid to the Advisors of the following Funds fees in amounts equivalent to the following percentages of average daily net asset value: Small Cap Fund - 0.50%; Mid Cap Fund - 0.40%, Growth and Income Fund - 0.334%; International Equity Fund - 0.50%, Emerging Markets Fund - 0.40%, and Foreign Value Fund - 0.35%. For services rendered to the Small Cap Fund during the fiscal years ended March 31, 1999, 1998, and 1997, the applicable Advisor received fees of $297,934, $357,261, and $477,141, respectively. For services rendered to the Mid Cap Fund during the fiscal years ended March 31, 1999, 1998, and 1997, the applicable advisor received fees of $59,448, $49,266, and $48,678, respectively. For services rendered to the Growth and Income Fund during the fiscal years ended March 31, 1999, 1998, and 1997, the applicable Advisor received fees of $226,254, $185,739, and 4148,785, respectively. For services rendered to the International Equity Fund during the fiscal years ended March 31, 1999, 1998, and 1997, the applicable Advisor received fees of $138,052, $155,972, and $143,731, respectively. For services rendered to the Emerging Markets Fund during the fiscal years ended March 31, 1999, 1998, and 1997, the applicable Advisor received fees of $36,733, $43,257, and $38,636, respectively. For services rendered to the Foreign Value Fund during the fiscal year ended March 31, 1999, the applicable Advisor received fees of $17,537.
Quantitative Small Cap Fund
Quantitative Mid Cap Fund
Columbia Partners, L.L.C., Investment Management, 1701 Pennsylvania Ave., NW, Washington, DC 20006 ("Columbia Partners") serves as Advisor to the Small Cap Fund and the Mid Cap Fund. The firm presently has over $1 billion in assets under management for individual, pension plan and endowment accounts. Robert A. von Pentz, CFA has managed the Small Cap and Mid Cap Funds since July 1996. Mr. von Pentz is a founder of Columbia Partners and previously served as chairman of the board and chief financial officer of Riggs Investment Management Corporation, where he worked from 1989 to 1995. Terence Collins, Robert von Pentz, Galway Capital Management, Landon Butler, Paul Kelley, John McKernan and Glen Lester Fant III are control persons of Columbia Partners L.L. C.
Quantitative Growth and Income Fund
State Street Global Advisors, 2 International Place, Boston, MA 02110, a unit of State Street Bank and Trust Company ("State Street"), serves as Advisor to the Growth and Income Fund. State Street is a wholly owned subsidiary of State Street Boston Corporation, a publicly owned bank holding company. State Street manages over $150 billion in assets for employee benefit plans, endowment funds and individuals. The Growth and Income Fund has been managed continuously by the Matrix Equity Group at State Street since the Fund's inception. The team at State Street presently responsible for the daily management of the Fund includes Steven M. Esielonis, Douglas T. Holmes, CFA, and Charles Babin, CFA. Mr. Esielonis has served as a Vice President at State Street since 1992. Mr. Holmes, Senior Vice President at State Street, has worked at State Street since 1984. Mr. Babin joined State Street as a Managing Director in 1996. Prior to that time, he was a Senior Vice President at Natwest Investment Management from 1995 to 1996 and the President and Managing Director of BRS Capital Management from 1987-1995. Marshall Carter, Savid Spina, Tenley Albright, David Gruber, I. MacAllister Booth, John M. Kucharshi, James I. Cash Jr., Charles R. LaMantia, Truman S. Casner, David Perini, Nader Darehshori, Dennis J. Picard, Arthur L. Goldstein, and David Chapman Walsh are Directors of State Street Global Advisors and are therefore considered control persons.
Quantitative International Equity Fund
Quantitative Emerging Markets Fund
Independence International Associates, Inc., 53 State Street, Boston, MA 02109, formerly Boston International Advisors, Inc. ("Independence International"), serves as Advisor to the International Equity Fund and the Emerging Markets Fund. The firm presently has over $2 billion under management in international portfolios of pension and endowment funds, among others. Norman H. Meltz and Dennis Fogerty manage both the International Equity Fund and Emerging Markets Fund. Mr. Meltz has been involved since the inception of each fund in the development and application of the funds' investment strategies. Independence International is wholly owned by Independence Investment Associates, Inc., a Delaware corporation. John Hancock Mutual Life Insurance and William Cameron Fletcher are control persons of Independence International Associates, Inc.
Quantitative Foreign Value Fund
Day-to-day responsibility for managing the Foreign Value Fund presently is provided by Polaris Capital Management, Inc., 125 Summer Street, Boston, MA 02110 ("Polaris"). The firm presently has over $50 million under management for institutional clients and wealthy individuals. The Foreign Value Fund is managed by Bernard R. Horn, Jr. Prior to founding Polaris in 1995, Mr. Horn worked as a portfolio manager at Horn & Company, Freedom Capital Management Corporation, and MDT Advisers, Inc. Bernard R. Horn, Jr and Edward Wendell Jr. are both control persons of Polaris Capital Management Inc.
U.S. Boston Capital Corporation, 55 Old Bedford Road, Lincoln, MA 01773 ("Distributor"), a Massachusetts corporation organized April 23, 1970, is a broker-dealer registered under the Securities Exchange Act of 1934 and a member of the National Association of Securities Dealers, Inc. The Distributor is an affiliated person of the Funds' Manager by virtue of being under common ownership with the Manager. The Distributor acts as the principal distributor of the Funds' shares pursuant to a written agreement dated April 17, 1985 ("Distribution Agreement"). Under the Distribution Agreement, the Distributor is not obligated to sell any specific amount of shares of the Funds and will purchase shares for resale only against orders for shares. The Distribution Agreement calls for the Distributor to use its best efforts to secure purchasers for shares of the Funds.
To permit the Funds to pay a monthly fee to the Distributor, the Funds have adopted a distribution plan (the "Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940. The fee is not directly tied to the Distributor's expenses. If expenses exceed the Distributor's fees, the Funds are not required to reimburse the Distributor for excess expenses; if the Distributor's fees exceed the expenses of distribution, the Distributor may realize a profit. The Small Cap, Growth and Income, International Equity, and Emerging Markets Funds pay the Distributor a monthly fee at the annual rate of 0.50% of the average net asset value of shares (excluding Institutional Shares) held in shareholder accounts opened during the period the Plan is in effect, as determined at the close of each business day during the month. The Mid Cap and Foreign Value Funds pay the Distributor a monthly fee at the annual rate of 0.25% of the average net asset value of their respective Ordinary Shares. Rule 12b-1 provides that any payments made by an investment company to a distributor must be made pursuant to a written plan describing all material aspects of the proposed financing of distributions and that all agreements with any person relating to implementation of the plan must be in writing. Continuance of the Plan and the Distribution Agreement is subject to annual approval by a vote of the Trustees, including a majority of the Trustees who are not "interested persons" of the Fund and have no direct or indirect financial interest in the operation of the plan or related agreements ("Qualified Trustees"), cast in person at a meeting called for the purpose. The Plan may be terminated as to a Fund by the vote of a majority of the Qualified Trustees, or by the vote of a majority of the outstanding voting securities of the Fund. All material amendments to the Plan must be approved by the Qualified Trustees and any amendment to increase materially the amount to be spent pursuant to the Plan must be approved by the vote of a majority of the outstanding voting securities of the Fund. The Trustees of the Funds review quarterly a written report of the amounts so expended and the purposes for which such expenditures were made.
For the fiscal year ended March 31, 1999, the aggregate fees (net of fees waived), paid to the Distributor pursuant to the Plan totaled $789,740, or 0.50% of the average net assets of the Ordinary Shares of the Small Cap, Growth and Income, International Equity, and Emerging Markets Funds and 0.25% of the average net assets of the Ordinary Shares of the Mid Cap Foreign Value Fund.
Investors Fiduciary Trust Company ("Custodian") is the custodian of each of the Funds' securities and cash. The Custodian's responsibilities include safekeeping and controlling the Funds' cash and securities, handling the receipt and delivery of securities, determining income and collecting interest and
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.
Quantitative Institutional Services ("Transfer Agent"), a division of the Manager, is the transfer agent and dividend disbursing agent for each of the Funds. All mutual fund transfer, dividend disbursing and shareholder services activities are performed at the offices of Quantitative Institutional Services, 55 Old Bedford Road, Lincoln, Massachusetts 01773. Account balances and other shareholder inquiries can be directed to the Transfer Agent at 800-331-1244. Subject to the approval of the Trustees, the Transfer Agent or the Fund may from time to time appoint a sub-transfer agent for the receipt of purchase orders and funds from certain investors. For its services, the Transfer Agent receives base at an annual rate of 0.13% of the aggregate average daily net asset value of each class of shares of each Fund and is reimbursed for out of pocket expenses.
PORTFOLIO TRANSACTIONS
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, 1997, March 31, 1998, and March 31, 1999 are as follows:
Fiscal Year Ended March 31, Fund 1997 1998 1999 ---------------------------------------------------------------- Small Cap Fund $773,033 $272,199 $221,371 Mid Cap Fund 46,196 44,701 58,392 Growth and Income Fund 85,411 63,665 94,378 International Equity Fund 147,002 74,654 74,831 Emerging Markets Fund 19,551 39,223 35,435 Foreign Value Fund --__ -- 34,047 |
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 following services are currently offered by the Open Account System:
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.
Traditional Individual Retirement Accounts (IRAs)
Roth IRAs
Simplified Employee Pension Plans (SEP-IRAs)
403(b) Custodial Accounts
Agreements to establish these kinds of accounts and additional information about them, including information about fees and charges, are available from the Distributor. There are many detailed rules, including provisions of tax law, governing each of theses kinds of accounts. Investors considering participation in any of these plans should consult with their attorneys or tax advisers with respect to the establishment and maintenance of any of these plans. The following is some very general information about them.
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.
HOW TO MAKE EXCHANGES
An exchange involves a redemption of all or a portion of shares of one class of a Fund and the investment of the redemption proceeds in shares of a like class in another Fund. The redemption will be made at the per share net asset value of the particular class of shares of a Fund being redeemed which is next determined after the exchange request is received in proper order.
The shares of the particular class of shares of the Fund being acquired will be purchased when the proceeds from the redemption become available, normally on the day of the exchange request, at the per share net asset value of such class next determined after acceptance of the purchase order by the Fund being acquired in accordance with the customary policy of that Fund for accepting investments.
The exchange of shares of one class of a Fund for shares of a like class of another Fund will constitute a sale for federal income tax purposes on which the investor will realize a capital gain or loss.
The exchange privilege may be modified or terminated at any time, and the Funds may discontinue offering shares of any Fund or any class of any Fund generally or in any particular State without notice to shareholders.
HOW TO REDEEM
Proceeds will normally be forwarded on the second day on which the New York Stock Exchange is open after a redemption request is processed; however, the Funds reserve the right to take up to three (3) business days to make payment. This amount may be more or less than the shareholder's investment and thus may involve a capital gain or loss for tax purposes. If the shares to be redeemed represent an investment made by check or through the automatic investment plan, the Funds reserve the right not to honor the redemption request until the check or monies have been collected.
Shareholders are entitled to redeem all or any portion of the shares credited to their accounts by submitting a written request for redemption to Quantitative Group of Funds. Shareholders who redeem more than $10,000, or request that the redemption proceeds be paid to someone other than the shareholders of record or sent to an address other than the address of record, must have their signature(s) guaranteed by
domestic banks, brokers, dealers, credit unions, national securities exchanges, registered securities associations, clearing agencies or savings associations. If the shareholder is a corporation, partnership, agent, fiduciary or surviving joint owner, the Funds may require additional documentation of a customary nature. Shareholders who have authorized the Funds to accept telephone instructions may redeem shares credited to their accounts by telephone. Once made, a telephone request may not be modified or canceled.
The Funds and the Transfer Agent will employ reasonable procedures to confirm that instructions communicated by telephone are genuine. If the Funds and the Transfer Agent fail to do so, they may be liable for any losses due to unauthorized or fraudulent transactions. The Funds provide written confirmation of all transactions effected by telephone and only mail the proceeds of telephone redemptions to the redeeming shareholder's address of record.
The Funds may suspend this right of redemption and may postpone payment for more than seven days only when the New York Stock Exchange is closed for other than customary weekends and holidays, or if permitted by the rules of the Securities and Exchange Commission during periods when trading on the Exchange is restricted or during any emergency which makes it impracticable for the Funds to dispose of their securities or to determine fairly the value of their net assets, or during any other period permitted by order of the Securities and Exchange Commission. As set forth in the Prospectus, the Funds may also delay payment of redemption proceeds from shares purchased by check until the check clears, which may take seven business days or longer.
The Funds reserve the right to redeem shares and mail the proceeds to the shareholder if at any time the number of shares in the shareholder's account falls below a specified amount, currently set at 50 shares. Shareholders will be notified and will have 30 days to bring the account up to the required amount before any redemption action will be taken by the Funds. To prevent a shareholder from becoming an affiliate of the Funds, the Funds reserve the right to redeem shares in a shareholder's account in excess of an amount set from time to time by the Trustees. No such limit is presently in effect, but such a limit could be established at any time and could be applicable to existing as well as future shareholders.
CALCULATION OF NET ASSET VALUE
Net asset value per share of each class of shares of a Fund will be determined as of the close of market on the New York Stock Exchange ("NYSE"), on each day on which the NYSE is open for trading. Currently, the NYSE is closed Saturdays, Sundays, and the following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, the Fourth of July, Labor Day, Thanksgiving and Christmas. The International Equity, Emerging Markets and Foreign Value Funds may invest in securities listed on foreign exchanges which trade on days on which those Funds do not compute net asset value (i.e., Saturdays and Exchange holidays) and the net asset value of shares of those Funds may be significantly affected on such days.
Securities for which market quotations are readily available shall be valued at market value, which is determined by using the last reported sale price on the primary exchange or market for each such security, or, if no sales are reported - as in the case of some securities traded over-the-counter - the mean between the last reported bid and asked prices. For certain foreign securities, where no sales have been reported, the Fund may value such securities at the last reported bid price. Securities quoted in foreign currencies shall be translated into U.S. dollars based upon the prevailing exchange rate of each business day. Short-term notes having remaining maturities of 60 days or less are stated at amortized cost, which approximates market, subject to a determination by the Trustees that this method represents fair value. All other securities and assets, including any restricted securities, will be valued at their fair value as determined in good faith by the Trustees or their delegate(s). Liabilities are deducted from the total, and the resulting amount is divided by the number of shares outstanding to produce the "net asset value" per share.
The fair value of any restricted securities from time to time held by a Fund is determined by its Advisor in accordance with procedures approved by the Trustees. Such valuations and procedures are reviewed periodically by the Trustees. The fair value of such securities is generally determined as the amount which the Fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. The valuation procedures applied in any specific instance are likely to vary from case to case. However, consideration is generally given to the financial position of the issuer and other fundamental analytical data relating to the investment and to the nature of the restrictions on disposition of the securities (including any registration expenses that might be borne by the Fund in connection with such disposition). In addition, such specific factors are also generally considered as the cost of the investment, the market value of any unrestricted securities of the same class (both at the time of purchase and at the time of valuation), the size of the holding, the prices of any recent transactions or offers with respect to such securities and any available analysts' reports regarding the issuer.
Market quotations are not considered to be readily available for long-term corporate bonds, debentures and notes; such investments are stated at fair value on the basis of valuations furnished by a pricing service, approved by the Trustees, which determines valuations for normal, institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships between securities which are generally recognized by institutional traders.
For purposes of determining the net asset value per share of each class of a Fund, all assets and liabilities initially expressed in foreign currencies will be valued in U.S. dollars at the mean between the bid and asked prices of such currencies against U.S. dollars.
Generally, trading in foreign securities, as well as corporate bonds, U.S.
government securities and money market instruments is substantially completed
each day at various times prior to 4:15 p.m. Eastern time upon the close of
business on the primary exchange for such securities. The values of such
securities used in determining the net asset value of the Funds' shares are
computed as of such other times. Foreign currency exchange rates are also
generally determined prior to 4:15 p.m. Eastern time. Occasionally, events
affecting the value of such securities may occur between such times and 4:15
p.m. Eastern time which will not be reflected in the computation of the Funds'
net asset value. If events materially affecting the value of the Funds'
securities occur during such a period, then these securities will be valued at
their fair value as determined in good faith by the Trustees.
Expenses of the Funds directly charged or attributable to any Fund will be paid from the assets of that Fund except that 12b-1 Plan expenses will not be borne by holders of Institutional Shares of the Funds and each class of shares of the Fund will bear its own transfer agency fees. General expenses of the Funds will be allocated among and charged to the assets of the respective Funds on a basis that the Trustees deem fair and equitable, which may be the relative assets of each Fund or the nature of the services performed and relative applicability to each Fund.
DISTRIBUTIONS
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 which occur between the time a Fund accrues receivables or liabilities denominated in a foreign currency, and the time the Fund actually collects such receivables or pays such liabilities, generally are treated as ordinary income or
ordinary loss. Similarly, on disposition of debt securities denominated in a foreign currency and on disposition of certain options futures, and forward contracts, gains or losses attributable to fluctuations in the value of foreign currency between the date of acquisition of the security or contract and the date of disposition also are treated as ordinary gain or loss. These gains or losses, referred to under the Code as "section 988" gains or losses, may increase or decrease the amount of a Fund's investment company taxable income to be distributed to its shareholders as ordinary income.
Upon the sale or other disposition of shares of a Fund, a shareholder may realize a capital gain or loss which may be 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.
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.
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.
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.
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.
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.
The portfolio turnover rates for the Funds for their fiscal years 1998
(April 1, 1997 to March 31, 1998) and 1999 (April 1, 1998 to March 31, 1999)
were as follows:
1998 1999
----- -----
Small Cap Fund 135% 113%
Mid Cap Fund 128% 168%
Growth and Income Fund 72% 97%
International Equity Fund 61% 128%
Emerging Markets Fund 52% 49%
Foreign Value Fund --% 22%
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There were no outstanding shares of the Foreign Value Fund during the 1998 fiscal year. The Foreign Value Fund commenced operations on May 18, 1998.
INVESTMENT RESTRICTIONS OF THE FUNDS
As fundamental policies, which may not be changed without "a vote of the majority of the outstanding voting securities" of a Fund (as defined below), a Fund will not take any of the following actions:
(1) purchase any security if as a result a Fund would then hold more than 10% of any class of securities of an issuer (taking all common stock issues of an issuer as a single class, all preferred stock issues as a single class, and all debt issues as a single class) or more than 10% of the outstanding voting securities of an issuer;
(2) purchase any security if as a result any Fund would then have more than 10% of the value of its net assets (taken at current value) invested in any of the following types of investment vehicles: in securities of companies (including predecessors) less than three years old, in securities which are not readily marketable, in securities which are subject to legal or contractual restrictions on resale ("restricted securities") and in repurchase agreements which have a maturity longer than seven (7) days, provided, however, that no Fund may invest more than 15% of its assets in illiquid securities;
(3) make short sales of securities or maintain a short position, if, for the Mid Cap Fund, as a result the value of all securities sold short would exceed 25% of the Fund's net assets; or, for all other Funds, unless at all times when a short position is open the particular Fund owns an equal amount of such securities or securities convertible into, or exchangeable without payment of any further consideration for, securities of the same issue as, and equal in amount to, the securities sold short, and unless not more than 10% of the Fund's net assets (taken at current value) is held as collateral for such sales at any one time.
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)/
Year Ended 5 Years Ended 10 Years Ended
March 31, 1999 March 31, 1999 March 31, 1999 Since Inception
Small Cap Fund
Ordinary Shares (18.80)% 10.99% __ 16.73% (8/3/92)
Institutional Shares (17.55)% 11.75% __ 14.05% (1/6/93)
Mid Cap Fund
Ordinary Shares (1.08)% __ __ 22.90% (3/21/95)
Institutional Shares (1.07)% __ __ 22.63% (4/17/95)
Growth and Income Fund
Ordinary Shares 12.53 % 22.61% 17.47% 16.84% (5/9/85)
Institutional Shares 14.27 % 23.47% __ 17.89% (3/25/91)
International Equity Fund
Ordinary Shares (5.73)% 3.36% 3.09% 3.53% (7/31/87)
Institutional Shares (4.34)% __ __ 2.74% (8/25/94)
Emerging Markets Fund
Ordinary Shares (14.27)% __ __ (8.16)% (10/3/94)
Institutional Shares (12.93)% __ __ (7.24)% (4/2/96)
Foreign Value Fund
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Ordinary Shares __ __ __ (16.99)% (5/18/98) Institutional Shares __ __ __ (0.71)% (12/18/98) |
(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.
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
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.
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 which may, without shareholder approval, be divided into an unlimited number of series of such shares and an unlimited number of classes of shares of any such series. Shares are presently divided into six series of shares, the Funds, each comprised of two classes of shares. There are no rights of conversion between shares of different Funds which are granted by the Amended and Restated Declaration of Trust, but holders of shares of either class of a Fund may exchange all or a portion of their shares for shares of a like class in another Fund (subject to their respective minimums). No exchanges are permitted from one class of shares to another class of shares of the same or a different Fund.
These shares are entitled to one vote per share (with proportional voting for fractional shares) on such matters as shareholders are entitled to vote, including the election of Trustees. Shares vote by individual Fund (or class thereof under certain circumstances) on all matters except that (i) when the Investment Company Act of 1940 so requires, shares shall be voted in the aggregate and not by individual Fund and (ii) when the Trustees of the Funds have determined that a matter affects only the interest of one or more Funds, then only holders of shares of such Fund shall be entitled to vote thereon.
There will normally be no meetings of shareholders for the purpose of electing Trustees unless and until such time as less than a majority of the Trustees have been elected by the shareholders, at which time the Trustees then in office will call a shareholders' meeting for the election of Trustees. In addition, Trustees may be removed from office by a written consent signed by the holders of two-thirds of the outstanding shares of each Fund and filed with the Fund or by a vote of the holders of two-thirds of the outstanding shares of each Fund at a meeting duly called for that purpose, which meeting shall be held upon the written request of the holders of not less than 10% of the outstanding shares. Upon written request by ten or more shareholders, who have been such for at least six months and who hold, in the aggregate, shares having a net asset value of at least $25,000, stating that such shareholders wish to communicate with the other shareholders for the purpose of obtaining the signatures necessary to demand a meeting to consider removal of a Trustee, the Funds have undertaken to provide a list of shareholders or to disseminate appropriate materials (at the expense of the requesting shareholders). Except as set forth above, the Trustees shall continue to hold office and may appoint their successors.
Shares are freely transferable, are entitled to dividends as declared by the Trustees, and in liquidation of the Trust are entitled to receive the net assets of their Fund, but not of the other Funds. Shareholders have no preemptive rights. The Funds' fiscal year ends on the last day of March.
Under Massachusetts law, shareholders could, under certain circumstances, be held liable for the obligations of the Funds. However, the Agreement and Declaration of Trust disclaims shareholder liability for acts or obligations of the Funds and requires notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Funds or the Trustees. The Agreement and Declaration of Trust provides for indemnification out of a Fund's property for all loss and expense of any shareholder of that Fund held liable on account of being or having been a shareholder. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the Fund of which he was a shareholder would be unable to meet its obligations.
EXPERTS
The audited financial statements as of March 31, 1999 incorporated by reference in this Statement of Additional Information have been so included in reliance upon the report of PricewaterhouseCoopers LLP, 160 Federal Street, Boston, MA 02110, independent accountants, given on the authority of that firm as experts in accounting and auditing.
FORM N-1A PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
1a. Amended And Restated Agreement And Declaration Of Trust, Dated April 2,
1990--Exhibit 1
1b. Amendment 1, Dated July 18, 1993, To The Agreement And Declaration Of
Trust, Dated April 2, 1990 -- Exhibit 2
2a. Amended And Restated Bylaws, Dated April 2, 1990 -- Exhibit 3
2b. Amendment1, Dated July 19, 1993, To The Bylaws Dated April 2, 1990 --
Exhibit 4
3a. Portions Of Agreement And Declaration Of Trust Relating To Shareholders'
Rights -- Exhibit 5.
3b. Portions Of By-Laws Relating To Shareholders' Rights -- Exhibit 6
4a. Management Contract Between Quantitative Group Of Funds And Quantitative
Advisors,
Inc. Dated January 31, 1999 -- Exhibit 7
4b. Advisory Contract Between Quantitative Advisors, Inc. And Columbia
Partners, L.L.C, Dated January 31, 1999-Midcap Fund-- Exhibit 8
4c. Advisory Contract Between Quantitative Advisors, Inc. And Columbia
Partners, L.L.C, Dated January 31, 1999-Smallcap Fund -- Exhibit 9
4d. Advisory Contract Between Quantitative Advisors, Inc. And Independence
International Associates, Inc, Dated January 31, 1999-Emerging Markets
Fund--Exhibit 10
4e. Advisory Contract Between Quantitative Advisors, Inc. And Independence
International Associates, Inc, Dated January 31, 1999 International Equity
Fund -- Exhibit 11
4f. Advisory Contract Between Quantitative Advisors, Inc. And Polaris Capital Management, Inc, Dated January 31, 1999 --Exhibit 12
4g. Advisory Contract Between Quantitative Advisors, Inc. And Foreign Value
Fund, State Street Bank and Trust, Dated January 31, 1999 Growth and Income
Fund --Exhibit 13 </R
>
5a. Distribution Agreement Dated May 6, 1994 --Exhibit 14
5b. Amendment To Distribution Agreement Dated April 8, 1994-- Exhibit 15
5c. Amendment To Distribution Agreement Dated May 15, 1994-- Exhibit 16
5d. Amendment To Distribution Agreement Dated May 18, 1998-- Exhibit 17
5e. Form Of Specimen Ordinary Share Selling Agreement (Fully Disclosed
Accounts) --Exhibit 18
5f. Form Of Specimen Ordinary And Institutional Share Selling Agreement (Fully
Disclosed Accounts) --Exhibit 19
6a. Custodian And Investment Accounting Agreement With Investors Fiduciary
Trust Company Dated January 18, 1998--Exhibit 20
6b. First Amendment To The Custodian And Investment Accounting Agreement With
Investors Fiduciary Trust Company Dated March 1, 1998 --Exhibit 21
7a. Transfer Agent And Service Agreement Dated October 31, 1989 -- Exhibit 22.
7b. Limited Agency Agreement For Transfer Agency Services -- Exhibit 23
8. Opinion And Consent Of Dechert Price & Rhoads -- Exhibit 24.
9. Distributi
on Plan Dated April 2, 1990 -- Exhibit 25.
10a. Form Of Specimen Ordinary And Institutional Share Service Agreement --
Exhibit 26.
10b. Form Of Specimen Ordinary Share Service Agreement-Undisclosed --
Exhibit 27.
10b. Form Of Specimen Ordinary Share Service Agreement-Ntf -- Exhibit 28
11a. Financial Data Schedule For Ordinary Shares --Exhibit 29.
11b. Financial Data Schedule For Institutional Shares --Exhibit 30.
12a. Rule 18f-3 Plan Amendment 1-- Exhibit 31.
12b. Rule 18f-3 Plan Amendment 2-- Exhibit 32.
12c. Rule 18f-3 Plan Amendment 3-- Exhibit 33.
Item 24. Persons Controlled by or under Common Control with Registrant
None
Item 25. Indemnification
The information required by this item is Incorporated by reference to Post-Effective Amendment No. 19 to the Registrant's Registration Statement.
Item 26. Business and Other Connections of Investment Adviser
There is set forth below information as to any other business, vocation or employment of a substantial nature in which each director or officer of Quantitative Advisors, Inc., the Registrant's investment adviser (the "Manager"), is or at any time during the past two fiscal years has been engaged for his own account or in the capacity of director, officer, employee, partner or trustee.
Name Business and other connections
--------------------------------------- -----------------------------------
Willard L. Umphrey: President/Treasurer/Clerk/Director, U.S. Boston Insurance Agency, Inc.;
Treasurer/Director, U.S. Boston Capital Corporation, USB Technology, Inc.;
President/Director, USB Atlantic Associates, Inc., USB 95 Acquisition Corp., Waterfront
Parking Corporation; Director/Treasurer, USB Corporation and U.S. Boston Corporation;
Assistant Secretary/Director, AB&T, Inc.; Director, Cambridge Diagnostics Ireland Ltd.,
Pear Tree Royalty Company, Inc., U.S. Boston Asset Management Corporation, U.S. Boston
Funding Corporation, U.S. Boston Fiduciary Corporation, U.S. Boston Institutional
Services, Inc., Selfcare, Inc.; Partner, U.S. Boston Company, U.S. Boston Company II,
U.S. Boston Company III; U.S. Boston Company (IV; President/Chairman/Trustee,
Quantitative Group of Funds
Leon Okurowski: Director/President, U.S. Boston Corporation, USB Corporation and U.S. Boston Asset
Clerk Management Corporation; Vice Presi
dent/Treasurer/Clerk/Director, Waterfront Parking
Director Corporation; Vice President/Director, U.S. Boston Capital Corporation; Vice
President, U.S. Boston Insurance Agency, Inc. Director/Treasurer, U.S. Boston
Institutional Services, Inc., AB&T, Inc.; Director, U.S. Boston Fiduciary Corporation,
U.S. Boston Funding Corporation, USB Technology, Inc.; Partner, U.S. Boston Company,
U.S. Boston Company II, U.S. Boston Company III, U.S. Boston Company IV; Treasurer/Vice
Chairman/Trustee, Quantitative Group of Funds
Fred Marius Executive Vice President, Clerk, Quantitative Group of Funds; President,
President General Counsel, U.S. Boston Capital Corporation.
|
The principal business address of each U.S. Boston affiliate named above is Lincoln North, Lincoln, Massachusetts 01773. The principal business address of AB&T is 200 Franklin Street, Boston, Massachusetts 02109.
Item 27. Principal Underwriter
(a) Not applicable.
(b) The directors and officers of the Registrant's principal
underwriter are:
Positions and Positions and
Offices with Offices with
Name Underwriter Registrant
------------------- ---------------- -------------------------
Carol A. Higgins Clerk None
Leon O
kurowski Vice President Vice President, Treasurer
and Director and Trustee
Willard L. Umphrey Treasurer President, Chairman,
and Director and Trustee
Frederick S. Marius President, Executive Vice President, Clerk
General Counsel
|
The principal business address of each person listed above is 55 Old Bedford Road, Lincoln, Massachusetts 01773.
(c) Not applicable.
Item 28. Location of Accounts and Records.
Persons maintaining physical possession of accounts, books and
other documents required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and the Rules promulgated thereunder include Registrant's
investment advisers, Quantitative Advisors, Inc. and Polaris Capital Management,
Inc.; Registrant's custodian, Investors' Fiduciary Trust Company; and
Registrant's transfer agent and dividend disbursing agent, Quantitati
ve
Institutional Services. The address of Quantitative Advisors, Inc. is 55 Old
Bedford Road, Lincoln, Massachusetts 01773; the address of Quantitative
Institutional Services is 55 Old Bedford Road, Lincoln, Massachusetts 01773; the
address of State Street Bank and Trust Company is 2 International Place, Boston,
Massachusetts 02110; the address of Independence International Associates, Inc.
is 53 State Street, Boston, Massachusetts 02109, the address of Columbia
Partners, L.L.C., Investment Management is 1775 Pennsylvania Avenue, N.W.,
Washington, DC 20006; the address of Polaris Capital Management, Inc. is 125
Summer Street, Boston, Massachusetts 02110; and the address of Investors'
Fiduciary Trust Company is 801 Pennsylvania Ave, Kansas City, MO 64105.
Item 29. Management Services
None.
Item 30. Undertakings
(a) Not applicable.
NOTICE
A copy of the Agreement and Declaration of Trust of Quantitative Group of Funds, as amended, is on file with the Secretary of the Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Registrant by an officer of the registrant acting as an officer and not individually and that the obligations of or arising out of this instrument are not binding on any of the Trustees or shareholders individually but are binding only upon the assets and property of the Registrant.
Signatures
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940,
the Registrant has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of Lincoln, and Commonwealth of Massachusetts on
the 30 day of July, 1999.
Quantitative Group of Funds
By /s/ Frederick S. Marius ------------------------ Frederick S. Marius, Executive Vice President |
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment to the Registration Statement of Quantitative Group of Funds has been signed by the following persons in the capacities and on the dates indicated.
/s/Robert M. Armstrong ----------------------------- Robert M. Armstrong Trustee July 30, 1999 /s/Edward A. Bond, Jr. ----------------------------- Edward A. Bond, Jr. Trustee July 30, 1 999 /s/ John M. Bulbrook ----------------------------- John M. Bulbrook Trustee July 30, 1999 /s/ Edward E. Burrows ----------------------------- Edward E. Burrows Trustee July 30, 1999 /s/ Leon Okurowski ----------------------------- Leon Okurowski Trustee July 30, 1999 /s/ Willard L. Umphrey ----------------------------- Willard L. Umphrey Trustee July 30, 1999 /s/ Ron Zwanziger ----------------------------- Ron Zwanziger Trustee July 30, 1999 |
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus and Statement of Additional Information constituting parts of this Post-Effective Amendment No.20 to the registration statement on Form N-1A (the "Registration Statement") of our report dated May 17, 1999 relating to the financial statements and financial highlights appearing in the March 31, 1999 Annual Report to Shareholders of the Quantitative Group of Funds, which are also incorporated by reference into the Registration. We also consent to the reference to us under the headings "Financial Highlights" and "Independent Accountants" in the Prospectus and under the heading "Experts" in the Statement of Additional Information.
PricewaterhouseCoopers LLP
Boston, MA
July 30, 1999
Exhibit Index
1a. Amended And Restated Agreement And Declaration Of Trust, Dated April 2,
1990--Exhibit 1
1b. Amendment 1, Dated July 18, 1993, To The Agreement And Declaration Of
Trust, Dated April 2, 1990 -- Exhibit 2
2a. Amended And Restated Bylaws, Dated April 2, 1990 -- Exhibit 3
2b. Amendment1, Dated July 19, 1993, To The Bylaws Dated April 2, 1990 --
Exhibit 4
3a. Portions Of Agreement And Declaration Of Trust Relating To Shareholders'
Rights -- Exhibit 5.
3b. Portions Of By-Laws Relating To Shareholders' Rights -- Exhibit 6
4a. Management Contract Between Quantitative Group Of Funds And Quantitative
Advisors, Inc. Dated January 31, 1999 -- Exhibit 7
4b. Advisory Contract Between Quantitative Advisors, Inc. And
Columbia
Partners, L.L.C, Dated January 31, 1999-Midcap Fund-- Exhibit 8
4c. Advisory Contract Between Quantitative Advisors, Inc. And Columbia
Partners, L.L.C, Dated January 31, 1999-Smallcap Fund -- Exhibit 9
4d. Advisory Contract Between Quantitative Advisors, Inc. And Independence
International Associates, Inc, Dated January 31, 1999-Emerging Markets
Fund--Exhibit 10
4e. Advisory Contract Between Quantitative Advisors, Inc. And Independence
International Associates, Inc, Dated January 31, 1999 International Equity
Fund -- Exhibit 11
4f. Advisory Contract Between Quantitative Advisors, Inc. And Polaris Capital Management, Inc, Dated January 31, 1999 --Exhibit 12
4g. Advisory Contract Between Quantitative Advisors, Inc. And Foreign Value
Fund, State Street Bank and Trust, Dated January 31, 1999 Growth and Income
Fund --Exhibit 13
5a. Distribution Agreement Dated May 6, 1994 --Exhibit 14
5b. Amendment To Distribution Agreement Da
ted April 8, 1994-- Exhibit 15
5c. Amendment To Distribution Agreement Dated May 15, 1994-- Exhibit 16
5d. Amendment To Distribution Agreement Dated May 18, 1998-- Exhibit 17
5e. Form Of Specimen Ordinary Share Selling Agreement (Fully Disclosed
Accounts) --Exhibit 18
5f. Form Of Specimen Ordinary And Institutional Share Selling Agreement (Fully
Disclosed Accounts) --Exhibit 19
6a. Custodian And Investment Accounting Agreement With Investors Fiduciary
Trust Company Dated January 18, 1998--Exhibit 20
6b. First Amendment To The Custodian And Investment Accounting Agreement With
Investors Fiduciary Trust Company Dated March 1, 1998 --Exhibit 21
7a. Transfer Agent And Service Agreement Dated October 31, 1989 -- Exhibit 22.
7b. Limited Agency Agreement For Transfer Agency Services -- Exhibit 23
8. Opinion And Consent Of Dechert Price & Rhoads -- Exhibit 24.
9. Distribution Plan Dated April 2, 1990 -- Exhibit 25.
10a. Form Of Specimen Ordinary And Institutional Share Servic
e Agreement --
Exhibit 26.
10b. Form Of Specimen Ordinary Share Service Agreement-Undisclosed --
Exhibit 27.
10b. Form Of Specimen Ordinary Share Service Agreement-Ntf -- Exhibit 28
11a. Financial Data Schedule For Ordinary Shares --Exhibit 29.
11b. Financial Data Schedule For Institutional Shares --Exhibit 30.
12a. Rule 18f-3 Plan Amendment 1-- Exhibit 31.
12b. Rule 18f-3 Plan Amendment 2-- Exhibit 32.
12c. Rule 18f-3 Plan Amendment 3-- Exhibit 33.
QUANTITATIVE GROUP OF FUNDS
Cross Reference Sheet
Pursuant to Rule 495(a)
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...... Investm
ent Objectives and Policies; Risk Considerations;
Portfolio Securities; Other Investment Practices
5. Management of the Fund................. Management of the Funds, Prior Performance of the Portfolio
Manager of the Foreign Value Fund
6. Capital Stock and Other Securities..... The Quantitative Group
7. Purchase of Securities Being Offered... Calculation of Net Asset Value; How to Invest
8. Redemption or Repurchase............... How to Redeem
9. Pending Legal Proceedings.............. Not Applicable
|
Item No. Registration Statement Caption Caption in Statement of Additional Information
-------- --------------------------------------- ----------------------------------------------------------
10. Cover Page and Table of Contents....... Cover Page
11. Fund History........................... The Quantitative Group
12. Description of the Fund and its Investment Objectives and Policies; Other Investment Practices;
Investments and Risks................ Investment Restrictions of the Funds
13. Management of the Registrant.......... Management of the Fun
ds
14. Control Persons and Principal Holders
of Securities......................... (Trustees and Officers)
15. Investment Advisory and Other Services Management of the Fund (Trustees and Officers);
Management Contract; Advisory Contracts;
Distribution and Distribution Plan
16. Brokerage Allocation and Other
Practices............................ Portfolio Transactions
17. Capital Stock and Other Securities.... The Quantitative Group
18. Purchase, Redemption and Pricing of How to Invest; How to Redeem;
Shares............................... Calculation of Net Asset Value
19. Taxation of the Fund.................. Distributions; Taxation
20. Underwriter........................... Distributor and Distribution Plan
21
. Calculation of Performance Data....... Performance Measures
22. Financial Statements.................. Financial Statements
|
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.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
| ARTICLE 6 |
| CIK: 0000722885 |
| NAME: QUANTITATIVE GROUP OF FUNDS |
| SERIES: |
| NUMBER: 1 |
| NAME: QUANTITATIVE GROWTH AND INCOME FUND ORD SHS. |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | YEAR |
| FISCAL YEAR END | MAR 31 1999 |
| PERIOD END | MAR 31 1999 |
| INVESTMENTS AT COST | 53,194 |
| INVESTMENTS AT VALUE | 73,765 |
| RECEIVABLES | 24,263 |
| ASSETS OTHER | 14 |
| OTHER ITEMS ASSETS | 1,523 |
| TOTAL ASSETS | 99,765 |
| PAYABLE FOR SECURITIES | 24,153 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 132 |
| TOTAL LIABILITIES | 132 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 46,779 |
| SHARES COMMON STOCK | 3,334 |
| SHARES COMMON PRIOR | 3,185 |
| ACCUMULATED NII CURRENT | 0 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | 8,131 |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 20,571 |
| NET ASSETS | 75,481 |
| DIVIDEND INCOME | 885 |
| INTEREST INCOME | 0 |
| OTHER INCOME | 0 |
| EXPENSES NET | 1,122 |
| NET INVESTMENT INCOME | (237) |
| REALIZED GAINS CURRENT | 10,151 |
| APPREC INCREASE CURRENT | (1,023) |
| NET CHANGE FROM OPS | 5,361 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | 0 |
| DISTRIBUTIONS OF GAINS | 7,029 |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 360 |
| NUMBER OF SHARES REDEEMED | (509) |
| SHARES REINVESTED | 298 |
| NET CHANGE IN ASSETS | 5,361 |
| ACCUMULATED NII PRIOR | 7 |
| ACCUMULATED GAINS PRIOR | 8,864 |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 528 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 1,154 |
| AVERAGE NET ASSETS | 66,393 |
| PER SHARE NAV BEGIN | 20.85 |
| PER SHARE NII | (0.08) |
| PER SHARE GAIN APPREC | 2.82 |
| PER SHARE DIVIDEND | 0.00 |
| PER SHARE DISTRIBUTIONS | 2.33 |
| RETURNS OF CAPITAL | 0 |
| PER SHARE NAV END | 21.26 |
| EXPENSE RATIO | .017 [ARTICLE] 6 [CIK] 0000722885 [NAME] QUANTITATIVE GROUP OF FUNDS [SERIES] [NUMBER] 4 [NAME] QUANTITATIVE INTERNATIONAL EQUITY FUND ORD SHS. [MULTIPLIER] 1,000 |
| [PERIOD-TYPE] YEAR [FISCAL-YEAR-END] MAR-31-1999 [PERIOD-END] MAR-31-1999 [INVESTMENTS-AT-COST] 20,986 [INVESTMENTS-AT-VALUE] 23,793 [RECEIVABLES] 1,021 [ASSETS-OTHER] 9 [OTHER-ITEMS-ASSETS] 2,642 [TOTAL-ASSETS] 27,464 [PAYABLE-FOR-SECURITIES] 2,367 [SENIOR-LONG-TERM-DEBT] 0 [OTHER-ITEMS-LIABILITIES] 1,246 [TOTAL-LIABILITIES] 3,613 [SENIOR-EQUITY] 0 [PAID-IN-CAPITAL-COMMON] 21,457 [SHARES-COMMON-STOCK] 1,931 [SHARES-COMMON-PRIOR] 2,608 [ACCUMULATED-NII-CURRENT] (27) [OVERDISTRIBUTION-NII] 0 [ACCUMULATED-NET-GAINS] (384) [OVERDISTRIBUTION-GAINS] 0 [ACCUM-APPREC-OR-DEPREC] 2,805 [NET-ASSETS] 23,851 [DIVIDEND-INCOME] 566 [INTEREST-INCOME] 38 [OTHER-INCOME] 0 [EXPENSES-NET] 564 [NET-INVESTMENT-INCOME] 605 [REALIZED-GAINS-CURRENT] 51 [APPREC-INCREASE-CURRENT] (1,703) [NET-CHANGE-FROM-OPS] (1,612) [EQUALIZATION] 0 [DISTRIBUTIONS-OF-INCOME] 47 [DISTRIBUTIONS-OF-GAINS] 9 [DISTRIBUTIONS-OTHER] 0 [NUMBER-OF-SHARES-SOLD] 202 [NUMBER-OF-SHARES-REDEEMED] (964) [SHARES-REINVESTED] 5 [NET-CHANGE-IN-ASSETS] (8,384) [ACCUMULATED-NII-PRIOR] 204 [ACCUMULATED-GAINS-PRIOR] 221 [OVERDISTRIB-NII-PRIOR] 0 [OVERDIST-NET-GAINS-PRIOR] 0 [GROSS-ADVISORY-FEES] 276 [INTEREST-EXPENSE] 0 [GROSS-EXPENSE] 671 [AVERAGE-NET-ASSETS] 25,767 [PER-SHARE-NAV-BEGIN] 11.97 [PER-SHARE-NII] 0.01 [PER-SHARE-GAIN-APPREC] (0.58) [PER-SHARE-DIVIDEND] 0.03 [PER-SHARE-DISTRIBUTIONS] 0.00 [RETURNS-OF-CAPITAL] .00 [PER-SHARE-NAV-END] 11.37 [EXPENSE-RATIO] .021 |
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
| ARTICLE 6 |
| CIK: 0000722885 |
| NAME: QUANTITATIVE GROUP OF FUNDS |
| SERIES: |
| NUMBER: 5 |
| NAME: QUANTITATIVE INTERNATIONAL EQUITY FUND INST. SHS. |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | YEAR |
| FISCAL YEAR END | MAR 31 1999 |
| PERIOD END | MAR 31 1999 |
| INVESTMENTS AT COST | 20,986 |
| INVESTMENTS AT VALUE | 23,793 |
| RECEIVABLES | 1,021 |
| ASSETS OTHER | 9 |
| OTHER ITEMS ASSETS | 2,642 |
| TOTAL ASSETS | 27,464 |
| PAYABLE FOR SECURITIES | 2,367 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 1,246 |
| TOTAL LIABILITIES | 3,613 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 21,457 |
| SHARES COMMON STOCK | 166 |
| SHARES COMMON PRIOR | 145 |
| ACCUMULATED NII CURRENT | (27) |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | (384) |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 2805 |
| NET ASSETS | 23,851 |
| DIVIDEND INCOME | 566 |
| INTEREST INCOME | 38 |
| OTHER INCOME | 0 |
| EXPENSES NET | 564 |
| NET INVESTMENT INCOME | 605 |
| REALIZED GAINS CURRENT | 51 |
| APPREC INCREASE CURRENT | (1,703) |
| NET CHANGE FROM OPS | (1,612) |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | 5 |
| DISTRIBUTIONS OF GAINS | 1 |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 21 |
| NUMBER OF SHARES REDEEMED | (0) |
| SHARES REINVESTED | 1 |
| NET CHANGE IN ASSETS | (8,384) |
| ACCUMULATED NII PRIOR | 204 |
| ACCUMULATED GAINS PRIOR | 221 |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 276 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 671 |
| AVERAGE NET ASSETS | 1,828 |
| PER SHARE NAV BEGIN | 11.95 |
| PER SHARE NII | 0.06 |
| PER SHARE GAIN APPREC | (0.58) |
| PER SHARE DIVIDEND | 0.04 |
| PER SHARE DISTRIBUTIONS | 0.00 |
| RETURNS OF CAPITAL | .00 |
| PER SHARE NAV END | 11.39 |
| EXPENSE RATIO | .016 [ARTICLE] 6 [CIK] 0000722885 [NAME] QUANTITATIVE GROUPS OF FUNDS [SERIES] [NUMBER] 6 [NAME] QUANTITATIVE GROWTH AND INCOME FUND INST. SHS. [MULTIPLIER] 1,000 |
| [PERIOD-TYPE] YEAR [FISCAL-YEAR-END] MAR-31-1999 [PERIOD-END] MAR-31-1999 [INVESTMENTS-AT-COST] 53,194 [INVESTMENTS-AT-VALUE] 73,765 [RECEIVABLES] 24,263 [ASSETS-OTHER] 14 [OTHER-ITEMS-ASSETS] 1,523 [TOTAL-ASSETS] 99,765 [PAYABLE-FOR-SECURITIES] 24,153 [SENIOR-LONG-TERM-DEBT] 0 [OTHER-ITEMS-LIABILITIES] 132 [TOTAL-LIABILITIES] 132 [SENIOR-EQUITY] 0 [PAID-IN-CAPITAL-COMMON] 46,779 [SHARES-COMMON-STOCK] 216 [SHARES-COMMON-PRIOR] 179 [ACCUMULATED-NII-CURRENT] 0 [OVERDISTRIBUTION-NII] 0 [ACCUMULATED-NET-GAINS] 8,131 [OVERDISTRIBUTION-GAINS] 0 [ACCUM-APPREC-OR-DEPREC] 20,571 [NET-ASSETS] 75,481 [DIVIDEND-INCOME] 885 [INTEREST-INCOME] 0 [OTHER-INCOME] 0 [EXPENSES-NET] 1,122 [NET-INVESTMENT-INCOME] (237) [REALIZED-GAINS-CURRENT] 10,151 [APPREC-INCREASE-CURRENT] (1,023) [NET-CHANGE-FROM-OPS] 5,361 [EQUALIZATION] 0 [DISTRIBUTIONS-OF-INCOME] 0 [DISTRIBUTIONS-OF-GAINS] 429 [DISTRIBUTIONS-OTHER] 0 [NUMBER-OF-SHARES-SOLD] 60 [NUMBER-OF-SHARES-REDEEMED] (36) [SHARES-REINVESTED] 13 [NET-CHANGE-IN-ASSETS] 5,361 [ACCUMULATED-NII-PRIOR] 7 [ACCUMULATED-GAINS-PRIOR] 8,864 [OVERDISTRIB-NII-PRIOR] 0 [OVERDIST-NET-GAINS-PRIOR] 0 [GROSS-ADVISORY-FEES] 528 [INTEREST-EXPENSE] 0 [GROSS-EXPENSE] 1,154 [AVERAGE-NET-ASSETS] 4,043 [PER-SHARE-NAV-BEGIN] 20.84 [PER-SHARE-NII] 0.03 [PER-SHARE-GAIN-APPREC] 2.83 [PER-SHARE-DIVIDEND] 0.00 [PER-SHARE-DISTRIBUTIONS] 2.33 [RETURNS-OF-CAPITAL] 0 [PER-SHARE-NAV-END] 21.37 [EXPENSE-RATIO] .012 |
| [ARTICLE] 6 [CIK] 0000722885 [NAME] QUANTITATIVE GROUP OF FUNDS [SERIES] [NUMBER] 7 [NAME] QUANTITATIVE SMALL CAP FUND ORD. SHS. [MULTIPLIER] 1,000 |
| [PERIOD-TYPE] YEAR [FISCAL-YEAR-END] MAR-31-1999 [PERIOD-END] MAR-31-1999 [INVESTMENTS-AT-COST] 45,267 [INVESTMENTS-AT-VALUE] 50,961 [RECEIVABLES] 1,693 [ASSETS-OTHER] 21 [OTHER-ITEMS-ASSETS] 381 [TOTAL-ASSETS] 53,056 [PAYABLE-FOR-SECURITIES] 645 [SENIOR-LONG-TERM-DEBT] 0 [OTHER-ITEMS-LIABILITIES] 126 [TOTAL-LIABILITIES] 771 [SENIOR-EQUITY] 0 [PAID-IN-CAPITAL-COMMON] 52,378 [SHARES-COMMON-STOCK] 3,260 [SHARES-COMMON-PRIOR] 3,758 [ACCUMULATED-NII-CURRENT] 12 [OVERDISTRIBUTION-NII] 0 [ACCUMULATED-NET-GAINS] (5,800) [OVERDISTRIBUTION-GAINS] 0 [ACCUM-APPREC-OR-DEPREC] 5,694 [NET-ASSETS] 52,285 [DIVIDEND-INCOME] 570 [INTEREST-INCOME] 61 [OTHER-INCOME] 1 [EXPENSES-NET] 1,132 [NET-INVESTMENT-INCOME] (563) [REALIZED-GAINS-CURRENT] (5,509) [APPREC-INCREASE-CURRENT] (6,573) [NET-CHANGE-FROM-OPS] (12,644) [EQUALIZATION] 0 [DISTRIBUTIONS-OF-INCOME] 0 [DISTRIBUTIONS-OF-GAINS] 0 [DISTRIBUTIONS-OTHER] 0 [NUMBER-OF-SHARES-SOLD] 321 [NUMBER-OF-SHARES-REDEEMED] (819) [SHARES-REINVESTED] 0 [NET-CHANGE-IN-ASSETS] (8,233) [ACCUMULATED-NII-PRIOR] (915) [ACCUMULATED-GAINS-PRIOR] 2,413 [OVERDISTRIB-NII-PRIOR] 0 [OVERDIST-NET-GAINS-PRIOR] 0 [GROSS-ADVISORY-FEES] 596 [INTEREST-EXPENSE] 0 [GROSS-EXPENSE] 1,132 [AVERAGE-NET-ASSETS] 54,340 [PER-SHARE-NAV-BEGIN] 17.80 [PER-SHARE-NII] (0.15) [PER-SHARE-GAIN-APPREC] (3.05) [PER-SHARE-DIVIDEND] 0.00 [PER-SHARE-DISTRIBUTIONS] 0.00 [RETURNS-OF-CAPITAL] 0 [PER-SHARE-NAV-END] 14.60 [EXPENSE-RATIO] .019 |
| [ARTICLE] 6 [CIK] 0000722885 [NAME] QUANTITATIVE GROUP OF FUNDS [SERIES] [NUMBER] 8 [NAME] QUANTITATIVE SMALL CAP FUND INST. SHS. [MULTIPLIER] 1,000 |
| [PERIOD-TYPE] YEAR [FISCAL-YEAR-END] MAR-31-1999 [PERIOD-END] MAR-31-1999 [INVESTMENTS-AT-COST] 45,267 [INVESTMENTS-AT-VALUE] 50,961 [RECEIVABLES] 1,693 [ASSETS-OTHER] 21 [OTHER-ITEMS-ASSETS] 381 [TOTAL-ASSETS] 53,056 [PAYABLE-FOR-SECURITIES] 645 [SENIOR-LONG-TERM-DEBT] 0 [OTHER-ITEMS-LIABILITIES] 126 [TOTAL-LIABILITIES] 771 [SENIOR-EQUITY] 0 [PAID-IN-CAPITAL-COMMON] 52,378 [SHARES-COMMON-STOCK] 308 [SHARES-COMMON-PRIOR] 342 [ACCUMULATED-NII-CURRENT] 12 [OVERDISTRIBUTION-NII] 0 [ACCUMULATED-NET-GAINS] (5,800) [OVERDISTRIBUTION-GAINS] 0 [ACCUM-APPREC-OR-DEPREC] 5,694 [NET-ASSETS] 52,285 [DIVIDEND-INCOME] 570 [INTEREST-INCOME] 61 [OTHER-INCOME] 1 [EXPENSES-NET] 1,132 [NET-INVESTMENT-INCOME] (563) [REALIZED-GAINS-CURRENT] (5,509) [APPREC-INCREASE-CURRENT] (6,573) [NET-CHANGE-FROM-OPS] (12,644) [EQUALIZATION] 0 [DISTRIBUTIONS-OF-INCOME] 0 [DISTRIBUTIONS-OF-GAINS] 0 [DISTRIBUTIONS-OTHER] 0 [NUMBER-OF-SHARES-SOLD] 165 [NUMBER-OF-SHARES-REDEEMED] (198) [SHARES-REINVESTED] 0 [NET-CHANGE-IN-ASSETS] (8,233) [ACCUMULATED-NII-PRIOR] (915) [ACCUMULATED-GAINS-PRIOR] 2,413 [OVERDISTRIB-NII-PRIOR] 0 [OVERDIST-NET-GAINS-PRIOR] 0 [GROSS-ADVISORY-FEES] 596 [INTEREST-EXPENSE] 0 [GROSS-EXPENSE] 1,132 [AVERAGE-NET-ASSETS] 5,231 [PER-SHARE-NAV-BEGIN] 18.40 [PER-SHARE-NII] (0.08) [PER-SHARE-GAIN-APPREC] (3.15) [PER-SHARE-DIVIDEND] 0.00 [PER-SHARE-DISTRIBUTIONS] 0.00 [RETURNS-OF-CAPITAL] 0 [PER-SHARE-NAV-END] 15.17 [EXPENSE-RATIO] .014 |
| [ARTICLE] 6 [CIK] 0000722885 [NAME] QUANTITATIVE GROUP OF FUNDS [SERIES] [NUMBER] 9 [NAME] QUANTITATIVE EMERGING MARKETS FUND ORD. SHS. [MULTIPLIER] 1,000 |
| [PERIOD-TYPE] YEAR [FISCAL-YEAR-END] MAR-31-1999 [PERIOD-END] MAR-31-1999 [INVESTMENTS-AT-COST] 9,725 [INVESTMENTS-AT-VALUE] 9,701 [RECEIVABLES] 42 [ASSETS-OTHER] 19 [OTHER-ITEMS-ASSETS] 61 [TOTAL-ASSETS] 9,936 [PAYABLE-FOR-SECURITIES] 25 [SENIOR-LONG-TERM-DEBT] 0 [OTHER-ITEMS-LIABILITIES] 21 [TOTAL-LIABILITIES] 46 [SENIOR-EQUITY] 0 [PAID-IN-CAPITAL-COMMON] 12,557 [SHARES-COMMON-STOCK] 1,282 [SHARES-COMMON-PRIOR] 1,201 [ACCUMULATED-NII-CURRENT] (12) [OVERDISTRIBUTION-NII] 0 [ACCUMULATED-NET-GAINS] (2,626) [OVERDISTRIBUTION-GAINS] 0 [ACCUM-APPREC-OR-DEPREC] (30) [NET-ASSETS] 9,889 [DIVIDEND-INCOME] 286 [INTEREST-INCOME] 13 [OTHER-INCOME] 0 [EXPENSES-NET] 200 [NET-INVESTMENT-INCOME] 98 [REALIZED-GAINS-CURRENT] (154) [APPREC-INCREASE-CURRENT] (1,311) [NET-CHANGE-FROM-OPS] (1,367) [EQUALIZATION] 0 [DISTRIBUTIONS-OF-INCOME] 63 [DISTRIBUTIONS-OF-GAINS] 0 [DISTRIBUTIONS-OTHER] 0 [NUMBER-OF-SHARES-SOLD] 237 [NUMBER-OF-SHARES-REDEEMED] (171) [SHARES-REINVESTED] 15 [NET-CHANGE-IN-ASSETS] 1,126 [ACCUMULATED-NII-PRIOR] (39) [ACCUMULATED-GAINS-PRIOR] (2,089) [OVERDISTRIB-NII-PRIOR] 0 [OVERDIST-NET-GAINS-PRIOR] 0 [GROSS-ADVISORY-FEES] 73 [INTEREST-EXPENSE] 0 [GROSS-EXPENSE] 232 [AVERAGE-NET-ASSETS] 8,082 [PER-SHARE-NAV-BEGIN] 7.70 [PER-SHARE-NII] 0.07 [PER-SHARE-GAIN-APPREC] (1.11) [PER-SHARE-DIVIDEND] 0.05 [PER-SHARE-DISTRIBUTIONS] 0.00 [RETURNS-OF-CAPITAL] 0.02 [PER-SHARE-NAV-END] 6.59 [EXPENSE-RATIO] .023 |
| [ARTICLE] 6 [CIK] 0000722885 [NAME] QUANTITATIVE GROUP OF FUNDS [SERIES] [NUMBER] 10 [NAME] QUANTITATIVE EMERGING MARKETS FUND INST. SHS. [MULTIPLIER] 1,000 |
| [PERIOD-TYPE] YEAR [FISCAL-YEAR-END] MAR-31-1999 [PERIOD-END] MAR-31-1999 [INVESTMENTS-AT-COST] 9,725 [INVESTMENTS-AT-VALUE] 9,701 [RECEIVABLES] 42 [ASSETS-OTHER] 19 [OTHER-ITEMS-ASSETS] 61 [TOTAL-ASSETS] 9,936 [PAYABLE-FOR-SECURITIES] 25 [SENIOR-LONG-TERM-DEBT] 0 [OTHER-ITEMS-LIABILITIES] 21 [TOTAL-LIABILITIES] 46 [SENIOR-EQUITY] 0 [PAID-IN-CAPITAL-COMMON] 12,557 [SHARES-COMMON-STOCK] 218 [SHARES-COMMON-PRIOR] 129 [ACCUMULATED-NII-CURRENT] (12) [OVERDISTRIBUTION-NII] 0 [ACCUMULATED-NET-GAINS] (2,626) [OVERDISTRIBUTION-GAINS] 0 [ACCUM-APPREC-OR-DEPREC] (30) [NET-ASSETS] 9,889 [DIVIDEND-INCOME] 286 [INTEREST-INCOME] 13 [OTHER-INCOME] 0 [EXPENSES-NET] 200 [NET-INVESTMENT-INCOME] 98 [REALIZED-GAINS-CURRENT] (154) [APPREC-INCREASE-CURRENT] (1,311) [NET-CHANGE-FROM-OPS] (1,367) [EQUALIZATION] 0 [DISTRIBUTIONS-OF-INCOME] 16 [DISTRIBUTIONS-OF-GAINS] 0 [DISTRIBUTIONS-OTHER] 0 [NUMBER-OF-SHARES-SOLD] 89 [NUMBER-OF-SHARES-REDEEMED] (0) [SHARES-REINVESTED] 0 [NET-CHANGE-IN-ASSETS] 1126 [ACCUMULATED-NII-PRIOR] (39) [ACCUMULATED-GAINS-PRIOR] (2,089) [OVERDISTRIB-NII-PRIOR] 0 [OVERDIST-NET-GAINS-PRIOR] 0 [GROSS-ADVISORY-FEES] 73 [INTEREST-EXPENSE] 0 [GROSS-EXPENSE] 232 [AVERAGE-NET-ASSETS] 1,098 [PER-SHARE-NAV-BEGIN] 7.76 [PER-SHARE-NII] 0.09 [PER-SHARE-GAIN-APPREC] (1.64) [PER-SHARE-DIVIDEND] 0.07 [PER-SHARE-DISTRIBUTIONS] 0.00 [RETURNS-OF-CAPITAL] 0.03 [PER-SHARE-NAV-END] 6.64 [EXPENSE-RATIO] .018 |
| [ARTICLE] 6 [CIK] 0000722885 [NAME] QUANTITATIVE GROUP OF FUNDS [SERIES] [NUMBER] 11 [NAME] QUANTITATIVE MID CAP FUND ORD. SHS. [MULTIPLIER] 1,000 |
| [PERIOD-TYPE] YEAR [FISCAL-YEAR-END] MAR-31-1999 [PERIOD-END] MAR-31-1999 [INVESTMENTS-AT-COST] 11,392 [INVESTMENTS-AT-VALUE] 13,270 [RECEIVABLES] 477 [ASSETS-OTHER] 3 [OTHER-ITEMS-ASSETS] 1 [TOTAL-ASSETS] 13,750 [PAYABLE-FOR-SECURITIES] 529 [SENIOR-LONG-TERM-DEBT] 0 [OTHER-ITEMS-LIABILITIES] 48 [TOTAL-LIABILITIES] 577 [SENIOR-EQUITY] 0 [PAID-IN-CAPITAL-COMMON] 10,693 [SHARES-COMMON-STOCK] 816 [SHARES-COMMON-PRIOR] 965 [ACCUMULATED-NII-CURRENT] 0 [OVERDISTRIBUTION-NII] 0 [ACCUMULATED-NET-GAINS] 603 [OVERDISTRIBUTION-GAINS] 0 [ACCUM-APPREC-OR-DEPREC] 1,878 [NET-ASSETS] 13,174 [DIVIDEND-INCOME] 116 [INTEREST-INCOME] 23 [OTHER-INCOME] 0 [EXPENSES-NET] 246 [NET-INVESTMENT-INCOME] (107) [REALIZED-GAINS-CURRENT] 606 [APPREC-INCREASE-CURRENT] (1,098) [NET-CHANGE-FROM-OPS] (599) [EQUALIZATION] 0 [DISTRIBUTIONS-OF-INCOME] 0 [DISTRIBUTIONS-OF-GAINS] 352 [DISTRIBUTIONS-OTHER] 0 [NUMBER-OF-SHARES-SOLD] 130 [NUMBER-OF-SHARES-REDEEMED] (302) [SHARES-REINVESTED] 23 [NET-CHANGE-IN-ASSETS] (2,158) [ACCUMULATED-NII-PRIOR] (63) [ACCUMULATED-GAINS-PRIOR] 2,420 [OVERDISTRIB-NII-PRIOR] 0 [OVERDIST-NET-GAINS-PRIOR] 0 [GROSS-ADVISORY-FEES] 149 [INTEREST-EXPENSE] 0 [GROSS-EXPENSE] 276 [AVERAGE-NET-ASSETS] 14,037 [PER-SHARE-NAV-BEGIN] 16.05 [PER-SHARE-NII] (0.11) [PER-SHARE-GAIN-APPREC] (0.09) [PER-SHARE-DIVIDEND] 0.00 [PER-SHARE-DISTRIBUTIONS] 0.39 [RETURNS-OF-CAPITAL] 0 [PER-SHARE-NAV-END] 15.46 [EXPENSE-RATIO] .017 |
| [ARTICLE] 6 [CIK] 0000722885 [NAME] QUANTITATIVE GROUP OF FUNDS [SERIES] [NUMBER] 12 [NAME] QUANTITATIVE MID CAP FUND INST. SHS. [MULTIPLIER] 1,000 |
| [PERIOD-TYPE] YEAR [FISCAL-YEAR-END] MAR-31-1999 [PERIOD-END] MAR-31-1999 [INVESTMENTS-AT-COST] 11,392 [INVESTMENTS-AT-VALUE] 13,270 [RECEIVABLES] 477 [ASSETS-OTHER] 3 [OTHER-ITEMS-ASSETS] 1 [TOTAL-ASSETS] 13,750 [PAYABLE-FOR-SECURITIES] 529 [SENIOR-LONG-TERM-DEBT] 0 [OTHER-ITEMS-LIABILITIES] 48 [TOTAL-LIABILITIES] 577 [SENIOR-EQUITY] 0 [PAID-IN-CAPITAL-COMMON] 10,693 [SHARES-COMMON-STOCK] 36 [SHARES-COMMON-PRIOR] 51 [ACCUMULATED-NII-CURRENT] 0 [OVERDISTRIBUTION-NII] 0 [ACCUMULATED-NET-GAINS] 603 [OVERDISTRIBUTION-GAINS] 0 [ACCUM-APPREC-OR-DEPREC] 1,878 [NET-ASSETS] 13,174 [DIVIDEND-INCOME] 116 [INTEREST-INCOME] 23 [OTHER-INCOME] 0 [EXPENSES-NET] 246 [NET-INVESTMENT-INCOME] (107) [REALIZED-GAINS-CURRENT] 606 [APPREC-INCREASE-CURRENT] (1,098) [NET-CHANGE-FROM-OPS] (599) [EQUALIZATION] 0 [DISTRIBUTIONS-OF-INCOME] 0 [DISTRIBUTIONS-OF-GAINS] 24 [DISTRIBUTIONS-OTHER] 0 [NUMBER-OF-SHARES-SOLD] 24 [NUMBER-OF-SHARES-REDEEMED] (40) [SHARES-REINVESTED] 1 [NET-CHANGE-IN-ASSETS] (2,158) [ACCUMULATED-NII-PRIOR] (63) [ACCUMULATED-GAINS-PRIOR] 2,420 [OVERDISTRIB-NII-PRIOR] 0 [OVERDIST-NET-GAINS-PRIOR] 0 [GROSS-ADVISORY-FEES] 149 [INTEREST-EXPENSE] 0 [GROSS-EXPENSE] 276 [AVERAGE-NET-ASSETS] 882 [PER-SHARE-NAV-BEGIN] 16.24 [PER-SHARE-NII] (0.10) [PER-SHARE-GAIN-APPREC] (0.10) [PER-SHARE-DIVIDEND] 0.00 [PER-SHARE-DISTRIBUTIONS] 0.39 [RETURNS-OF-CAPITAL] 0 [PER-SHARE-NAV-END] 15.65 [EXPENSE-RATIO] .016 |
| [ARTICLE] 6 [CIK] 0000722885 [NAME] QUANTITATIVE GROUP OF FUNDS [SERIES] [NUMBER] 15 [NAME] QUANTITATIVE FOREIGN VALUE FUND ORD SHS. [MULTIPLIER] 1,000 |
| [PERIOD-TYPE] YEAR [FISCAL-YEAR-END] MAR-31-1999 [PERIOD-END] MAR-31-1999 [INVESTMENTS-AT-COST] 7,879 [INVESTMENTS-AT-VALUE] 8,288 [RECEIVABLES] 301 [ASSETS-OTHER] 0 [OTHER-ITEMS-ASSETS] 1 [TOTAL-ASSETS] 7,879 [PAYABLE-FOR-SECURITIES] 391 [SENIOR-LONG-TERM-DEBT] 0 [OTHER-ITEMS-LIABILITIES] 18 [TOTAL-LIABILITIES] 409 [SENIOR-EQUITY] 0 [PAID-IN-CAPITAL-COMMON] 7,478 [SHARES-COMMON-STOCK] 894 [SHARES-COMMON-PRIOR] 0 [ACCUMULATED-NII-CURRENT] (18) [OVERDISTRIBUTION-NII] 0 [ACCUMULATED-NET-GAINS] (289) [OVERDISTRIBUTION-GAINS] 0 [ACCUM-APPREC-OR-DEPREC] (549) [NET-ASSETS] 7,879 [DIVIDEND-INCOME] 83 [INTEREST-INCOME] 22 [OTHER-INCOME] 0 [EXPENSES-NET] 96 [NET-INVESTMENT-INCOME] 10 [REALIZED-GAINS-CURRENT] (298) [APPREC-INCREASE-CURRENT] (549) [NET-CHANGE-FROM-OPS] (837) [EQUALIZATION] 0 [DISTRIBUTIONS-OF-INCOME] 20 [DISTRIBUTIONS-OF-GAINS] 0 [DISTRIBUTIONS-OTHER] 0 [NUMBER-OF-SHARES-SOLD] 965 [NUMBER-OF-SHARES-REDEEMED] (73) [SHARES-REINVESTED] 2 [NET-CHANGE-IN-ASSETS] 8,736 [ACCUMULATED-NII-PRIOR] 0 [ACCUMULATED-GAINS-PRIOR] 0 [OVERDISTRIB-NII-PRIOR] 0 [OVERDIST-NET-GAINS-PRIOR] 0 [GROSS-ADVISORY-FEES] 50 [INTEREST-EXPENSE] 0 [GROSS-EXPENSE] 122 [AVERAGE-NET-ASSETS] 4,923 [PER-SHARE-NAV-BEGIN] 10.00 [PER-SHARE-NII] 0.02 [PER-SHARE-GAIN-APPREC] (1.64) [PER-SHARE-DIVIDEND] 0.02 [PER-SHARE-DISTRIBUTIONS] 0 [RETURNS-OF-CAPITAL] 0 [PER-SHARE-NAV-END] 8.36 [EXPENSE-RATIO] .020 |
| [ARTICLE] 6 [CIK] 0000722885 [NAME] QUANTITATIVE GROUP OF FUNDS [SERIES] [NUMBER] 16 [NAME] QUANTITATIVE FOREIGN VALUE FUND INST. SHS [MULTIPLIER] 1,000 |
| [PERIOD-TYPE] YEAR [FISCAL-YEAR-END] MAR-31-1999 [PERIOD-END] MAR-31-1999 [INVESTMENTS-AT-COST] 7,879 [INVESTMENTS-AT-VALUE] 8,288 [RECEIVABLES] 301 [ASSETS-OTHER] 0 [OTHER-ITEMS-ASSETS] 1 [TOTAL-ASSETS] 7,879 [PAYABLE-FOR-SECURITIES] 391 [SENIOR-LONG-TERM-DEBT] 0 [OTHER-ITEMS-LIABILITIES] 18 [TOTAL-LIABILITIES] 409 [SENIOR-EQUITY] 0 [PAID-IN-CAPITAL-COMMON] 7,478 [SHARES-COMMON-STOCK] 48 [SHARES-COMMON-PRIOR] 0 [ACCUMULATED-NII-CURRENT] (18) [OVERDISTRIBUTION-NII] 0 [ACCUMULATED-NET-GAINS] (289) [OVERDISTRIBUTION-GAINS] 0 [ACCUM-APPREC-OR-DEPREC] (549) [NET-ASSETS] 7,879 [DIVIDEND-INCOME] 83 [INTEREST-INCOME] 22 [OTHER-INCOME] 0 [EXPENSES-NET] 96 [NET-INVESTMENT-INCOME] 10 [REALIZED-GAINS-CURRENT] (298) [APPREC-INCREASE-CURRENT] (549) [NET-CHANGE-FROM-OPS] (837) [EQUALIZATION] 0 [DISTRIBUTIONS-OF-INCOME] 0 [DISTRIBUTIONS-OF-GAINS] 0 [DISTRIBUTIONS-OTHER] 0 [NUMBER-OF-SHARES-SOLD] 48 [NUMBER-OF-SHARES-REDEEMED] (0) [SHARES-REINVESTED] 0 [NET-CHANGE-IN-ASSETS] 8,736 [ACCUMULATED-NII-PRIOR] 0 [ACCUMULATED-GAINS-PRIOR] 0 [OVERDISTRIB-NII-PRIOR] 0 [OVERDIST-NET-GAINS-PRIOR] 0 [GROSS-ADVISORY-FEES] 50 [INTEREST-EXPENSE] 0 [GROSS-EXPENSE] 122 [AVERAGE-NET-ASSETS] 105 [PER-SHARE-NAV-BEGIN] 8.43 [PER-SHARE-NII] 0.06 [PER-SHARE-GAIN-APPREC] (0.12) [PER-SHARE-DIVIDEND] 0 [PER-SHARE-DISTRIBUTIONS] 0 [RETURNS-OF-CAPITAL] 0 [PER-SHARE-NAV-END] 8.37 [EXPENSE-RATIO] .017 |
EXHIBIT 1
U.S. BOSTON INVESTMENT COMPANY
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
(As amended through April 2, 1990)
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST made at Burlington, Massachusetts, this second day of April, 1990, amending and restating the AGREEMENT AND DECLARATION OF TRUST dated June 27, 1983, as heretofore amended, by the Trustees hereunder and by the holders of shares of beneficial interest issued hereunder as hereinafter provided.
WITNESSETH that
WHEREAS, this Trust has been formed to carry on the business of an investment company; and
WHEREAS, the Trustees have agreed to manage all property coming into their hands as trustees of a Massachusetts voluntary association with transferable shares in accordance with the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash, securities and other assets, which they may from time to time acquire in any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the following terms and conditions for the pro rata benefit of the holders from time to time of Shares in this Trust as hereinafter set forth.
ARTICLE I
Name and Definitions
Section 1. This Trust shall be known as "U.S. BostonInvestment Company", and the Trustees shall conduct the business of the Trust under that 'name or any other name as they may from time to time determine.
Section 2. Whenever used herein, unless otherwise required by the context or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust established by this Agreement and Declaration of Trust, as amended from time to time;
(b) "Trustees" refers to the Trustees of the Trust named herein or elected in accordance with Article IV;
(c) "Shares" means the equal proportionate transferable units of interest into which the beneficial interest in the Trust shall be divided from time to time or, if more than one Series or Class of Shares is authorized by the Trustees, the equal proportionate transferable units into which each series or Class of Shares shall be divided from time to time;
(d) "Shareholder" means a record owner of Shares;
(e) The 111940 Act" refers to the Investment Company Act of 1940 and the Rules and Regulations thereunder, all as amended from time to time;
(f) The terms. "Affiliated Person", "Assignment", "Commission"! "Interested Person". "Principal Underwriter" and "Majority Shareholder Vote" (the 67% or 50% requirement of the third sentence of Section 2(a)(42) of the 1940 Act, whichever may be applicable) shall have the meanings given them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and Declaration of Trust as amended or restated from time to time;
(h) "Bylaws" shall mean the Bylaws of the Trust as amended from time to time;
(i) "Series" or "Series of Shares" refers to the division of Shares into two or more Series as provided in Article III, Section 1, hereof; and
(j) "Class" or "Class of Shares" refers to the division of Shares representing any series into two or more Classes as provided in Article III, Section 1, hereof.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to provide investors a managed investment primarily in securities, debt instruments and stock index futures contracts and Options thereon.
ARTICLE III
Shares
Section 1. The Shares of the Trust shall be issued in one or more Series and one or more Classes of Shares of any such Series as the Trustees may, without shareholder approval, authorize. Each Series shall be preferred over all other series in respect of the assets allocated to that Series. The beneficial interest in each Series shall at all times be divided into one or more Classes of Shares, without par value, each Class having such preferences or special or relative rights or privileges as the Trustees may determine. The number of Shares authorized shall be unlimited. The Trustees may from time to time divide or combine the Shares into a greater or lesser number without thereby changing the proportionate beneficial interests in the Series.
Section 2. The ownership of Shares shall be recorded on the books of the Trust or a transfer or similar agent. No certificates certifying the ownership of Shares shall be issued except as the Trustees may otherwise determine from time to time. The Trustees may make such rules as they consider appropriate for the issuance of Share certificates, the transfer of Shares and similar matters.
The record books of the Trust as kept by the Trust or any transfer or similar agent, as the case may be, shall be conclusive as to who are the shareholders of each Series and as to the number of Shares of each Series held from time to time by each shareholder.
Section 3. The Trustees shall accept investments in the Trust from such persons and on such terms and for such consideration, which may consist of cash or tangible or intangible property or a combination thereof, as they from time to time authorize.
All consideration received by the Trust for the issue or sale of Shares of each Series, together with all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation thereof and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall irrevocably belong to the series of shares with respect to which the same were received by the Trust for all purposes, subject only to the rights of creditors, and shall be so handled upon the books of account of the Trust and are herein referred to as "assets of" such Series.
Section 4. Shareholders shall have no preemptive or other right to subscribe to any additional Shares or other securities issued by the Trust.
Section 5. Shares shall be deemed to be personal property giving only the rights provided in this instrument. Every Shareholder by virtue of having become a Shareholder shall be held to have expressly assented and agreed to the terms hereof and to have become a party hereto. The death of a Shareholder during the continuance of the Trust shall not operate to terminate the same nor entitle the representative of any deceased Shareholder to an accounting or to take any action in court or elsewhere against the Trust or the Trustees but only to the rights of said decedent under this Trust. ownership of Shares shall not entitle the Shareholder to any title in or to the whole or any part of the Trust property or right to call for a partition or division of the same or for an accounting, nor shall the ownership of Shares constitute the Shareholders partners. Neither the Trust nor the Trustees, nor any officer, employee or agent of the Trust shall have any power to bind personally any Shareholder, nor except as specifically provided herein to call upon any Shareholder for the payment of any sum of money or assessment whatsoever other than such as the Shareholder may at any time personally agree to pay.
ARTICLE IV
The Trustees
Section 1. A Trustee may be elected either by the Trustees or by the Shareholders. There shall be not less than three Trustees. The number of Trustees shall be fixed by the Trustees. Each Trustee elected by the Trustees or the Shareholders shall serve until he or she retires, resigns, is removed or dies or until the next meeting of Shareholders called for the purpose of electing Trustees and until the election and qualification of his or her
successor. At any meeting called for the purpose, a Trustee may be removed by vote of two-thirds of the outstanding shares.
Section 2. The death, declination, resignation, retirement, removal or incapacity of the Trustees, or any one of them, shall not operate to annul the Trust or to revoke any existing agency created pursuant to the terms of this Declaration of Trust.
Section 3. Subject to the provisions of this Declaration of Trust, the business of the Trust shall be managed by the Trustees., and they shall have all powers necessary or convenient to carry out that responsibility. Without limiting the foregoing, the Trustees may adopt Bylaws not inconsistent with this Declaration of Trust providing for the conduct of the business of the Trust and may amend and repeal them to the extent that such Bylaws do not reserve that right to the shareholders; they may from time to time in accordance with the provisions of Article III, Section 1, hereof establish one or more Series to which they may allocate such of the Trust property, subject to such liabilities as they may deem appropriate; they may establish one or more Classes of Shares representing interests in such Series as they may deem appropriate; they may fill vacancies in or add to their number, and may elect and remove such officers and appoint and terminate such agents as they consider appropriate; they may appoint from their own number, and terminate, any one or more committees consisting of two or more Trustees, including an executive committee which may, when the Trustees are not in session, exercise some or all of the power and authority of the Trustees as the Trustees may determine; they may employ one or more custodians of the assets of the Trust and may authorize such custodians to employ subcustodians and to deposit all or any part of such assets in a system or systems for the central handling of securities, retain a transfer agent or a Shareholder servicing agent, or both, provide for the distribution of Shares by the Trust, through one or more principal underwriters or otherwise, set record dates for the determination of Shareholders with respect to various matters, and in general delegate such authority as they consider desirable to any officer of the Trust, to any committee of the Trustees and to any agent or employee of the Trust or to any such custodian or underwriter.
Without limiting the foregoing, the Trustees shall have power and authority:
(a) To invest and reinvest cash, and to hold cash uninvested;
(b) To sell, exchange, lend, pledge, mortgage,hypothecate, write options on and lease any or all of the assets of the Trust;
(c) To vote or give assent, or exercise any rights of ownership, with respect to stock or other securities or property; and to execute and deliver proxies or powers of attorney to such person or persons as the Trustees shall deem proper, granting to such person or persons such power and discretion with relation to securities or property as the Trustees shall deem proper;
(d) To exercise powers and rights of subscription or otherwise which in any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any trust, whether in bearer, unregistered or other negotiable form, or in the name of the Trustees or of the Trust or in the name of a custodian, subcustodian or other depositary or a nominee or nominees or otherwise;
(f) To allocate assets, liabilities and expenses of the Trust to a particular Series of Shares or to apportion the same among two or more Series, provided that any liabilities or expenses incurred by a particular Series of Shares shall be payable solely out of the assets of that Series.
(g) To consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or issuer, any security of which is or was held in the Trust; to consent to any contract, lease, mortgage, purchase or sale of property by such corporation or issuer, and to pay calls or subscriptions with respect to any security held in the Trust;
(h) To join with other security holders in acting through a committee, depositary, voting trustee or otherwise, and in that connection to deposit any security with, or transfer any security to, any such committee, depositary or trustee, and to delegate to them such power and authority with relation to any security (whether or not so deposited or transferred) as the Trustees shall deem proper, and to agree to pay, and to pay, such portion of the expenses and compensation of such committee, depositary or trustee as the Trustees shall deem proper;
(i) To compromise, arbitrate or otherwise adjust claims in favor of or against the Trust or any matter in controversy, including but not limited to claims for taxes;
(j) To enter into joint ventures, general or limited partnerships and any other combinations or associations;
(k) To borrow funds;
(l) To endorse or guarantee the payment of any notes or other obligations of any person; to make contracts of guaranty or suretyship, or otherwise assume liability for payment thereof; and to mortgage and pledge the Trust property or any part thereof to secure any of or all such obligations;
(m) To purchase and pay for entirely out of Trust property such insurance as they may deem necessary or appropriate for the conduct of the business, including without limitation, insurance policies insuring the assets of the Trust and payment of distributions and principal on its portfolio investments, and insurance policies insuring the Shareholders, Trustees, officers, employees, agents, investment advisers or managers, principal underwriters, or independent contractors of the Trust individually against all claims and liabilities of every nature arising by reason of holding, being or having held any such office or position, or by reason of any action alleged to have been taken or omitted by any such person as Shareholder, Trustee, officer, employee, agent, investment adviser or manager, principal underwriter, or independent contractor, including any action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to indemnify such person against such liability; and
(n) To pay pensions for faithful service, as deemed appropriate by the Trustees, and to adopt, establish and carry out pension, profit-sharing, share bonus, share purchase, savings, thrift and other retirement, incentive and provisions, including the purchasing of life insurance and annuity contracts as a means of providing such retirement and other benefits, for any or all of the Trustees, officers, employees and agents of the Trust.
The Trustees shall not in any way be bound or limited by any present or future law or custom in regard to investments by trustees. Except as otherwise provided herein or from time to time in the Bylaws, any action to be taken by the Trustees may be taken by a majority of the Trustees present at a meeting of Trustees (a quorum being present), within or without Massachusetts, including any meeting held by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other at the same time and participation by such means shall constitute presence in person at a meeting, or by written consents of majority of the Trustees then in office.
Section 4. The Trustees are authorized to pay or to cause to be paid out of the principal or income of the Trust, or partly out of principal and partly out of income, as they deem fair, all expenses, fees, charges, taxes and liabilities incurred or arising in connection with the Trust, or in connection with the management thereof, including, but not limited to, the Trustees' compensation and such expenses and charges for the services of the Trust's officers/employees, investment adviser or manager, principal underwriter, auditor, counsel, custodian, transfer agent, Shareholder servicing agent, and such other agents or independent contractors and such other expenses and charges as the Trustees may deem necessary or proper to incur, provided, however, that all expenses, fees, charges, taxes and liabilities incurred or arising in connection with a particular Series of Shares shall be payable solely out of the assets of that Series.
Section 5. Title to all of the assets of each Series of Shares and of the Trust shall at all times be considered as vested in the Trustees.
Section 6. Subject to a favorable Majority Shareholder Vote, the Trustees may, at any time and from time to time, contract for exclusive or nonexclusive advisory and/or management services with any corporation, trust, association or other organization (the "Manager"); any such contract may permit the Manager to contract with any corporation, trust, association or other organization to provide advisory services to any series of Shares (the "Adviser"); every such contract shall comply with such requirements and restrictions as may be set forth in the Bylaws; and any such contract may contain such other terms interpretive of or in addition to said requirements and restrictions as the Trustees may determine, including, without limitation, authority to determine from time to time what investments shall be purchased, held, sold or exchanged and what portion, if any, of the assets of the Trust shall be held uninvited and
to make changes in the Trust's investments. The Trustees may also, at any time and from time to time, contract with the Manager or any other corporation, trust, association or other organization, appointing it exclusive or nonexclusive distributor or principal underwriter for the Shares, every such contract to comply with such requirements and restrictions as may be set forth in the Bylaws; and any such contract may contain such other terms interpretive of or in addition to said requirements and restrictions as the Trustees may determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a shareholder, director, officer, partner, trustee, employee, manager, adviser, principal underwriter or distributor or agent of or for any corporation, trust, association, or other organization, or of or for any parent or affiliate of any organization, with which an advisory or management contract, or principal underwriter's or distributor's contract, or transfer, Shareholder servicing or other agency contract may have been or may hereafter be made, or that any such organization, or any parent or affiliate thereof, is a Shareholder or has an interest in the Trust, or that
(ii) any corporation, trust, association or other organization with which an advisory or management contract or principal underwriter's or distributor's contract, or transfer, Shareholder servicing or other agency contract may have been or may hereafter be made also has an advisory or management contract, or principal underwriter's or distributor's contract, or transfer, Shareholder servicing or other agency contract with one or more other corporations, trusts, associations, or other organizations, or has other business or interests shall not affect the validity of any such contract or disqualify any Shareholder, Trustee or officer of the Trust from voting upon or executing the same or create any liability or accountability to the Trust or its Shareholders.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. The Shareholders shall have power to vote only (i) for the election of Trustees as provided in Article IV, Section 1, (ii) for the removal of Trustees as provided in Article IV, Section 1, (iii) with respect to any Manager as provided in Article IV, Section 6, (iv) with respect to any termination of this Trust to the extent and as provided in Article IX, Section 4, (v) with respect to any amendment of this Declaration of Trust to the extent and as provided in Article IX, Section 7, (vi) to the same extent as the stockholders of a Massachusetts business corporation as to whether or not a court action, proceeding or claim should or should not be brought or maintained derivatively or as a class action on behalf of the Trust or the Shareholders, and (vii) with respect to such additional matters relating to the Trust as may be required by this Declaration of Trust, the Bylaws or any registration of the Trust with the Commission (or any successor agency) or any state, or as the Trustees may consider necessary or desirable. Each whole Share shall be entitled to one vote as to any matter on which it is entitled to vote and each fractional Share shall be entitled to a proportionate fractional vote. Notwithstanding any other provision of this Declaration of Trust, on any matter submitted to a vote of Shareholders, all Shares of the Trust then entitled to
vote shall be voted by individual Series, except (1) when required by the 1940 Act or any Rules or Orders hereunder, Shares shall be voted in the aggregate and not by individual Series; and (2) when the Trustees have determined that the matter affects only the interests of one or more Series, then only Shareholders of such Series shall be entitled to vote thereon. There shall be no cumulative voting in the election of Trustees. Shares may be voted in person or by proxy. A proxy with respect to Shares held in the name of two or more persons shall be valid if executed by any one of them unless at or prior to exercise of the proxy the Trust receives a specific written notice to the contrary from any one of them. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise and the burden of proving invalidity shall rest on the challenger. Until Shares are issued, the Trustees may exercise all rights of Shareholders and may take any action required by law, this Declaration of Trust or the Bylaws to be taken by Shareholders.
Section 2. Meetings of any or all Series or Classes of Shares may be called by the Trustees from time to time for the purpose of taking action upon any matter requiring the vote or authority of the Shareholders of such Series or Class as herein provided or upon any other matter deemed by the Trustees to be necessary or desirable. Written notice of any meeting of Shareholders shall be given or caused by mailing such notice at least seven days before such meeting,postage prepaid, stating the time, place and purpose of the meeting, to each Shareholder entitled to vote at such meeting at the Shareholder's address as it appears on the records of the Trust. If the Trustees shall fail to call or give notice of any meeting of Shareholders for a period of 30 days after written application by Shareholders holding at least 10% of the then outstanding Shares of each Series entitled to vote at such meeting (or of all Series if all Series are entitled to vote at such meeting) requesting a meeting to be called for a purpose requiring action by the Shareholders as provided herein or in the Bylaws, then Shareholders holding at least 10% of the then outstanding Shares of each Series entitled to vote at such meeting (or of all series if all series are entitled to vote at such meeting) may call and give notice of such meeting, and thereupon the meeting shall be held in the manner provided for herein in case of call thereof by the Trustees.
Section 3. A majority of Shares entitled to vote shall be a quorum for the transaction of business at a Shareholders' meeting, except that where any provision of law or of this Declaration of Trust permits or requires that holders of any Series or Class shall vote as a Series or Class then a majority of the aggregate number of Shares of that Series or Class entitled to vote shall be necessary to constitute a quorum for the transaction of business by that Series or Class. Any lesser number shall be sufficient for adjournments. Any adjourned session or sessions may be held, within a reasonable time after the date set for the original meeting, without the necessity of further notice. Except when a larger vote is required by any provision of law or this Declaration of Trust or the Bylaws, a majority of the Shares voted shall decide any questions and a plurality shall elect a Trustee, provided that where any provision of law or of this Declaration of Trust permits or requires that the holders of any Series shall vote as a Series, then a majority of the Shares of that Series voted on the matter shall decide that matter insofar as that Series is concerned.
Section 4. Any action taken by Shareholders may be taken without a meeting if a majority of Shareholders entitled to vote on the matter (or such larger proportion thereof as shall be required by any express provision of this Declaration of Trust or the Bylaws) consent to the action in writing and such written consents are filed with the records of the meetings of Shareholders. Such consent shall be treated for all purposes as a vote taken at a meeting of Shareholders.
Section 5. The Bylaws may include further provisions of Shareholders' votes and meetings and related matters.
ARTICLE VI
Distributions, Redemptions and Repurchases
Section 1. The Trustees may each year, or more frequently if they so determine, distribute to the Shareholders of each Series or Class such income and capital gains, accrued or realized, as the Trustees may determine, after providing for actual and accrued expenses and liabilities (including such reserves as the Trustees may establish) determined in accordance with good accounting practices. The Trustees shall have full discretion to determine which items shall be treated as income and which items as capital and their determination shall be binding upon the Shareholders. Distributions of each year's income of each Series or Class shall be distributed pro rata to Shareholders in proportion to the number of Shares of each Series or Class held by each of them. Such distributions shall be made in cash or Shares or a combination thereof as determined by the Trustees. Any such distribution paid in Shares will be paid at the net asset value thereof as determined in accordance with the Bylaws.
Section 2. The Trust shall purchase such Shares as are offered by any Shareholder for redemption, upon the presentation of any certificate for the Shares to be purchased, a proper I instrument of transfer and a request directed to the Trust or a person designated by the Trust that the Trust purchase such Shares, or in accordance with such other procedures for redemption as the Trustees may from time to time authorize; and the Trust will pay therefore the net asset value thereof, as next determined in accordance with the Bylaws. Payment for said Shares shall be made by the Trust to the Shareholder within seven days after the date on which the request is made. The obligation set forth in this section 2 is subject to the provision that in the event that any time the New York Stock Exchange is closed for other than customary weekends or holidays, or, if permitted by rules of the Commission, during periods when trading on the Exchange is restricted or during any emergency which makes it impractical for the Trust to dispose of its investments or to determine fairly the value of its net assets, or during any other period permitted by order of the Commission for the protection of investors, such obligation may be suspended or postponed by the Trustees. The Trust may also purchase or repurchase Shares at a price not exceeding the net asset value of such Shares in effect when the purchase or repurchase or any contract to purchase or repurchase is made.
Section 3. The Trust shall have the right at its option and at any time to redeem Shares of any Shareholder at the net asset value thereof as determined in accordance with the Bylaws: (i) if at such time such Shareholder owns fewer Shares than, or Shares having an aggregate net asset value of less than, an amount determined from time to time by the Trustees; or (ii) to the extent that such Shareholder owns Shares of a particular series or Class of Shares equal to or in excess of a percentage of the outstanding Shares of that Series or Class determined from time to time by the Trustees; or (iii) to the extent that such Shareholder owns Shares of the Trust representing a percentage equal to or in excess of such percentage of the aggregate number of outstanding Share of the Trust or the aggregate net asset value of the Trust determined from time to time by the Trustees.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Section 1. The Trustees as such shall be entitled to reasonable compensation from the Trust; they may fix the amount of their compensation. Nothing herein shall in any way prevent the employment of any Trustee for advisory, management, legal, accounting, investment banking or other services and payment for the same by the Trust.
Section 2. The Trustees shall not be responsible or liable in any event for any neglect or wrongdoing of any officer, agent, employee, manager or principal underwriter of the Trust, nor shall any Trustee be responsible for the act or omission of any other Trustee, but nothing herein contained shall protect any Trustee against any liability to which he or she would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate or undertaking and every other act or thing whatsoever executed or done by or on behalf of the Trust or the Trustees or any of them in connection with the Trust shall be conclusively deemed to have been executed or done only in or with respect to their or his or her capacity as Trustees or Trustee, and such Trustees or Trustee shall not be personally liable thereon.
ARTICLE VIII
Indemnification
Section 1. The Trust shall indemnify each of its Trustees and officers (including persons who serve at the Trust's request as directors, officers or trustees of another organization in which the Trust has any interest as a shareholder, creditor or otherwise (hereinafter referred to as a "Covered Person") against all liabilities and expenses, including but not limited to amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and counsel fees reasonably incurred by any Person in connection with the defense or disposition of any action, suit or other proceeding, whether
civil or criminal, before any court or administrative or legislative body, in which such Covered Person may be or may have been involved as a party or otherwise or with which such Covered Person may be or may have been threatened, while in office or thereafter, by reason of being or having been such a Covered Person except with respect to any matter as to which such Covered Person shall have been finally adjudicated in any such action, suit or other proceeding (a) not to have acted in good faith in the reasonable belief that such Covered Person's action was in the best interests of the Trust or (b) to be liable to the Trust or its Shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person's office. Expenses, including counsel fees so incurred by any such Covered Person (but excluding amounts paid in satisfaction of judgments, in compromise or as fines or penalties), shall be paid from time to time by the Trust in advance of the final disposition of any such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Covered Person to repay amounts so paid to the Trust if it is ultimately determined that indemnification of such expenses is authorized under this Article, provided, however, that either that either (a)such Covered Person shall have appropriate security for such undertaking, (b) the Trust shall be insured against losses arising from any such advance payments or (c) either a majority of the disinterested Trustees acting on the matter (provided that a majority of the disinterested Trustees then in office act on the matter), or independent legal counsel in a written opinion, shall have determined, based upon a review of readily available facts (as opposed to a full trial type inquiry) that there is reason to believe that such Covered Person will be found entitled to indemnification under this Article.
Section 2. As to any matter disposed of (whether by a compromise payment, pursuant to a consent decree or otherwise)without an adjudication by a court, or by any other body before which the proceeding was brought, that such Covered Person either (a) did not act in good faith in the reasonable belief that his action was in the best interests of the Trust or (b) is liable to the Trust or its Shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office, indemnification shall be provided if (a) approved as in the best interests of the Trust, after notice that it involves such indemnification, by at least a majority of the disinterested Trustees acting on the matter (provided that a majority of the disinterested Trustees then in office act on the matter) upon a determination, based upon a review of readily available facts (as opposed to a full trial type inquiry) that such Covered Person acted in good faith in the reasonable belief that his action was in the best interests of the Trust and is not liable to the Trust or its Shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office, or (b) there has been obtained an opinion in writing of independent legal counsel, based upon a review of readily available facts (as opposed to a full trial type inquiry) to the effect that such Covered Person appears to have acted in good faith in the reasonable belief that his action was in the best interests of the Trust and that such indemnification would not protect such Covered Person against any liability to the Trust to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. Any approval pursuant to this Section shall not prevent the recovery from any Covered Person of any amount paid to such Covered Person in accordance with this Section as indemnification if such Covered Person is subsequently adjudicated by a court of
competent jurisdiction not to have acted in good faith in the reasonable belief that such Covered Person's action was in the best interests of the Trust or to have been liable to the Trust or its Shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person's office.
Section 3. The right of indemnification hereby provided shall not be
exclusive of or affect any other rights to which such Covered Person may be
entitled. As used in this Article VIII, the term "Covered Person" shall include
such person's heirs, executors and administrators and a "disinterested Trustee"
is a Trustee who is not an "interested person" of the Trust as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended, (or who has
been exempted from being an "interested person" by any rule, regulation or order
of the Commission) and against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or has been pending. Nothing contained in this Article shall
affect any rights to indemnification to which personnel of the Trust, other than
Trustees or officers, and other persons may be entitled by contract or otherwise
under law, nor the power of the Trust to purchase and maintain liability
insurance on behalf of any such person.
Section 4. In case any Shareholder or former Shareholder shall be held to be personally liable solely by reason of his or her being or having been a Shareholder and not because of his or her acts or omissions or for some other reason, the Shareholder or former Shareholder (or his or her heirs, executors, administrators or other legal representatives or in the case of a corporation or other entity, its corporate or other general successor) shall be entitled to be held harmless from and indemnified against all loss and expense arising from such liability, but only out of the assets of the particular Series of Shares of which he or she is or was a Shareholder.
ARTICLE IX
Miscellaneous
Section 1. All persons extending credit to, contracting with or having any claim against the Trust or a particular Series or Class of Shares shall look only to the assets of the Trust or the assets of that particular Series or Class of Shares for payment under such credit, contract or claim; and neither the Shareholders nor the Trustees, nor any of the Trust's officers, employees or agents, whether past, present or future, shall be personally liable therefor. Nothing in this Declaration of Trust shall protect any Trustee against any liability to which such Trustee would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate or undertaking made or issued by the Trustees or by any officer or officers shall give notice that this Declaration of Trust is on file with the Secretary of The Commonwealth of Massachusetts and shall recite that the same was executed or made by or on behalf of the Trust or by them as Trustee or Trustees or as officers or officer and not individually and that the obligations of such instrument are not binding
upon any of them or the Shareholders individually but are binding only upon the assets and property of the Trust, and may contain such further recital as he or she or they may deem appropriate, but the omission thereof shall not operate to bind any Trustee or Trustees or officer or officers or Shareholder or Shareholders individually.
Section 2. The exercise by the Trustees of their powers and discretions hereunder shall be binding upon everyone interested. A Trustee shall be liable for his or her own willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee, and for nothing else, and shall not be liable for errors of judgment or mistakes of fact or law. The Trustees may take advice of counsel or other experts with respect to the meaning and operation of this Declaration of Trust, and shall be under, no liability for any act or omission in accordance with such advice or for failing to follow such advice. The Trustees shall not be required to give any bond as such, nor any surety if a bond is required.
Section 3. No person dealing with the Trustees shall be bound to make any inquiry concerning the validity of any transaction made or to be made by the Trustees or to see to the application of any payments made or property transferred to the Trust or upon its order.
Section 4. Unless terminated as provided herein, the Trust shall continue without limitation of time. The Trust may be terminated at any time by vote of Shareholders holding at least 66-2/3% of the Shares entitled to vote or by the Trustees by written notice to the Shareholders. Any Series or Class of Shares may be terminated at any time by vote of Shareholders holding at least 66-2/3% of the Shares of such Series or Class entitled to vote or by the Trustees by written notice to the Shareholders of such Series or Class.
Upon termination of the Trust or of any one, or more series of Shares, after paying or otherwise providing for all charges, taxes, expenses and liabilities, whether due or accrued or anticipated, of the Trust or of the particular Series as may be determined by the Trustees, the Trust shall in accordance with such procedures as the Trustees consider appropriate reduce the remaining assets to distributable form in cash or shares or other securities, or any combination thereof, and distribute the proceeds to the Shareholders of the Series involved, ratably according to the number of Shares of such Series held by the several Shareholders of such Series on the date of termination.
Section 5. The original or a copy of this instrument and of each amendment hereto shall be kept at the office of the Trust where it may be inspected by any Shareholder. A copy of this instrument and of each amendment hereto shall be filed by the Trust with the Secretary of The Commonwealth of Massachusetts and with the Burlington Town Clerk, as well as any other governmental office where such filing may from time to time be required. Anyone dealing with the Trust may rely on a certificate by an officer of the Trust as to whether or not any such amendments have been made and as to any matters in connection with the Trust hereunder, and, with the same effect as if
it were the original, may rely on a copy certified by an officer of the Trust to be a copy of this instrument or of any such amendments. In this instrument and in any such amendment, references to this instrument and all expressions like "herein", "hereof" and "hereunder" shall be deemed to refer to this instrument as amended or affected by any such amendments. Headings are placed herein for convenience of reference only and shall not be taken as a part hereof or control or affect the meaning, construction or effect of this instrument. This instrument may be executed in any number of counterparts each of which shall be deemed an original.
Section 6. This Declaration of Trust is made in The Commonwealth of Massachusetts, and it is created under and is to be governed by and construed and administered according to the laws of said Commonwealth. The Trust shall be of the type commonly called a Massachusetts business trust, and without limiting the provisions hereof, the Trust may exercise all powers which are ordinarily exercised by such a trust.
Section 7. This Declaration of Trust may be amended at any time by an instrument in writing signed by a majority of the then Trustees when authorized to do so by vote of Shareholders holding a majority of the Shares entitled to vote, except that an amendment which shall affect the holders of one or more Series or Classes of Shares but not the holders of all outstanding Series or Classes of Shares shall be authorized by vote of the Shareholders holding a majority of the Shares entitled to vote of each Series or Class affected and no vote of Shareholders of a Series or Class not affected shall be required. Amendments having the purpose of changing the name of the Trust or of supplying any omission, occuring any ambiguity or curing, correcting or supplementing any defective or inconsistent provision contained herein shall not require authorization by Shareholder vote.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals in the Town of Burlington, Massachusetts for themselves and their assigns, as of
the day and year first above written.
EXHIBIT 2
AMENDMENT NO. I TO THE AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST OF
U.S. BOSTON INVESTMENT COMPANY
We, the undersigned, being all of the Trustees of U.s. Boston Investment Company, a Massachusetts business trust created and existing under an Amended and Restated Agreement and Declaration of Trust dated as of April 2, 1990, (the "Agreement") , a copy of which is on file in the office of the Secretary of State of the Commonwealth of Massachusetts, do hereby certify that the following amendment to said Agreement has been authorized by the unanimous vote of the Trustees, taken at a meeting held for that purpose on July 14, 1993, consistent with Article IX, Section 7 of the Agreement, and do hereby amend said Agreement as follows:
By amending Section 1 of ARTICLE I to read in its entirety as follows:
"Section 1. This Trust shall be known as "The Quantitative Group of Funds", and the Trustees shall conduct the business of the Trust under that name or any other name as they may from time to time determine."
The foregoing Amendment shall become effective as of the close of business July 18, 1993.
IN WITNESS WHEREOF, we have hereunto set our hands and common Seal, for ourselves and our successors and assigns.
Leon Okurowski
Exhibit 3 Amended and Restated April 2, 1990
BYLAWS
OF
U.S. BOSTON INVESTMENT COMPANY
ARTICLE I
Agreement and Declaration of Trust and Principal Office
ARTICLE 2
Meetings of Trustees
need not be given to any Trustee if a written waiver of notice, executed by him or her before the meeting, is filed with the records of the meeting, or to any Trustee who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him or her. Neither notice of a meeting nor a waiver of a notice need specify the purposes of the meeting.
ARTICLE 3
Officers
ARTICLE 4
Committees
meeting can hear each other at the same time and participation by such means shall constitute presence in person at a meeting.
ARTICLE 5
Reports
ARTICLE 6
Fiscal Year
ARTICLE 7
Seal
ARTICLE 8
Execution of Papers
ARTICLE 9
Issuance of Share Certificates
Declaration of Trust and these By-Laws and, in the case of fractional shares, at a proportionate reduction in such price. In the case of shares sold for securities, such securities shall be valued in accordance with the provisions for determining value of assets of the Trust as stated in the Declaration of Trust and these By-Laws. The officers of the Trust are severally authorized to take all such actions as may be necessary or desirable to carry out this Section 9.1.
The Trustees may at any time authorize the issuance of share certificates. In that event, each shareholder shall be entitled to a certificate stating the number of shares owned by him, in such form as shall be prescribed from time to time by the Trustees. Such certificates shall be signed by the president or vice-president and by the treasurer or assistant treasurer. Such signatures may be if the certificate is signed by a transfer agent, or by a registrar, other than a Trustee, officer or employee of the Trust. In case any officer who has signed or whose facsimile signature has been placed on such certificate shall cease to be such officer before such certificate is issued, it may be issued by the Trust with the same effect as if he were such officer at the time of its issue.
cancellation. Such surrender and cancellation shall not effect the ownership of shares in the Trust.
ARTICLE 10
Provisions Relating to the Conduct of the Trust's Business
(a) All securities and cash owned by this Trust shall be held by or deposited with one or more banks or trust companies having (according to its last published report) not less than $5,000,000 aggregate capital, surplus and undivided profits (any such bank or trust company being hereby designated as "Custodian"), provided such a Custodian can be found ready and willing to act; subject to such rules, regulations and orders, if any, as the Securities and Exchange Commission may adopt, this Trust may, or may permit any Custodian to, deposit all or any part of the Securities owned by this Trust in a system for the central handling of securities pursuant to which all securities of any particular class or series of any issue deposited within the system may be transferred or pledged by bookkeeping entry, without physical delivery. The Custodian may appoint, subject to the approval of the Trustees, one or more subcustodians.
(b) The Trust shall enter into a written contract with each Custodian regarding the powers, duties and compensation of such Custodian with respect to the cash and securities of the Trust held by such Custodian. Said contract and all amendments thereto shall be approved by the Trustees.
(c) The Trust shall upon the resignation or inability to serve of any Custodian or upon change of any Custodian:
(i) in case of such resignation or inability to serve, use its best efforts to obtain a successor Custodian;
(ii) require that the cash and securities owned by the Trust be delivered directly to the successor Custodian; and
(iii)in the event that no successor Custodian can be found, submit to the shareholders, before permitting delivery of the cash and securities owned by the Trust otherwise than to a successor Custodian, the question whether the Trust shall be liquidated or shall function without a Custodian.
of its operations, containing all information required by applicable laws or regulations.
In valuing the portfolio investment of any series for determination of per share net asset values, securities for which market quotations are readily available shall be valued at prices which, in the opinion of the Trustees or the person designated by the Trustees to make the determination, most nearly represent the market value of such securities, and other securities and assets shall be valued at their fair value as determined by or pursuant to the direction of the Trustees, which in the case of short-term debt obligations, commercial paper and repurchase agreements may, but need not, be on the basis of quoted yields for securities of comparable maturity, quality and type, or on the basis of amortized cost. Expenses and liabilities of the Trust shall be accrued each day. Liabilities may include such reserves for taxes, estimated accrued expenses and contingencies as the Trustees or their designates may in their sole discretion deem fair and reasonable under the circumstances. No accruals shall be made in respect of taxes on unrealized appreciation of securities owned unless the Trustees shall otherwise determine. Dividends payable by the Trust shall be deducted as at the time of but immediately prior to the determination of per share net asset values on the record date therefor.
ARTICLE 11
Shareholders
(i) afford to such applicants access to a list of names and addresses of all shareholders as recorded on the books of the Trust; or
(ii) inform such applicants of the approximate number of shareholders of record and the approximate cost of mailing material to them, and, within a reasonable time thereafter, mail, at the applicants' expense, materials submitted by the applicants, to all such shareholders of record. the Trustees shall not be obligated to mail materials which they believe to be misleading or in violation of applicable law.
record date the Trustees may for any of such purposes close the register or transfer books for all or any part of such period.
ARTICLE 12
Amendments to the Bylaws
The Fund will be required to maintain records that account for both classes of shares (Class A Shares and Existing Shares) within each series. The Class A Shares will be offered and sold to investors investing at least $1,000,000 in the Fund. The Class A Shares will not be subject to 12b-1 fees, a deferred sales charge or a sales load. The class of shares presently outstanding are principally offered and sold pursuant to a 12b-1 fee and are subject to a 1.00% fee payable upon redemption. No sales load is charged on the purchase of the shares presently outstanding Accordingly, separate net asset value's and/or dividends/distributions must be calculated for each class of shares.
The procedures for calculating NAV and dividends/ distributions depend upon the dividend policy of the respective series. Presently, each series of the Fund pays annually as dividends all of its net investment income and distributes annually substantially all of its net capital gains.
In maintaining the records for the Fund, the profit and loss accounts must be allocated to each class of shares within each series. That is, net investment income, unrealized and realized gains or losses will be allocated daily to each class of shares based on the percentage of net assets at the beginning of the day. These balances will be accumulated by class of shares.
On a daily basis, expenses are attributable to each class of shares depending on the nature of the expenditures. These fall into three categories: (1) expense attributable to both classes that are allocated based on net assets at the beginning of the day (i.e., legal, audit, etc.); (2) items attributable to only one class of shares (12b-1); and, (3) certain expenses that have higher cost for one class versus the other (i.e., transfer agent fee). Prior to determining the day's NAV or annual dividends/distributions, the following expense items must be calculated as indicated:
. Management Fee:
Using the prior day's combined net assets of both classes of shares (i.e. total net assets of the fund) calculate the current day's accrual and then allocate the amount to each class based on the percentages of assets by class.
. 12b-1 Fee:
Using the prior day's net assets for the Existing Shares, calculate the current day's accrual.
. Transfer Agent Fee (where different rates exist for Class A and Existing Shares):
Using the existing budget for each class of shares, accrue separate daily amounts for each class.
In designing accounting procedures and controls regarding the allocation of income and expenses and the calculation of NAV and dividends and distributions for the two classes of shares the following objectives must be met:
1. To ascertain that- the direct expenses charged to each class of shares are correctly recorded in the fund accounting records and are allocated to the correct class of shares,
2. To ascertain that income and operating expense are allocated properly to each class of shares based upon the value of outstanding share's of each class at the end of the day, and
3. To ascertain that the dividend rates and daily NAV per share for each class of shares reflect the proper allocation of income and operating expenses as well as the full amount of any direct expenses charged to the respective class of shares.
Set forth below are the additional procedures which will be implemented to satisfy the objectives described above. These procedures presume that the normal procedures and controls remain in effect at State Street Bank and Trust Company and U.S. Boston Investment Management Corporation for all other daily fund accounting.
. The dividend is declared annually by the Trustees of the Fund and consists of substantially all the accumulated undistributed net investment income for each class of shares as of the record date.
. The capital gains distribution is declared annually by the Trustees of the Fund and consists of substantially all the accumulated net undistributed realized gains for each class of shares as of the record date.
. The U.S. Boston Investment Company dual pricing worksheet determines the NAV by each class of shares.
DUAL PRICING WORKSHEET
FUND DATE
ASSET ALLOCATION COMPOSITE CLASS A EXISTING
1. PRIOR DAY NAV PER SHAKE
INCOME AND EXPENSES REVIEWED/APPROVED BY FLM:
7. Dividend Income
8. Interest Income
9. Amortization
10. Total Daily Income
CAPITAL
18. Income Distribution
19. Undistributed Net Income
20. Capital Stock Activity
21. Capital Gain Distribution
22. Realized Gain/Loss
23. Unrealized Apprec./Deprecialion
24. Daily Net Asset Change
25. Prior Day Net Assets
26. Net Assets
27. NAV Per Share and Offering Price
1. The net asset value per share by class as of the close of business from the previous day's worksheet.
2. The total number of shares by class outstanding at the close of business the previous day, as per the previous day's worksheet, and confirmed by the transfer agent.
3. The net total of capital share transactions by class for the current day, as reported by the transfer agent for the previous day's activity.
4. The total of lines 2 and 3 to arrive at today's outstanding shares, and confirmed with the transfer agent.
5. The value of shares outstanding by class before the current day's change in net assets. The composite amount is arrived at by adding the total of Class A assets and Existing assets.
6. The percent of assets each class represents in total assets of the portfolio.
7. The total dividend income for the portfolio for the current day prorated at the class level based on line 6.
8. The total interest income for the portfolio for the current day prorated at the class level based on line 6.
9. The total net (amortization) of premium or accretion of discount for the current day prorated at the class level based on line 6.
10. The total of lines 7, 8 and 9 to arrive at total income for the portfolio by class for the current day.
11. Using the prior day's combined net assets, the total costs incurred for management and advisory services prorated at the class level based on line 6.
12. The 12b-1 distribution fee based on the prior day's net assets for Existing Shares.
13. The expenses that are attributable to both classes of the Fund, exclusive of management fees, prorated at the class level based on line 6.
14. The transfer agent expenses directly attributable to each class and any other expenses attributable to a particular class.
15. The total of lines 11, 12, 13 and 14 to arrive at total expenses for the current day.
16. The portion of expenses, if any, borne by the manager calculated on a class level.
17. Line 15 subtracted from line 10 which subtotal is added to line 16.
18. The portion of accumulated net income declared as a dividend by the Fund's Board of Trustees to shareholders on the current day (ex-dividend date).
19. Line 17 minus Line 18.
20. The net dollar amount of all capital share transactions for the current day as reported by the transfer agent.
21. The portion of accumulated realized gains declared as a capital gain distribution by the Fund's Board of Trustees to shareholders on the current day (ex-dividend date).
22. The realized gain or loss for the current day prorated at the class level based on line 6.
23. The change in the market value of investments from the previous day to the current day prorated at the class level based on line 6.
24. The total of lines 19 through 23.
25. The net assets of each class of shares from the previous day's worksheet.
26. The total of lines 24 and 25.
27. The net assets for the current day divided by the respective number of
class shares as reported on line 4.
EXHIBIT 4
AMENDMENT NO. 1 TO
AMENDED AND RESTATED BYLAWS
OF
U.S. BOSTON INVESTMENT COMPANY
Effective July 19, 1993, the heading and Article 1 of the Amended and Restated Bylaws of U.S. Boston Investment Company dated April 2, 1990 are hereby amended to read as follows:
BYLAWS
OF
QUANTITATIVE GROUP OF FUNDS
ARTICLE 1
Agreement and Declaration of Trust and Principal office
by the Trustees of the Trust.
EXHIBIT 5
ARTICLE V of the Fund's Declaration of Trust Relating to Shareholder Rights
Shareholders' Voting Powers and Meetings
Section 1. The Shareholders shall have power to vote only (i) for the election of Trustees as provided in Article IV, Section 1, (ii) for the removal of Trustees as provided in Article IV, Section 1, (iii) with respect to any Manager as provided in Article IV, Section 6, (iv) with respect to any termination of this Trust to the extent and as provided in Article IX, Section 4, (v) with respect to any amendment of this Declaration of Trust to the extent and as provided in Article IX, Section 7, (vi) to the same extent as the stockholders of a Massachusetts business corporation as to whether or not a court action, proceeding or claim should or should not be brought or maintained derivatively or as a class action on behalf of the Trust or the Shareholders, and (vii) with respect to such additional matters relating to the Trust as may be required by this Declaration of Trust, the Bylaws or any registration of the Trust with the Commission (or any successor agency) or any state, or as the Trustees may consider necessary or desirable. Each whole Share shall be entitled to one vote as to any matter on which it is entitled to vote and each fractional Share shall be entitled to a proportionate fractional vote. Notwithstanding any other provision of this Declaration of Trust, on any matter submitted to a vote of Shareholders, all Shares of the Trust then entitled to vote shall be voted by individual Series, except (1) when required by the 1940 Act or any Rules or Orders hereunder, Shares shall be voted in the aggregate and not by individual Series; and (2) when the Trustees have determined that the matter affects only the interests of one or more Series, then only Shareholders of such Series shall be entitled to vote thereon. There shall be no cumulative voting in the election of Trustees. Shares may be voted in person or by proxy. A proxy with respect to Shares held in the name of two or more persons shall be valid if executed by any one of them unless at or prior to exercise of the proxy the Trust receives a specific written notice to the contrary from any one of them. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise and the burden of proving invalidity shall rest on the challenger. Until Shares are issued, the Trustees may exercise all rights of Shareholders and may take any action required by law, this Declaration of Trust or the Bylaws to be taken by Shareholders.
Section 2. Meetings of any or all Series or Classes of Shares may be called by the Trustees from time to time for the purpose of taking action upon any matter requiring the vote or authority of the Shareholders of such Series or Class as herein provided or upon any other matter deemed by the Trustees to be necessary or desirable. Written notice of any meeting of Shareholders shall be given or caused by mailing such notice at least seven days before such meeting,postage prepaid, stating the time, place and purpose of the meeting, to each Shareholder entitled to vote at such meeting at the Shareholder's address as it appears on the records of the Trust. If the Trustees shall
fail to call or give notice of any meeting of Shareholders for a period of 30 days after written application by Shareholders holding at least 10% of the then outstanding Shares of each Series entitled to vote at such meeting (or of all Series if all Series are entitled to vote at such meeting) requesting a meeting to be called for a purpose requiring action by the Shareholders as provided herein or in the Bylaws, then Shareholders holding at least 10% of the then outstanding Shares of each Series entitled to vote at such meeting (or of all series if all series are entitled to vote at such meeting) may call and give notice of such meeting, and thereupon the meeting shall be held in the manner provided for herein in case of call thereof by the Trustees.
Section 3. A majority of Shares entitled to vote shall be a quorum for the transaction of business at a Shareholders' meeting, except that where any provision of law or of this Declaration of Trust permits or requires that holders of any Series or Class shall vote as a Series or Class then a majority of the aggregate number of Shares of that Series or Class entitled to vote shall be necessary to constitute a quorum for the transaction of business by that Series or Class. Any lesser number shall be sufficient for adjournments. Any adjourned session or sessions may be held, within a reasonable time after the date set for the original meeting, without the necessity of further notice. Except when a larger vote is required by any provision of law or this Declaration of Trust or the Bylaws, a majority of the Shares voted shall decide any questions and a plurality shall elect a Trustee, provided that where any provision of law or of this Declaration of Trust permits or requires that the holders of any Series shall vote as a Series, then a majority of the Shares of that Series voted on the matter shall decide that matter insofar as that Series is concerned.
Section 4. Any action taken by Shareholders may be taken without a meeting if a majority of Shareholders entitled to vote on the matter (or such larger proportion thereof as shall be required by any express provision of this Declaration of Trust or the Bylaws) consent to the action in writing and such written consents are filed with the records of the meetings of Shareholders. Such consent shall be treated for all purposes as a vote taken at a meeting of Shareholders.
Section 5. The Bylaws may include further provisions of Shareholders' votes
and meetings and related matters.
EXHIBIT 6
ARTICLE 11 of the Fund's Bylaws relating to Shareholders rights.
(i) afford to such applicants access to a list of names and addresses of all shareholders as recorded on the books of the Trust; or
(ii) inform such applicants of the approximate number of shareholders of record and the approximate cost of mailing material to them, and, within a reasonable time thereafter, mail, at the applicants' expense, materials submitted by the applicants, to all such shareholders of record. the Trustees shall not be obligated to mail materials which they believe to be misleading or in violation of applicable law.
ARTICL
EXHIBIT 7
Management Contract ("Contract") dated as of January 31, 1999, between QUANTITATIVE GROUP OF FUNDS, a Massachusetts business trust (the "Fund") and QUANTITATIVE ADVISORS, INC., a Massachusetts corporation (the "Manager").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is agreed as follows:
1. SERVICES TO BE RENDERED BY MANAGER TO FUND.
(a) Subject always to the control of the trustees (the "Trustees") of the Fund, the Manager, will, at its expense, manage, supervise and conduct the affairs and business of the Fund and matters incidental thereto. In the performance of its duties, the Manager will comply with the provisions of the Agreement and Declaration of Trust and By-Laws of the Fund, as amended, and its stated investment objectives, policies and restrictions as set forth in the then current Prospectus and/or Statement of Additional Information of the Fund, and will use its best efforts to safeguard and promote the welfare of the Fund and to comply with other written policies which the Trustees may from time-to-time determine and of which the Manager has received notice, and shall exercise the same care and diligence expected of the Trustees. In its management, supervision and conduct of the Fund's affairs and business, the Manager will do all things necessary so that each series of the Fund (the "Series") may qualify as a "regulated investment company" within the meaning of the Internal Revenue Code of 1986, as amended (the "Code"), and the Rules and Regulations thereunder.
(b) Subject to the provisions of the Declaration of Trust and the Investment Company Act of 1940, as amended, (the "1940 Act"), the Manager may, at its expense, select and contract with investment advisers (the "Advisers") for each of the Series and shall supervise any such Adviser. The Manager will compensate the Advisers for their services to the Fund from the fee paid to the Manager by the Fund pursuant to this Management Contract or from other funds available to the Manager.
(c) The Fund hereby agrees with the Manager and with any Adviser selected by the Manger as provided in Section 1(b) hereof that any entity or person associated with the Manager which is a member of a national securities exchange is authorized to effect any transaction on such exchange for the account of the Fund and any Series thereof which is permitted by Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder, and the Fund hereby consents to the retention of compensation for such transactions in accordance with Rule 11a2-2(T)(2)(iv).
(d) Except to the extent that any such facilities are provided for any Series by its Adviser, the Manager, at its expense, will furnish (1) all necessary investment and management facilities, including salaries of personnel, required for it to execute its duties faithfully, (2) suitable office space for the Fund; and (3) administrative facilities, including bookkeeping, clerical personnel and equipment necessary for the efficient conduct of the affairs of the Fund, but excluding shareholder accounting services. The Manager will pay the compensation, if any, of the officers of the Fund.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and employees of the Fund may be a shareholder, partner, director, officer or employee of, or be otherwise interested in, the Manager, and in any person controlled by or under common control with the Manager, and that the Manager and any person controlled by or under common control with the Manager may have an interest in the Fund. It is also understood that the Manager and persons controlled by or under common control with the Manager have and may have advisory, management, service or other contracts with other organizations (including other investment companies and other managed accounts) and persons, and may have other interests and businesses.
3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.
The Fund will pay to the Manager, as compensation for the Manager's services rendered, for the facilities furnished, and for the expenses borne by the Manager pursuant to Section 1, a fee, computed and paid monthly at the annual rate for each Series set forth in Schedule I. Such fee computed with respect to the net asset value of each of such Series shall be paid from the assets of such Series. Such aggregate average daily net asset value of the Series shall be determined by taking an average of all the determinations of such net asset value during such month at the close of business on each business day, and for non-business days, the net asset value determined on the previous business day, during such month while this Contract is in effect. Such fee shall be payable for each month within 30 days after the end of each month.
In the event that the expenses of the Quantitative Small Cap Fund, Quantitative Growth and Income Fund, or Quantitative International Equity Fund exceed 2% of such Series' average net assets, the compensation due the Manager with respect to such Series for such year shall be reduced and, if necessary, the Manager shall assume expenses of the Series, to the extent required to reduce the Series' expenses to 2% of average net assets. Series expenses subject to this limitation are exclusive of brokerage, interest, taxes and extraordinary expenses, if any and shall be calculated before giving effect to any custody credits.
If the Manager shall serve for less than the whole of a month, the foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS TO THIS CONTRACT.
This Contract shall automatically terminate, without the payment of any penalty, in the event of its assignment; and this Contract shall not be amended as to any Series unless such amendment is approved at a meeting by an affirmative vote of a majority of the outstanding shares of the Series, and by the vote, cast in person at a meeting called for the purpose of voting on such approval, of a majority of the Trustees of the Fund who are not interested persons of the Fund or of the Manager or of the Advisors.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and shall remain in full force and effect as to each Series continuously thereafter (unless terminated automatically as set forth in Section 4) until terminated as follows:
(a) Either party hereto may at any time terminate this Contract as to any Series or as to the Fund as a whole by not more than sixty days' nor less than thirty days' written notice delivered or mailed by registered mail, postage prepaid, to the other party, or
(b) If (i) the Trustees of the Fund, or the shareholders by the affirmative vote of a majority of the outstanding shares of any Series, and (ii) a majority of the Trustees of the Fund who are not interested persons of the Fund or of the Manager, by vote cast in person at a meeting called for the purpose of voting on such approval, do not specifically approve at least annually the continuance of this Contract, then this Contract shall automatically terminate as to such Series at the close of business on the second anniversary of the effective date hereof or the expiration of one year from the effective date of the last such continuance, whichever is later; provided, however, that if the continuance of this Contract is submitted to the shareholders of a Series for their approval and such shareholders fail to approve such continuance of this Contract as provided herein, the Manager may continue to serve hereunder in a manner consistent with the 1940 Act and the Rules and Regulations thereunder.
Action by the Fund under (a) above may be taken either (i) by vote of a majority of its Trustees, or (ii) by the affirmative vote of a majority of the outstanding shares of the one or more Series affected.
Termination of this Contract pursuant to this Section 5 shall be without the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of a majority of the outstanding shares" means the affirmative vote, at a duly called and held meeting of shareholders, (a) of the holders of 67% or more of the shares of the Fund or the Series, as the case may be, present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding shares of the Fund or the Series, as the case may be, entitled to vote at such meeting are present in person or by proxy, or (b) of the holders of more than 50% of the outstanding shares of the Fund or the Series, as the case may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person", "control", "interested person" and "assignment" shall have their respective meanings defined in the 1940 Act and the Rules and Regulations thereunder, subject, however, to such exemptions as may be granted by the Securities and Exchange Commission ("SEC") under said Act; the term "specifically approve at least annually" shall be construed in a manner consistent with the 1940 Act and the Rules and Regulations thereunder.
7. NONLIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross negligence on the part of the Manager, its partners, officers, directors, employees or agents or reckless disregard of the Manager's obligations and duties hereunder, neither the Manager nor its officers, directors, employees or agents shall be subject to any liability to the Fund, or to any shareholder of the Fund, for any act or omission in the course of, or connected with, rendering services hereunder, provided however, that such limitation shall not apply to the extent such limitation violates Federal securities or other laws.
8. LIMITS OF THE LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Fund is on file with the Secretary of the Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Trustees of the Fund as Trustees and not individually and that the obligations of this instrument are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of the Fund.
IN WITNESS WHEREOF, QUANTITATIVE GROUP OF FUNDS and QUANTITATIVE ADVISORS, INC. have each caused this instrument to be signed in duplicate in its behalf, all as of the day and year first above written.
QUANTITATIVE GROUP OF FUNDS
By___________________________
Willard L. Umphrey
President
QUANTITATIVE ADVISORS, INC.
By__________________________
Willard L. Umphrey
President
Schedule I to Management Contract dated as of January 31, 1999 between Quantitative Group of Funds and Quantitative Advisors, Inc.
Management Fee (as a
Series Percentage of Net Assets)
------ -------------------------
Quantitative Small Cap Fund 1.00%
Quantitative Mid Cap Fund 0.80%
Quantitative Growth and Income Fund 0.75%
Quantitative International Equity Fund 1.00%
Quantitative Emerging Markets Fund 0.80%
Quantitative Foreign Value Fund 1.00%
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EXHIBIT 8
Advisory Contract ("Contract") dated as of January 31, 1999, between QUANTITATIVE ADVISORS, INC., a Massachusetts corporation (the "Manager") and COLUMBIA PARTNERS, L.L.C., INVESTMENT MANAGEMENT, a Delaware limited liability company (the "Advisor").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is agreed as follows:
1. SERVICES TO BE RENDERED BY ADVISOR TO TRUST.
(a) Subject always to the control of the trustees (the "Trustees") of Quantitative Group of Funds, a Massachusetts business trust (the "Trust"), and the Manager, the Advisor, at its expense, will furnish continuously an investment program for the Quantitative Mid Cap Fund (the "Fund") of the Trust. The Advisor will determine what securities shall be purchased, held, sold or exchanged by the Fund and what portion, if any, of the assets of the Fund shall be held uninvested and shall, on behalf of the Fund, make changes in the Fund's investments. In the performance of its duties, the Advisor will comply with the provisions of the Agreement and Declaration of Trust and By-Laws of the Trust, as amended, and the stated investment objectives, policies and restrictions of the Fund as set forth in the then current Prospectus and/or Statement of Additional Information of the Trust and with other written policies which the Trustees or the Manager may from time-to-time determine and of which the Advisor has received notice. In furnishing an investment program to the Fund and in determining what securities shall be purchased, held, sold or exchanged by the Fund, the Advisor shall (1) comply in all material respects with all provisions of applicable law governing its duties and responsibilities hereunder, including, without limitation, the Investment Company Act of 1940 (the "1940 Act"), and the Rules and Regulations thereunder; the Investment Advisors Act of 1940, and the Rules and Regulations thereunder; the Internal Revenue Code of 1986, as amended (the "Code"), relating to regulated investment companies and all Rules and Regulations thereunder; the Insider Trading and Securities Fraud Enforcement Act of 1988; and such other laws as may be applicable to its activities as Advisor to the Fund and (2) use its best efforts to manage the Fund so that the Fund will qualify, and continue to qualify, as a regulated investment company under Subchapter M of the Code and regulations issued thereunder. The Advisor shall make its officers and employees available to the Manager or Trustees from time-to-time at reasonable times to review investment policies of the Fund and to consult with the Manager or Trustees regarding the investment affairs of the Fund.
(b) The Advisor, at its expense, will (1) furnish all necessary investment and management facilities, including salaries of personnel, required for it to execute its duties hereunder, (2) keep records relating to the purchase, sale or current status of portfolio securities, (3) provide clerical personnel and equipment necessary for the efficient rendering of investment advice to the Fund, (4) furnish to the Manager such reports and records regarding the Fund and the Advisor as the Manager or Trustees shall from time-to-time request, and, (5) upon reasonable notice, review written references to the Advisor, or its methodology, whether in a Prospectus, Statement of Additional Information, sales material or otherwise. The Advisor shall have no obligation with respect to the determination of the Fund's net asset value, except to provide the Trust's custodian with information as to the securities held in the Fund's portfolio. The Advisor shall not be obligated to provide shareholder accounting services.
(c) The Advisor shall place all orders for the purchase and sale of portfolio investments for the Fund's account with brokers or dealers selected by the Advisor. In the selection of such brokers or dealers and the placing of such orders, the Advisor shall use its best efforts to obtain for the Fund the most favorable price and execution available, except to the extent that it may be permitted to pay higher brokerage commissions for brokerage and research services as described below. In using its best efforts to obtain for the Fund the most favorable price and execution available, the Advisor, bearing in mind the Fund's best interests at all times, shall consider all factors it deems relevant, including by way of illustration, price, the size of the transaction, the nature of the market for the security, the amount of the commission, if any, the timing of the transaction taking into account market prices and trends, the reputation, experience and financial stability of the broker or dealer involved and the quality of service rendered by the broker or dealer in other transactions. Subject to such written policies as the Trustees or the Manager may determine, and of which the Advisor has received notice and which the Advisor has accepted in writing, the Advisor shall not be deemed to have acted unlawfully or to have breached any duty created by this Contract or otherwise solely by reason of its having caused the Fund to pay a broker or dealer that provides brokerage and research services to the Advisor and/or the Manager an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Advisor determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Advisor's and/or Manager's overall responsibilities with respect to the Trust and to other clients as to which the Advisor and/or Manager or persons controlled by or under common control with the Advisor and/or Manager exercise investment discretion. The Advisor agrees that in connection with purchase or sales of portfolio instruments for the Fund's account, neither the Advisor nor any officer, director, employee or agent of the Advisor shall act as principal or receive any commission other than as provided in Section 3.
(d) The assets of the Fund shall be held by the Trust's custodian in an account which the Trust has directed the Custodian to open. The Advisor shall at no time have custody or physical control of any of the assets of the Fund. The Manager shall cause such custodian to provide the Advisor with such information and reports concerning the Fund or its assets as the Advisor may from time to time reasonably request and to accept instructions from the Advisor with respect to such assets and transactions by the Fund in the performance of the Advisor's duties hereunder. The Advisor shall have no liability or obligation to pay the cost of such custodian or any of its services.
(e) Advice rendered to the Fund shall be confidential and may not be used by any shareholder, Trustee, officer, director, employee or agent of the Trust or of the Manager or by the advisor of any other fund of the Trust. Non-public information provided to the Manager on a confidential basis regarding the methodology of the Advisor shall not be made publicly available by the Manager, except that such information may be disclosed to the Trustees and may be disclosed to the extent necessary to comply with the federal and state securities laws and, after notice to the Advisor, upon order of any court or administrative agency or self regulatory organization of which the Manager or its affiliates are members.
(f) The Advisor shall not be obligated to pay any expenses of or for the Fund not expressly assumed by the Advisor pursuant to this Section 1.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and employees of the Trust may be a shareholder, partner, director, officer or employee of, or be otherwise interested in, the Advisor, and in any person controlled by or under common control with the Advisor, and that the Advisor and any person controlled by or under common control with the Advisor may have an interest in the Trust. It is also understood that the Advisor and persons controlled by or under common control with the Advisor have and may have advisory, management, service or other contracts with other organizations (including other investment companies and other managed accounts) and persons, and may have other interests and businesses.
Nothing in this Contract shall prohibit the Advisor or any of its affiliates from providing any services for any other person or entity or limit the services which the Advisor or any such affiliate can provide to any person or entity, provided, however, that without the written consent of the Manager, the Advisor may not provide investment advisory or investment management services to another investment company which invests the primary portion of its assets in companies comprising the Russell 2000 Index, or any other widely recognized index of small cap stocks. The Manager understands and agrees that the Advisor and its affiliates perform investment advisory and investment management services for various clients other than the Manager and the Trust. The Manager agrees that the Advisor and its affiliates may give advice and take action in the performance of duties with respect to any other client which may differ from advice
given, or the timing or nature of action taken, with respect to the Fund. Nothing in this Contract shall be deemed to impose upon the Advisor any obligation to purchase or sell or to recommend for purchase or sale for the Fund any security or other property which the Advisor or any of its affiliates may purchase or sell for its own account or for the account of any other client, so long as it continues to be the policy and practice of the Advisor not to favor or disfavor consistently or consciously any client or class of clients in the allocation of investment opportunities, so that to the extent practical, such opportunities will be allocated among clients over a period of time on a fair and equitable basis.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE ADVISOR
The Manager will pay to the Advisor, as compensation for the Advisor's services rendered and for the expenses borne by the Advisor pursuant to Section 1, a fee, computed and paid monthly at the annual rate of 0.40% of the aggregate average daily net asset value of the Fund. Such fee shall be paid by the Manager and not by the Fund out of the management fee paid by the Trust to the Manager pursuant to the Management Contract between the Manager and the Trust or out of any other funds available to the Manager. Such average daily net asset value of the Fund shall be determined by taking an average of all the determinations of such net asset value during such month at the close of business on each business day, and for non-business days, the net asset value determined on the previous business day, during such month while this Contract is in effect. Such fee shall be payable for each month within 30 days after the end of each month.
If the Advisor shall serve for less than the whole of a month, the foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS TO THIS CONTRACT
This Contract shall automatically terminate, without the payment of any penalty, in the event of its assignment or in the event that the Management Contract between the Trust and the Manager is terminated generally, or with respect to the Fund; and this Contract shall not be amended unless (i) such amendment is approved at a meeting by an affirmative vote of a majority of the outstanding shares of the Fund, and (ii) by the vote, cast in person at a meeting called for the purpose of voting on such approval, of a majority of the Trustees of the Trust who are not interested persons of the Trust or of the Manager or of the Advisor. Notwithstanding the foregoing, shareholder approval will not be required for amendments to this Contract if the Fund obtains an exemptive order from the Securities and Exchange Commission permitting amendments to this Contract without shareholder approval.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective on January 31, 1999 or such other time as shall be agreed upon by the Manager and the Advisor, and shall remain in full force and effect as to the Fund continuously thereafter (unless terminated automatically as set forth in Section 4) until terminated as follows:
(a) The Trust or the Manager may at any time terminate this Contract as to the Fund by not more than sixty days' or less than thirty days' written notice delivered or mailed by registered mail, postage prepaid, to the Advisor, or
(b) The Advisor may at any time terminate this Contract as to the Fund by not less than one hundred fifty days' written notice delivered or mailed by registered mail, postage prepaid, to the Manager, or
(c) If (i) the Trustees of the Trust, or the shareholders by the affirmative vote of a majority of the outstanding shares of the Fund, and (ii) a majority of the Trustees of the Trust who are not interested persons of the Trust or of the Manager or of the Advisor, by vote cast in person at a meeting called for the purpose of voting on such approval, do not specifically approve at least annually the continuance of this Contract, then this Contract shall automatically terminate as to the Fund at the close of business on the second anniversary of the effective date hereof or the expiration of one year from the effective date of the last such continuance, whichever is later; provided, however, that if the continuance of this Contract is submitted to the shareholders of the Fund for their approval and such shareholders fail to approve such continuance of this Contract as provided herein, the Advisor may continue to serve hereunder in a manner consistent with the 1940 Act and the Rules and Regulations thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a majority of its Trustees, or (ii) by the affirmative vote of a majority of the outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without the payment of any penalty.
6. CERTAIN DEFINITIONS
For the purposes of this Contract, the "affirmative vote of a majority of the outstanding shares" means the affirmative vote, at a duly called and held meeting of shareholders, (a) of the holders of 67% or more of the shares of the Trust or the Fund, as the case may be, present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding shares of the Trust or the Fund, as the case may be, entitled to vote at such meeting are present in person or by proxy, or (b) of the holders of more than 50% of the outstanding shares of the Trust or the Fund, as the case may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person", "control", "interested person" and "assignment" shall have their respective meanings defined in the
1940 Act and the Rules and Regulations thereunder, subject, however, to such exemptions as may be granted by the Securities and Exchange Commission ("SEC") under said Act; the term "specifically approve at least annually" shall be construed in a manner consistent with the 1940 Act and the Rules and Regulations thereunder; and the term "brokerage and research services" shall have the meaning given by the Securities Exchange Act of 1934 and the Rules and Regulations thereunder.
7. NONLIABILITY OF ADVISOR.
Notwithstanding any other agreement to the contrary, in the absence of willful misfeasance, bad faith or gross negligence on the part of the Advisor, its partners, officers, directors, employees or agents or reckless disregard of the Advisor's obligations and duties hereunder, neither the Advisor nor its officers, directors, employees or agents shall be subject to any liability to the Trust or to the Manager, or to any shareholder of the Trust, for any act or omission in the course of, or connected with, rendering services hereunder, unless the Advisor is claiming indemnity from any of them in connection herewith, but then only to the extent of the indemnity obtained.
8. VOTING OF SECURITIES.
The Advisor shall have the power to vote, either in person or by proxy, all securities in which assets of the Fund may be invested from time to time and shall not be required to seek or take instructions from the Manager or the Trustees of the Trust, or to take any action, with respect thereto.
9. REPRESENTATIONS AND COVENANTS OF THE MANAGER.
(a) The Manager represents that the terms of this Contract do not violate any obligation by which it is bound, whether arising by contract, operation of law or otherwise, and that it has the power, capacity and authority to enter into this Contract and to perform in accordance herewith. In addition, the Manager represents, warrants and covenants to the Advisor that it has the power, capacity and authority to commit the Trust to this Contract; that a true and complete copy of the Agreement and Declaration of Trust and By-Laws of the Trust and the stated objectives, policies and restrictions of the Fund have been delivered to the Advisor; and that true and complete copies of every amendment thereto will be delivered to the Advisor as promptly as practicable after the adoption thereof. The Manager agrees that notwithstanding any other provision of this Contract to the contrary, the Advisor will not be bound by any such amendment until the Advisor has received a copy thereof and has had a reasonable opportunity to review it.
(b) The Manager shall indemnify and hold harmless the Advisor, its partners, officers, employees and agents and each person, if any, who controls the Advisor within the meaning of any applicable law (each individually an "Indemnified Party") from and against all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable fees and other expenses of an Indemnified Party's counsel, other than attorneys' fees and costs in relation to the preparation of this Contract; each
party bearing responsibility for its own such costs and fees), joint or several, (other than liabilities, losses, expenses, attorneys' fees and costs or damages arising from the failure of the Advisor to perform its responsibilities hereunder or claims arising from its acts or failure to act in performing this Contract) to which the Advisor or any other Indemnified Party may become subject under any federal or state law as a result of any failure of the Manager or, if caused by any failure of the Manager, of the Trust or the Fund, to disclose a material fact, or any omission by the Manager, or, if caused by any failure of the Manager, of the Trust or the Fund, to disclose a material fact, in any document relating to the Trust or the Fund, except any failure or omission caused solely by (i) the incorporation in any such document of information relating to the Advisor which is furnished to the Manager in writing by or with the consent of the Advisor expressly for inclusion in such document or (ii) a breach, of which the Manager was not aware, by the Advisor of its duties hereunder. With respect to any claim for which an Indemnified Party is entitled to indemnity hereunder, the Manager shall assume the reasonable expenses and costs (including any reasonable attorneys' fees and costs) of the Indemnified Party or investigating and/or defending any claim asserted or threatened by any party, subject always to the Manager first receiving a written undertaking from the Indemnified Party to repay any amounts paid on its behalf in the event and to the extent of any subsequent determination that the Indemnified Party was not entitled to indemnification hereunder with respect of such claim.
(c) No public reference to, or description of, the Advisor or its methodology or work shall be made by the Manager or the Trust, whether in a prospectus, Statement of Additional Information or otherwise, unless the Manager provides the Advisor with a reasonable opportunity to review any such reference or description prior to the first use of such reference or description.
10. REPRESENTATIONS AND COVENANTS OF THE ADVISOR.
(a) The Advisor represents that the terms of this Contract do not violate any obligation by which it is bound, whether arising by contract, operation of law, or otherwise, and that it has the power, capacity and authority to enter into this Contract and to perform in accordance herewith.
(b) The Advisor shall immediately notify the Manager in the event that the Advisor or any of its affiliates: (1) becomes aware that it is subject to a statutory disqualification that prevents the Advisor from serving as investment advisor pursuant to this Contract; or (2) becomes aware that it the subject of an administrative proceeding or enforcement action by the SEC or any other regulatory authority. The Advisor further agrees to notify the Manager immediately of any material fact known to the Advisor respecting or relating to the Advisor that is not contained in the Trust's Registration Statement regarding the Fund, or any amendment or supplement thereto, but that is required to be disclosed therein, and of any statement contained therein that becomes untrue in any material respect.
(c) The Advisor agrees to maintain such books and records with respect to its services to the Fund as are required under the 1940 Act, and rules adopted thereunder, and by other applicable legal provisions, and to preserve such records for the periods and in the manner required by that Section, and those rules and legal provisions. The Advisor also agrees that records it maintains and preserves pursuant to Rule 31a-1 and Rule 31a-2 under the 1940 Act and otherwise in connection with its services hereunder are the property of the Trust and will be surrendered promptly to the Trust upon its request. The Advisor further agrees that it will furnish to regulatory authorities having the requisite authority any information or reports in connection with its services hereunder which may be requested in order to determine whether the operations of the Fund are being conducted in accordance with applicable laws and regulations.
(d) The Advisor shall provide the Manager with quarterly representations regarding the compliance of its' employees with the Advisor's code of ethics governing personal securities transactions. The Advisor shall provide the Manager with copies of any revisions to its code of ethics.
(e) The Advisor shall indemnify and hold harmless the Manager, the Fund, their partners, officers, employees and agents and each person, if any, who controls the Manager or Fund within the meaning of any applicable law (each individually an "Indemnified Party") from and against all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable fees and other expenses of an Indemnified Party's counsel, other than attorneys' fees and costs in relation to the preparation of this Contract; each party bearing responsibility for its own such costs and fees), joint or several, (other than liabilities, losses, expenses, attorneys' fees and costs or damages arising from the failure of the Manager to perform its responsibilities hereunder or claims arising from its acts or failure to act in performing this Contract) arising from Advisor's (or its respective agents and employees) failure to perform its duties and assume its obligations hereunder, including any action or claim against the Manager based on any alleged untrue statement or misstatement of a material fact made or provided in writing by or with the consent of Advisor contained in any registration statement, prospectus, shareholder report or other information or materials relating to the Fund and shares issued by the Fund, or the failure or alleged failure to state a material fact therein required to be stated in order that the statements therein are not misleading, which fact should have been made known or provided by the Advisor to the Manager. With respect to any claim for which an Indemnified Party is entitled to indemnity hereunder, the Advisor shall assume the reasonable expenses and costs (including any reasonable attorneys' fees and costs) of the Indemnified Party of investigating and/or defending any claim asserted or threatened by any party, subject always to the Advisor first receiving a written undertaking from the Indemnified Party to repay any amounts paid on its behalf in the event and to the extent of any subsequent determination that the Indemnified Party was not entitled to indemnification hereunder with respect of such claim.
11. USE OF NAME.
It is understood that the name of the Fund (as it may be changed from time to time while the Advisor provides services pursuant to this Contract) or any derivative thereof or logo associated with that name is the valuable property of the Trust and/or its affiliates, and that the Advisor has the right to use such name (or derivative or logo) only with the approval of the Manager and only so long as the Advisor is Advisor to the Trust and/or the Fund. Upon termination of this Contract the Advisor shall forthwith cease to use such name (or derivative or logo).
12. GOVERNING LAW.
This Contract shall be governed by, and construed and enforced in accordance with, the substantive laws of The Commonwealth of Massachusetts without regard to its principles of conflicts of laws, except to the extent such laws shall be preempted by the Investment Company Act of 1940 or by other applicable laws.
13. INDEPENDENT CONTRACTOR.
Advisor shall for all purposes of this Contract be deemed to be an independent contractor and, except as otherwise expressly provided herein, shall have no authority to act for, bind or represent the Fund in any way or otherwise be deemed to be an agent of the Fund. Likewise, the Fund, the Manager and their affiliates, agents and employees shall not be deemed agents of the Advisor and shall have no authority to bind the Advisor.
14. MISCELLANEOUS.
(a) The captions of this Contract are included for convenience only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect.
(b) In the event that the Advisor or Manager is or becomes a party to any action or proceedings in respect of which indemnification may be sought hereunder, the party seeking indemnification shall promptly notify the other party thereof. The party from whom indemnification is sought shall not be liable hereunder for any settlement of any action or claim effected without its written consent, which consent shall not be reasonably withheld.
(c) This Contract may be executed in one or more counterparts, all of which taken together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, QUANTITATIVE ADVISORS, INC. and COLUMBIA PARTNERS, L.L.C., INVESTMENT MANAGEMENT have each caused this instrument to be signed in duplicate in its behalf, all as of the day and year first above written.
QUANTITATIVE ADVISORS, INC.
COLUMBIA PARTNERS, L.L.C.,
INVESTMENT MANAGEMENT
Title:
Exhibit 9
Advisory Contract ("Contract") dated as of January 31, 1999, between QUANTITATIVE ADVISORS, INC., a Massachusetts corporation (the "Manager") and COLUMBIA PARTNERS, L.L.C., INVESTMENT MANAGEMENT a Delaware limited liability company (the "Advisor").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is agreed as follows:
1. SERVICES TO BE RENDERED BY ADVISOR TO TRUST.
(a) Subject always to the control of the trustees (the "Trustees") of Quantitative Group of Funds, a Massachusetts business trust (the "Trust"), and the Manager, the Advisor, at its expense, will furnish continuously an investment program for the Quantitative Small Cap Fund (the "Fund") of the Trust. The Advisor will determine what securities shall be purchased, held, sold or exchanged by the Fund and what portion, if any, of the assets of the Fund shall be held uninvested and shall, on behalf of the Fund, make changes in the Fund's investments. In the performance of its duties, the Advisor will comply with the provisions of the Agreement and Declaration of Trust and By-Laws of the Trust, as amended, and the stated investment objectives, policies and restrictions of the Fund as set forth in the then current Prospectus and/or Statement of Additional Information of the Trust and with other written policies which the Trustees or the Manager may from time-to-time determine and of which the Advisor has received notice. In furnishing an investment program to the Fund and in determining what securities shall be purchased, held, sold or exchanged by the Fund, the Advisor shall (1) comply in all material respects with all provisions of applicable law governing its duties and responsibilities hereunder, including, without limitation, the Investment Company Act of 1940 (the "1940 Act"), and the Rules and Regulations thereunder; the Investment Advisors Act of 1940, and the Rules and Regulations thereunder; the Internal Revenue Code of 1986, as amended (the "Code"), relating to regulated investment companies and all Rules and Regulations thereunder; the Insider Trading and Securities Fraud Enforcement Act of 1988; and such other laws as may be applicable to its activities as Advisor to the Fund and (2) use its best efforts to manage the Fund so that the Fund will qualify, and continue to qualify, as a regulated investment company under Subchapter M of the Code and regulations issued thereunder. The Advisor shall make its officers and employees available to the Manager or Trustees from time-to-time at reasonable times to review investment policies of the Fund and to consult with the Manager or Trustees regarding the investment affairs of the Fund.
(b) The Advisor, at its expense, will (1) furnish all necessary investment and management facilities, including salaries of personnel, required for it to execute its duties hereunder, (2) keep records relating to the purchase, sale or current status of portfolio securities, (3) provide clerical personnel and equipment necessary for the efficient rendering of investment advice to the Fund, (4) furnish to the Manager such reports and records regarding the Fund and the Advisor as the Manager or Trustees shall from time-to-time request, and, (5) upon reasonable notice, review written references to the Advisor, or its methodology, whether in a Prospectus, Statement of Additional Information, sales material or otherwise. The Advisor shall have no obligation with respect to the determination of the Fund's net asset value, except to provide the Trust's custodian with information as to the securities held in the Fund's portfolio. The Advisor shall not be obligated to provide shareholder accounting services.
(c) The Advisor shall place all orders for the purchase and sale of portfolio investments for the Fund's account with brokers or dealers selected by the Advisor. In the selection of such brokers or dealers and the placing of such orders, the Advisor shall use its best efforts to obtain for the Fund the most favorable price and execution available, except to the extent that it may be permitted to pay higher brokerage commissions for brokerage and research services as described below. In using its best efforts to obtain for the Fund the most favorable price and execution available, the Advisor, bearing in mind the Fund's best interests at all times, shall consider all factors it deems relevant, including by way of illustration, price, the size of the transaction, the nature of the market for the security, the amount of the commission, if any, the timing of the transaction taking into account market prices and trends, the reputation, experience and financial stability of the broker or dealer involved and the quality of service rendered by the broker or dealer in other transactions. Subject to such written policies as the Trustees or the Manager may determine, and of which the Advisor has received notice and which the Advisor has accepted in writing, the Advisor shall not be deemed to have acted unlawfully or to have breached any duty created by this Contract or otherwise solely by reason of its having caused the Fund to pay a broker or dealer that provides brokerage and research services to the Advisor and/or the Manager an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Advisor determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Advisor's and/or Manager's overall responsibilities with respect to the Trust and to other clients as to which the Advisor and/or Manager or persons controlled by or under common control with the Advisor and/or Manager exercise investment discretion. The Advisor agrees that in connection with purchase or sales of portfolio instruments for the Fund's account, neither the Advisor nor any officer, director, employee or agent of the Advisor shall act as principal or receive any commission other than as provided in Section 3.
(d) The assets of the Fund shall be held by the Trust's custodian in an account which the Trust has directed the Custodian to open. The Advisor shall at no time have custody or physical control of any of the assets of the Fund. The Manager shall cause such custodian to provide the Advisor with such information and reports concerning the Fund or its assets as the Advisor may from time to time reasonably request and to accept instructions from the Advisor with respect to such assets and transactions by the Fund in the performance of the Advisor's duties hereunder. The Advisor shall have no liability or obligation to pay the cost of such custodian or any of its services.
(e) Advice rendered to the Fund shall be confidential and may not be used by any shareholder, Trustee, officer, director, employee or agent of the Trust or of the Manager or by the advisor of any other fund of the Trust. Non-public information provided to the Manager on a confidential basis regarding the methodology of the Advisor shall not be made publicly available by the Manager, except that such information may be disclosed to the Trustees and may be disclosed to the extent necessary to comply with the federal and state securities laws and, after notice to the Advisor, upon order of any court or administrative agency or self regulatory organization of which the Manager or its affiliates are members.
(f) The Advisor shall not be obligated to pay any expenses of or for the Fund not expressly assumed by the Advisor pursuant to this Section 1.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and employees of the Trust may be a shareholder, partner, director, officer or employee of, or be otherwise interested in, the Advisor, and in any person controlled by or under common control with the Advisor, and that the Advisor and any person controlled by or under common control with the Advisor may have an interest in the Trust. It is also understood that the Advisor and persons controlled by or under common control with the Advisor have and may have advisory, management, service or other contracts with other organizations (including other investment companies and other managed accounts) and persons, and may have other interests and businesses.
Nothing in this Contract shall prohibit the Advisor or any of its affiliates from providing any services for any other person or entity or limit the services which the Advisor or any such affiliate can provide to any person or entity, provided, however, that without the written consent of the Manager, the Advisor may not provide investment advisory or investment management services to another investment company which invests the primary portion of its assets in companies comprising the Russell 2000 Index, or any other widely recognized index of small cap stocks. The Manager understands and agrees that the Advisor and its affiliates perform investment advisory and investment management services for various clients other than the Manager and the Trust. The Manager agrees that the Advisor and its affiliates may give advice and take action in the performance of duties with respect to any other client which may differ from advice
given, or the timing or nature of action taken, with respect to the Fund. Nothing in this Contract shall be deemed to impose upon the Advisor any obligation to purchase or sell or to recommend for purchase or sale for the Fund any security or other property which the Advisor or any of its affiliates may purchase or sell for its own account or for the account of any other client, so long as it continues to be the policy and practice of the Advisor not to favor or disfavor consistently or consciously any client or class of clients in the allocation of investment opportunities, so that to the extent practical, such opportunities will be allocated among clients over a period of time on a fair and equitable basis.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE ADVISOR
The Manager will pay to the Advisor, as compensation for the Advisor's services rendered and for the expenses borne by the Advisor pursuant to Section 1, a fee, computed and paid monthly at the annual rate of 0.50% of the aggregate average daily net asset value of the Fund. Such fee shall be paid by the Manager and not by the Fund out of the management fee paid by the Trust to the Manager pursuant to the Management Contract between the Manager and the Trust or out of any other funds available to the Manager. Such average daily net asset value of the Fund shall be determined by taking an average of all the determinations of such net asset value during such month at the close of business on each business day, and for non-business days, the net asset value determined on the previous business day, during such month while this Contract is in effect. Such fee shall be payable for each month within 30 days after the end of each month.
If the Advisor shall serve for less than the whole of a month, the foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS TO THIS CONTRACT
This Contract shall automatically terminate, without the payment of any penalty, in the event of its assignment or in the event that the Management Contract between the Trust and the Manager is terminated generally, or with respect to the Fund; and this Contract shall not be amended unless (i) such amendment is approved at a meeting by an affirmative vote of a majority of the outstanding shares of the Fund, and (ii) by the vote, cast in person at a meeting called for the purpose of voting on such approval, of a majority of the Trustees of the Trust who are not interested persons of the Trust or of the Manager or of the Advisor. Notwithstanding the foregoing, shareholder approval will not be required for amendments to this Contract if the Fund obtains an exemptive order from the Securities and Exchange Commission permitting amendments to this Contract without shareholder approval.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective on January 31, 1999 or such other time as shall be agreed upon by the Manager and the Advisor, and shall remain in full force and effect as to the Fund continuously thereafter (unless terminated automatically as set forth in Section 4) until terminated as follows:
(a) The Trust or the Manager may at any time terminate this Contract as to the Fund by not more than sixty days' or less than thirty days' written notice delivered or mailed by registered mail, postage prepaid, to the Advisor, or
(b) The Advisor may at any time terminate this Contract as to the Fund by not less than one hundred fifty days' written notice delivered or mailed by registered mail, postage prepaid, to the Manager, or
(c) If (i) the Trustees of the Trust, or the shareholders by the affirmative vote of a majority of the outstanding shares of the Fund, and (ii) a majority of the Trustees of the Trust who are not interested persons of the Trust or of the Manager or of the Advisor, by vote cast in person at a meeting called for the purpose of voting on such approval, do not specifically approve at least annually the continuance of this Contract, then this Contract shall automatically terminate as to the Fund at the close of business on the second anniversary of the effective date hereof or the expiration of one year from the effective date of the last such continuance, whichever is later; provided, however, that if the continuance of this Contract is submitted to the shareholders of the Fund for their approval and such shareholders fail to approve such continuance of this Contract as provided herein, the Advisor may continue to serve hereunder in a manner consistent with the 1940 Act and the Rules and Regulations thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a majority of its Trustees, or (ii) by the affirmative vote of a majority of the outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without the payment of any penalty.
6. CERTAIN DEFINITIONS
For the purposes of this Contract, the "affirmative vote of a majority of the outstanding shares" means the affirmative vote, at a duly called and held meeting of shareholders, (a) of the holders of 67% or more of the shares of the Trust or the Fund, as the case may be, present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding shares of the Trust or the Fund, as the case may be, entitled to vote at such meeting are present in person or by proxy, or (b) of the holders of more than 50% of the outstanding shares of the Trust or the Fund, as the case may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person", "control", "interested person" and "assignment" shall have their respective meanings defined in the 1940 Act and the Rules and Regulations thereunder, subject, however, to such exemptions as may be granted by the Securities and Exchange Commission ("SEC") under said Act; the term "specifically approve at least annually" shall be construed in a manner consistent with the 1940 Act and the Rules and Regulations thereunder; and the term "brokerage and research services" shall have the meaning given by the Securities Exchange Act of 1934 and the Rules and Regulations thereunder.
7. NONLIABILITY OF ADVISOR.
Notwithstanding any other agreement to the contrary, in the absence of willful misfeasance, bad faith or gross negligence on the part of the Advisor, its partners, officers, directors, employees or agents or reckless disregard of the Advisor's obligations and duties hereunder, neither the Advisor nor its officers, directors, employees or agents shall be subject to any liability to the Trust or to the Manager, or to any shareholder of the Trust, for any act or omission in the course of, or connected with, rendering services hereunder, unless the Advisor is claiming indemnity from any of them in connection herewith, but then only to the extent of the indemnity obtained.
8. VOTING OF SECURITIES.
The Advisor shall have the power to vote, either in person or by proxy, all securities in which assets of the Fund may be invested from time to time and shall not be required to seek or take instructions from the Manager or the Trustees of the Trust, or to take any action, with respect thereto.
9. REPRESENTATIONS AND COVENANTS OF THE MANAGER.
(a) The Manager represents that the terms of this Contract do not violate any obligation by which it is bound, whether arising by contract, operation of law or otherwise, and that it has the power, capacity and authority to enter into this Contract and to perform in accordance herewith. In addition, the Manager represents, warrants and covenants to the Advisor that it has the power, capacity and authority to commit the Trust to this Contract; that a true and complete copy of the Agreement and Declaration of Trust and By-Laws of the Trust and the stated objectives, policies and restrictions of the Fund have been delivered to the Advisor; and that true and complete copies of every amendment thereto will be delivered to the Advisor as promptly as practicable after the adoption thereof. The Manager agrees that notwithstanding any other provision of this Contract to the contrary, the Advisor will not be bound by any such amendment until the Advisor has received a copy thereof and has had a reasonable opportunity to review it.
(b) The Manager shall indemnify and hold harmless the Advisor, its partners, officers, employees and agents and each person, if any, who controls the Advisor within the meaning of any applicable law (each individually an "Indemnified Party") from and against all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable fees and other expenses of an Indemnified Party's counsel, other than attorneys' fees and costs in relation to the preparation of this Contract; each party bearing responsibility for its own such costs and fees), joint or several, (other than liabilities, losses, expenses, attorneys' fees and costs or damages arising from the failure of the Advisor to perform its responsibilities hereunder or claims arising from its acts or failure to act in performing this Contract) to which the Advisor or any other Indemnified Party may become subject under any federal or state law as a result of any failure of the Manager or, if caused by any failure of the Manager, of the Trust or the Fund, to disclose a material fact, or any omission by the Manager, or, if caused by any failure of the Manager, of the Trust or the Fund, to disclose a material fact, in any document relating to the Trust or the Fund, except any failure or omission caused solely by (i) the incorporation in any such document of information relating to the Advisor which is furnished to the Manager in writing by or with the consent of the Advisor expressly for inclusion in such document or (ii) a breach, of which the Manager was not aware, by the Advisor of its duties hereunder. With respect to any claim for which an Indemnified Party is entitled to indemnity hereunder, the Manager shall assume the reasonable expenses and costs (including any reasonable attorneys' fees and costs) of the Indemnified Party or investigating and/or defending any claim asserted or threatened by any party, subject always to the Manager first receiving a written undertaking from the Indemnified Party to repay any amounts paid on its behalf in the event and to the extent of any subsequent determination that the Indemnified Party was not entitled to indemnification hereunder with respect of such claim.
(c) No public reference to, or description of, the Advisor or its methodology or work shall be made by the Manager or the Trust, whether in a prospectus, Statement of Additional Information or otherwise, unless the Manager provides the Advisor with a reasonable opportunity to review any such reference or description prior to the first use of such reference or description.
10. REPRESENTATIONS AND COVENANTS OF THE ADVISOR.
(a) The Advisor represents that the terms of this Contract do not violate any obligation by which it is bound, whether arising by contract, operation of law, or otherwise, and that it has the power, capacity and authority to enter into this Contract and to perform in accordance herewith.
(b) The Advisor shall immediately notify the Manager in the event that the Advisor or any of its affiliates: (1) becomes aware that it is subject to a statutory disqualification that prevents the Advisor from serving as investment advisor pursuant to this Contract; or (2) becomes aware that it the subject of an administrative proceeding or enforcement action by the SEC or any other regulatory authority. The Advisor further agrees to notify the Manager immediately of any material fact known to the Advisor respecting or relating to the Advisor that is not contained in the Trust's Registration Statement regarding the Fund, or any amendment or supplement thereto, but that is required to be disclosed therein, and of any statement contained therein that becomes untrue in any material respect.
(c) The Advisor agrees to maintain such books and records with respect to its services to the Fund as are required under the 1940 Act, and rules adopted thereunder, and by other applicable legal provisions, and to preserve such records for the periods and in the manner required by that Section, and those rules and legal provisions. The Advisor also agrees that records it maintains and preserves pursuant to Rule 31a-1 and Rule 31a-2 under the 1940 Act and otherwise in connection with its services hereunder are the property of the Trust and will be surrendered promptly to the Trust upon its request. The Advisor further agrees that it will furnish to regulatory authorities having the requisite authority any information or reports in connection with its services hereunder which may be requested in order to determine whether the operations of the Fund are being conducted in accordance with applicable laws and regulations.
(d) The Advisor shall provide the Manager with quarterly representations regarding the compliance of its' employees with the Advisor's code of ethics governing personal securities transactions. The Advisor shall provide the Manager with copies of any revisions to its code of ethics.
(e) The Advisor shall indemnify and hold harmless the Manager, the Fund, their partners, officers, employees and agents and each person, if any, who controls the Manager or Fund within the meaning of any applicable law (each individually an "Indemnified Party") from and against all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable fees and other expenses of an Indemnified Party's counsel, other than attorneys' fees and costs in relation to the preparation of this Contract; each party bearing responsibility for its own such costs and fees), joint or several, (other than liabilities, losses, expenses, attorneys' fees and costs or damages arising from the failure of the Manager to perform its responsibilities hereunder or claims arising from its acts or failure to act in performing this Contract) arising from Advisor's (or its respective agents and employees) failure to perform its duties and assume its obligations hereunder, including any action or claim against the Manager based on any alleged untrue statement or misstatement of a material fact made or provided in writing by or with the consent of Advisor contained in any registration statement, prospectus, shareholder report or other information or materials relating to the Fund and shares issued by the Fund, or the failure or alleged failure to state a material fact therein required to be stated in order that the statements therein are not misleading,
which fact should have been made known or provided by the Advisor to the Manager. With respect to any claim for which an Indemnified Party is entitled to indemnity hereunder, the Advisor shall assume the reasonable expenses and costs (including any reasonable attorneys' fees and costs) of the Indemnified Party of investigating and/or defending any claim asserted or threatened by any party, subject always to the Advisor first receiving a written undertaking from the Indemnified Party to repay any amounts paid on its behalf in the event and to the extent of any subsequent determination that the Indemnified Party was not entitled to indemnification hereunder with respect of such claim.
11. USE OF NAME.
It is understood that the name of the Fund (as it may be changed from time to time while the Advisor provides services pursuant to this Contract) or any derivative thereof or logo associated with that name is the valuable property of the Trust and/or its affiliates, and that the Advisor has the right to use such name (or derivative or logo) only with the approval of the Manager and only so long as the Advisor is Advisor to the Trust and/or the Fund. Upon termination of this Contract the Advisor shall forthwith cease to use such name (or derivative or logo).
12. GOVERNING LAW.
This Contract shall be governed by, and construed and enforced in accordance with, the substantive laws of The Commonwealth of Massachusetts without regard to its principles of conflicts of laws, except to the extent such laws shall be preempted by the Investment Company Act of 1940 or by other applicable laws.
13. INDEPENDENT CONTRACTOR.
Advisor shall for all purposes of this Contract be deemed to be an independent contractor and, except as otherwise expressly provided herein, shall have no authority to act for, bind or represent the Fund in any way or otherwise be deemed to be an agent of the Fund. Likewise, the Fund, the Manager and their affiliates, agents and employees shall not be deemed agents of the Advisor and shall have no authority to bind the Advisor.
14. MISCELLANEOUS.
(a) The captions of this Contract are included for convenience only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect.
(b) In the event that the Advisor or Manager is or becomes a party to any action or proceedings in respect of which indemnification may be sought hereunder, the party seeking indemnification shall promptly notify the other party thereof. The party from whom indemnification is sought shall not be liable hereunder for any settlement of any action or claim effected without its written consent, which consent shall not be reasonably withheld.
(c) This Contract may be executed in one or more counterparts, all of which taken together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, QUANTITATIVE ADVISORS, INC. and COLUMBIA PARTNERS, L.L.C., INVESTMENT MANAGEMENT have each caused this instrument to be signed in duplicate in its behalf, all as of the day and year first above written.
QUANTITATIVE ADVISORS, INC.
By_________________________
Willard L. Umphrey
President
COLUMBIA PARTNERS, L.L.C.,
INVESTMENT MANAGEMENT
By_________________________
Name:
Title:
Exhibit 10
Advisory Contract ("Contract") dated as of January 31, 1999, between QUANTITATIVE ADVISORS, INC., a Massachusetts corporation (the "Manager") and INDEPENDENCE INTERNATIONAL ASSOCIATES, INC., a Massachusetts Corporation (the "Advisor").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is agreed as follows:
1. SERVICES TO BE RENDERED BY ADVISOR TO TRUST.
(a) Subject always to the control of the trustees (the "Trustees") of Quantitative Group of Funds, a Massachusetts business trust (the "Trust"), and the Manager, the Advisor, at its expense, will furnish continuously an investment program for the Quantitative Emerging Markets Fund (the "Fund") of the Trust. The Advisor will determine what securities shall be purchased, held, sold or exchanged by the Fund and what portion, if any, of the assets of the Fund shall be held uninvested and shall, on behalf of the Fund, make changes in the Fund's investments. In the performance of its duties, the Advisor will comply with the provisions of the Agreement and Declaration of Trust and By-Laws of the Trust, as amended, and the stated investment objectives, policies and restrictions of the Fund as set forth in the then current Prospectus and/or Statement of Additional Information of the Trust and with other written policies which the Trustees or the Manager may from time-to-time determine and of which the Advisor has received notice. In furnishing an investment program to the Fund and in determining what securities shall be purchased, held, sold or exchanged by the Fund, the Advisor shall (1) comply in all material respects with all provisions of applicable law governing its duties and responsibilities hereunder, including, without limitation, the Investment Company Act of 1940 (the "1940 Act"), and the Rules and Regulations thereunder; the Investment Advisors Act of 1940, and the Rules and Regulations thereunder; the Internal Revenue Code of 1986, as amended (the "Code"), relating to regulated investment companies and all Rules and Regulations thereunder; the Insider Trading and Securities Fraud Enforcement Act of 1988; and such other laws as may be applicable to its activities as Advisor to the Fund and (2) use its best efforts to manage the Fund so that the Fund will qualify, and continue to qualify, as a regulated investment company under Subchapter M of the Code and regulations issued thereunder. The Advisor shall make its officers and employees available to the Manager or Trustees from time-to-time at reasonable times to review investment policies of the Fund and to consult with the Manager or Trustees regarding the investment affairs of the Fund.
(b) The Advisor, at its expense, will (1) furnish all necessary investment and management facilities, including salaries of personnel, required for it to execute its duties hereunder, (2) keep records relating to the purchase, sale or current status of portfolio securities, (3) provide clerical personnel and equipment necessary for the efficient rendering of investment advice to the Fund, (4) furnish to the Manager such reports and records regarding the Fund and the Advisor as the Manager or Trustees shall from time-to-time request, and, (5) upon reasonable notice, review written references to the Advisor, or its methodology, whether in a Prospectus, Statement of Additional Information, sales material or otherwise. The Advisor shall have no obligation with respect to the determination of the Fund's net asset value, except to provide the Trust's custodian with information as to the securities held in the Fund's portfolio. The Advisor shall not be obligated to provide shareholder accounting services.
(c) The Advisor shall place all orders for the purchase and sale of portfolio investments for the Fund's account with brokers or dealers selected by the Advisor. In the selection of such brokers or dealers and the placing of such orders, the Advisor shall use its best efforts to obtain for the Fund the most favorable price and execution available, except to the extent that it may be permitted to pay higher brokerage commissions for brokerage and research services as described below. In using its best efforts to obtain for the Fund the most favorable price and execution available, the Advisor, bearing in mind the Fund's best interests at all times, shall consider all factors it deems relevant, including by way of illustration, price, the size of the transaction, the nature of the market for the security, the amount of the commission, if any, the timing of the transaction taking into account market prices and trends, the reputation, experience and financial stability of the broker or dealer involved and the quality of service rendered by the broker or dealer in other transactions. Subject to such written policies as the Trustees or the Manager may determine, and of which the Advisor has received notice and which the Advisor has accepted in writing, the Advisor shall not be deemed to have acted unlawfully or to have breached any duty created by this Contract or otherwise solely by reason of its having caused the Fund to pay a broker or dealer that provides brokerage and research services to the Advisor and/or the Manager an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Advisor determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Advisor's and/or Manager's overall responsibilities with respect to the Trust and to other clients as to which the Advisor and/or Manager or persons controlled by or under common control with the Advisor and/or Manager exercise investment discretion. The Advisor agrees that in connection with purchase or sales of portfolio instruments for the Fund's account, neither the Advisor nor any officer, director, employee or agent of the Advisor shall act as principal or receive any commission other than as provided in Section 3.
(d) The assets of the Fund shall be held by the Trust's custodian in an account which the Trust has directed the Custodian to open. The Advisor shall at no time have custody or physical control of any of the assets of the Fund. The Manager shall cause such custodian to provide the Advisor with such information and reports concerning the Fund or its assets as the Advisor may from time to time reasonably request and to accept instructions from the Advisor with respect to such assets and transactions by the Fund in the performance of the Advisor's duties hereunder. The Advisor shall have no liability or obligation to pay the cost of such custodian or any of its services.
(e) Advice rendered to the Fund shall be confidential and may not be used by any shareholder, Trustee, officer, director, employee or agent of the Trust or of the Manager or by the advisor of any other fund of the Trust. Non-public information provided to the Manager on a confidential basis regarding the methodology of the Advisor shall not be made publicly available by the Manager, except that such information may be disclosed to the Trustees and may be disclosed to the extent necessary to comply with the federal and state securities laws and, after notice to the Advisor, upon order of any court or administrative agency or self regulatory organization of which the Manager or its affiliates are members.
(f) The Advisor shall not be obligated to pay any expenses of or for the Fund not expressly assumed by the Advisor pursuant to this Section 1.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and employees of the Trust may be a shareholder, partner, director, officer or employee of, or be otherwise interested in, the Advisor, and in any person controlled by or under common control with the Advisor, and that the Advisor and any person controlled by or under common control with the Advisor may have an interest in the Trust. It is also understood that the Advisor and persons controlled by or under common control with the Advisor have and may have advisory, management, service or other contracts with other organizations (including other investment companies and other managed accounts) and persons, and may have other interests and businesses.
Nothing in this Contract shall prohibit the Advisor or any of its affiliates from providing any services for any other person or entity or limit the services which the Advisor or any such affiliate can provide to any person or entity. The Manager understands and agrees that the Advisor and its affiliates perform investment advisory and investment management services for various clients other than the Manager and the Trust. The Manager agrees that the Advisor and its affiliates may give advice and take action in the performance of duties with respect to any other client which may differ from advice given, or the timing or nature of action taken, with respect to the Fund. Nothing in this Contract shall be deemed to impose upon the Advisor any obligation to purchase or sell or to recommend for purchase or sale for the Fund any security or other property which the Advisor or any of its affiliates may purchase or sell for its own account or for
the account of any other client, so long as it continues to be the policy and practice of the Advisor not to favor or disfavor consistently or consciously any client or class of clients in the allocation of investment opportunities, so that to the extent practical, such opportunities will be allocated among clients over a period of time on a fair and equitable basis.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE ADVISOR
The Manager will pay to the Advisor, as compensation for the Advisor's services rendered and for the expenses borne by the Advisor pursuant to Section 1, a fee, computed and paid monthly at the annual rate of 0.40% of the aggregate average daily net asset value of the Fund. Such fee shall be paid by the Manager and not by the Fund out of the management fee paid by the Trust to the Manager pursuant to the Management Contract between the Manager and the Trust or out of any other funds available to the Manager. Such average daily net asset value of the Fund shall be determined by taking an average of all the determinations of such net asset value during such month at the close of business on each business day, and for non-business days, the net asset value determined on the previous business day, during such month while this Contract is in effect. Such fee shall be payable for each month within 30 days after the end of each month.
If the Advisor shall serve for less than the whole of a month, the foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS TO THIS CONTRACT
This Contract shall automatically terminate, without the payment of any penalty, in the event of its assignment or in the event that the Management Contract between the Trust and the Manager is terminated generally, or with respect to the Fund; and this Contract shall not be amended unless (i) such amendment is approved at a meeting by an affirmative vote of a majority of the outstanding shares of the Fund, and (ii) by the vote, cast in person at a meeting called for the purpose of voting on such approval, of a majority of the Trustees of the Trust who are not interested persons of the Trust or of the Manager or of the Advisor. Notwithstanding the foregoing, shareholder approval will not be required for amendments to this Contract if the Fund obtains an exemptive order from the Securities and Exchange Commission permitting amendments to this Contract without shareholder approval.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective on January 31, 1999 or such other time as shall be agreed upon by the Manager and the Advisor, and shall remain in full force and effect as to the Fund continuously thereafter (unless terminated automatically as set forth in Section 4) until terminated as follows:
(a) The Trust or the Manager may at any time terminate this Contract as to the Fund by not more than sixty days' or less than thirty days' written notice delivered or mailed by registered mail, postage prepaid, to the Advisor, or
(b) The Advisor may at any time terminate this Contract as to the Fund by not less than one hundred fifty days' written notice delivered or mailed by registered mail, postage prepaid, to the Manager, or
(c) If (i) the Trustees of the Trust, or the shareholders by the affirmative vote of a majority of the outstanding shares of the Fund, and (ii) a majority of the Trustees of the Trust who are not interested persons of the Trust or of the Manager or of the Advisor, by vote cast in person at a meeting called for the purpose of voting on such approval, do not specifically approve at least annually the continuance of this Contract, then this Contract shall automatically terminate as to the Fund at the close of business on the second anniversary of the effective date hereof or the expiration of one year from the effective date of the last such continuance, whichever is later; provided, however, that if the continuance of this Contract is submitted to the shareholders of the Fund for their approval and such shareholders fail to approve such continuance of this Contract as provided herein, the Advisor may continue to serve hereunder in a manner consistent with the 1940 Act and the Rules and Regulations thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a majority of its Trustees, or (ii) by the affirmative vote of a majority of the outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without the payment of any penalty.
6. CERTAIN DEFINITIONS
For the purposes of this Contract, the "affirmative vote of a majority of the outstanding shares" means the affirmative vote, at a duly called and held meeting of shareholders, (a) of the holders of 67% or more of the shares of the Trust or the Fund, as the case may be, present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding shares of the Trust or the Fund, as the case may be, entitled to vote at such meeting are present in person or by proxy, or (b) of the holders of more than 50% of the outstanding shares of the Trust or the Fund, as the case may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person", "control", "interested person" and "assignment" shall have their respective meanings defined in the 1940 Act and the Rules and Regulations thereunder, subject, however, to such exemptions as may be granted by the Securities and Exchange Commission ("SEC") under said Act; the term "specifically approve at least annually" shall be construed in a manner consistent with the 1940 Act and the Rules and Regulations thereunder; and the
term "brokerage and research services" shall have the meaning given by the Securities Exchange Act of 1934 and the Rules and Regulations thereunder.
7. NONLIABILITY OF ADVISOR.
Notwithstanding any other agreement to the contrary, in the absence of willful misfeasance, bad faith or gross negligence on the part of the Advisor, its partners, officers, directors, employees or agents or reckless disregard of the Advisor's obligations and duties hereunder, neither the Advisor nor its officers, directors, employees or agents shall be subject to any liability to the Trust or to the Manager, or to any shareholder of the Trust, for any act or omission in the course of, or connected with, rendering services hereunder, unless the Advisor is claiming indemnity from any of them in connection herewith, but then only to the extent of the indemnity obtained.
8. VOTING OF SECURITIES.
The Advisor shall have the power to vote, either in person or by proxy, all securities in which assets of the Fund may be invested from time to time and shall not be required to seek or take instructions from the Manager or the Trustees of the Trust, or to take any action, with respect thereto.
9. REPRESENTATIONS AND COVENANTS OF THE MANAGER.
(a) The Manager represents that the terms of this Contract do not violate any obligation by which it is bound, whether arising by contract, operation of law or otherwise, and that it has the power, capacity and authority to enter into this Contract and to perform in accordance herewith. In addition, the Manager represents, warrants and covenants to the Advisor that it has the power, capacity and authority to commit the Trust to this Contract; that a true and complete copy of the Agreement and Declaration of Trust and By-Laws of the Trust and the stated objectives, policies and restrictions of the Fund have been delivered to the Advisor; and that true and complete copies of every amendment thereto will be delivered to the Advisor as promptly as practicable after the adoption thereof. The Manager agrees that notwithstanding any other provision of this Contract to the contrary, the Advisor will not be bound by any such amendment until the Advisor has received a copy thereof and has had a reasonable opportunity to review it.
(b) The Manager shall indemnify and hold harmless the Advisor, its partners, officers, employees and agents and each person, if any, who controls the Advisor within the meaning of any applicable law (each individually an "Indemnified Party") from and against all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable fees and other expenses of an Indemnified Party's counsel, other than attorneys' fees and costs in relation to the preparation of this Contract; each party bearing responsibility for its own such costs and fees), joint or several, (other than liabilities, losses, expenses, attorneys' fees and costs or damages arising from the failure of the Advisor to perform its responsibilities hereunder or claims arising from its acts or failure to act in performing this Contract) to which the Advisor or any other Indemnified
Party may become subject under any federal or state law as a result of any failure of the Manager or, if caused by any failure of the Manager, of the Trust or the Fund, to disclose a material fact, or any omission by the Manager, or, if caused by any failure of the Manager, of the Trust or the Fund, to disclose a material fact, in any document relating to the Trust or the Fund, except any failure or omission caused solely by (i) the incorporation in any such document of information relating to the Advisor which is furnished to the Manager in writing by or with the consent of the Advisor expressly for inclusion in such document or (ii) a breach, of which the Manager was not aware, by the Advisor of its duties hereunder. With respect to any claim for which an Indemnified Party is entitled to indemnity hereunder, the Manager shall assume the reasonable expenses and costs (including any reasonable attorneys' fees and costs) of the Indemnified Party or investigating and/or defending any claim asserted or threatened by any party, subject always to the Manager first receiving a written undertaking from the Indemnified Party to repay any amounts paid on its behalf in the event and to the extent of any subsequent determination that the Indemnified Party was not entitled to indemnification hereunder with respect of such claim.
(c) No public reference to, or description of, the Advisor or its methodology or work shall be made by the Manager or the Trust, whether in a prospectus, Statement of Additional Information or otherwise, unless the Manager provides the Advisor with a reasonable opportunity to review any such reference or description prior to the first use of such reference or description..
10. REPRESENTATIONS AND COVENANTS OF THE ADVISOR.
(a) The Advisor represents that the terms of this Contract do not violate any obligation by which it is bound, whether arising by contract, operation of law, or otherwise, and that it has the power, capacity and authority to enter into this Contract and to perform in accordance herewith.
(b) The Advisor shall immediately notify the Manager in the event that the Advisor or any of its affiliates: (1) becomes aware that it is subject to a statutory disqualification that prevents the Advisor from serving as investment advisor pursuant to this Contract; or (2) becomes aware that it the subject of an administrative proceeding or enforcement action by the SEC or any other regulatory authority. The Advisor further agrees to notify the Manager immediately of any material fact known to the Advisor respecting or relating to the Advisor that is not contained in the Trust's Registration Statement regarding the Fund, or any amendment or supplement thereto, but that is required to be disclosed therein, and of any statement contained therein that becomes untrue in any material respect.
(c) The Advisor agrees to maintain such books and records with respect to its services to the Fund as are required under the 1940 Act, and rules adopted thereunder, and by other applicable legal provisions, and to preserve such records for the periods and in the manner required by that Section, and those rules and legal provisions. The Advisor also agrees that records it maintains and preserves pursuant to Rule 31a-1
and Rule 31a-2 under the 1940 Act and otherwise in connection with its services hereunder are the property of the Trust and will be surrendered promptly to the Trust upon its request. The Advisor further agrees that it will furnish to regulatory authorities having the requisite authority any information or reports in connection with its services hereunder which may be requested in order to determine whether the operations of the Fund are being conducted in accordance with applicable laws and regulations.
(d) The Advisor shall provide the Manager with quarterly representations regarding the compliance of its' employees with the Advisor's code of ethics governing personal securities transactions. The Advisor shall provide the Manager with copies of any revisions to its code of ethics.
(e) The Advisor shall indemnify and hold harmless the Manager, the Fund, their partners, officers, employees and agents and each person, if any, who controls the Manager or Fund within the meaning of any applicable law (each individually an "Indemnified Party") from and against all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable fees and other expenses of an Indemnified Party's counsel, other than attorneys' fees and costs in relation to the preparation of this Contract; each party bearing responsibility for its own such costs and fees), joint or several, (other than liabilities, losses, expenses, attorneys' fees and costs or damages arising from the failure of the Manager to perform its responsibilities hereunder or claims arising from its acts or failure to act in performing this Contract) arising from Advisor's (or its respective agents and employees) failure to perform its duties and assume its obligations hereunder, including any action or claim against the Manager based on any alleged untrue statement or misstatement of a material fact made or provided in writing by or with the consent of Advisor contained in any registration statement, prospectus, shareholder report or other information or materials relating to the Fund and shares issued by the Fund, or the failure or alleged failure to state a material fact therein required to be stated in order that the statements therein are not misleading, which fact should have been made known or provided by the Advisor to the Manager. With respect to any claim for which an Indemnified Party is entitled to indemnity hereunder, the Advisor shall assume the reasonable expenses and costs (including any reasonable attorneys' fees and costs) of the Indemnified Party of investigating and/or defending any claim asserted or threatened by any party, subject always to the Advisor first receiving a written undertaking from the Indemnified Party to repay any amounts paid on its behalf in the event and to the extent of any subsequent determination that the Indemnified Party was not entitled to indemnification hereunder with respect of such claim.
11. USE OF NAME.
It is understood that the name of the Fund (as it may be changed from time to time while the Advisor provides services pursuant to this Contract) or any derivative thereof or logo associated with that name is the valuable property of the Trust and/or its affiliates, and that the Advisor has the right to use such name (or derivative or logo) only with the approval of the Manager and only so long as the Advisor is Advisor to the Trust and/or the Fund. Upon termination of this Contract the Advisor shall forthwith cease to use such name (or derivative or logo).
12. GOVERNING LAW.
This Contract shall be governed by, and construed and enforced in accordance with, the substantive laws of The Commonwealth of Massachusetts without regard to its principles of conflicts of laws, except to the extent such laws shall be preempted by the Investment Company Act of 1940 or by other applicable laws.
13. INDEPENDENT CONTRACTOR.
Advisor shall for all purposes of this Contract be deemed to be an independent contractor and, except as otherwise expressly provided herein, shall have no authority to act for, bind or represent the Fund in any way or otherwise be deemed to be an agent of the Fund. Likewise, the Fund, the Manager and their affiliates, agents and employees shall not be deemed agents of the Advisor and shall have no authority to bind the Advisor.
14. MISCELLANEOUS.
(a) The captions of this Contract are included for convenience only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect.
(b) In the event that the Advisor or Manager is or becomes a party to any action or proceedings in respect of which indemnification may be sought hereunder, the party seeking indemnification shall promptly notify the other party thereof. The party from whom indemnification is sought shall not be liable hereunder for any settlement of any action or claim effected without its written consent, which consent shall not be reasonably withheld.
(c) This Contract may be executed in one or more counterparts, all of which taken together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, QUANTITATIVE ADVISORS, INC. and INDEPENDENCE INTERNATIONAL ASSOCIATES, INC., have each caused this instrument to be signed in duplicate in its behalf, all as of the day and year first above written.
QUANTITATIVE ADVISORS, INC.
By___________________________
Willard L. Umphrey
President
INDEPENDENCE INTERNATIONAL
ASSOCIATES, INC.
By__________________________
Name:
Title:
EXHIBIT 11
Advisory Contract ("Contract") dated as of January 31, 1999, between QUANTITATIVE ADVISORS, INC., a Massachusetts corporation (the "Manager") and INDEPENDENCE INTERNATIONAL ASSOCIATES, INC., a Massachusetts Corporation (the "Advisor").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is agreed as follows:
1. SERVICES TO BE RENDERED BY ADVISOR TO TRUST.
(a) Subject always to the control of the trustees (the "Trustees") of Quantitative Group of Funds, a Massachusetts business trust (the "Trust"), and the Manager, the Advisor, at its expense, will furnish continuously an investment program for the Quantitative International Equity Fund (the "Fund") of the Trust. The Advisor will determine what securities shall be purchased, held, sold or exchanged by the Fund and what portion, if any, of the assets of the Fund shall be held uninvested and shall, on behalf of the Fund, make changes in the Fund's investments. In the performance of its duties, the Advisor will comply with the provisions of the Agreement and Declaration of Trust and By-Laws of the Trust, as amended, and the stated investment objectives, policies and restrictions of the Fund as set forth in the then current Prospectus and/or Statement of Additional Information of the Trust and with other written policies which the Trustees or the Manager may from time-to-time determine and of which the Advisor has received notice. In furnishing an investment program to the Fund and in determining what securities shall be purchased, held, sold or exchanged by the Fund, the Advisor shall (1) comply in all material respects with all provisions of applicable law governing its duties and responsibilities hereunder, including, without limitation, the Investment Company Act of 1940 (the "1940 Act"), and the Rules and Regulations thereunder; the Investment Advisors Act of 1940, and the Rules and Regulations thereunder; the Internal Revenue Code of 1986, as amended (the "Code"), relating to regulated investment companies and all Rules and Regulations thereunder; the Insider Trading and Securities Fraud Enforcement Act of 1988; and such other laws as may be applicable to its activities as Advisor to the Fund and (2) use its best efforts to manage the Fund so that the Fund will qualify, and continue to qualify, as a regulated investment company under Subchapter M of the Code and regulations issued thereunder. The Advisor shall make its officers and employees available to the Manager or Trustees from time-to-time at reasonable times to review investment policies of the Fund and to consult with the Manager or Trustees regarding the investment affairs of the Fund.
(b) The Advisor, at its expense, will (1) furnish all necessary investment and management facilities, including salaries of personnel, required for it to execute its duties hereunder, (2) keep records relating to the purchase, sale or current status of portfolio securities, (3) provide clerical personnel and equipment necessary for the efficient rendering of investment advice to the Fund, (4) furnish to the Manager such reports and records regarding the Fund and the Advisor as the Manager or Trustees shall from time-to-time request, and, (5) upon reasonable notice, review written references to the Advisor, or its methodology, whether in a Prospectus, Statement of Additional Information, sales material or otherwise. The Advisor shall have no obligation with respect to the determination of the Fund's net asset value, except to provide the Trust's custodian with information as to the securities held in the Fund's portfolio. The Advisor shall not be obligated to provide shareholder accounting services.
(c) The Advisor shall place all orders for the purchase and sale of portfolio investments for the Fund's account with brokers or dealers selected by the Advisor. In the selection of such brokers or dealers and the placing of such orders, the Advisor shall use its best efforts to obtain for the Fund the most favorable price and execution available, except to the extent that it may be permitted to pay higher brokerage commissions for brokerage and research services as described below. In using its best efforts to obtain for the Fund the most favorable price and execution available, the Advisor, bearing in mind the Fund's best interests at all times, shall consider all factors it deems relevant, including by way of illustration, price, the size of the transaction, the nature of the market for the security, the amount of the commission, if any, the timing of the transaction taking into account market prices and trends, the reputation, experience and financial stability of the broker or dealer involved and the quality of service rendered by the broker or dealer in other transactions. Subject to such written policies as the Trustees or the Manager may determine, and of which the Advisor has received notice and which the Advisor has accepted in writing, the Advisor shall not be deemed to have acted unlawfully or to have breached any duty created by this Contract or otherwise solely by reason of its having caused the Fund to pay a broker or dealer that provides brokerage and research services to the Advisor and/or the Manager an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Advisor determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Advisor's and/or Manager's overall responsibilities with respect to the Trust and to other clients as to which the Advisor and/or Manager or persons controlled by or under common control with the Advisor and/or Manager exercise investment discretion. The Advisor agrees that in connection with purchase or sales of portfolio instruments for the Fund's account, neither the Advisor nor any officer, director, employee or agent of the Advisor shall act as principal or receive any commission other than as provided in Section 3.
(d) The assets of the Fund shall be held by the Trust's custodian in an account which the Trust has directed the Custodian to open. The Advisor shall at no time have custody or physical control of any of the assets of the Fund. The Manager shall cause such custodian to provide the Advisor with such information and reports concerning the Fund or its assets as the Advisor may from time to time reasonably request and to accept instructions from the Advisor with respect to such assets and transactions by the Fund in the performance of the Advisor's duties hereunder. The Advisor shall have no liability or obligation to pay the cost of such custodian or any of its services.
(e) Advice rendered to the Fund shall be confidential and may not be used by any shareholder, Trustee, officer, director, employee or agent of the Trust or of the Manager or by the advisor of any other fund of the Trust. Non-public information provided to the Manager on a confidential basis regarding the methodology of the Advisor shall not be made publicly available by the Manager, except that such information may be disclosed to the Trustees and may be disclosed to the extent necessary to comply with the federal and state securities laws and, after notice to the Advisor, upon order of any court or administrative agency or self regulatory organization of which the Manager or its affiliates are members.
(f) The Advisor shall not be obligated to pay any expenses of or for the Fund not expressly assumed by the Advisor pursuant to this Section 1.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and employees of the Trust may be a shareholder, partner, director, officer or employee of, or be otherwise interested in, the Advisor, and in any person controlled by or under common control with the Advisor, and that the Advisor and any person controlled by or under common control with the Advisor may have an interest in the Trust. It is also understood that the Advisor and persons controlled by or under common control with the Advisor have and may have advisory, management, service or other contracts with other organizations (including other investment companies and other managed accounts) and persons, and may have other interests and businesses.
Nothing in this Contract shall prohibit the Advisor or any of its affiliates from providing any services for any other person or entity or limit the services which the Advisor or any such affiliate can provide to any person or entity. The Manager understands and agrees that the Advisor and its affiliates perform investment advisory and investment management services for various clients other than the Manager and the Trust. The Manager agrees that the Advisor and its affiliates may give advice and take action in the performance of duties with respect to any other client which may differ from advice given, or the timing or nature of action taken, with respect to the Fund. Nothing in this Contract shall be deemed to impose upon the Advisor any obligation to purchase or sell or to recommend for purchase or sale for the Fund any security or other property which the Advisor or any of its affiliates may purchase or sell for its own account or for
the account of any other client, so long as it continues to be the policy and practice of the Advisor not to favor or disfavor consistently or consciously any client or class of clients in the allocation of investment opportunities, so that to the extent practical, such opportunities will be allocated among clients over a period of time on a fair and equitable basis.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE ADVISOR
The Manager will pay to the Advisor, as compensation for the Advisor's services rendered and for the expenses borne by the Advisor pursuant to Section 1, a fee, computed and paid monthly at the annual rate of 0.50% of the aggregate average daily net asset value of the Fund. Such fee shall be paid by the Manager and not by the Fund out of the management fee paid by the Trust to the Manager pursuant to the Management Contract between the Manager and the Trust or out of any other funds available to the Manager. Such average daily net asset value of the Fund shall be determined by taking an average of all the determinations of such net asset value during such month at the close of business on each business day, and for non-business days, the net asset value determined on the previous business day, during such month while this Contract is in effect. Such fee shall be payable for each month within 30 days after the end of each month.
If the Advisor shall serve for less than the whole of a month, the foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS TO THIS CONTRACT
This Contract shall automatically terminate, without the payment of any penalty, in the event of its assignment or in the event that the Management Contract between the Trust and the Manager is terminated generally, or with respect to the Fund; and this Contract shall not be amended unless (i) such amendment is approved at a meeting by an affirmative vote of a majority of the outstanding shares of the Fund, and (ii) by the vote, cast in person at a meeting called for the purpose of voting on such approval, of a majority of the Trustees of the Trust who are not interested persons of the Trust or of the Manager or of the Advisor. Notwithstanding the foregoing, shareholder approval will not be required for amendments to this Contract if the Fund obtains an exemptive order from the Securities and Exchange Commission permitting amendments to this Contract without shareholder approval.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective on January 31, 1999 or such other time as shall be agreed upon by the Manager and the Advisor, and shall remain in full force and effect as to the Fund continuously thereafter (unless terminated automatically as set forth in Section 4) until terminated as follows:
(a) The Trust or the Manager may at any time terminate this Contract as to the Fund by not more than sixty days' or less than thirty days' written notice delivered or mailed by registered mail, postage prepaid, to the Advisor, or
(b) The Advisor may at any time terminate this Contract as to the Fund by not less than one hundred fifty days' written notice delivered or mailed by registered mail, postage prepaid, to the Manager, or
(c) If (i) the Trustees of the Trust, or the shareholders by the affirmative vote of a majority of the outstanding shares of the Fund, and (ii) a majority of the Trustees of the Trust who are not interested persons of the Trust or of the Manager or of the Advisor, by vote cast in person at a meeting called for the purpose of voting on such approval, do not specifically approve at least annually the continuance of this Contract, then this Contract shall automatically terminate as to the Fund at the close of business on the second anniversary of the effective date hereof or the expiration of one year from the effective date of the last such continuance, whichever is later; provided, however, that if the continuance of this Contract is submitted to the shareholders of the Fund for their approval and such shareholders fail to approve such continuance of this Contract as provided herein, the Advisor may continue to serve hereunder in a manner consistent with the 1940 Act and the Rules and Regulations thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a majority of its Trustees, or (ii) by the affirmative vote of a majority of the outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without the payment of any penalty.
6. CERTAIN DEFINITIONS
For the purposes of this Contract, the "affirmative vote of a majority of the outstanding shares" means the affirmative vote, at a duly called and held meeting of shareholders, (a) of the holders of 67% or more of the shares of the Trust or the Fund, as the case may be, present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding shares of the Trust or the Fund, as the case may be, entitled to vote at such meeting are present in person or by proxy, or (b) of the holders of more than 50% of the outstanding shares of the Trust or the Fund, as the case may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person", "control", "interested person" and "assignment" shall have their respective meanings defined in the 1940 Act and the Rules and Regulations thereunder, subject, however, to such exemptions as may be granted by the Securities and Exchange Commission ("SEC") under said Act; the term "specifically approve at least annually" shall be construed in a manner consistent with the 1940 Act and the Rules and Regulations thereunder; and the
term "brokerage and research services" shall have the meaning given by the Securities Exchange Act of 1934 and the Rules and Regulations thereunder.
7. NONLIABILITY OF ADVISOR.
Notwithstanding any other agreement to the contrary, in the absence of willful misfeasance, bad faith or gross negligence on the part of the Advisor, its partners, officers, directors, employees or agents or reckless disregard of the Advisor's obligations and duties hereunder, neither the Advisor nor its officers, directors, employees or agents shall be subject to any liability to the Trust or to the Manager, or to any shareholder of the Trust, for any act or omission in the course of, or connected with, rendering services hereunder, unless the Advisor is claiming indemnity from any of them in connection herewith, but then only to the extent of the indemnity obtained.
8. VOTING OF SECURITIES.
The Advisor shall have the power to vote, either in person or by proxy, all securities in which assets of the Fund may be invested from time to time and shall not be required to seek or take instructions from the Manager or the Trustees of the Trust, or to take any action, with respect thereto.
9. REPRESENTATIONS AND COVENANTS OF THE MANAGER.
(a) The Manager represents that the terms of this Contract do not violate any obligation by which it is bound, whether arising by contract, operation of law or otherwise, and that it has the power, capacity and authority to enter into this Contract and to perform in accordance herewith. In addition, the Manager represents, warrants and covenants to the Advisor that it has the power, capacity and authority to commit the Trust to this Contract; that a true and complete copy of the Agreement and Declaration of Trust and By-Laws of the Trust and the stated objectives, policies and restrictions of the Fund have been delivered to the Advisor; and that true and complete copies of every amendment thereto will be delivered to the Advisor as promptly as practicable after the adoption thereof. The Manager agrees that notwithstanding any other provision of this Contract to the contrary, the Advisor will not be bound by any such amendment until the Advisor has received a copy thereof and has had a reasonable opportunity to review it.
(b) The Manager shall indemnify and hold harmless the Advisor, its partners, officers, employees and agents and each person, if any, who controls the Advisor within the meaning of any applicable law (each individually an "Indemnified Party") from and against all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable fees and other expenses of an Indemnified Party's counsel, other than attorneys' fees and costs in relation to the preparation of this Contract; each party bearing responsibility for its own such costs and fees), joint or several, (other than liabilities, losses, expenses, attorneys' fees and costs or damages arising from the failure of the Advisor to perform its responsibilities hereunder or claims arising from its acts or failure to act in performing this Contract) to which the Advisor or any other Indemnified
Party may become subject under any federal or state law as a result of any failure of the Manager or, if caused by any failure of the Manager, of the Trust or the Fund, to disclose a material fact, or any omission by the Manager, or, if caused by any failure of the Manager, of the Trust or the Fund, to disclose a material fact, in any document relating to the Trust or the Fund, except any failure or omission caused solely by (i) the incorporation in any such document of information relating to the Advisor which is furnished to the Manager in writing by or with the consent of the Advisor expressly for inclusion in such document or (ii) a breach, of which the Manager was not aware, by the Advisor of its duties hereunder. With respect to any claim for which an Indemnified Party is entitled to indemnity hereunder, the Manager shall assume the reasonable expenses and costs (including any reasonable attorneys' fees and costs) of the Indemnified Party or investigating and/or defending any claim asserted or threatened by any party, subject always to the Manager first receiving a written undertaking from the Indemnified Party to repay any amounts paid on its behalf in the event and to the extent of any subsequent determination that the Indemnified Party was not entitled to indemnification hereunder with respect of such claim.
(c) No public reference to, or description of, the Advisor or its methodology or work shall be made by the Manager or the Trust, whether in a prospectus, Statement of Additional Information or otherwise, unless the Manager provides the Advisor with a reasonable opportunity to review any such reference or description prior to the first use of such reference or description..
10. REPRESENTATIONS AND COVENANTS OF THE ADVISOR.
(a) The Advisor represents that the terms of this Contract do not violate any obligation by which it is bound, whether arising by contract, operation of law, or otherwise, and that it has the power, capacity and authority to enter into this Contract and to perform in accordance herewith.
(b) The Advisor shall immediately notify the Manager in the event that the Advisor or any of its affiliates: (1) becomes aware that it is subject to a statutory disqualification that prevents the Advisor from serving as investment advisor pursuant to this Contract; or (2) becomes aware that it the subject of an administrative proceeding or enforcement action by the SEC or any other regulatory authority. The Advisor further agrees to notify the Manager immediately of any material fact known to the Advisor respecting or relating to the Advisor that is not contained in the Trust's Registration Statement regarding the Fund, or any amendment or supplement thereto, but that is required to be disclosed therein, and of any statement contained therein that becomes untrue in any material respect.
(c) The Advisor agrees to maintain such books and records with respect to its services to the Fund as are required under the 1940 Act, and rules adopted thereunder, and by other applicable legal provisions, and to preserve such records for the periods and in the manner required by that Section, and those rules and legal provisions. The Advisor also agrees that records it maintains and preserves pursuant to Rule 31a-1
and Rule 31a-2 under the 1940 Act and otherwise in connection with its services hereunder are the property of the Trust and will be surrendered promptly to the Trust upon its request. The Advisor further agrees that it will furnish to regulatory authorities having the requisite authority any information or reports in connection with its services hereunder which may be requested in order to determine whether the operations of the Fund are being conducted in accordance with applicable laws and regulations.
(d) The Advisor shall provide the Manager with quarterly representations regarding the compliance of its' employees with the Advisor's code of ethics governing personal securities transactions. The Advisor shall provide the Manager with copies of any revisions to its code of ethics.
(e) The Advisor shall indemnify and hold harmless the Manager, the Fund, their partners, officers, employees and agents and each person, if any, who controls the Manager or Fund within the meaning of any applicable law (each individually an "Indemnified Party") from and against all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable fees and other expenses of an Indemnified Party's counsel, other than attorneys' fees and costs in relation to the preparation of this Contract; each party bearing responsibility for its own such costs and fees), joint or several, (other than liabilities, losses, expenses, attorneys' fees and costs or damages arising from the failure of the Manager to perform its responsibilities hereunder or claims arising from its acts or failure to act in performing this Contract) arising from Advisor's (or its respective agents and employees) failure to perform its duties and assume its obligations hereunder, including any action or claim against the Manager based on any alleged untrue statement or misstatement of a material fact made or provided in writing by or with the consent of Advisor contained in any registration statement, prospectus, shareholder report or other information or materials relating to the Fund and shares issued by the Fund, or the failure or alleged failure to state a material fact therein required to be stated in order that the statements therein are not misleading, which fact should have been made known or provided by the Advisor to the Manager. With respect to any claim for which an Indemnified Party is entitled to indemnity hereunder, the Advisor shall assume the reasonable expenses and costs (including any reasonable attorneys' fees and costs) of the Indemnified Party of investigating and/or defending any claim asserted or threatened by any party, subject always to the Advisor first receiving a written undertaking from the Indemnified Party to repay any amounts paid on its behalf in the event and to the extent of any subsequent determination that the Indemnified Party was not entitled to indemnification hereunder with respect of such claim.
11. USE OF NAME.
It is understood that the name of the Fund (as it may be changed from time to time while the Advisor provides services pursuant to this Contract) or any derivative thereof or logo associated with that name is the valuable property of the Trust and/or its affiliates, and that the Advisor has the right to use such name (or derivative or logo) only with the approval of the Manager and only so long as the Advisor is Advisor to the Trust and/or the Fund. Upon termination of this Contract the Advisor shall forthwith cease to use such name (or derivative or logo).
12. GOVERNING LAW.
This Contract shall be governed by, and construed and enforced in accordance with, the substantive laws of The Commonwealth of Massachusetts without regard to its principles of conflicts of laws, except to the extent such laws shall be preempted by the Investment Company Act of 1940 or by other applicable laws.
13. INDEPENDENT CONTRACTOR.
Advisor shall for all purposes of this Contract be deemed to be an independent contractor and, except as otherwise expressly provided herein, shall have no authority to act for, bind or represent the Fund in any way or otherwise be deemed to be an agent of the Fund. Likewise, the Fund, the Manager and their affiliates, agents and employees shall not be deemed agents of the Advisor and shall have no authority to bind the Advisor.
14. MISCELLANEOUS.
(a) The captions of this Contract are included for convenience only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect.
(b) In the event that the Advisor or Manager is or becomes a party to any action or proceedings in respect of which indemnification may be sought hereunder, the party seeking indemnification shall promptly notify the other party thereof. The party from whom indemnification is sought shall not be liable hereunder for any settlement of any action or claim effected without its written consent, which consent shall not be reasonably withheld.
(c) This Contract may be executed in one or more counterparts, all of which taken together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, QUANTITATIVE ADVISORS, INC. and INDEPENDENCE INTERNATIONAL ASSOCIATES, INC., have each caused this instrument to be signed in duplicate in its behalf, all as of the day and year first above written.
QUANTITATIVE ADVISORS, INC.
By___________________________
Willard L. Umphrey
President
INDEPENDENCE INTERNATIONAL
ASSOCIATES, INC.
By__________________________
Name:
Title:
EXHIBIT 12
Advisory Contract ("Contract") dated as of January 31, 1999, between QUANTITATIVE ADVISORS, INC., a Massachusetts corporation (the "Manager") and POLARIS CAPITAL MANAGEMENT, INC., a Massachusetts Corporation (the "Advisor").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is agreed as follows:
1. SERVICES TO BE RENDERED BY ADVISOR TO TRUST.
(a) Subject always to the control of the trustees (the "Trustees") of Quantitative Group of Funds, a Massachusetts business trust (the "Trust"), and the Manager, the Advisor, at its expense, will furnish continuously an investment program for the Quantitative Foreign Value Fund (the "Fund") of the Trust. The Advisor will determine what securities shall be purchased, held, sold or exchanged by the Fund and what portion, if any, of the assets of the Fund shall be held uninvested and shall, on behalf of the Fund, make changes in the Fund's investments. In the performance of its duties, the Advisor will comply with the provisions of the Agreement and Declaration of Trust and By-Laws of the Trust, as amended, and the stated investment objectives, policies and restrictions of the Fund as set forth in the then current Prospectus and/or Statement of Additional Information of the Trust and with other written policies which the Trustees or the Manager may from time-to-time determine and of which the Advisor has received notice. In furnishing an investment program to the Fund and in determining what securities shall be purchased, held, sold or exchanged by the Fund, the Advisor shall (1) comply in all material respects with all provisions of applicable law governing its duties and responsibilities hereunder, including, without limitation, the Investment Company Act of 1940 (the "1940 Act"), and the Rules and Regulations thereunder; the Investment Advisors Act of 1940, and the Rules and Regulations thereunder; the Internal Revenue Code of 1986, as amended (the "Code"), relating to regulated investment companies and all Rules and Regulations thereunder; the Insider Trading and Securities Fraud Enforcement Act of 1988; and such other laws as may be applicable to its activities as Advisor to the Fund and (2) use its best efforts to manage the Fund so that the Fund will qualify, and continue to qualify, as a regulated investment company under Subchapter M of the Code and regulations issued thereunder. The Advisor shall make its officers and employees available to the Manager or Trustees from time-to-time at reasonable times to review investment policies of the Fund and to consult with the Manager or Trustees regarding the investment affairs of the Fund.
(b) The Advisor, at its expense, will (1) furnish all necessary investment and management facilities, including salaries of personnel, required for it to execute its duties
hereunder, (2) keep records relating to the purchase, sale or current status of portfolio securities, (3) provide clerical personnel and equipment necessary for the efficient rendering of investment advice to the Fund, (4) furnish to the Manager such reports and records regarding the Fund and the Advisor as the Manager or Trustees shall from time-to-time request, and, (5) upon reasonable notice, review written references to the Advisor, or its methodology, whether in a Prospectus, Statement of Additional Information, sales material or otherwise. The Advisor shall have no obligation with respect to the determination of the Fund's net asset value, except to provide the Trust's custodian with information as to the securities held in the Fund's portfolio. The Advisor shall not be obligated to provide shareholder accounting services.
(c) The Advisor shall place all orders for the purchase and sale of portfolio investments for the Fund's account with brokers or dealers selected by the Advisor. In the selection of such brokers or dealers and the placing of such orders, the Advisor shall use its best efforts to obtain for the Fund the most favorable price and execution available, except to the extent that it may be permitted to pay higher brokerage commissions for brokerage and research services as described below. In using its best efforts to obtain for the Fund the most favorable price and execution available, the Advisor, bearing in mind the Fund's best interests at all times, shall consider all factors it deems relevant, including by way of illustration, price, the size of the transaction, the nature of the market for the security, the amount of the commission, if any, the timing of the transaction taking into account market prices and trends, the reputation, experience and financial stability of the broker or dealer involved and the quality of service rendered by the broker or dealer in other transactions. Subject to such written policies as the Trustees or the Manager may determine, and of which the Advisor has received notice and which the Advisor has accepted in writing, the Advisor shall not be deemed to have acted unlawfully or to have breached any duty created by this Contract or otherwise solely by reason of its having caused the Fund to pay a broker or dealer that provides brokerage and research services to the Advisor and/or the Manager an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Advisor determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Advisor's and/or Manager's overall responsibilities with respect to the Trust and to other clients as to which the Advisor and/or Manager or persons controlled by or under common control with the Advisor and/or Manager exercise investment discretion. The Advisor agrees that in connection with purchase or sales of portfolio instruments for the Fund's account, neither the Advisor nor any officer, director, employee or agent of the Advisor shall act as principal or receive any commission other than as provided in Section 3.
(d) The assets of the Fund shall be held by the Trust's custodian in an account which the Trust has directed the Custodian to open. The Advisor shall at no time have custody or physical control of any of the assets of the Fund. The Manager shall cause such custodian to provide the Advisor with such information and reports concerning the Fund or its assets as the Advisor may from time to time reasonably request and to accept
instructions from the Advisor with respect to such assets and transactions by the Fund in the performance of the Advisor's duties hereunder. The Advisor shall have no liability or obligation to pay the cost of such custodian or any of its services.
(e) Advice rendered to the Fund shall be confidential and may not be used by any shareholder, Trustee, officer, director, employee or agent of the Trust or of the Manager or by the advisor of any other fund of the Trust. Non-public information provided to the Manager on a confidential basis regarding the methodology of the Advisor shall not be made publicly available by the Manager, except that such information may be disclosed to the Trustees and may be disclosed to the extent necessary to comply with the federal and state securities laws and, after notice to the Advisor, upon order of any court or administrative agency or self regulatory organization of which the Manager or its affiliates are members.
(f) The Advisor shall not be obligated to pay any expenses of or for the Fund not expressly assumed by the Advisor pursuant to this Section 1.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and employees of the Trust may be a shareholder, partner, director, officer or employee of, or be otherwise interested in, the Advisor, and in any person controlled by or under common control with the Advisor, and that the Advisor and any person controlled by or under common control with the Advisor may have an interest in the Trust. It is also understood that the Advisor and persons controlled by or under common control with the Advisor have and may have advisory, management, service or other contracts with other organizations (including other investment companies and other managed accounts) and persons, and may have other interests and businesses.
Nothing in this Contract shall prohibit the Advisor or any of its affiliates from providing any services for any other person or entity or limit the services which the Advisor or any such affiliate can provide to any person or entity. The Manager understands and agrees that the Advisor and its affiliates perform investment advisory and investment management services for various clients other than the Manager and the Trust. The Manager agrees that the Advisor and its affiliates may give advice and take action in the performance of duties with respect to any other client which may differ from advice given, or the timing or nature of action taken, with respect to the Fund. Nothing in this Contract shall be deemed to impose upon the Advisor any obligation to purchase or sell or to recommend for purchase or sale for the Fund any security or other property which the Advisor or any of its affiliates may purchase or sell for its own account or for the account of any other client, so long as it continues to be the policy and practice of the Advisor not to favor or disfavor consistently or consciously any client or class of clients in the allocation of investment opportunities, so that to the extent practical, such opportunities will be allocated among clients over a period of time on a fair and equitable basis.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE ADVISOR
The Manager will pay to the Advisor, as compensation for the Advisor's services rendered and for the expenses borne by the Advisor pursuant to Section 1, a fee, computed and paid monthly at the annual rate of (i) 0.35% of the aggregate average daily net asset value of the Fund for assets in the Fund up to $30,000,000 and (ii) 0.50% of the aggregate average daily net asset value of the Fund for assets in the Fund over $30,000,000. Such fee shall be paid by the Manager and not by the Fund out of the management fee paid by the Trust to the Manager pursuant to the Management Contract between the Manager and the Trust or out of any other funds available to the Manager. Such average daily net asset value of the Fund shall be determined by taking an average of all the determinations of such net asset value during such month at the close of business on each business day, and for non-business days, the net asset value determined on the previous business day, during such month while this Contract is in effect. Such fee shall be payable for each month within 30 days after the end of each month.
If the Advisor shall serve for less than the whole of a month, the foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS TO THIS CONTRACT
This Contract shall automatically terminate, without the payment of any penalty, in the event of its assignment or in the event that the Management Contract between the Trust and the Manager is terminated generally, or with respect to the Fund; and this Contract shall not be amended unless (i) such amendment is approved at a meeting by an affirmative vote of a majority of the outstanding shares of the Fund, and (ii) by the vote, cast in person at a meeting called for the purpose of voting on such approval, of a majority of the Trustees of the Trust who are not interested persons of the Trust or of the Manager or of the Advisor. Notwithstanding the foregoing, shareholder approval will not be required for amendments to this Contract if the Fund obtains an exemptive order from the Securities and Exchange Commission permitting amendments to this Contract without shareholder approval.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective on January 31, 1999 or such other time as shall be agreed upon by the Manager and the Advisor, and shall remain in full force and effect as to the Fund continuously thereafter (unless terminated automatically as set forth in Section 4) until terminated as follows:
(a) The Trust or the Manager may at any time terminate this Contract as to the Fund by not more than sixty days' or less than thirty days' written notice delivered or mailed by registered mail, postage prepaid, to the Advisor, or
(b) The Advisor may at any time terminate this Contract as to the Fund by not less than one hundred fifty days' written notice delivered or mailed by registered mail, postage prepaid, to the Manager, provided, however, that if the Manager has violated or breached any material provision of this Contract and has failed to cure said breach within thirty days of receipt of written notification of the breach from the Advisor, the Advisor may thereupon terminate this Contract or
(c) If (i) the Trustees of the Trust, or the shareholders by the affirmative vote of a majority of the outstanding shares of the Fund, and (ii) a majority of the Trustees of the Trust who are not interested persons of the Trust or of the Manager or of the Advisor, by vote cast in person at a meeting called for the purpose of voting on such approval, do not specifically approve at least annually the continuance of this Contract, then this Contract shall automatically terminate as to the Fund at the close of business on the second anniversary of the effective date hereof or the expiration of one year from the effective date of the last such continuance, whichever is later; provided, however, that if the continuance of this Contract is submitted to the shareholders of the Fund for their approval and such shareholders fail to approve such continuance of this Contract as provided herein, the Advisor may continue to serve hereunder in a manner consistent with the 1940 Act and the Rules and Regulations thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a majority of its Trustees, or (ii) by the affirmative vote of a majority of the outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without the payment of any penalty.
6. CERTAIN DEFINITIONS
For the purposes of this Contract, the "affirmative vote of a majority of the outstanding shares" means the affirmative vote, at a duly called and held meeting of shareholders, (a) of the holders of 67% or more of the shares of the Trust or the Fund, as the case may be, present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding shares of the Trust or the Fund, as the case may be, entitled to vote at such meeting are present in person or by proxy, or (b) of the holders of more than 50% of the outstanding shares of the Trust or the Fund, as the case may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person", "control", "interested person" and "assignment" shall have their respective meanings defined in the 1940 Act and the Rules and Regulations thereunder, subject, however, to such exemptions as may be granted by the Securities and Exchange Commission ("SEC") under said Act; the term "specifically approve at least annually" shall be construed in a manner consistent with the 1940 Act and the Rules and Regulations thereunder; and the term "brokerage and research services" shall have the meaning given by the Securities Exchange Act of 1934 and the Rules and Regulations thereunder.
7. NONLIABILITY OF ADVISOR.
Notwithstanding any other agreement to the contrary, in the absence of willful misfeasance, bad faith or gross negligence on the part of the Advisor, its partners, officers, directors, employees or agents or reckless disregard of the Advisor's obligations and duties hereunder, neither the Advisor nor its officers, directors, employees or agents shall be subject to any liability to the Trust or to the Manager, or to any shareholder of the Trust, for any act or omission in the course of, or connected with, rendering services hereunder, unless the Advisor is claiming indemnity from any of them in connection herewith, but then only to the extent of the indemnity obtained.
8. VOTING OF SECURITIES.
The Advisor shall have the power to vote, either in person or by proxy, all securities in which assets of the Fund may be invested from time to time and shall not be required to seek or take instructions from the Manager or the Trustees of the Trust, or to take any action, with respect thereto.
9. REPRESENTATIONS AND COVENANTS OF THE MANAGER.
(a) The Manager represents that the terms of this Contract do not violate any obligation by which it is bound, whether arising by contract, operation of law or otherwise, and that it has the power, capacity and authority to enter into this Contract and to perform in accordance herewith. In addition, the Manager represents, warrants and covenants to the Advisor that it has the power, capacity and authority to commit the Trust to this Contract; that a true and complete copy of the Agreement and Declaration of Trust and By-Laws of the Trust and the stated objectives, policies and restrictions of the Fund have been delivered to the Advisor; and that true and complete copies of every amendment thereto will be delivered to the Advisor as promptly as practicable after the adoption thereof. The Manager agrees that notwithstanding any other provision of this Contract to the contrary, the Advisor will not be bound by any such amendment until the Advisor has received a copy thereof and has had a reasonable opportunity to review it.
(b) The Manager shall indemnify and hold harmless the Advisor, its partners, officers, employees and agents and each person, if any, who controls the Advisor within the meaning of any applicable law (each individually an "Indemnified Party") from and against all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable fees and other expenses of an Indemnified Party's counsel, other than attorneys' fees and costs in relation to the preparation of this Contract; each party bearing responsibility for its own such costs and fees), joint or several, (other than liabilities, losses, expenses, attorneys' fees and costs or damages arising from the failure of the Advisor to perform its responsibilities hereunder or claims arising from its acts or failure to act in performing this Contract) to which the Advisor or any other Indemnified Party may become subject under any federal or state law as a result of any failure of the Manager or, if caused by any failure of the Manager, of the Trust or the Fund, to disclose
a material fact, or any omission by the Manager, or, if caused by any failure of the Manager, of the Trust or the Fund, to disclose a material fact, in any document relating to the Trust or the Fund, except any failure or omission caused solely by (i) the incorporation in any such document of information relating to the Advisor which is furnished to the Manager in writing by or with the consent of the Advisor expressly for inclusion in such document or (ii) a breach, of which the Manager was not aware, by the Advisor of its duties hereunder. With respect to any claim for which an Indemnified Party is entitled to indemnity hereunder, the Manager shall assume the reasonable expenses and costs (including any reasonable attorneys' fees and costs) of the Indemnified Party or investigating and/or defending any claim asserted or threatened by any party, subject always to the Manager first receiving a written undertaking from the Indemnified Party to repay any amounts paid on its behalf in the event and to the extent of any subsequent determination that the Indemnified Party was not entitled to indemnification hereunder with respect of such claim.
(c) No public reference to, or description of, the Advisor or its methodology or work shall be made by the Manager or the Trust, whether in a prospectus, Statement of Additional Information or otherwise, unless the Manager provides the Advisor with a reasonable opportunity to review any such reference or description prior to the first use of such reference or description..
(d) The Manager covenants to the Advisor that, during the term of this Agreement, the Trust and the Manager shall not knowingly solicit any multiemployer plan subject to the Taft-Hartley Act or any governmental plan described in Sections 401(a)(24) or 818(a)(6) of the Code (or portions thereof and/or any group of such plans and/or trusts) (collectively "Plan Investors") to purchase or hold shares of beneficial interest in the Fund or knowingly solicit any advisor for a Plan Investor to purchase shares of beneficial interest in the Fund for such Plan Investors or to advise such Plan Investors to purchase Fund shares. The Manager acknowledges that the Advisor is party to a non-competition covenant that restricts the Advisor's ability to provide investment advisory services, directly or indirectly, to any such Plan Investors and, accordingly, that this covenant is a material provision of this Contract.
10. REPRESENTATIONS AND COVENANTS OF THE ADVISOR.
(a) The Advisor represents that the terms of this Contract do not violate any obligation by which it is bound, whether arising by contract, operation of law, or otherwise, and that it has the power, capacity and authority to enter into this Contract and to perform in accordance herewith.
(b) The Advisor shall immediately notify the Manager in the event that the Advisor or any of its affiliates: (1) becomes aware that it is subject to a statutory disqualification that prevents the Advisor from serving as investment advisor pursuant to this Contract; or (2) becomes aware that it the subject of an administrative proceeding or enforcement action by the SEC or any other regulatory authority. The Advisor further agrees to notify the Manager immediately of any material fact known to the Advisor
respecting or relating to the Advisor that is not contained in the Trust's Registration Statement regarding the Fund, or any amendment or supplement thereto, but that is required to be disclosed therein, and of any statement contained therein that becomes untrue in any material respect.
(c) The Advisor agrees to maintain such books and records with respect to its services to the Fund as are required under the 1940 Act, and rules adopted thereunder, and by other applicable legal provisions, and to preserve such records for the periods and in the manner required by that Section, and those rules and legal provisions. The Advisor also agrees that records it maintains and preserves pursuant to Rule 31a-1 and Rule 31a-2 under the 1940 Act and otherwise in connection with its services hereunder are the property of the Trust and will be surrendered promptly to the Trust upon its request. The Advisor further agrees that it will furnish to regulatory authorities having the requisite authority any information or reports in connection with its services hereunder which may be requested in order to determine whether the operations of the Fund are being conducted in accordance with applicable laws and regulations.
(d) The Advisor shall provide the Manager with quarterly representations regarding the compliance of its' employees with the Advisor's code of ethics governing personal securities transactions. The Advisor shall provide the Manager with copies of any revisions to its code of ethics.
(e) The Advisor shall indemnify and hold harmless the Manager, the Fund, their partners, officers, employees and agents and each person, if any, who controls the Manager or Fund within the meaning of any applicable law (each individually an "Indemnified Party") from and against all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable fees and other expenses of an Indemnified Party's counsel, other than attorneys' fees and costs in relation to the preparation of this Contract; each party bearing responsibility for its own such costs and fees), joint or several, (other than liabilities, losses, expenses, attorneys' fees and costs or damages arising from the failure of the Manager to perform its responsibilities hereunder or claims arising from its acts or failure to act in performing this Contract) arising from Advisor's (or its respective agents and employees) failure to perform its duties and assume its obligations hereunder, including any action or claim against the Manager based on any alleged untrue statement or misstatement of a material fact made or provided in writing by or with the consent of Advisor contained in any registration statement, prospectus, shareholder report or other information or materials relating to the Fund and shares issued by the Fund, or the failure or alleged failure to state a material fact therein required to be stated in order that the statements therein are not misleading, which fact should have been made known or provided by the Advisor to the Manager. With respect to any claim for which an Indemnified Party is entitled to indemnity hereunder, the Advisor shall assume the reasonable expenses and costs (including any reasonable attorneys' fees and costs) of the Indemnified Party of investigating and/or defending any claim asserted or threatened by any party, subject always to the Advisor first receiving a written undertaking from the Indemnified Party to repay any amounts paid on its behalf in the event and to the extent of any subsequent determination that the
Indemnified Party was not entitled to indemnification hereunder with respect of such claim.
11. NON-COMPETITION COVENANT.
(a) For a period of two years from May 18, 1998, the Advisor shall not, and the Advisor shall use its best efforts to cause its affiliates not to, directly or indirectly, whether as owner, part-owner shareholder, partner, member, trustee, director, officer, employee, agent or consultant, or in any other capacity on behalf of itself or any firm, corporation or other business organization other than the Fund, provide any advisory services to any registered investment company offered within the United States with the investment purpose of investing exclusively in non-US securities.
(b) During the term of this Contract, the Advisor shall not, and the Advisor shall use its best efforts to cause its affiliates not to, directly or indirectly, whether as owner, part-owner shareholder, partner, member, trustee, director, officer, employee, agent or consultant, or in any other capacity on behalf of itself or any firm, corporation or other business organization other than the Fund, knowingly solicit any shareholder of the Fund, or knowingly engage in any other activity, for the purpose (which need not be the sole or primary purpose), or with the intended effect, of causing any shareholder to withdraw any assets from the Fund (referred to herein as the "Shareholder Competitive Activity"). Shareholder Competitive Activity shall not include any activities undertaken by the Advisor pursuant to the Solicitor's and Representatives Agreement dated May 18, 1998 between the Manager and the Advisor.
(c) In addition to, and not in limitation of, the provisions of
Sections 11(a) and 11(b) hereof, the Advisor agrees that, for the benefit of the
Fund and the Manager, from and after the termination of this Agreement and
continuing for six months following such termination, the Advisor shall not
knowingly, and the Advisor shall use its best efforts to cause its affiliates
not to, directly or indirectly, whether as owner, part-owner shareholder,
partner, member, trustee, director, officer, employee, agent or consultant, or
in any other capacity on behalf of itself of any firm, corporation or other
business organization other than the Fund engage in any Shareholder Competitive
Activity; provided, however, that upon a termination of this Contract under
Section 5(a) without Cause (as defined in Section 11(d) below) or under Section
5(b) due to a breach of this Contract by the Manager, this Section 11(c) shall
be void and of no further force and effect.
(d) For the purposes of Section 11(b) above, "Cause" shall mean any of the following:
(i) The Advisor has engaged in any criminal act which is or involves either (A) a violation of federal or state securities laws or regulations or (B) a crime involving dishonesty or other serious felony offense and has been convicted (whether or not subject to appeal) or pled nolo contendere (or any similar plea) to any criminal offense in connection with or relating to such act; or
(ii) The Advisor has violated or breached any material provision of this Contract and has failed to cure said breach within thirty days of receipt of written notification of the breach from the Manager, and the Manager, acting in good faith, has determined that harm that is not immaterial or insignificant has or is likely to occur to the Trust, the Fund or the Manager as a result of such violation, breach or activity.
(e) The Advisor, the Fund, and the Manager agree that the periods of time and the limited geographic area applicable to the covenants of this Section 11 are reasonable in view of: (i) the Advisor's receipt of the payments specified in Section 3 above; (ii) the geographic scope and nature of the business in which the Fund is engaged; (iii) the Advisor's knowledge of the Fund's businesses; and (iv) the parties' relative relationships with the shareholders of the Fund. However, if such period or such area should be adjudged unreasonable in any judicial proceeding, then the period of time shall be reduced by the number of months or such area shall be reduced by such portion of such area, or both, as are deemed unreasonable, so that this covenant may be enforced in such maximum area and during such maximum period of time as are adjudged to be reasonable.]
12. USE OF NAME.
It is understood that the name of the Fund (as it may be changed from time to time while the Advisor provides services pursuant to this Contract) or any derivative thereof or logo associated with that name is the valuable property of the Trust and/or its affiliates, and that the Advisor has the right to use such name (or derivative or logo) only with the approval of the Manager and only so long as the Advisor is Advisor to the Trust and/or the Fund. Upon termination of this Contract the Advisor shall forthwith cease to use such name (or derivative or logo).
It is further understood that the name of the Advisor and the name "Cloud Hill Conference Companies" (as they may be changed from time to time while the Advisor provides services pursuant to this Contract) or any derivative thereof or logo associated with those names is the valuable property of the Advisor and/or its affiliates, and that the Trust has the right to use such names (or derivatives or logos) only with the approval of the Advisor, which shall not be unreasonably withheld, and only so long as the Advisor is Advisor to the Trust and/or the Fund.
13. GOVERNING LAW.
This Contract shall be governed by, and construed and enforced in accordance with, the substantive laws of The Commonwealth of Massachusetts without regard to its principles of conflicts of laws, except to the extent such laws shall be preempted by the Investment Company Act of 1940 or by other applicable laws.
14. INDEPENDENT CONTRACTOR.
Advisor shall for all purposes of this Contract be deemed to be an independent contractor and, except as otherwise expressly provided herein, shall have no authority to act for, bind or represent the Fund in any way or otherwise be deemed to be an agent of the Fund. Likewise, the Fund, the Manager and their affiliates, agents and employees shall not be deemed agents of the Advisor and shall have no authority to bind the Advisor.
15. MISCELLANEOUS.
(a) The captions of this Contract are included for convenience only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect.
(b) In the event that the Advisor or Manager is or becomes a party to any action or proceedings in respect of which indemnification may be sought hereunder, the party seeking indemnification shall promptly notify the other party thereof. The party from whom indemnification is sought shall not be liable hereunder for any settlement of any action or claim effected without its written consent, which consent shall not be reasonably withheld.
(c) This Contract may be executed in one or more counterparts, all of which taken together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, QUANTITATIVE ADVISORS, INC. and POLARIS CAPITAL MANAGEMENT, INC. have each caused this instrument to be signed in duplicate in its behalf, all as of the day and year first above written.
QUANTITATIVE ADVISORS, INC.
POLARIS CAPITAL
MANAGEMENT, INC.
Title:
AMENDMENT NO. I TO THE AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST OF
U.S. BOSTON INVESTMENT COMPANY
We, the undersigned, being all of the Trustees of U.s. Boston Investment Company, a Massachusetts business trust created and existing under an Amended and Restated Agreement and Declaration of Trust dated as of April 2, 1990, (the "Agreement") , a copy of which is on file in the office of the Secretary of State of the Commonwealth of Massachusetts, do hereby certify that the following amendment to said Agreement has been authorized by the unanimous vote of the Trustees, taken at a meeting held for that purpose on July 14, 1993, consistent with Article IX, Section 7 of the Agreement, and do hereby amend said Agreement as follows:
By amending Section 1 of ARTICLE I to read in its entirety as follows:
"Section 1. This Trust shall be known as "The Quantitative Group of Funds", and the Trustees shall conduct the business of the Trust under that name or any other name as they may from time to time determine."
The foregoing Amendment shall become effective as of the close of business July 18, 1993.
IN WITNESS WHEREOF, we have hereunto set our hands and common Seal, for ourselves and our successors and assigns.
Leon Okurowski
EXHIBIT 13
Advisory Contract ("Contract") dated as of January 31, 1999, between QUANTITATIVE ADVISORS, INC., a Massachusetts corporation (the "Manager") and STATE STREET BANK AND TRUST COMPANY, a Massachusetts banking corporation (the "Advisor").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is agreed as follows:
1. SERVICES TO BE RENDERED BY ADVISOR TO TRUST.
(a) Subject always to the control of the trustees (the "Trustees") of Quantitative Group of Funds, a Massachusetts business trust (the "Trust"), and the Manager, the Advisor, at its expense, will furnish continuously an investment program for the Quantitative Growth and Income Fund (the "Fund") of the Trust. The Advisor will determine what securities shall be purchased, held, sold or exchanged by the Fund and what portion, if any, of the assets of the Fund shall be held uninvested and shall, on behalf of the Fund, make changes in the Fund's investments. In the performance of its duties, the Advisor will comply with the provisions of the Agreement and Declaration of Trust and By-Laws of the Trust, as amended, and the stated investment objectives, policies and restrictions of the Fund as set forth in the then current Prospectus and/or Statement of Additional Information of the Trust and with other written policies which the Trustees or the Manager may from time-to-time determine and of which the Advisor has received notice. In furnishing an investment program to the Fund and in determining what securities shall be purchased, held, sold or exchanged by the Fund, the Advisor shall (1) comply in all material respects with all provisions of applicable law governing its duties and responsibilities hereunder, including, without limitation, the Investment Company Act of 1940 (the "1940 Act"), and the Rules and Regulations thereunder; the Investment Advisors Act of 1940, and the Rules and Regulations thereunder; the Internal Revenue Code of 1986, as amended (the "Code"), relating to regulated investment companies and all Rules and Regulations thereunder; the Insider Trading and Securities Fraud Enforcement Act of 1988; and such other laws as may be applicable to its activities as Advisor to the Fund and (2) use its best efforts to manage the Fund so that the Fund will qualify, and continue to qualify, as a regulated investment company under Subchapter M of the Code and regulations issued thereunder. The Advisor shall make its officers and employees available to the Manager or Trustees from time-to-time at reasonable times to review investment policies of the Fund and to consult with the Manager or Trustees regarding the investment affairs of the Fund.
(b) The Advisor, at its expense, will (1) furnish all necessary investment and management facilities, including salaries of personnel, required for it to execute its duties hereunder, (2) keep records relating to the purchase, sale or current status of portfolio securities, (3) provide clerical personnel and equipment necessary for the efficient rendering of investment advice to the Fund, (4) furnish to the Manager such reports and records regarding the Fund and the Advisor as the Manager or Trustees shall from time-to-time request, and, (5) upon reasonable notice, review written references to the Advisor, or its methodology, whether in a Prospectus, Statement of Additional Information, sales material or otherwise. The Advisor shall have no obligation with respect to the determination of the Fund's net asset value, except to provide the Trust's custodian with information as to the securities held in the Fund's portfolio. The Advisor shall not be obligated to provide shareholder accounting services.
(c) The Advisor shall place all orders for the purchase and sale of portfolio investments for the Fund's account with brokers or dealers selected by the Advisor. In the selection of such brokers or dealers and the placing of such orders, the Advisor shall use its best efforts to obtain for the Fund the most favorable price and execution available, except to the extent that it may be permitted to pay higher brokerage commissions for brokerage and research services as described below. In using its best efforts to obtain for the Fund the most favorable price and execution available, the Advisor, bearing in mind the Fund's best interests at all times, shall consider all factors it deems relevant, including by way of illustration, price, the size of the transaction, the nature of the market for the security, the amount of the commission, if any, the timing of the transaction taking into account market prices and trends, the reputation, experience and financial stability of the broker or dealer involved and the quality of service rendered by the broker or dealer in other transactions. Subject to such written policies as the Trustees or the Manager may determine, and of which the Advisor has received notice and which the Advisor has accepted in writing, the Advisor shall not be deemed to have acted unlawfully or to have breached any duty created by this Contract or otherwise solely by reason of its having caused the Fund to pay a broker or dealer that provides brokerage and research services to the Advisor and/or the Manager an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Advisor determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Advisor's and/or Manager's overall responsibilities with respect to the Trust and to other clients as to which the Advisor and/or Manager or persons controlled by or under common control with the Advisor and/or Manager exercise investment discretion. The Advisor agrees that in connection with purchase or sales of portfolio instruments for the Fund's account, neither the Advisor nor any officer, director, employee or agent of the Advisor shall act as principal or receive any commission other than as provided in Section 3.
(d) The assets of the Fund shall be held by the Trust's custodian in an account which the Trust has directed the Custodian to open. The Advisor shall at no time have custody or physical control of any of the assets of the Fund. The Manager shall cause
such custodian to provide the Advisor with such information and reports concerning the Fund or its assets as the Advisor may from time to time reasonably request and to accept instructions from the Advisor with respect to such assets and transactions by the Fund in the performance of the Advisor's duties hereunder. The Advisor shall have no liability or obligation to pay the cost of such custodian or any of its services.
(e) Advice rendered to the Fund shall be confidential and may not be used by any shareholder, Trustee, officer, director, employee or agent of the Trust or of the Manager or by the advisor of any other fund of the Trust. Non-public information provided to the Manager on a confidential basis regarding the methodology of the Advisor shall not be made publicly available by the Manager, except that such information may be disclosed to the Trustees and may be disclosed to the extent necessary to comply with the federal and state securities laws and, after notice to the Advisor, upon order of any court or administrative agency or self regulatory organization of which the Manager or its affiliates are members.
(f) The Advisor shall not be obligated to pay any expenses of or for the Fund not expressly assumed by the Advisor pursuant to this Section 1.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and employees of the Trust may be a shareholder, partner, director, officer or employee of, or be otherwise interested in, the Advisor, and in any person controlled by or under common control with the Advisor, and that the Advisor and any person controlled by or under common control with the Advisor may have an interest in the Trust. It is also understood that the Advisor and persons controlled by or under common control with the Advisor have and may have advisory, management, service or other contracts with other organizations (including other investment companies and other managed accounts) and persons, and may have other interests and businesses.
Nothing in this Contract shall prohibit the Advisor or any of its affiliates from providing any services for any other person or entity or limit the services which the Advisor or any such affiliate can provide to any person or entity. The Manager understands and agrees that the Advisor and its affiliates perform investment advisory and investment management services for various clients other than the Manager and the Trust. The Manager agrees that the Advisor and its affiliates may give advice and take action in the performance of duties with respect to any other client which may differ from advice given, or the timing or nature of action taken, with respect to the Fund. Nothing in this Contract shall be deemed to impose upon the Advisor any obligation to purchase or sell or to recommend for purchase or sale for the Fund any security or other property which the Advisor or any of its affiliates may purchase or sell for its own account or for the account of any other client, so long as it continues to be the policy and practice of the Advisor not to favor or disfavor consistently or consciously any client or class of clients in the allocation of investment opportunities, so that to the extent practical, such
opportunities will be allocated among clients over a period of time on a fair and equitable basis.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE ADVISOR
The Manager will pay to the Advisor, as compensation for the Advisor's services rendered and for the expenses borne by the Advisor pursuant to Section 1, a fee, computed and paid monthly at the annual rate of 0.375% of the first $20 million and 0.30% of amounts in excess of $20 million of average daily total net assets, with an annual minimum of $25,000. Such fee shall be paid by the Manager and not by the Fund out of the management fee paid by the Trust to the Manager pursuant to the Management Contract between the Manager and the Trust or out of any other funds available to the Manager. Such average daily net asset value of the Fund shall be determined by taking an average of all the determinations of such net asset value during such month at the close of business on each business day, and for non-business days, the net asset value determined on the previous business day, during such month while this Contract is in effect. Such fee shall be payable for each month within 30 days after the end of each month.
If the Advisor shall serve for less than the whole of a month, the foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS TO THIS CONTRACT
This Contract shall automatically terminate, without the payment of any penalty, in the event of its assignment or in the event that the Management Contract between the Trust and the Manager is terminated generally, or with respect to the Fund; and this Contract shall not be amended unless (i) such amendment is approved at a meeting by an affirmative vote of a majority of the outstanding shares of the Fund, and (ii) by the vote, cast in person at a meeting called for the purpose of voting on such approval, of a majority of the Trustees of the Trust who are not interested persons of the Trust or of the Manager or of the Advisor. Notwithstanding the foregoing, shareholder approval will not be required for amendments to this Contract if the Fund obtains an exemptive order from the Securities and Exchange Commission permitting amendments to this Contract without shareholder approval.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective on January 31, 1999 or such other time as shall be agreed upon by the Manager and the Advisor, and shall remain in full force and effect as to the Fund continuously thereafter (unless terminated automatically as set forth in Section 4) until terminated as follows:
(a) The Trust or the Manager may at any time terminate this Contract as to the Fund by not more than sixty days' or less than thirty days' written notice delivered or mailed by registered mail, postage prepaid, to the Advisor, or
(b) The Advisor may at any time terminate this Contract as to the Fund by not less than one hundred fifty days' written notice delivered or mailed by registered mail, postage prepaid, to the Manager, or
(c) If (i) the Trustees of the Trust, or the shareholders by the affirmative vote of a majority of the outstanding shares of the Fund, and (ii) a majority of the Trustees of the Trust who are not interested persons of the Trust or of the Manager or of the Advisor, by vote cast in person at a meeting called for the purpose of voting on such approval, do not specifically approve at least annually the continuance of this Contract, then this Contract shall automatically terminate as to the Fund at the close of business on the second anniversary of the effective date hereof or the expiration of one year from the effective date of the last such continuance, whichever is later; provided, however, that if the continuance of this Contract is submitted to the shareholders of the Fund for their approval and such shareholders fail to approve such continuance of this Contract as provided herein, the Advisor may continue to serve hereunder in a manner consistent with the 1940 Act and the Rules and Regulations thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a majority of its Trustees, or (ii) by the affirmative vote of a majority of the outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without the payment of any penalty.
6. CERTAIN DEFINITIONS
For the purposes of this Contract, the "affirmative vote of a majority of the outstanding shares" means the affirmative vote, at a duly called and held meeting of shareholders, (a) of the holders of 67% or more of the shares of the Trust or the Fund, as the case may be, present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding shares of the Trust or the Fund, as the case may be, entitled to vote at such meeting are present in person or by proxy, or (b) of the holders of more than 50% of the outstanding shares of the Trust or the Fund, as the case may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person", "control", "interested person" and "assignment" shall have their respective meanings defined in the 1940 Act and the Rules and Regulations thereunder, subject, however, to such exemptions as may be granted by the Securities and Exchange Commission ("SEC") under said Act; the term "specifically approve at least annually" shall be construed in a manner consistent with the 1940 Act and the Rules and Regulations thereunder; and the
term "brokerage and research services" shall have the meaning given by the Securities Exchange Act of 1934 and the Rules and Regulations thereunder.
7. NONLIABILITY OF ADVISOR.
Notwithstanding any other agreement to the contrary, in the absence of willful misfeasance, bad faith or gross negligence on the part of the Advisor, its partners, officers, directors, employees or agents or reckless disregard of the Advisor's obligations and duties hereunder, neither the Advisor nor its officers, directors, employees or agents shall be subject to any liability to the Trust or to the Manager, or to any shareholder of the Trust, for any act or omission in the course of, or connected with, rendering services hereunder, unless the Advisor is claiming indemnity from any of them in connection herewith, but then only to the extent of the indemnity obtained.
8. VOTING OF SECURITIES.
The Advisor shall have the power to vote, either in person or by proxy, all securities in which assets of the Fund may be invested from time to time and shall not be required to seek or take instructions from the Manager or the Trustees of the Trust, or to take any action, with respect thereto.
9. REPRESENTATIONS AND COVENANTS OF THE MANAGER.
(a) The Manager represents that the terms of this Contract do not violate any obligation by which it is bound, whether arising by contract, operation of law or otherwise, and that it has the power, capacity and authority to enter into this Contract and to perform in accordance herewith. In addition, the Manager represents, warrants and covenants to the Advisor that it has the power, capacity and authority to commit the Trust to this Contract; that a true and complete copy of the Agreement and Declaration of Trust and By-Laws of the Trust and the stated objectives, policies and restrictions of the Fund have been delivered to the Advisor; and that true and complete copies of every amendment thereto will be delivered to the Advisor as promptly as practicable after the adoption thereof. The Manager agrees that notwithstanding any other provision of this Contract to the contrary, the Advisor will not be bound by any such amendment until the Advisor has received a copy thereof and has had a reasonable opportunity to review it.
(b) The Manager shall indemnify and hold harmless the Advisor, its partners, officers, employees and agents and each person, if any, who controls the Advisor within the meaning of any applicable law (each individually an "Indemnified Party") from and against all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable fees and other expenses of an Indemnified Party's counsel, other than attorneys' fees and costs in relation to the preparation of this Contract; each party bearing responsibility for its own such costs and fees), joint or several, (other than liabilities, losses, expenses, attorneys' fees and costs or damages arising from the failure of the Advisor to perform its responsibilities hereunder or claims arising from its acts or failure to act in performing this Contract) to which the Advisor or any other Indemnified
Party may become subject under any federal or state law as a result of any failure of the Manager or, if caused by any failure of the Manager, of the Trust or the Fund, to disclose a material fact, or any omission by the Manager, or, if caused by any failure of the Manager, of the Trust or the Fund, to disclose a material fact, in any document relating to the Trust or the Fund, except any failure or omission caused solely by (i) the incorporation in any such document of information relating to the Advisor which is furnished to the Manager in writing by or with the consent of the Advisor expressly for inclusion in such document or (ii) a breach, of which the Manager was not aware, by the Advisor of its duties hereunder. With respect to any claim for which an Indemnified Party is entitled to indemnity hereunder, the Manager shall assume the reasonable expenses and costs (including any reasonable attorneys' fees and costs) of the Indemnified Party or investigating and/or defending any claim asserted or threatened by any party, subject always to the Manager first receiving a written undertaking from the Indemnified Party to repay any amounts paid on its behalf in the event and to the extent of any subsequent determination that the Indemnified Party was not entitled to indemnification hereunder with respect of such claim.
(c) No public reference to, or description of, the Advisor or its methodology or work shall be made by the Manager or the Trust, whether in a prospectus, Statement of Additional Information or otherwise, unless the Manager provides the Advisor with a reasonable opportunity to review any such reference or description prior to the first use of such reference or description.
10. REPRESENTATIONS AND COVENANTS OF THE ADVISOR.
(a) The Advisor represents that the terms of this Contract do not violate any obligation by which it is bound, whether arising by contract, operation of law, or otherwise, and that it has the power, capacity and authority to enter into this Contract and to perform in accordance herewith.
(b) The Advisor shall immediately notify the Manager in the event that the Advisor or any of its affiliates: (1) becomes aware that it is subject to a statutory disqualification that prevents the Advisor from serving as investment advisor pursuant to this Contract; or (2) becomes aware that it the subject of an administrative proceeding or enforcement action by the SEC or any other regulatory authority. The Advisor further agrees to notify the Manager immediately of any material fact known to the Advisor respecting or relating to the Advisor that is not contained in the Trust's Registration Statement regarding the Fund, or any amendment or supplement thereto, but that is required to be disclosed therein, and of any statement contained therein that becomes untrue in any material respect.
(c) The Advisor agrees to maintain such books and records with respect to its services to the Fund as are required under the 1940 Act, and rules adopted thereunder, and by other applicable legal provisions, and to preserve such records for the periods and in the manner required by that Section, and those rules and legal provisions. The Advisor also agrees that records it maintains and preserves pursuant to Rule 31a-1
and Rule 31a-2 under the 1940 Act and otherwise in connection with its services hereunder are the property of the Trust and will be surrendered promptly to the Trust upon its request. The Advisor further agrees that it will furnish to regulatory authorities having the requisite authority any information or reports in connection with its services hereunder which may be requested in order to determine whether the operations of the Fund are being conducted in accordance with applicable laws and regulations.
(d) The Advisor shall provide the Manager with quarterly representations regarding the compliance of its' employees with the Advisor's code of ethics governing personal securities transactions. The Advisor shall provide the Manager with copies of any revisions to its code of ethics.
(e) The Advisor shall indemnify and hold harmless the Manager, the Fund, their partners, officers, employees and agents and each person, if any, who controls the Manager or Fund within the meaning of any applicable law (each individually an "Indemnified Party") from and against all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable fees and other expenses of an Indemnified Party's counsel, other than attorneys' fees and costs in relation to the preparation of this Contract; each party bearing responsibility for its own such costs and fees), joint or several, (other than liabilities, losses, expenses, attorneys' fees and costs or damages arising from the failure of the Manager to perform its responsibilities hereunder or claims arising from its acts or failure to act in performing this Contract) arising from Advisor's (or its respective agents and employees) failure to perform its duties and assume its obligations hereunder, including any action or claim against the Manager based on any alleged untrue statement or misstatement of a material fact made or provided in writing by or with the consent of Advisor contained in any registration statement, prospectus, shareholder report or other information or materials relating to the Fund and shares issued by the Fund, or the failure or alleged failure to state a material fact therein required to be stated in order that the statements therein are not misleading, which fact should have been made known or provided by the Advisor to the Manager. With respect to any claim for which an Indemnified Party is entitled to indemnity hereunder, the Advisor shall assume the reasonable expenses and costs (including any reasonable attorneys' fees and costs) of the Indemnified Party of investigating and/or defending any claim asserted or threatened by any party, subject always to the Advisor first receiving a written undertaking from the Indemnified Party to repay any amounts paid on its behalf in the event and to the extent of any subsequent determination that the Indemnified Party was not entitled to indemnification hereunder with respect of such claim.
11. USE OF NAME.
It is understood that the name of the Fund (as it may be changed from time to time while the Advisor provides services pursuant to this Contract) or any derivative thereof or logo associated with that name is the valuable property of the Trust and/or its affiliates, and that the Advisor has the right to use such name (or derivative or logo) only with the approval of the Manager and only so long as the Advisor is Advisor to the Trust and/or the Fund. Upon termination of this Contract the Advisor shall forthwith cease to use such name (or derivative or logo).
12. GOVERNING LAW.
This Contract shall be governed by, and construed and enforced in accordance with, the substantive laws of The Commonwealth of Massachusetts without regard to its principles of conflicts of laws, except to the extent such laws shall be preempted by the Investment Company Act of 1940 or by other applicable laws.
13. INDEPENDENT CONTRACTOR.
Advisor shall for all purposes of this Contract be deemed to be an independent contractor and, except as otherwise expressly provided herein, shall have no authority to act for, bind or represent the Fund in any way or otherwise be deemed to be an agent of the Fund. Likewise, the Fund, the Manager and their affiliates, agents and employees shall not be deemed agents of the Advisor and shall have no authority to bind the Advisor.
14. MISCELLANEOUS.
(a) The captions of this Contract are included for convenience only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect.
(b) In the event that the Advisor or Manager is or becomes a party to any action or proceedings in respect of which indemnification may be sought hereunder, the party seeking indemnification shall promptly notify the other party thereof. The party from whom indemnification is sought shall not be liable hereunder for any settlement of any action or claim effected without its written consent, which consent shall not be reasonably withheld.
(c) This Contract may be executed in one or more counterparts, all of which taken together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, QUANTITATIVE ADVISORS, INC. and STATE STREET BANK AND TRUST COMPANY have each caused this instrument to be signed in duplicate in its behalf, all as of the day and year first above written.
QUANTITATIVE ADVISORS, INC.
By__________________________
Willard L. Umphrey
President
STATE STREET BANK AND TRUST
COMPANY
By__________________________
Name:
Title:
EXHIBIT 14
DISTRIBUTION AGREEMENT
Distribution Agreement dated April 17, 1985, by and between U.S. BOSTON INVESTMENT COMPANY, a Massachusetts business trust (the "Trust") and U.S. BOSTON CAPITAL CORPORATION, a Massachusetts corporation ("U.S. Boston Capital").
WHEREAS, the Trust and U.S. Boston Capital are desirous of entering into an agreement providing for the distribution by U.S. Boston Capital of shares of the Trust;
NOW, THEREFORE, in consideration of the mutual agreements contained in the Terms and Conditions of Distribution Agreement attached to and forming a part of this Contract (the "Terms and Conditions"), the Trust hereby appoints U.S. Boston Capital as a distributor of shares of the Trust, and U.S. Boston Capital hereby accepts such appointment, all as set forth in the Terms and Conditions.
A copy of the Agreement and Declaration of Trust of the Trust is on file with the Secretary of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trustees of the Trust as Trustees and not individually, and that the obligations of or arising out of this instrument are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, U.S. BOSTON INVESTMENT COMPANY and U.S. BOSTON CAPITAL CORPORATION have each caused this Distribution Agreement to be signed in duplicate in its behalf, all as of the day and year first above written.
U.S. BOSTON INVESTMENT COMPANY
By:
U.S. BOSTON CAPITAL CORPORATION
By:
TERMS AND CONDITIONS
OF
DISTRIBUTION AGREEMENT
Upon receipt of an order from an investor to purchase Trust shares, U.S. Boston Capital will promptly purchase shares from the Trust to fill such order. Upon receipt of registration instructions in proper form and payment for such shares, U.S. Boston Capital will transmit such instructions to the Trust or its agent for registration of the shares purchased.
The net asset value of shares shall be determined in the manner provided in the Agreement and Declaration of Trust and By-laws of the Trust as then amended.
On every sale the Trust shall receive the net asset value of the shares.
In the event that the expenses of any Series for any fiscal year exceed 2% of such Series' average net assets after giving effect to the reduction of the compensation paid to the Fund's Manager with respect to such Series in accordance with the terms of its Management Contract with the Fund, the compensation of the Distributor with respect to such Series shall be reduced to the extent the Series expenses exceed 2% of average net assets. Series expenses subject to this limitation are exclusive of brokerage, interest, taxes and extraordinary expenses, if any. The Distributor's compensation shall not be reduced pursuant to this paragraph to the extent that the Distributor is committed to make payments to non-affiliated entities for services in connection with the distribution of a Series' shares.
no event shall anything contained in this Agreement be construed so as to protect U.S. Boston Capital against any liability to the Trust or its shareholders to which U.S. Boston Capital would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence, in the performance of its duties under this Agreement.
(a) Either by such Series or U.S. Boston Capital by not more than sixty (60) days' nor less than ten (10) days' written notice delivered or mailed by registered mail, postage prepaid, to the other party; or
(b) Automatically as to any Series at the close of business on the second anniversary of the execution of this Contract or upon the expiration of one year from the effective date of the last continuance of this Contract, whichever is later, if the continuance of this Contract is not specifically approved at least annually by the Trustees of the Trust or the shareholders of such Series by the affirmative vote of a majority of the outstanding shares of such Series, and by a majority of the Trustees of the Trust who are not interested persons of the Trust and who have no direct or indirect financial interest in the operation of the Distribution Plan or this Contract by vote cast in person at a meeting called for the purpose of voting on such approval.
Action by a Series of the Trust under (a) above may be taken either (i) by vote of the Trustees of the Trust, or (ii) by the affirmative vote of a majority of the outstanding shares of such Series. The requirement under (b) above that continuance of this Contract be "specifically approved at least annually" shall be construed in a manner consistent with the Investment Company Act of 1940 and the Rules and Regulations thereunder.
Termination of this Contract pursuant to this Section 12 shall be without the payment of any penalty.
If this Contract is terminated or not renewed with respect to one or more Series, it may continue in effect with respect to any Series as to which it has not been terminated (or has been renewed).
For the purposes of this Contract, the terms "interested persons" and "assignment" shall have the meanings defined in the Investment Company Act of 1940, subject, however, to such exemptions as may be granted by the Securities and Exchange Commission under said Act. Certain other items used herein that are not otherwise defined have the meaning given in the current prospectus of the
Trust or constituent agreements or documents of the Trust.
EXHIBIT 15
Amendment dated April 8, 1994 to the Terms and Conditions of the Distribution Agreement dated April 17, 1985, between QUANTITATIVE GROUP OF FUNDS, formerly U.S. Boston Investment Company, a Massachusetts business trust (the "Trust"), and U.S. BOSTON CAPITAL CORPORATION, a Massachusetts corporation ("U.S. Boston Capital").
Witnesseth:
Whereas, the Trust desires U.S. Boston Capital to distribute a new series, the Disciplined Growth Series, and the Trust and U.S. Boston Capital desire to adjust as to the Disciplined Growth Series only the fee payable to U.S. Boston Capital under the Terms and Conditions of the Distribution Agreement;
Now, therefore, in consideration of the mutual covenants set forth in the Distribution Agreement, the Trust and U.S. Boston Capital agree that the Terms and Conditions of the Distribution Agreement shall be amended as follows:
1. By adding to the end of the second paragraph of Section 2 of the Terms and Conditions of the Distribution Agreement the following:
The limitation set forth in this Section 2 shall not apply to the Disciplined Growth Series.
IN WITNESS WHEREOF, QUANTITATIVE GROUP OF FUNDS and U.S. BOSTON CAPITAL CORPORATION have each caused this instrument to be signed in duplicate in its behalf by its President or a Vice President thereunto duly authorized on this 8 day of April, 1994.
QUANTITATIVE GROUP OF FUNDS
By:
President
U.S. BOSTON CAPITAL CORPORATION
By:
President
EXHIBIT 16
Amendment dated May 15, 1994 to the Terms and Conditions of the Distribution Agreement dated April 17,1985, between QUANTITATIVE GROUP OF FUNDS, formerly U.S. Boston Investment Company, a Massachusetts business trust (the "Trust"), and U.S. BOSTON CAPITAL CORPORATION, a Massachusetts corporation ("U.S. Boston Capital").
Witnesseth:
Whereas, the Trust desires U.S. Boston Capital to distribute two new series, the Foreign Frontier Series and the Boston Numeric II Series, and the Trust and U.S. Boston Capital desire to set as to the Foreign Frontier Series and the Boston Numeric II Series the fee payable to U.S. Boston Capital under the Terms and Conditions of the Distribution Agreement;
Now, therefore, in consideration of the mutual covenants set forth in the Distribution Agreement, the Trust and U.S. Boston Capital agree that the Terms and Conditions of the Distribution Agreement shall be amended as follows:
1. By adding to the end of the second paragraph of Section 2 of the Terms and Conditions of the Distribution Agreement the following:
The limitation set forth in this Section 2 shall not apply to the Disciplined Growth Series, Foreign Frontier Series and the Boston Numeric II Series.
IN WITNESS WHEREOF, QUANTITATIVE GROUP OF FUNDS and U.S. BOSTON CAPITAL CORPORATION have each caused this instrument to be signed in duplicate in its behalf by its President or a Vice President thereunto duly authorized on this 19 day of May, 1994.
QUANTITATIVE GROUP OF FUNDS
By:
President
U.S. BOSTON CAPITAL CORPORATION
By:
President
EXHIBIT 17
Amendment dated May 18, 1998 to the Terms and Conditions of the Distribution Agreement dated April 17, 1985, between QUANTITATIVE GROUP OF FUNDS, formerly U.S. Boston Investment Company, a Massachusetts business trust (the "Trust"), and U.S. BOSTON CAPITAL CORPORATION, a Massachusetts Corporation ("U.S. Boston Capital").
Witnesseth:
Whereas, the Trust desires U.S. Boston Capital to distribute a new series, the Quantitative Foreign Value Fund, and the Trust and U.S. Boston Capital desire to set as to the Quantitative Foreign Value Fund the fee payable to U.S. Boston Capital under the Terms and Conditions of the Distribution Agreement; and
Now, therefore, in consideration of the mutual covenants set forth in the Distribution Agreement, the Trust and U.S. Boston Capital agree that: (1) the Terms and Conditions of the Distribution Agreement shall be amended as follows:
1. By adding to the end of the second paragraph of Section 2 of the Terms and Conditions of the Distribution Agreement the following:
The limitation set forth in this Section 2 shall not apply to the Quantitative Mi Cap Fund, Quantitative Emerging Markets Fund, or Quantitative Foreign Value Fund.
and (ii) the Distribution Plan be amended as follows:
1. By replacing the first sentence of Section 1 of the Distribution Plan with the following:
The Trust will pay to U.S. BOSTON CAPITAL Corporation a Massachusetts corporation which acts a principal distributor of the Trust's shares (the "Distributor") a monthly fee at the annual rate set forth in Exhibit A attached hereto for each series of the Trust ("Series") of the average net asset value of Ordinary Shares held in shareholder accounts opened during the period the Plan is in effect ("Qualified Accounts"), as determined at the close of each business day during the month, for acting as principal distributor. Such fee computed for each Series shall be paid from the assets of such Series
2. By adding the following Exhibit A to the Distribution Plan:
EXHIBIT A
to Distribution Plan
Quantitative Group of Funds
Fund Name Annual Fee
--------- ----------
Quantitative Small Cap Fund 0.50%
Quantitative Mid Cap Fund 0.25%
Quantitative Growth and Income Fund 0.50%
Quantitative International Equity Fund 0.50%
Quantitative Emerging Markets Fund 0.50%
Quantitative Foreign Value Fund 0.25%
|
IN WITNESS WHEREOF, QUANTITATIVE GROUP OF FUNDS and U.S. BOSTON CAPITAL CORPORATION have each caused this instrument to be signed in duplicate in its behalf by its President or a Vice President thereunto duly authorized on this 18th day of May, 1998.
QUANTITATIVE GROUP OF FUNDS
By:
President
U.S. BOSTON CAPITAL CORPORATION
By:
President
EXHIBIT 18
QUANTITATIVE GROUP OF FUNDS
ORDINARY SHARE SELLING AGREEMENT
(fully disclosed accounts)
Ladies and Gentlemen:
U.S. Boston Capital Corporation ("Distributor") is the exclusive underwriter and distributor for the Quantitative Group of Funds (collectively the "Funds") and each series of the Funds (individually a "Fund"). We invite you to distribute Ordinary Shares of the Fund(s) listed in Exhibit A to this Agreement, subject to the terms and conditions set forth below. As used herein, the term "Prospectus" shall mean the then current prospectus of the Funds as filed with the Securities and Exchange Commission.
SALES AND SERVICE FEES
Distributor hereby agrees to sell to you as agent, to cover orders received by you from your customers, shares of the Fund(s) in states in which you are registered and which shares of the Fund(s) are currently qualified for sale. In no transactions shall you have any authority to act as agent for the Funds, or for the Distributor, or for any affiliates, including employees and directors, of the Funds or Distributor.
In return for sales of the Fund for which you are the dealer of record, except as noted below, Distributor will pay a sales fee as set forth in Exhibit A of this Agreement. The Distributor agrees to accept and confirm such sales orders to you at the applicable public offering price. Payments of sales fees will be mailed to dealers monthly within twenty (20) days of the end of each month, based on fully paid orders of Fund(s) shares during that month. The net asset value and public offering price of the shares of the Fund(s) will be furnished on a daily basis to public information sources or, if applicable, made available through other sources as set forth in an addendum to this Agreement.
The Distributor and/or the Fund(s) may at any time modify the sales fee to be paid in connection with the sale of shares of the Fund(s). In the event of any such change, you agree that you will have no continuing claim to or vested interest in the level of sales fees established by this Agreement as to any shares of the Fund(s) sold by you subsequent to any such change.
You agree to act as service agent, in accordance with the terms of the Service Agreement with Distributor dated _______________________________, and as amended. Pursuant to the terms of the Service Agreement, in addition to the foregoing sales fee, you will be entitled to receive for each Fund account in Ordinary Shares for which, on the last business day of the period you are the dealer of record, a quarterly service fee equal to the fee set forth in Exhibit A of the Service Agreement, as calculated by the Distributor. Service fee payments will be mailed to you within thirty (30) days of quarter end.
You hereby agree that the Distributor has made no representations to you with respect to the Distribution Plan of any of the Funds which are in addition to, or in conflict with the description set forth in the Funds' Prospectus and that you will look solely to the Distributor for the payment of the one time sales fee and quarterly service fees. All sales fees and service fees will be paid to you at the address of your principal office, as indicated below in your acceptance of this Agreement.
No sales fee will be paid for sales of shares to Contributory Qualified Plans under Section 401(k) of the Internal Revenue Code and other persons for whom a deferred sales charge is not imposed (as set forth in the Prospectus). Employees of broker-dealers having a selling agreement
with the Distributor may purchase no load Institutional Shares of the Funds. The term "employee" includes an employee's spouse and minor children, and retired employees. To purchase Institutional Shares, sales to employees of broker dealers must be made for investment purposes only and such shares may not be resold except to the Funds. Any employee of a broker-dealer exercising this right should first obtain the proper forms from the Distributor prior to purchasing shares. In addition, no sales fee will be paid for sales of the Ordinary Shares of the Quantitative Mid Cap Fund or Institutional Shares of any Fund.
REPRESENTATIONS AND WARRANTIES
All sales of shares issued by the Fund(s) are subject to the following terms:
In ordering shares of any Fund, you may rely upon the representations contained in the Prospectus. You agree that all offers or sales of Fund shares will be made by you in compliance with all applicable federal and state securities laws and the rules and regulations of applicable regulatory agencies or authorities.
You will not make any representations concerning any Fund other than those contained in the Prospectus, or in any promotional materials or sales literature furnished to you by the Distributor or the Funds. Except as otherwise provided, you will not furnish or cause to be furnished to any person or display or publish any information or material relating to the Funds or any Fund, (including without limitation, promotional materials and sales literature, advertisements, press releases, announcements, statements, posters, signs or other similar material), except such information and materials as may be furnished to you by the Distributor or the Fund(s), and other materials as may be approved in writing by the Distributor.
In connection with sales and offers to sell shares of the Fund(s), you will furnish to each person to whom any such sale or offer is made, a copy of one Prospectus and, if requested, the statement of additional information at or prior to the time of written offering (including any confirmation) or sale. Distributor will furnish additional copies of the Prospectus in reasonable quantities, upon request.
You represent and warrant that (i) you are a corporation, partnership or other entity duly organized and validly existing in good standing under the laws of the jurisdiction in which you are organized; (ii) you are a member of the National Association of Securities Dealers, Inc. ("NASD") and that with respect to any sales in the United States, you agree to abide by all its rules and regulations, including, without limitation, its Rules of Fair Practice.
The Distributor represents that it is currently in compliance with the provisions of Rule 2830 of the NASD's Rules of Fair Practice relating to investment company sales charges and that each Fund's sales charges currently comply with such provisions.
We agree to inform you, upon request, as to the states in which the shares of the Funds have been qualified for sale under, or are exempt from the registration requirements of, the respective securities laws of such states. You agree to notify us immediately in the event of (a) your expulsion or suspension from the NASD, or (b) your violation of any applicable federal or state law, rule or regulation arising out of your sales of Fund shares in connection with this Agreement, and (c) any other action by federal or state regulators that may otherwise affect in any material way your ability to act as a dealer in accordance with the terms of this Agreement. Your expulsion from the NASD will automatically terminate this Agreement immediately without notice. Our suspension from the NASD for violation of any applicable federal or state
law, rule or regulation will terminate this Agreement effective immediately upon our written notice to you of termination.
PAYMENT AND DELIVERY
All orders for the purchase of any Fund(s) shares will be executed at the then current public offering price per share and all orders for the redemption of any Fund(s) shares will be executed at the net asset value per share, less any redemption fee payable to us, as described in the Prospectus. Pursuant to Rule 18f-1 of the Investment Company Act of 1940, we reserve the right, as set forth in the Prospectus, to redeem in-kind any redemption requests in excess of $250,000 per Fund, unless we receive thirty (30) days' prior notice of the redemption. We acknowledge that each of your customers who is a named account holder of the Fund(s) shares held in your account is an individual "shareholder" of such shares within the meaning of Rule 18f-1 and the Fund's election to redeem in-kind filed with the Securities and Exchange Commission pursuant to the Rule. For purpose of complying with Rule 18f-1, in the event of a redemption in excess of $250,000, you agree to provide us, upon request, the names and account numbers, the number of shares held, and other relevant information for each of your account holders who are the owners of Fund(s) shares participating in the redemption.
All orders are subject to acceptance or rejection by us at our sole discretion. Each transaction will be promptly confirmed by us or by Quantitative Institutional Services, Transfer Agent of the Funds ("Transfer Agent"), on our behalf, directly to you, unless separately agreed and set forth as an addendum to this Agreement. We reserve the right, at our sole discretion, to suspend or withdraw the sale of shares of any the Funds.
You agree to pay for purchase orders of any Fund(s) shares from the
Distributor in accordance with the terms of the Prospectus. On or before three
(3) business days from trade date of each purchase order for shares of any Fund,
or such earlier time as shall be required by rule or regulation of the NASD or
Securities and Exchange Commission, you shall remit to an account designated by
the Distributor with the Transfer Agent an amount equal to the then current
public offering price of the Fund(s)' shares being purchased, without deduction
for any sales fee or dealer reallowance.
All checks should be made payable to Quantitative Group of Funds and forwarded to:
Quantitative Institutional Services 55 Old Bedford Road Lincoln, Massachusetts 01773
Wire orders for any Fund(s) are to be placed through our office at (781) 259-1144.
If payment is not received in accordance with the terms of this Agreement or the Prospectus, we reserve the right, without notice, to cancel the sale and to hold you responsible for any loss sustained as a result thereof.
INDEMNITIES
The parties in this Agreement hereby agree to indemnify and hold harmless each other, their officers and directors/trustees, and any person who is or may be deemed to be a controlling
person of each other, from and against any losses claims, damages, liabilities or expenses (including reasonable fees of counsel), whether joint or several, and to which any such person or entity may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) arise out of, or are based upon, (a) any untrue statement or alleged untrue statement of material fact, or any omission to state a material fact made or omitted by them in this Agreement, or (b) any willful misfeasance or gross misconduct by them in the performance of their duties and obligations set forth in this Agreement.
In consideration of Distributor's distribution services, and Quantitative Institutional Services' services as Transfer Agent, in liquidating, exchanging and/or transferring unissued shares of the Fund(s) for your customer(s) without the use of original or underlying documentation supporting such transactions (e.g. a signed stock power or signature guarantee) you hereby agree to indemnify the Distributor, Transfer Agent, the Funds and each respective Fund against any losses, including reasonable attorney's fees, that may arise from such liquidation, exchange and/or transfer of unused shares upon your direction. You represent and warrant to the Fund(s), the Distributor, and Transfer Agent, that all such transactions shall be properly authorized by your customers. The indemnification contained herein shall not apply to any losses (including attorney's fees) caused by a failure of the Distributor, Transfer Agent, or Fund(s) to comply with any of your instructions governing any of the above transactions, or any negligent act or omission of the Distributor, Transfer Agent, or Fund(s), or any of their directors/trustees, officers, employees or agents.
The Distributor, Fund(s), Transfer Agent, or you may revoke the indemnity herein upon prior written notice to each of the parties hereto, and in the case of such revisions, this indemnity agreement shall remain effective as to trades made prior to such revocation.
This Agreement shall become effective only when accepted and signed by you, and may be terminated at any time by either party hereto upon fifteen days prior written notice to the other party. This Agreement may be amended only by a written instrument signed by both of the parties hereto and may not be assigned by either party without the prior written consent of the other party. This Agreement constitutes the entire agreement and understanding between the parties hereto relating to the subject matter hereof and supersedes any and all prior agreement between the parties hereto relating to the subject matter hereof.
This agreement shall be governed by and construed in accordance with the internal laws of the State of Massachusetts.
Name of Broker-Dealer (please type or print)
----------------------------------
Address
Date:______________________ By:__________________________________
Title:_______________________________
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Note: Please sign and return both copies of this agreement to U.S. Boston Capital Corporation. Upon acceptance, one countersigned copy will be returned to you for your files.
Accepted: U.S. BOSTON CAPITAL CORPORATION
Date:______________________ By:__________________________________
Title:_______________________________
EXHIBIT A
to Ordinary Share Selling Agreement
Quantitative Group of Funds
Ordinary Shares
---------------
Sales Fee (as a
percentage of
Ticker the public
Fund Name CUSIP Symbol offering price)
--------- --------- ------ ----------------
Quantitative Small Cap Fund 74762R608 USBNX 1.0%
Quantitative Mid Cap Fund 74762R806 QNIIX 0.0%
Quantitative Growth and Income Fund 74762R202 USBOX 1.0%
Quantitative International Equity Fund 74762R400 USBFX 1.0%
Quantitative Emerging Markets Fund 74762R855 QFFOX 1.0%
Quantitative Foreign Value Fund 74762R830 none 1.0%
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Policies and Procedures With Respect to Sales of Quantitative Group of Funds Under Multiple Class Pricing Structure.
Each series of the Quantitative Group of Funds offers two classes of shares. It is important for investors to choose not only the proper series, but also the correct class of shares that will best suit their investment needs. In addition to Ordinary Shares, which are covered by the Selling Agreement, the Fund also offers investors Institutional Shares. Institutional Shares bear no sales charge and carry no 12b-1 fee or service charges. These Shares are available only to investors that can meet the minimum investment requirements of $1 million and who meet certain other criteria as set forth in the Prospectus, or who can invest through certain managed account programs in which the investment manager is compensated directly by his or her client for providing investment advice and other services.
A National Association of Securities Dealers, Inc. rule specifically prohibits "breakpoint" sales of mutual funds. A "breakpoint sale" is defined as a sale to an investor of an amount of shares just below the amount which would be subject to the next breakpoint on the fund's sales charge schedule. The minimum investment requirements for Institutional Shares of the Fund in some ways may be analogous to breakpoints of other mutual funds. From time-to-time you may wish to inform investors that investments in a series of the Fund above the minimum investment requirement for Institutional Shares may eliminate both any sales charge and annual 12b-1 fees that they would incur. Moreover, in some cases you may wish to advise investors who initially have purchased Ordinary Shares in amounts below the minimum investment requirement for Institutional Shares of a series, but who have subsequently attained investment amounts exceeding that minimum, that they may have the option of redeeming their Ordinary Shares, subject to a redemption fee, and purchasing Institutional Shares.
Responsibilities of the Broker-Dealer
You must assure that all employees receiving investor inquiries about the purchase of shares in the Fund have advised appropriate investors of the available investment options and the impact of choosing one class of shares rather than another. Questions relating to this policy should be directed to Mark A. Katzoff, U.S. Boston Capital Corporation, Lincoln North, Lincoln, Massachusetts, 01773 (800) 331-1244.
EXHIBIT 19
QUANTITATIVE GROUP OF FUNDS
ORDINARY AND INSTITUTIONAL SHARE SELLING AGREEMENT
Ladies and Gentlemen:
U.S. Boston Capital Corporation ("Distributor") is the exclusive underwriter and distributor for the Quantitative Group of Funds (collectively the "Funds") and each series of the Funds (individually a "Fund"). We invite you to distribute Ordinary and Institutional Shares of the Fund(s) listed in Exhibit A to this Agreement, subject to the terms and conditions set forth below. As used herein, the term "Prospectus" shall mean the then current prospectus of the Funds as filed with the Securities and Exchange Commission.
SALES AND SERVICE FEES
Distributor hereby agrees to sell to you as principal, to cover orders received by you from your customers, shares of the Fund(s) in states in which you are registered and which shares of the Fund(s) are currently qualified for sale. In no transactions shall you have any authority to act as agent for the Funds, or for the Distributor, or for any affiliates, including employees and directors, of the Funds or Distributor.
In return for sales of the Fund for which you are the dealer of record, except as noted below, Distributor will pay a sales fee as set forth in Exhibit A of this Agreement. The Distributor agrees to accept and confirm such sales orders to you at the applicable public offering price. Payments of sales fees will be mailed to dealers monthly within twenty (20) days of the end of each month, based on fully paid orders of Fund(s) shares during that month. The net asset value and public offering price of the shares of the Fund(s) will be furnished on a daily basis to public information sources or, if applicable, made available through other sources as set forth in an addendum to this Agreement.
The Distributor and/or the Fund(s) may at any time modify the sales fee to be paid in connection with the sale of shares of the Fund(s). In the event of any such change, you agree that you will have no continuing claim to or vested interest in the level of sales fees established by this Agreement as to any shares of the Fund(s) sold by you subsequent to any such change.
You agree to act as service agent, in accordance with the terms of the Service Agreement with Distributor dated _______________________________, and as amended. Pursuant to the terms of the Service Agreement, in addition to the foregoing sales fee, you will be entitled to receive for each Fund account in Ordinary Shares for which, on the last business day of the period you are the dealer of record, a quarterly service fee equal to the fee set forth in Exhibit A of the Service Agreement, as calculated by the Distributor. Service fee payments will be mailed to you within thirty (30) days of quarter end.
You hereby agree that the Distributor has made no representations to you with respect to the Distribution Plan of any of the Funds which are in addition to, or in conflict with the description set forth in the Funds' Prospectus and that you will look solely to the Distributor for the payment of the one time sales fee and quarterly service fees. All sales fees and service fees will be paid to you at the address of your principal office, as indicated below in your acceptance of this Agreement.
No sales fee will be paid for sales of shares to Contributory Qualified Plans under Section 401(k) of the Internal Revenue Code and other persons for whom a deferred sales charge is not imposed (as set forth in the Prospectus), including employees of broker-dealers having a selling
agreement with the Distributor. The term "employee" includes an employee's spouse and minor children, and retired employees. To avoid a deferred sales charge, sales to employees of broker dealers must be made for investment purposes only and such shares may not be resold except to the Funds. Any employee of a broker-dealer exercising this right should first obtain the proper forms from the Distributor prior to purchasing shares. In addition, no sales fee will be paid for sales of the Ordinary Shares of the Quantitative Mid Cap Fund or of the Institutional Shares of any Funds.
[delete for fully disclosed]
We understand that you serve as clearing broker for other broker dealers who may hold Fund shares in the accounts that you will maintain with the Funds. You agree to forward promptly to such broker dealers, after receipt from us, any sales or service fees attributable to accounts for which such broker dealers are the dealers of record with you.
REPRESENTATIONS AND WARRANTIES
All sales of shares issued by the Fund(s) are subject to the following terms:
In ordering shares of any Fund, you may rely upon the representations contained in the Prospectus. You agree that all offers or sales of Fund shares will be made by you in compliance with all applicable federal and state securities laws and the rules and regulations of applicable regulatory agencies or authorities.
You will not make any representations concerning any Fund other than those contained in the Prospectus, or in any promotional materials or sales literature furnished to you by the Distributor or the Funds. Except as otherwise provided, you will not furnish or cause to be furnished to any person or display or publish any information or material relating to the Funds or any Fund, (including without limitation, promotional materials and sales literature, advertisements, press releases, announcements, statements, posters, signs or other similar material), except such information and materials as may be furnished to you by the Distributor or the Fund(s), and other materials as may be approved in writing by the Distributor.
In connection with sales and offers to sell shares of the Fund(s), you will furnish to each person to whom any such sale or offer is made, a copy of one Prospectus and, if requested, the statement of additional information at or prior to the time of written offering (including any confirmation) or sale. Distributor will furnish additional copies of the Prospectus in reasonable quantities, upon request.
You represent and warrant that (i) you are a corporation, partnership or other entity duly organized and validly existing in good standing under the laws of the jurisdiction in which you are organized; (ii) you are a member of the National Association of Securities Dealers, Inc. ("NASD") and that with respect to any sales in the United States, you agree to abide by all its rules and regulations, including, without limitation, its Rules of Fair Practice.
The Distributor represents that it is currently in compliance with the provisions of Rule 2830 of the NASD's Rules of Fair Practice relating to investment company sales charges and that each Fund's sales charges currently comply with such provisions.
We agree to inform you, upon request, as to the states in which the shares of the Funds have been qualified for sale under, or are exempt from the registration requirements of, the respective securities laws of such states. You agree to notify us immediately in the event of (a) your expulsion or suspension from the NASD, or (b) your violation of any applicable federal or
II
state law, rule or regulation arising out of your sales of Fund shares in connection with this Agreement, and (c) any other action by federal or state regulators that may otherwise affect in any material way your ability to act as a dealer in accordance with the terms of this Agreement. Your expulsion from the NASD will automatically terminate this Agreement immediately without notice. Our suspension from the NASD for violation of any applicable federal or state law, rule or regulation will terminate this Agreement effective immediately upon our written notice to you of termination.
PAYMENT AND DELIVERY
All orders for the purchase of any Fund(s) shares will be executed at the then current public offering price per share and all orders for the redemption of any Fund(s) shares will be executed at the net asset value per share, less any redemption fee payable to us, as described in the Prospectus. Pursuant to Rule 18f-1 of the Investment Company Act of 1940, we reserve the right, as set forth in the Prospectus, to redeem in-kind any redemption requests in excess of $250,000 per Fund, unless we receive thirty (30) days' prior notice of the redemption. We acknowledge that each of your customers who is a named account holder of the Fund(s) shares held in your account is an individual "shareholder" of such shares within the meaning of Rule 18f-1 and the Fund's election to redeem in-kind filed with the Securities and Exchange Commission pursuant to the Rule. For purpose of complying with Rule 18f-1, in the event of a redemption in excess of $250,000, you agree to provide us, upon request, the names and account numbers, the number of shares held, and other relevant information for each of your account holders who are the owners of Fund(s) shares participating in the redemption.
All orders are subject to acceptance or rejection by us at our sole discretion. Each transaction will be promptly confirmed by us or by Quantitative Institutional Services, Transfer Agent of the Funds ("Transfer Agent"), on our behalf, directly to you, unless separately agreed and set forth as an addendum to this Agreement. We reserve the right, at our sole discretion, to suspend or withdraw the sale of shares of any the Funds.
You agree to pay for purchase orders of any Fund(s) shares from the
Distributor in accordance with the terms of the Prospectus. On or before three
(3) business days from trade date of each purchase order for shares of any Fund,
or such earlier time as shall be required by rule or regulation of the NASD or
Securities and Exchange Commission, you shall remit to an account designated by
the Distributor with the Transfer Agent an amount equal to the then current
public offering price of the Fund(s)' shares being purchased, without deduction
for any sales fee or dealer reallowance.
All checks should be made payable to Quantitative Group of Funds and forwarded to:
Quantitative Institutional Services.
55 Old Bedford Road
Lincoln, Massachusetts 01773
Wire orders for any Fund(s) are to be placed through our office at (781) 259-1144.
If payment is not received in accordance with the terms of this Agreement or the Prospectus, we reserve the right, without notice, to cancel the sale and to hold you responsible for any loss sustained as a result thereof.
INDEMNITIES
III
The parties in this Agreement hereby agree to indemnify and hold harmless each other, their officers and directors/trustees, and any person who is or may be deemed to be a controlling person of each other, from and against any losses claims, damages, liabilities or expenses (including reasonable fees of counsel), whether joint or several, and to which any such person or entity may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) arise out of, or are based upon, (a) any untrue statement or alleged untrue statement of material fact, or any omission to state a material fact made or omitted by them in this Agreement, or (b) any willful misfeasance or gross misconduct by them in the performance of their duties and obligations set forth in this Agreement.
In consideration of Distributor's distribution services, and Quantitative Institutional Services' services as Transfer Agent, in liquidating, exchanging and/or transferring unissued shares of the Fund(s) for your customer(s) without the use of original or underlying documentation supporting such transactions (e.g. a signed stock power or signature guarantee) you hereby agree to indemnify the Distributor, Transfer Agent, the Funds and each respective Fund against any losses, including reasonable attorney's fees, that may arise from such liquidation, exchange and/or transfer of unused shares upon your direction. You represent and warrant to the Fund(s), the Distributor, and Transfer Agent, that all such transactions shall be properly authorized by your customers. The indemnification contained herein shall not apply to any losses (including attorney's fees) caused by a failure of the Distributor, Transfer Agent, or Fund(s) to comply with any of your instructions governing any of the above transactions, or any negligent act or omission of the Distributor, Transfer Agent, or Fund(s), or any of their directors/trustees, officers, employees or agents.
The Distributor, Fund(s), Transfer Agent, or you may revoke the indemnity herein upon prior written notice to each of the parties hereto, and in the case of such revisions, this indemnity agreement shall remain effective as to trades made prior to such revocation.
This Agreement shall become effective only when accepted and signed by you, and may be terminated at any time by either party hereto upon fifteen days prior written notice to the other party. This Agreement may be amended only by a written instrument signed by both of the parties hereto and may not be assigned by either party without the prior written consent of the other party. This Agreement constitutes the entire agreement and understanding between the parties hereto relating to the subject matter hereof and supersedes any and all prior agreement between the parties hereto relating to the subject matter hereof.
This agreement shall be governed by and construed in accordance with the internal laws of the Commonwealth of Massachusetts.
Name of Broker-Dealer (please type or print)
--------------------------------------------
Address
Date: By:
--------------------- -----------------------------------------
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Note: Please sign and return both copies of this agreement to U.S. Boston Capital Corporation. Upon acceptance, one countersigned copy will be returned to you for your files.
IV
Accepted: U.S. BOSTON CAPITAL CORPORATION
Date: By:
--------------------- ----------------------------------------
Dealer/agent/3/99 Title:
-------------------------------------
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V
EXHIBIT A
to Ordinary and Institutional Share Selling Agreement
Quantitative Group of Funds
Ordinary Shares
---------------
Sales Fee (as a
percentage of
Ticker the public
Fund Name CUSIP Symbol offering price)
--------- --------- ------ ----------------
Quantitative Small Cap Fund 74762R608 USBNX 1.0%
Quantitative Mid Cap Fund 74762R806 QNIIX 0.0%
Quantitative Growth and Income Fund 74762R202 USBOX 1.0%
Quantitative International Equity Fund 74762R400 USBFX 1.0%
Quantitative Emerging Markets Fund 74762R855 QFFOX 1.0%
Quantitative Foreign Value Fund 74762R830 none 1.0%
Institutional Shares
--------------------
Sales Fee (as a
percentage of
Ticker the public
Fund Name CUSIP Symbol offering price)
--------- --------- ------ ---------------
Quantitative Small Cap Fund 74762R509 QBNAX 0.0%
Quantitative Mid Cap Fund 74762R707 QNIAX 0.0%
Quantitative Growth and Income Fund 74762R103 QGIAX 0.0%
Quantitative International Equity Fund 74762R301 QIEAX 0.0%
Quantitative Emerging Markets Fund 74762R863 QEMAX 0.0%
Quantitative Foreign Value Fund 74762R848 none 0.0%
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VI
Policies and Procedures With Respect to Sales of Quantitative Group of Funds Under Multiple Class Pricing Structure.
Each series of the Quantitative Group of Funds offers two classes of shares. It is important for investors to choose not only the proper series, but also the correct class of shares that will best suit their investment needs. In addition to Ordinary Shares, which are covered by the Selling Agreement, the Fund also offers investors Institutional Shares. Institutional Shares bear no sales charge and carry no 12b-1 fee or service charges. These Shares are available only to investors that can meet the minimum investment requirements of $1 million and who meet certain other criteria as set forth in the Prospectus, or who can invest through certain managed account programs in which the investment manager is compensated directly by his or her client for providing investment advice and other services.
A National Association of Securities Dealers, Inc. rule specifically prohibits "breakpoint" sales of mutual funds. A "breakpoint sale" is defined as a sale to an investor of an amount of shares just below the amount which would be subject to the next breakpoint on the fund's sales charge schedule. The minimum investment requirements for Institutional Shares of the Fund in some ways may be analogous to breakpoints of other mutual funds. From time-to-time you may wish to inform investors that investments in a series of the Fund above the minimum investment requirement for Institutional Shares may eliminate both any sales charge and annual 12b-1 fees that they would incur. Moreover, in some cases you may wish to advise investors who initially have purchased Ordinary Shares in amounts below the minimum investment requirement for Institutional Shares of a series, but who have subsequently attained investment amounts exceeding that minimum, that they may have the option of redeeming their Ordinary Shares, subject to a redemption fee, and purchasing Institutional Shares.
Responsibilities of the Broker-Dealer
You must assure that all employees receiving investor inquiries about the purchase of shares in the Fund have advised appropriate investors of the available investment options and the impact of choosing one class of shares rather than another. Questions relating to this policy should be directed to Mark A. Katzoff, U.S. Boston Capital Corporation, Lincoln North, Lincoln, Massachusetts, 01773 (800) 331-1244.
Dealcomb/3/99
VII
EXHIBIT 20
CUSTODY AND INVESTMENT ACCOUNTING AGREEMENT
WITNESSETH:
WHEREAS, Fund desires to appoint IFTC as custodian of the assets of the Fund's investment portfolio or portfolios (each a "Portfolio", and collectively the "Portfolios") and as its agent to perform certain investment accounting and recordkeeping functions; and
WHEREAS, IFTC is willing to accept such appointment on the terms and conditions hereinafter set forth;
NOW THEREFORE, for and in consideration of the mutual promises contained her parties hereto, intending to be legally bound, mutually covenant and agree as follows:
A. Custodian of the investment securities, interests in loans and other non-cash investment property, and monies at any time owned by each of the Portfolios and delivered to IFTC as custodian hereunder ("Assets"); and
B. Agent to perform certain accounting and recordkeeping functions relating to portfolio transactions required of a duly registered investment company under Rule 3 1 a of the Investment Company Act of 1940, as amended (the " 1940 Act") and to calculate the net asset value of the Portfolios.
A. Fund hereby represents, warrants and acknowledges to IFTC:
1. That it is a trust duly organized and existing and in good standing under the laws of its state of organization, and that it is registered under the 1940 Act; and
2. That it has the requisite power and authority under applicable law and its declaration of trust to enter into this Agreement; that it has taken all requisite action necessary to appoint IFTC as custodian and investment accounting and recordkeeping agent; that this Agreement has been duly executed and delivered by Fund; and that this Agreement constitutes a legal, valid and binding obligation of Fund, enforceable in accordance with its terms.
B. IFTC hereby represents, warrants and acknowledges to Fund:
1. That it is a trust company duly organized and existing and in good standing under the laws of the State of Missouri; and
2. That it has the requisite power and authority under applicable law, its charter and its bylaws to enter into and perform this Agreement; that this Agreement has been duly executed and
delivered by IFTC; and that this Agreement constitutes a legal, valid and binding obligation of IFTC, enforceable in accordance with its terms.
1. If applicable, the name of the Portfolio making such purchase;
2. The name of the issuer and description of the Asset;
3. The number of shares and the principal amount purchased, and
accrued interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage commission, taxes and
other expenses payable in connection with the purchase;
7. The total amount payable upon such purchase;
8. The name of the person from whom or the broker or dealer through
whom the purchase was made; and
9. Whether the Asset is to be received in certificated form or via a
specified Depository.
In accordance with such Instructions, IFTC will pay for out of monies
held for the purchasing Portfolio, but only insofar as such monies are
available for such purpose, and receive the Assets so purchased by or
for the account of such Portfolio, except that IFTC, or a
Subcustodian, may in its sole discretion advance funds to such
Portfolio which may result in an overdraft because the monies held on
behalf of such Portfolio are insufficient to pay the total amount
payable upon such purchase. Except as otherwise instructed by Fund,
IFTC will make such payment only upon receipt of Assets: (a) by IFTC;
(b) by a clearing corporation of a national exchange of which IFTC is
a member; or (c) by a Depository. Notwithstanding the foregoing, (i)
IFTC may release funds to a Depository prior to the receipt of advice
from the Depository that the Assets underlying a repurchase agreement
have been transferred by bookentry into the account maintained with
such Depository by IFTC on behalf of its customers; provided that
IFTC's instructions to the Depository require that the Depository make
payment of such funds only upon transfer by book-entry of the Assets
underlying the repurchase agreement in such account; (ii) IFTC may
make payment for time deposits, call account deposits, currency
deposits and other deposits, foreign exchange transactions, futures
contracts or options, before receipt of an advice or confirmation
evidencing said deposit or entry into such transaction; and (iii) IFTC
may make, or cause a Subcustodian to make, payment for the purchase of
Assets the settlement of which occurs outside of the United States of
America in accordance with generally accepted local custom and market
practice generally accepted by Institutional Clients (as defined
below) in the country in which settlement occurs, provided that in
every case IFTC shall be subject to the standard of care set forth in
Section 5. For purposes of this Agreement, "Institutional Clients"
means U.S. registered investment companies or major, U.S.-based
commercial banks, insurance companies, pension funds or substantially
similar financial institutions which, as a substantial part of their
business operations, purchase or sell securities and make use of
custodial services.
1. If applicable, the name of the Portfolio making such sale;
2. The name of the issuer and description of the Asset;
3. The number of shares and principal amount sold, and accrued
interest, if any;
4. The date on which the Assets sold were purchased or other
information identifying the Assets sold and to be delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage commission, taxes or
other expenses payable in connection with such sale;
8. The total amount to be received by the Portfolio upon such sale;
and
9. The name and address of the broker or dealer through whom or
person to whom the sale was made.
IFTC will deliver or cause to be delivered the Assets thus designated as sold for the account of the selling Portfolio as specified in the Instructions. Except as otherwise instructed by Fund, IFTC will make such delivery upon receipt of. (a) payment therefor in such form as is satisfactory to IFTC; (b) credit to the account of IFTC with a clearing corporation of a national securities exchange of which IFTC is a member; or (c) credit to the account maintained by IFTC on behalf of its customers with a Depository. Notwithstanding the foregoing: (i) IFTC will deliver Assets held in physical form in accordance with "street delivery custom" to a broker or its clearing agent, provided that IFTC shall have taken reasonable steps to ensure prompt collection of the payment for, or the return of, such Assets by the broker or its clearing agent; or (ii) IFTC may make, or cause a Subcustodian to make, delivery of Assets the settlement of which occurs outside of the United States of America upon payment therefor in accordance with generally accepted local custom and market practice generally accepted by Institutional Clients in the country in which settlement occurs, provided that in every case IFTC shall be subject to the standard of care set forth in Section 5.
1. If applicable, the name of the Portfolio making such purchase or
sale;
2. In the case of security options:
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening, exercising, expiring or
closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. Market on which option traded; and
j. Name and address of the broker or dealer through whom the sale
or purchase was made.
3. In the case of options on indices:
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
g. Whether the transaction is an opening, exercising, expiring
or closing transaction;
h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased; and
j. The name and address of the broker or dealer through whom the
sale or purchase was made, or other applicable settlement
instructions.
4. In the case of options on index future contracts:
a. The underlying index future contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening, exercising,
expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased; and
i. The market on which the option is traded.
5. In the case of security index futures contracts:
a. The last trading date specified in the contract and, when
available, the closing level, thereof;
b. The index level on the date the contract is entered into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin account (in addition to
Instructions, and if not already in the possession of IFTC,
Fund will deliver a substantially complete and executed
custodial safekeeping account and procedural agreement,
incorporated herein by this reference); and
f. The name and address of the futures commission merchant
through whom the sale or purchase was made, or other
applicable settlement instructions.
1. Upon receipt of Instructions, IFTC will release or cause to be released Assets to the designated pledgee by way of pledge or hypothecation to secure any loan incurred by a Portfolio; provided, however, that IFTC will release Assets only upon payment to IFTC of the monies borrowed, except that in cases where additional collateral is required to secure a borrowing already made, further Assets may be released or caused to be released for that purpose. Upon receipt of Instructions, IFTC will pay, but only from funds available for such purpose, any such loan upon redelivery to it of the Assets pledged or hypothecated therefor and upon surrender of the note or notes evidencing such loan.
2. Upon receipt of Instructions, IFTC will release Assets to the designated borrower; provided, however, that the Assets will be released only upon deposit with IFTC of full cash collateral as specified in such Instructions, and that the lending Portfolio will retain the right to any dividends, interest or distribution on such loaned Assets. Upon receipt of Instructions and the loaned Assets, IFTC will release the cash collateral to the borrower.
1. To make Fed Funds available to the applicable Portfolio at 9:00
a.m., Kansas City time, on the second business day after deposit
of any check into an Account, in the amount of the check;
2. To make funds available immediately upon a deposit made by Federal Reserve wire; and
3. To make funds available on the next business day after deposit of ACH wires.
1. Collect, claim and receive and deposit for the account of the applicable Portfolio all income (including income from the Accounts) and other payments which become due and payable on or after the effective date hereof with respect to the Assets, and credit the account of such Portfolio in accordance with the schedule attached hereto as Exhibit A. If, for any reason, a Portfolio is credited with income that is not subsequently collected, IFTC may reverse that credited amount. If monies are collected after such reversal, IFTC will credit the Portfolio in that amount;
2. Execute ownership and other certificates and affidavits for all federal, state and local tax purposes in connection with the collection of bond and note coupons; and
3. Take such other action as may be necessary or proper in connection with (a) the collection, receipt and deposit of such income and other payments, including but not limited to the presentation for payment of all coupons and other income items requiring presentation; and all other Assets which may mature or be called, redeemed, retired or otherwise become payable and regarding which IFTC has actual knowledge, or should reasonably be expected to have knowledge; and (b) the endorsement for collection, in the name of Fund or a Portfolio, of all checks, drafts or other negotiable instruments.
IFTC, however, will not be required to institute suit or take other extraordinary action to enforce collection except upon receipt of Instructions and upon being indemnified to its satisfaction against the costs and expenses of such suit or other actions. IFTC will receive, claim and collect all stock dividends, rights and other similar items and will deal with the same pursuant to Instructions.
same, or execute any proxy, power of attorney, or other similar instrument voting any of such Assets, or give any consent, approval or waiver with respect thereto, or take any other similar action.
1. All or any of the Assets may be held in IFTC's own custody or in the custody of one or more other banks or trust companies (including, without limitation, affiliates of IFTC) acting as Subcustodians as may be selected by IFTC; provided that IFTC, to the extent practicable, shall notify the Fund in writing of the identity and qualifications of any proposed Subcustodian other than an affiliate of IFTC at least 30 days prior to appointment of such Subcustodian, and the Fund may, in its sole discretion, by written notice to IFTC disapprove of the appointment of such Subcustodian. If following notice by IFTC to the Fund regarding appointment of a Subcustodian and the expiration of 30 days after the date of such notice the Fund shall have failed to notify IFTC of its disapproval thereof, IFTC may, in its discretion, appoint such proposed Subcustodian as its subcustodian. Any such Subcustodian selected by IFTC must have the qualifications required for a custodian under the 1940 Act. Neither IFTC nor Subcustodian will be entitled to reimbursement by Fund for any fees or expenses of any Subcustodian. The appointment of a Subcustodian will not relieve IFTC of any of its obligations under this Agreement. IFTC will be responsible to the applicable Portfolio for any loss, damage or expense suffered or incurred by such Portfolio resulting from the actions or omissions of any Subcustodians selected and appointed by IFTC (except Subcustodians appointed at the request of Fund and as provided in Subsection 2 below) to the same extent IFTC would be responsible to Fund hereunder if it committed the act or omission itself.
2. Upon request of Fund, IFTC will contract with other Subcustodians reasonably acceptable to IFTC for purposes of (a) effecting third- party repurchase transactions with banks, brokers, dealers, or other entities through the use of a common custodian or subcustodian, or (b) providing depository and clearing agency services with respect to certain variable rate demand note securities, or (c) for other reasonable purposes specified by Fund; provided, however, that IFTC will be responsible to Fund for any loss, damage or expense suffered or incurred by Fund resulting from the actions or omissions of any such Subcustodian only to the same extent such Subcustodian is responsible to IFTC. Fund may review IFTC's contracts with such Subcustodians.
"Country Risk" means all factors reasonably related to the systemic risk of holding Foreign Assets in a particular country including, but not limited to, such country's political environment; economic and financial infrastructure (including financial institutions such as any Mandatory Securities Depositories operating in the country); prevailing or developing custody and settlement practices; and laws and regulations applicable to the safekeeping and recovery of Foreign Assets held in custody in that country.
"Eligible Foreign Custodian" has the meaning set forth in section
(a)(1) of Rule 17f-5, except that the term does not include
Mandatory Securities Depositories.
"Foreign Assets" means any of the Portfolios' investments (including foreign currencies) for which the primary market is outside the United States and such cash and cash equivalents in amounts deemed by Fund to be reasonably necessary to effect the Portfolios' transactions in such investments.
"Foreign Custody Manager" or "FCM" has the meaning set forth in section (a)(2) of Rule 17f-5.
"Mandatory Securities Depository" means a foreign securities depository or clearing agency that, either as a legal or practical matter, must be used if the Fund determines to place Foreign Assets in a country outside the United States (1) because required by law or regulation; (ii) because securities cannot be withdrawn from such foreign securities depository or clearing agency; or (iii) because maintaining or effecting trades in securities outside the foreign securities depository or clearing agency is not consistent with prevailing or developing custodial or market practices.
Upon the receipt by the FCM of Instructions to open an account, or to place or maintain Foreign Assets, in a country listed on Exhibit D, and the fulfillment by the Fund of the applicable account opening requirements for such country, the FCM is deemed to have been delegated by the Board responsibility as FCM with respect to that country and to have accepted such delegation.
Following the receipt of Instructions directing the FCM to close the account of a Portfolio with the Eligible Foreign Custodian selected by the FCM in a designated country, the delegation by the Board to IFTC as FCM for that country is deemed to have been withdrawn and IFTC will immediately cease to be the FCM of the Portfolio with respect to that country.
The FCM may withdraw its acceptance of delegated responsibilities with respect to a designated country upon written notice to the Fund. Thirty days (or such longer period as to which the parties agree in writing) after receipt of any such notice by the Fund, IFTC will have no further responsibility as FCM to a Portfolio with respect to the country as to which IFTC's acceptance of delegation is withdrawn.
In performing its delegated responsibilities as FCM to place or maintain Foreign Assets with an Eligible Foreign Custodian, the FCM will determine that the Foreign Assets will be subject to reasonable care, based on the standards applicable to custodians in the country in which the Foreign Assets will be held by that Eligible Foreign Custodian, after considering all factors relevant to the safekeeping of such assets, including, without limitation, those set forth in Rule 17f-5(c)(1)(1) through (iv).
behalf of the Portfolios, and IFTC each expressly acknowledge that the FCM will not be delegated any responsibilities under this Section with respect to Mandatory Securities Depositories.
The Fund represents to IFTC that the Board has determined that it is reasonable for the Board to rely on IFTC and State Street Bank & Trust Company to perform the responsibilities delegated pursuant to this Contract to IFTC and State Street Bank & Trust Company as the FCM of each Portfolio and that IFTC has been granted the authority by Fund to delegate to State Street Bank & Trust Company the FCM functions to which IFTC has been appointed by Fund.
the necessary information or instructions, IFTC will supply information from the books and records it maintains for Fund that Fund needs for tax returns, questionnaires, periodic reports to shareholders and such other reports and information requests as Fund and IFTC agree upon from time to time. IFTC shall take all reasonable action as Fund may request in order for the Fund to obtain from year to year favorable opinions from the Fund's independent certified public accountants with respect to IFTC's activities hereunder in connection with the preparation of amendments to the Fund's Registration Statement on Form N- 1 A, the Fund's annual and semiannual reports to shareholders and the Fund's filings on Form N- SAR or other periodic reports to SEC and with respect to any other requirements of the SEC.
1. Fund will deliver to IFTC Instructions with respect to the declaration and payment of any dividend or other distribution on the shares of capital stock of a Portfolio ("Fund Shares") by a Portfolio. On the date specified in such Instruction, IFTC will pay out of the monies held for the account of the Portfolio, insofar as it is available for such purposes, and credit to the account of the Dividend Disbursing Agent for the Portfolio, the amount specified in such Instructions.
2. Whenever Fund Shares are repurchased or redeemed by a Portfolio, Portfolio or its agent will give IFTC Instructions regarding the aggregate dollar amount to be paid for such shares. Upon
receipt of such Instruction, IFTC will charge such aggregate dollar amount to the account of the Portfolio and either deposit the same in the account maintained for the purpose of paying for the repurchase or redemption of Fund Shares or deliver the same in accordance with such Instruction. IFTC has no duty or responsibility to determine that Fund Shares have been removed from the proper shareholder accounts or that the proper number of Fund Shares have been canceled and removed from the shareholder records.
3. Whenever Fund Shares are purchased from Fund, Fund will deposit or cause to be deposited with IFTC the amount received for such shares. IFTC has no duty or responsibility to determine that Fund Shares purchased from Fund have been added to the proper shareholder account or that the proper number of such shares have been added to the shareholder records.
A. The term "Instructions", as used herein, means written (including telecopied, telexed, or electronically transmitted) or oral instructions which IFTC reasonably believes were given by a designated representative of Fund. Fund will deliver to IFTC, prior to delivery of any Assets to IFTC and thereafter from time to time as changes therein are necessary, written Instructions naming one or more designated representatives to give Instructions in the name and on behalf of Fund, which Instructions may be received and accepted by IFTC as conclusive evidence of the authority of any designated representative to act for Fund and may be considered to be in full force and effect until receipt by IFTC of notice to the contrary. Unless such written Instructions delegating authority to any person to give Instructions specifically limit such authority to specific matters or require that the approval of anyone else will first have been obtained, IFTC will be under no obligation to inquire into the right of such person, acting alone, to give any Instructions whatsoever. If Fund fails to provide IFTC any such Instructions naming designated representatives, any Instructions received by IFTC from a person reasonably believed to be an appropriate representative of Fund will constitute valid and proper Instructions hereunder. "Designated representatives" may include Fund's or a Portfolio's employees and agents, including investment, managers and their employees.
B. No later than the next business day immediately following each oral Instruction, Fund will send IFTC written confirmation of such oral Instruction. At IFTC's sole discretion, IFTC may record on tape, or otherwise, any oral Instruction whether given in person or via telephone, each such recording identifying the date and the time of the beginning and ending of such oral Instruction.
C. Fund will provide, upon IFTC's request, a certificate signed by an officer or designated representative of Fund, as conclusive proof of any fact or matter required to be ascertained from Fund hereunder. Fund will also provide IFTC Instructions with respect to any matter concerning this Agreement requested by IFTC. If IFTC reasonably believes that it could not prudently act according to the Instructions, or the instruction or advice of Fund's or a Portfolio's accountants or counsel, it may in its discretion, with notice to Fund, not act according to such Instructions.
In addition to the liability of IFTC under this Section 5, IFTC shall be liable to Fund for all reasonable costs and expenses incurred by Fund in connection with any claim by Fund against IFTC arising from the obligations
of
IFTC hereunder including, without limitation, all reasonable attorneys' fees and expenses incurred by Fund in asserting any such claim, and all reasonable expenses incurred by Fund in connection with any investigations, lawsuits or proceedings relating to such claim, provided that Fund has recovered from IFTC for such claim.
IFTC is not responsible or liable for, and Fund will indemnify and hold IFTC harmless from and against, any and all costs, expenses, losses, damages, charges, counsel fees, payments and liabilities which may be asserted against or incurred by IFTC or for which IFTC may be held to be liable, arising out of or attributable to:
A. IFTC's action or omission to act pursuant to the terms of this Agreement; provided that IFTC has acted in good faith and with due diligence and reasonable care; and provided further, that IFTC is not liable for consequential, special, or punitive damages in any event.
B. IFTC's payment of money as requested by Fund, or the taking of any action which might make it or its nominee liable for payment of monies or in any other way; provided, however, that nothing herein obligates IFTC to take any such action or expend its own monies in its, sole discretion.
C. IFTC's action or omission to act hereunder upon any Instructions, advice, notice, request, consent, certificate or other instrument or paper appearing to it to be genuine and to have been properly executed, including any Instructions, communications, data or other information received by IFTC by means of the Systems, as hereinafter defined, or any electronic system of communication.
D. IFTC's action or omission to act in good faith reliance on the advice or opinion of counsel for Fund or of its own counsel with respect to questions or matters of law, which advice or opinion may be obtained by IFTC from counsel for Fund at the expense of Fund or from IFTC's counsel at its own expense, or on the Instructions, advice or statements of any officer or employee of Fund, or Fund's accountants or other authorized individuals, and other persons believed by it in good faith to be expert in matters upon which they are consulted.
E. The purchase or sale of any securities or foreign currency positions. Without limiting the generality of the foregoing, IFTC is under no duty or obligation to inquire into:
1. The validity of the issue of any securities purchased by or for any Portfolio, or the legality of the purchase thereof or of foreign currency positions, or evidence of ownership required by Fund to be received by IFTC, or the propriety of the decision to purchase or the amount paid therefor;
2. The legality of the sale of any securities or foreign currency positions by or for any Portfolio, or the propriety of the amount for which the same are sold; or
3. The legality of the issue or sale of any Fund Shares, or the sufficiency of the amount to be received therefore, the legality of the repurchase or redemption of any Fund Shares, or the propriety of the amount to be paid therefor, or the legality of the declaration of any dividend by Fund, or the legality of the issue of any Fund Shares in payment of any stock dividend.
F. Any error, omission, inaccuracy or other deficiency in any Portfolio's accounts and records or other information provided by or on behalf of a Portfolio to IFTC, including the accuracy of the prices quoted by the Pricing Sources or for the information supplied by Fund to price the Assets, or the failure of Fund to provide, or provide in a timely manner, any accounts, records, or information needed by IFTC to perform hereunder.
G. Fund's refusal or failure to comply with the terms hereof (including
without limitation Fund's failure to pay or reimburse IFTC under
Section 5 hereof), Fund's negligence or willful misconduct, or the
failure of
any representation or warranty of Fund hereunder to be and remain true and correct in all respects at all times.
H. The use or misuse, whether authorized or unauthorized, of the Systems or any electronic system of communication used hereunder, by Fund or by any person who acquires access to the Systems or such other systems through the terminal device, passwords, access instructions or other means of access to such Systems or such other system which are utilized by, assigned to or otherwise made available to Fund, except to the extent attributable to any negligence or willful misconduct by IFTC.
I. Except as otherwise provided in this Agreement, any money represented by any check, draft, wire transfer, clearinghouse funds, uncollected funds, or instrument for the payment of money to be received by IFTC on behalf of a Portfolio until actually received; provided, however, that IFTC will advise Fund promptly if it fails to receive any such money in the ordinary course of business and will cooperate with Fund toward the end that such money is received.
J. Except as provided in Section 3.P hereof, loss occasioned by the acts, neglects, defaults or insolvency of any broker, bank, trust company, or any other person with whom IFTC may deal.
K. The failure or delay in performance of its obligations hereunder, or
those of any entity for which it is responsible hereunder, arising out
of or caused, directly or indirectly, by circumstances beyond the
affected entity's reasonable control, including, without limitation:
any interruption, loss or malfunction of any utility, transportation,
computer (hardware or software) or communication service; inability to
obtain labor, material, equipment or transportation, or a delay in
mails; governmental or exchange action, statute, ordinance, rulings,
regulations or direction; war, strike, riot, emergency, civil
disturbance, terrorism, vandalism, explosions, labor disputes,
freezes, floods, fires, tornadoes, acts of God or public enemy,
revolutions, or insurrection.
5 hereof with respect to such claim, Fund shall retain the right to settle, compromise and/or terminate any action or proceeding in respect of the losses incurred by Fund without IFTC's consent and provided further that if Fund has not made an acknowledgment of its obligation to indemnify IFTC, Fund shall not settle, compromise or terminate any such action or proceeding without the written consent of IFTC, which consent shall not be unreasonably withheld or delayed. IFTC agrees to cooperate with Fund and take all actions reasonably requested by Fund in connection with Fund's enforcement of any rights of IFTC. Fund agrees to reimburse IFTC for all reasonable out-of-pocket expenses incurred by IFTC in connection with the fulfillment of its obligations under this Section 7, provided that such reimbursement shall not apply to expenses occasioned by or resulting from the negligence, misfeasance or misconduct of IFTC.
A. Fund will pay IFTC its fees and compensation due hereunder and its reimbursable disbursements, costs and expenses paid or incurred to such date upon receipt by Fund of a statement setting forth such disbursements, costs and expenses;
B. Fund will designate a successor investment accounting and recordkeeping agent (which may be Fund) by Instruction to IFTC;
C. Fund will designate a successor custodian by Instruction to IFTC. In the event no such Instruction has been delivered to IFTC on or before the date when such termination becomes effective, then IFTC may, at its option, (i) choose as successor custodian a bank or trust company meeting the qualifications for custodian set forth in the 1940 Act and having not less than Two Million Dollars ($2,000,000) aggregate capital, surplus and undivided profits, as shown by its last published report, or (ii) apply to a court of competent jurisdiction for the appointment of a successor or other proper relief, or take any other lawful action under the circumstances; provided, however, that Fund will reimburse IFTC for its costs and expenses, including reasonable attorney's fees, incurred in connection therewith; and
D. IFTC will, upon payment of all sums due to IFTC from Fund hereunder or otherwise, deliver at IFTC's office (i) all accounts and records to the successor investment accounting and recordkeeping agent or, if none, to Fund; and (ii) all Assets, duly endorsed and in form for transfer, to the successor custodian, or as specified by the court. IFTC will cooperate in effecting changes in book-entries at all Depositories. Upon proper delivery to a successor or as specified by the court, IFTC will have no further obligations or liabilities hereunder. Thereafter such successor will be the successor hereunder and will be entitled to reasonable compensation for its services.
In the event that accounts, records or Assets remain in the possession of IFTC after the date of termination hereof for any reason other than IFTC's failure to deliver the same, IFTC is entitled to compensation as provided in the then-current fee schedule for its services during such period, and the provisions hereof relating to the duties and obligations of IFTC will remain in full force and effect.
A. If IFTC provides Fund direct access to the computerized investment portfolio custody, recordkeeping and accounting systems used by IFTC ("Systems") or if IFTC and Fund agree to utilize any electronic system of communication, Fund agrees to implement and enforce appropriate security policies and procedures to prevent unauthorized or improper access to or use of the Systems or such other system.
B. Fund will preserve the confidentiality of the Systems and the tapes, books, reference manuals, instructions, records, programs, documentation and Information of, and other materials relevant to, the Systems and the business of IFTC ("Confidential Information"). Fund agrees that it will not voluntarily disclose any such Confidential Information to any other person other than its own employees who reasonably have a need to know such information pursuant hereto. Fund will return all such Confidential Information to IFTC upon termination or expiration hereof.
C. Fund has been informed that the Systems are licensed for use by IFTC from one or more third parties ("Licensors"), and Fund acknowledges that IFTC and Licensors have proprietary rights in and to the Systems and all other IFTC or Licensor programs, code, techniques, know-how, data bases, supporting documentation, data formats, and procedures, including without limitation any changes or modifications made at the request or expense or both of Fund (collectively, the "Protected Information"). Fund acknowledges that the Protected Information constitutes confidential material and trade secrets of IFTC and Licensors. Fund will preserve the confidentiality of the Protected Information, and Fund hereby acknowledges that any unauthorized use, misuse, disclosure or taking of Protected Information, residing or existing internal or external to a computer, computer system, or computer network, or the knowing and unauthorized accessing or causing to be accessed of any computer, computer system, or computer network, may be subject to civil liabilities and criminal penalties under applicable law. Fund will so inform employees and agents who have access to the Protected Information or to any computer equipment capable of accessing the same. Licensors are intended to be and are third party beneficiaries of Fund's obligations and undertakings contained in this Section.
D. Fund hereby represents and warrants to IFTC that it has determined to its satisfaction that the Systems are appropriate and suitable for its use. THE SYSTEMS ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. IFTC EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
A. Each Portfolio will be regarded for all purposes hereunder as a separate party apart from each other Portfolio. Unless the context otherwise requires, with respect to every transaction covered hereby, every reference herein to Fund is deemed to relate solely to the particular Portfolio to which such transaction relates. Under no circumstances will the rights, obligations or remedies with respect to a particular Portfolio constitute a right, obligation or remedy applicable to any other Portfolio. The use of this single document to memorialize the separate agreement of each Portfolio is understood to be for clerical convenience only and will not constitute any basis for joining the Portfolios for any reason.
B. Fund may appoint IFTC as its custodian and investment accounting and recordkeeping agent for additional Portfolios from time to time by written notice, provided that IFTC consents to such addition. Rates or charges for each additional Portfolio will be as agreed upon by IFTC and Fund in writing.
A. This Agreement will be construed according to, and the rights and liabilities of the parties hereto will be governed by, the laws of The Commonwealth of Massachusetts without reference to the choice of laws principles thereof.
B. All terms and provisions hereof will be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns.
C. The representations and warranties, the indemnifications extended hereunder, and the provisions of Section 10 hereof are intended to and will continue after and survive the expiration, termination or cancellation hereof.
D. No provisions hereof may be amended or modified in any manner except by a written agreement properly authorized and executed by each party hereto.
E. The failure of either party to insist upon the performance of any terms or conditions hereof or to enforce any rights resulting from any breach of any of the terms or conditions hereof, including the payment of damages, will not be construed as a continuing or permanent waiver of any such terms, conditions, rights or privileges, but the same will continue and remain in full force and effect as if no such forbearance or waiver had occurred. No waiver, release or discharge of any party's rights hereunder will be effective unless contained in a written instrument signed by the party sought to be charged.
F. The captions herein are included for convenience of reference only, and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect.
G. This Agreement may be executed in two or more counterparts, each of which is deemed an original but all of which together constitute one and the same instrument.
H. If any provision hereof is determined to be invalid, illegal, in conflict with any law or otherwise unenforceable, the remaining provisions hereof will be considered severable and will not be affected thereby, and every remaining provision hereof will remain in full force and effect and will remain enforceable to the fullest extent permitted by applicable law.
I. This Agreement shall be binding on and shall inure to the benefit of Fund and IFTC and their respective successors and assigns, provided that neither party hereto may assign this Agreement or any of its rights hereunder without the prior written consent of the other party.
J. Neither the execution nor performance hereof will be deemed to create a partnership or joint venture by and between IFTC and Fund or any Portfolio.
K. Except as specifically provided herein, this Agreement does not in any way affect any other agreements entered into among the parties hereto and any actions taken or omitted by either party hereunder will not affect any rights or obligations of the other party hereunder.
L. Notice is hereby given that a copy of Fund's Trust Agreement and all amendments thereto is on file with the Secretary of State of the state of its organization; that this Agreement has been executed on behalf of Fund by the undersigned duly authorized representative of Fund in his/her capacity as such and not individually; and that the obligations of this Agreement are binding only upon the assets and property of Fund and not upon any trustee, officer of shareholder of Fund individually.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective duly authorized officers.
INVESTORS FIDUCIARY TRUST QUANTITATIVE GROUP OF FUNDS COMPANY By: By: Title: Title: |
EXHIBIT A -- INCOME AVAILABILITY SCHEDULE
Foreign -- Income will be credited contractually on pay day in the markets noted with Contractual Income Policy. The markets noted with Actual income policy will be credited income when it is received.
Market Income Policy Market Income Policy Market Income Policy
=================================================================================================================
Argentina Actual Hong Kong Contractual Poland Actual
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Australia Contractual Hungary Actual Portugal Contractual
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Austria Contractual India Actual Russia Actual
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Bahrain Actual Indonesia Actual Singapore Contractual
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Bangladesh Actual Ireland Actual Slovak Republic Actual
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Belgium Contractual Israel Actual South Africa Actual
-----------------------------------------------------------------------------------------------------------------
Bermuda Actual Italy Contractual South Korea Actual
-----------------------------------------------------------------------------------------------------------------
* Bolivia Actual Ivory Coast Actual Spain Contractual
-----------------------------------------------------------------------------------------------------------------
Botswana Actual * Jamaica Actual Sri Lanka Actual
-----------------------------------------------------------------------------------------------------------------
Brazil Actual Japan Contractual Swaziland Actual
-----------------------------------------------------------------------------------------------------------------
Canada Contractual Jordan Actual Sweden Contractual
-----------------------------------------------------------------------------------------------------------------
Chile Actual Kenya Actual Switzerland Contractual
-----------------------------------------------------------------------------------------------------------------
China Actual Lebanon Actual Taiwan Actual
-----------------------------------------------------------------------------------------------------------------
Colombia Actual Luxembourg Actual Thailand Actual
-----------------------------------------------------------------------------------------------------------------
Cyprus Actual Malaysia Actual * Trinidad & Tobago Actual
-----------------------------------------------------------------------------------------------------------------
Czech Republic Actual Mauritius Actual * Tunisia Actual
-----------------------------------------------------------------------------------------------------------------
Denmark Contractual Mexico Actual Turkey Actual
-----------------------------------------------------------------------------------------------------------------
Ecuador Actual Morocco Actual United Kingdom Contractual
-----------------------------------------------------------------------------------------------------------------
Egypt Actual Namibia Actual United States See Attached
-----------------------------------------------------------------------------------------------------------------
** Euroclear Contractual/ Actual Netherlands Contractual Uruguay Actual
-----------------------------------------------------------------------------------------------------------------
Euro CDS Actual New Zealand Contractual Venezuela Actual
-----------------------------------------------------------------------------------------------------------------
Finland Contractual Norway Contractual Zambia Actual
-----------------------------------------------------------------------------------------------------------------
France Contractual Oman Actual Zimbabwe Actual
-----------------------------------------------------------------------------------------------------------------
Germany Contractual Pakistan Actual
-----------------------------------------------------------------------------------------------------------------
Ghana Actual Peru Actual
-----------------------------------------------------------------------------------------------------------------
Greece Actual Philippines Actual
=================================================================================================================
|
* Market is not 17F-5 eligible ** For EuroClear, contractual income paid only in markets listed with Income Policy of Contractual.
United States
Income Type DTC FED PTC Physical
====================================================================================
Dividends Contractual N/A N/A Actual
------------------------------------------------------------------------------------
Fixed Rate Interest Contractual Contractual N/A Actual
------------------------------------------------------------------------------------
Variable Rate Interest Contractual Contractual N/A Actual
------------------------------------------------------------------------------------
GNMA I N/A N/A Contractual PD +1 N/A
------------------------------------------------------------------------------------
GNMA II N/A N/A Contractual PD *** N/A
------------------------------------------------------------------------------------
Mortgages Actual Contractual Contractual Actual
------------------------------------------------------------------------------------
Maturities Actual Contractual N/A Actual
====================================================================================
|
Exceptions to the above Contractual Income Policy include securities that are:
. Involved in a trade whose settlement either States); failed, or is pending
over the record date (excluding the United States);
. On loan under a self directed securities lending program other than IFTC's
own vendor lending program
. Known to be in a condition of default, or suspected to present a risk of
default or payment delay;
. In the asset categories, without limitation, of Private Placements,
Derivatives, Options, Futures, CMOs, and Zero Coupon Bonds.
. Securities whose amount of income and redemption cannot be calculated in
advance of payable date, or determined in advance of actual collection,
examples include ADRs;
. Payments received as the result of a corporate action, not limited to, bond
calls, and tender offers.
*** For GNMA 11 securities, if the 19th day of the month is a business day, Payable/Distribution Date is the next business day. If the 19th is not a business day, but the 20th is a business day, Payable/Distribution date is the first business day after the 20th. If both the 19th and 20th are not business days, Payable/Distribution will be the next business day thereafter.
EXHIBIT B -- FUNDS TRANSFER OPERATING GUIDELINES
1. OBLIGATION OF THE SENDER: IFTC is authorized to promptly debit Fund's ("Client's") account(s) upon the receipt of a payment order in compliance with any of the Security Procedures chosen by the Client, from those offered on the attached selection form (and any updated selection forms hereafter executed by the Client), for funds transfers and in the amount of money that IFTC has been instructed to transfer. IFTC is hereby instructed to accept funds transfer instructions only via the delivery methods and Security Procedures indicated on the attached selection form (and any updated executed by the Client). The Client agrees that the Security Procedures are reasonable and adequate for its wire transfer transactions and agrees to be bound by any payment orders, amendments and cancellations, whether or not authorized, issued in its name and accepted by IFTC after being confirmed by any of the selected Security Procedures. The Client also agrees to be bound by any other valid and authorized payment order accepted by IFTC. IFTC shall execute payment orders in compliance with the selected Security Procedures and with the Client's/Investment Manager's instructions on the execution date provided that such payment order is received by the customary deadline for processing such a request, unless the payment order specifies a later time. IFTC will use reasonable efforts to execute on the execution date payment orders received after the customary deadline, but if it is unable to execute any such payment order on the execution date, such payment order will be deemed to have been received on the next business day.
2. SECURITY PROCEDURES: The Client acknowledges that the selected Security Procedures were selected by the Client from Security Procedures offered by IFTC. The Client shall restrict access to confidential information relating to the Security Procedures to authorized persons as communicated in writing to IFTC. The Client must notify IFTC immediately if it has reason to believe unauthorized persons may have obtained access to such information or of any change in the Client's authorized personnel. IFTC shall verify the authenticity of all instructions according to the selected Security Procedures.
3. ACCOUNT NUMBERS: IFTC shall process all payment orders on the basis of the account number contained in the payment order. In the event of a discrepancy between any name indicated on the payment order and the account number, the account number shall take precedence and govern. Financial institutions that receive payment orders initiated by IFTC at the instruction of the Client may also process payment orders on the basis of account numbers, regardless of any name included in the payment order. IFTC will also rely on any financial institution identification numbers included in any payment order, regardless of any financial institution name included in the payment order.
4. REJECTION: IFTC reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected balance in
the account to be charged at the time of IFTC's receipt of such payment order;
(b) if initiating such payment order would cause IFTC, in IFTC's sole judgment,
to exceed any applicable volume, aggregate dollar, network, time, credit or
similar limits upon wire transfers; or (c) if IFTC, in good faith, is unable to
satisfy itself that the transaction has been properly authorized.
5. CANCELLATION OR AMENDMENT: IFTC shall use reasonable efforts to act on all authorized requests to cancel or amend payment orders received in compliance with the selected Security Procedures provided that such requests are received in sufficient time to afford IFTC a reasonable opportunity to act prior to executing the payment order. However, IFTC assumes no liability if the request for amendment or cancellation cannot be satisfied by IFTC's reasonable efforts.
6. ERRORS: IFTC shall assume no responsibility for failure to detect any erroneous payment order provided that IFTC complies with the payment order instructions as received and IFTC complies with the selected Security Procedures. The Security Procedures are established for the purpose of authenticating payment orders only and not for the detection of errors in payment orders.
7. INTEREST AND LIABILITY LIMITS: IFTC shall assume no responsibility for lost
interest with respect to the refundable amount of any unauthorized payment
order, unless IFTC is notified of the unauthorized payment order within thirty
(30) days of notification by IFTC of the acceptance of such payment order. In no
event (including but not limited to
failure to execute a payment order) shall IFTC be liable for special, indirect or consequential damages, even if advised of the possibility of such damages.
8. AUTOMATED CLEARING HOUSE ("ACH") CREDIT ENTRIES/PROVISIONAL PAYMENTS: When the Client initiates or receives ACH credit and debit entries pursuant to these Guidelines and the rules of the National Automated Clearing House Association and the MidAmerica Payment Exchange or other similar body, IFTC or its agent will act as an Originating Depository Financial Institution and/or Receiving Depository Financial Institution, as the case may be, with respect to such entries. Credits given with respect to an ACH credit entry are provisional until final settlement for such entry is received from the Federal Reserve Bank. If such final settlement is not received, the Client agrees to promptly refund the amount credited to the Client in connection with such entry, and the party making payment to the Client via entry shall not be such deemed to have paid the amount of the entry.
9. CONFIRMATIONS: Confirmation of IFTC's execution of payment orders shall ordinarily be provided within 24 hours. Notice may be delivered through IFTC's account statements, advices, information systems, or by facsimile or callback. The Client must report any objections to the execution of a payment order within 30 days.
10. MISCELLANEOUS: IFTC may use the Federal Reserve System Fedwire to execute payment orders, and any payment order carried in whole or in part through Fedwire will be subject to applicable Federal Reserve Board rules and regulations. IFTC and the Client agree to cooperate to attempt to recover any funds erroneously paid to wrong parties, regardless of any fault of IFTC or the Client, but the party responsible for the erroneous payment shall bear all costs and expenses incurred in trying to effect such recovery. These Guidelines may not be amended except by a written agreement signed by the parties.
SECURITY PROCEDURES SELECTION FORM
Please select one or more of the funds transfer security procedures indicated below.
[_] SWIFT SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a cooperative society owned and operated by member financial institutions that provides telecommunication services for its membership. Participation is limited to securities brokers and dealers, clearing and depository institutions, recognized exchanges for securities, and investment management institutions. SWIFT provides a number of security features through encryption and authentication to protect against unauthorized access, loss or wrong delivery of messages, transmission errors, loss of confidentiality and fraudulent changes to messages. Selection of this security procedure would be most appropriate for existing SWIFT members.
[_] REMOTE BATCH TRANSMISSION Wire transfer instructions are delivered via Computer-to-Computer (CPU-CPU) data communications between the Client and/or its agent and IFTC and/or its agent. Security procedures include encryption and/or the use of a test key by those individuals authorized as Automated Batch Verifiers or a callback procedure to those individuals. Clients selecting this option should have an existing facility for completing CP U-CP U transmissions. This delivery mechanism is typically used for highvolume business such as shareholder redemptions and dividend payments.
[X] TELEPHONE CONFIRMATION (CALL BACK) This procedure requires Clients to designate individuals as authorized initiators and authorized verifiers. IFTC will verifythat the instruction contains the signature of an authorized person and prior to execution ofthe payment order, will contact someone other than the originator at the Client's location to authenticate the instruction. Selection of this alternative is appropriate for Clients who do not have the capability to use other security procedures.
[_] TEST KEY Test Key confirmation will be used to verify all non-repetitive funds transfer instructions received via facsimile or phone. IFTC will provide test keys if this option is chosen. IFTC will verify that the instruction contains the signature of an authorized person and prior to execution of the payment order, will authenticate the test key provided with the corresponding test key at IFTC. Selection of this alternative is appropriate for Clients who do not have the capability to use other security procedures.
[X] REPETITIVE WIRES For situations where funds are transferred periodically from an existing authorized account to the same payee (destination bank and account number) and only the date and currency amount are variable, a repetitive wire may be implemented. Repetitive wires will be subject to a $10 million limit. If the payment order exceeds the $10 million limit, the instruction will be confirmed by telephone or test key prior to execution. Repetitive wire instructions must be reconfirmed annually. Clients may establish Repetitive Wires by following the agreed upon security procedures as described by Telephone Confirmation (Call Back) or Test Key. This alternative is recommended whenever funds are frequently transferred between the same two accounts.
[_] STANDING INSTRUCTIONS Funds are transferred by IFTC to a counter party on the Client's established list of authorized counter parties. Only the date and the dollar amount are variable. Clients may establish Standby Instructions by following the agreed upon security procedures as described by Telephone Confirmation (Call Back) or Test Key. This option is used for transactions that include but are not limited to Foreign Exchange Contracts, Time Deposits and Tri-Party Repurchase Agreements.
[_] AUTOMATED CLEARING HOUSE (ACH) IFTC or its agent receives an automated transmission from a Client for the initiation of payment (credit) or collection (debit) transactions through the ACH network. The transactions contained on each transmission or tape must be authenticated by the Client. The transmission is sent from the Client's or its agent's system to IFTC's or its agent's system with encryption.
KEY CONTACT INFO
Whom shall we contact to implement your selection(s)?
CLIENT OPERATIONS CONTACT ALTERNATE CONTACT Mariella Harrington Joan Coco (1) Sheila Bennett (2) ------------------- -------------------------------- Name Name Lincoln North Lincoln North 55 Old Bedford Road 55 Old Bedford Road ------------------- ------------------- Address Address Lincoln, MA 01773 Lincoln, MA 01773 ----------------- ----------------- City/State/Zip Code City/State/Zip Code (781) 259 - 1144 (781) 259 - 1144 ---------------- ---------------- Telephone Number Telephone Number (781) 259 - 1166 ---------------- Facsimile Number ___________________ SWIFT Number QUANTITATIVE GROUP OF FUNDS By: Title: Date: |
EXHIBIT C--REUTERS DATA SERVICE AGREEMENT
The undersigned acknowledges and agrees that some of the data being provided in the service by IFTC to Fund contains information supplied to IFTC by Reuters America Inc. ("Reuters") (the "Data"). Fund agrees that:
(i) although Reuters makes every effort to ensure the accuracy and reliability of the Data, Fund acknowledges that Reuters, its employees, agents, contractors, subcontractors, contributors and third party providers will not be liable for any loss, cost or damage suffered or incurred by Fund arising out of any fault, interruption or delays in the Data or out of any inaccuracies, errors or omissions in the Data however such faults, interruptions, delays, inaccuracies, errors or omissions arise, unless due to the gross negligence or willful misconduct of Reuters;
(ii) it will not transfer, transmit, recirculate by digital or analogue means, republish or resell all or part of the Data; and
(iii) certain parts of the Data are proprietary and unique to Reuters.
The undersigned further agrees that the benefit of this clause will inure to the benefit of Reuters.
QUANTITATIVE GROUP OF FUNDS
By:
Title:
Date:
EXHIBIT D
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND OPTIONAL DEPOSITORIES
Country Subcustodian Optional Depositories
Argentina Citibank, N.A.
Australia Westpac Banking Corporation
Austria GiroCredit Bank Aktiengesellschaft der Sparkassen
Bahrain The British Bank of the Middle East (as delegate of the
Hongkong and Shanghai Banking Corporation Limited)
Bangladesh Standard Chartered Bank
Belgium Generale Bank
Bermuda The Bank of Bermuda Limited
Bolivia Banco Boliviano Americano
Botswana Barclays Bank of Botswana Limited
Brazil Citibank, N.A.
Canada Canada Trustco Mortgage Company
Chile Citibank, N.A.
People's The Hongkong and Shanghai Banking Corporation
Republic of Limited Shanghai and Shenzhen branches
China
Colombia Cititrust Colombia S.A.Sociedad Fiduciaria
Croatia Privredana banka Zagreb d.d
Cyprus Barclays Bank PLC Cyprus Offshore Banking Unit
Czech Ceskoslovenska, Obchodni Banka A.S.
Republic
Denmark Den Danske Bank
Ecuador Citibank, N.A.
Egypt National Bank of Egypt
Estonia Hansabank
|
EXHIBIT D
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND OPTIONAL DEPOSITORIES
Country Subcustodian Optional Depositories
Finland Merita Bank Limited
France Banque Paribas
Germany Dresdner Bank AG
Ghana Barclays Bank of Ghana Limited
Greece National Bank of Greece S.A. Bank of Greece
Hong Kong Standard Chartered Bank
Hungary Citibank Budapest Rt.
India Deutsche Bank AG; The Hongkong and Shanghai
Banking Corporation Limited
Indonesia Standard Chartered Bank
Ireland Bank of Ireland
Israel Bank Hapoalim B.M.
Italy Banque Paribas
Ivory Coast Societe Generale de Banques en Cote d'Ivoire
Jamaica Scotiabank Trust and Merchant Bank
Jordan The Daiwa Bank, Limited; The Fuji Bank Limited Japan Securities Depository
The Sumitomo Trust & Banking Co., Ltd.
Kenya Barclays Bank of Kenya Limited
Republic of Korea Citibank, N.A.
|
EXHIBIT D
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND OPTIONAL DEPOSITORIES
Country Subcustodian Optional Depositories
Lebanon The British Bank of the Middle East Custodian and Clearing Center of
(as delegate of the Hongkong and Financial Instruments for Lebanon
Shanghai Banking Corporation Limited) (MIDCLEAR) S.A.L.;
Malaysia Standard Chartered Bank Malaysia Berhad
Mauritius The Hongkong and Shanghai Banking
Corporation Limited
Mexico Citibank Mexico, S.A.
Morocco Banque Commerciale du Maroc
Namibia (via) Standard Bank of South Africa
Netherlands MeesPierson N.V.
New Zealand ANZ Banking Group (New Zealand) Limited
Norway Christiania Bank og Kreditkasse
Oman The British Bank of the Middle East (as delegate of the
Hongkong and Shanghai Banking Corporation Limited)
Pakistan Deutsche Bank AG
Peru Citibank, N.A.
Philippines Standard Chartered Bank
Poland Citibank Poland S.A.
Portugal Banco Comercial Portugues
Romania ING Bank, N.V.
Russia Credit Suisse First Boston, Zurich via Credit
Suisse First Boston Limited, Moscow
Singapore The Development Bank of Singapore Ltd.
|
EXHIBIT D
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND OPTIONAL DEPOSITORIES
Country Subcustodian Optional Depositories
Slovak Ceskoslovenska. Obchodn6Banka A.S.
Republic
South Africa Standard Bank of South Africa Limited
Spain Banco Santander, S.A
SriLanka The Hongkong and Shanghai Banking
Corporation Limited
Swaziland Barclays Bank of Swaziland Limited
Sweden Skandinaviska, Enskilda Banken
Switzerland Union Bank of Switzerland
Taiwan R.O.C. Central Trust of China
Thailand Standard Chartered Bank
Trinidad Republic Bank Ltd.
& Tobago
Tunisia Banque Internationale Arabe de Tunisie
Turkey Citibank, N.A.
United State Street Bank and Trust
Kingdom
Uruguay Citibank, N.A.
Venezuela Citibank, N.A.
Zambia Barclays Bank of Zambia Limited
Zimbabwe Barclays Bank of Zimbabwe Limited
Euroclear (The Euroclear System)
Cedel (Cedel Bank, societe anonyme)
INTERSETTLE (for EASDAQ Securities)
|
EXHIBIT E
STATE STREET GLOBAL CUSTODY NETWORK MANDATORY DEPOSITORIES
Country Mandatory Depositories (Includes entities for which use is
mandatory as a matter of law or effectively mandatory as a
matter of market practice)
Argentina -Caja de Valores S.A.;
-CRYL
Australia -Austraclear Limited;
-Reserve Bank Information and Transfer System
Austria -Oesterreichische Kontrollbank AG (Wertpapiersammelbank Division)
Belgium -Caisse Interprofessionnelle de Depots et de Virements de Titres S.A.;
-Banque Nationale de Belgique
Brazil -Bolsa de Valores de Sao Paulo;
-Balsa de Valores de Rio de Janeiro
-All SSB clients presently use Calispa
-Central de Custodia e de Liquidagdo Financeira de Titulos
-Banco Central do Brasil, systema Especial de Liquidacao e Custodia
Canada -The Canadian Depository for Securities Limited; West Canada
Depository Trust Company [depositories linked]
People's Republic -Shanghai Securities Central Clearing and Registration Corporation;
of China -Shenzhen Securities Central Clearing Co., Ltd.
Croatia Ministry of Finance
Czech Republic -Stredisko cennych papiru;
-Czech National Bank
Denmark -Vaerdipapircentralen - The Danish Securities Center
Egypt -Misr Company for Clearing, Settlement, and Central Depository
Estonia -Eesti Vaartpaberite Keskdepositooruim
Finland -The Finnish Central Securities Depository
France -Societe Interprofessionnelle pour la Compensation des Valeurs Mobilieres;
-Banque de France, Saturate System
Germany -The Deutscher Kassenverein AG
Greece -The Central Securities Depository (Apothetirion Titlon A.E.);
|
EXHIBIT E
STATE STREET GLOBAL CUSTODY NETWORK MANDATORY DEPOSITORIES
Country Mandatory Depositories (Includes entities for which use is mandatory as a matter of
law or effectively mandatory as a matter of market practice)
Hong Kong -The Central Clearing and Settlement System;
-The Central Money Markets Unit
Hungary -The Central Depository and Clearing House (Budapest) Ltd.
[Mandatory for Gov't Bonds only; SSB does not use for other securities]
Indonesia -Bank of Indonesia
Ireland -The Central Bank of Ireland, The Gilt Settlement Office
Israel -The Clearing House of the Tel Aviv Stock Exchange;
-Bank of Israel
Italy -Monte Titoli S.p.A.;
-Banca d'Italia
Japan -Bank of Japan Net System
Republic of Korea -Korea Securities Depository
Lebanon -The Central Bank of Lebanon
Malaysia -Malaysian Central Depository Sdn. Bhd.;
-Bank Negara Malaysia, Scripless Securities Trading and Safekeeping Systems
Mauritius -The Central Depository & Settlement System
Mexico -S.D. INDEVAL, S.A. de C.V. (Instituto para el Deposito de valorem)
Netherlands -Nederlands Centraal Instituut voor Giraal Effectenverkeer B.V. ("NECIGEF")
[* * It is planned that as of 111198 NBNV will no longer hold
government securities, all securities will be transferred to NECIGEF];
-De Nederlandsche Bank N.V. ("NBNV")**
New Zealand -New Zealand Central Securities Depository Limited
Norway - Verdipapirsentralen - The Norwegian Registry of Securities
Oman -Muscat Securities Market
Peru -Caja de Valores y Liquidaciones (CAVALI, S.A.)
|
EXHIBIT E
STATE STREET GLOBAL CUSTODY NETWORK MANDATORY DEPOSITORIES
Country Mandatory Depositories (Includes entities for which use is mandatory as a matter of
law or effectively mandatory as a matter of market practice)
Philippines -The Philippines Central Depository Inc.;
-The Book-Entry-System of Bangko Sentral ng Pilipinas;
-The Registry of Scripless Securities of the Bureau of the Treasury
Poland -The National Depository of Securities (Krajowy Depozyt Papier6w Wartos~ciowych);
-National Bank of Poland
Portugal -Central de Valores Mobilidrios
Romania -National Securities Clearing, Settlement and Depository Co.;
-Bucharest Stock Exchange;
-National Bank of Romania
Singapore -The Central Depository (Pte)Limited; -Monetary Authority of Singapore
Slovak Republic -Stredisko Cennych Papierov;
-National Bank of Slovakia
South Africa -The Central Depository Limited
Spain -Servicio de Compensacion y Liquidacion de valorem, S.A.;
-Banco de Emporia, Anotaciones en Cuenta
SriLanka -Central Depository System (Pvt) Limited
Sweden -Vardepapperscentralen VPC AB - The Swedish Central Securities Depository
Switzerland -Schweizerische Effekten - Giro AG;
Taiwan - R.O.C. -The Taiwan Securities Central Depository Company, Ltd.
Thailand -Thailand Securities Depository Company Limited
Tunisia -STICODEVAM;
-Central Bank of Tunisia;
-Junisian Treasury
Turkey -Takas ve Saklama Bankasi A.S.;
-Central Bank of Turkey
|
EXHIBIT E
STATE STREET GLOBAL CUSTODY NETWORK MANDATORY DEPOSITORIES
Country Mandatory Depositories (Includes entities for which use is mandatory as a matter of
law or effectively mandatory as a matter of market practice)
United Kingdom -The Bank of England, The Central Gilts Office; The Central Money markets
Office; The European Settlements Office;
-First Chicago Clearing Centre
Uruguay -Central Bank of Uruguay
Zambia -Lusaka Central Depository
|
INVESTORS FIDUCIARY TRUST COMPANY
FEE SCHEDULE
QUANTITATIVE GROUP OF FUNDS
I. INVESTMENT ACCOUNTING
$500 (not included in minimum monthly asset fee discussed in I.B. below.)
There is a monthly minimum fee of $2,000 per fund/portfolio. The monthly minimum fee per portfolio does not apply to any portfolio if the asset based fee discussed in I C. below produces greater revenue than the aggregate minimum.
3/100 of 1% (3 basis points) on the first $400 million in assets 2/100 of 1% (2 basis points) on the next $200 million in assets 1/100 of 1% (1 basis point) on all assets in excess of $600 million in assets
$ 400 (not included in minimum monthly fee discussed in LB)
Monthly Base Charge Waived
Monthly Quote Charge:
Municipal Bonds via Kenny/S & P or Muller Data $16.00
Corporate, Municipal, Convertible, Government Bonds
and Adjustable Rate Preferred Stocks Via IDSI $13.00
Government, Corporate Bonds via Kenny/S & P or Muller $11.00
Government, Corporate and Convertible Bonds via Merrill Lynch $11.00
Foreign Bonds via Extel $10.00
Options, Futures and Private Placements $ 8.00
Listed Equities (including International) and OTC Equities $ 8.00
|
Quantitative Funds Fee Schedule (Continued) |
NOTES:
1. For billing purposes, the monthly quote charge will be based on the average number of positions in the portfolio at month end.
2. Quantitative will not be charged a monthly pricing fee on US Equities.
II. SECURITY CUSTODY
Asset-Based Fee on a total relationship basis:
0.5/100 of 1% (0.5 basis point) on all assets
See appendix I for Global Agreement.
IFTC will offset fees with balance credits calculated at 75% of the 90 day T-Bill rate in effect the last business day of each month will be applied to the average custody collected cash balances for the month. Balance credits can be used to offset fees. Any credits in excess of fees will be carried forward from month to month through the end of the calendar year. Any excess credit remaining at year-end will not be carried forward. For calculation purposes, IFTC uses an actual/actual basis.
III. NOTES TO THE ABOVE, FEE SCHEDULE
A. Asset based fees will be billed monthly at 1/12th of the annual stated rate based on monthly average net assets. Annual maintenance fees are payable monthly at 1/12th of the annual stated rate.
Quantitative Funds
Fee Schedule (Continued)
B. The above schedule does not include out-of-pocket expenses that would be incurred by IFTC on the client's behalf. Examples of out-of-pocket expenses include but are not limited to microfiche, disaster recovery, pricing and research services, overnight mailing services, foreign registration and script fees, etc. IFTC bills out-of-pocket expenses separately from service fees.
C. The fees stated above are exclusive of terminal equipment required in the client's location(s) and communication line costs.
D. Any fees or out-of-pocket expenses not paid within 30 days of the date of the original invoice will be charged a late payment fee of 1% per month until payment of the fees are received by IFTC.
E. The above fee schedule is applicable for selections made and communicated within 90 days of the date of this proposal. The fees are guaranteed for a one-year period commencing on the effective date of the service agreement between IFTC and the client. All changes to the fee schedule will be communicated in writing at least 60 days prior to their effective date.
_________________________________ ___________________________________ Investors Fiduciary Trust Company Quantitative Group of Funds Date Date |
Appendix I
Quantitative Fund
Global Custody Fees
Market Asset Charge Transaction Charge Market Asset Charge Transaction Charge ================================================================================================= Argentina 35 $125 Malaysia 10 $ 30 ------------------------------------------------------------------------------------------------- Australia 8 $ 30 Mauritius 40 $125 ------------------------------------------------------------------------------------------------- Austria 8 $ 30 Mexico 8 $ 30 ------------------------------------------------------------------------------------------------- Bangladesh 40 $125 Morocco 30 $125 ------------------------------------------------------------------------------------------------- Belgium 8 $ 30 Namibia 40 $ 30 ------------------------------------------------------------------------------------------------- Belize 75 $125 Netherlands 8 $ 30 ------------------------------------------------------------------------------------------------- Botswana 35 $125 New Zealand 8 $ 30 ------------------------------------------------------------------------------------------------- Brazil 30 $ 75 Norway 8 $ 30 ------------------------------------------------------------------------------------------------- Canada 5 $ 30 Pakistan 40 $125 ------------------------------------------------------------------------------------------------- Euroclear 5 $ 30 Peru 40 $125 ------------------------------------------------------------------------------------------------- Chile 40 $125 Philippines 15 $ 75 ------------------------------------------------------------------------------------------------- Colombia 45 $125 Poland 40 $125 ------------------------------------------------------------------------------------------------- Czech Republic 30 $125 Portugal 10 $ 75 ------------------------------------------------------------------------------------------------- Denmark 8 $ 30 Shanghai (China) 35 $125 ------------------------------------------------------------------------------------------------- Egypt 100 $125 Shenzhen (China) 35 $125 ------------------------------------------------------------------------------------------------- ECU* 5 $ 45 Singapore 10 $ 30 ------------------------------------------------------------------------------------------------- Finland 8 $ 30 South Africa 8 $ 30 ------------------------------------------------------------------------------------------------- France 6 $ 30 South Korea 25 $ 75 ------------------------------------------------------------------------------------------------- Germany 6 $ 30 Spain 10 $ 30 ------------------------------------------------------------------------------------------------- Ghana 40 $125 Sri Lanka 25 $125 ------------------------------------------------------------------------------------------------- Greece 30 $125 Swaziland 40 $125 ------------------------------------------------------------------------------------------------- Hong Kong 10 $ 30 Sweden 8 $ 30 ------------------------------------------------------------------------------------------------- Hungary 40 $125 Switzerland 6 $ 30 ------------------------------------------------------------------------------------------------- India 45 $125 Taiwan 30 $125 ------------------------------------------------------------------------------------------------- Indonesia 15 $100 Thailand 10 $ 30 ------------------------------------------------------------------------------------------------- Ireland 8 $ 30 Turkey 30 $125 ------------------------------------------------------------------------------------------------- Israel 35 $ 75 United Kingdom 6 $ 30 ------------------------------------------------------------------------------------------------- Italy 8 $ 30 Uruguay 45 $125 ------------------------------------------------------------------------------------------------- Japan 6 $ 30 Venezuela 40 $125 ------------------------------------------------------------------------------------------------- Jordan 45 $125 Zimbabwe 35 $125 ------------------------------------------------------------------------------------------------- |
NOTE: Any country not listed above will be negotiated at time of investment.
Out of Pocket Expenses: As incurred (e.g. stamp taxes, registration costs, script fees, special transportation costs, etc.).
* ECU = European Currency Unit.
Exhibit 21
FIRST AMENDMENT
TO CUSTODY AND INVESTMENT ACCOUNTING AGREEMENT
THIS FIRST AMENDMENT TO CUSTODY AND INVESTMENT ACCOUNTING AGREEMENT (the "Amendment") is made and entered into as of March 1, 1998 by and among QUANTITATIVE GROUP OF FUNDS ("Client"), a Massachusetts business trust, and INVESTORS FIDUCIARY TRUST COMPANY, a Missouri trust company ("IFTC").
WITNESSETH:
WHEREAS, Client and IFTC are parties to that certain Custody and Investment Accounting Agreement dated as of January 19, 1998 (the "Agreement"); and
WHEREAS, Client and IFTC desire to amend and supplement the Agreement upon the following terms and conditions.
NOW THEREFORE, for and in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Client and IFTC hereby agree that the Agreement is amended and supplemented as follows:
1. The Security Procedures Selection Form attached to the Agreement shall be replaced in its entirety by the Security Procedures Selection Form dated March 1, 1998 attached hereto and incorporated herein by this reference.
2. General Provisions. This Amendment is made in the State of Missouri, and will at all times and in all respects be construed, interpreted, and governed by the laws of the State of Missouri, without giving effect to the conflict of laws provisions thereof. This Amendment may be executed in any number of counterparts, each constituting an original and all considered one and the same agreement. This Amendment is intended to modify and amend the Agreement and the terms of this Amendment and the Agreement are to be construed to be cumulative and not exclusive of each other. Except as provided herein, the Agreement is hereby ratified and confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized officers to be effective as of the date first above written.
INVESTORS FIDUCIARY TRUST COMPANY
By:
Stephen R. Hilliard, Executive Vice President
QUANTITATIVE GROUP OF FUNDS
By:
SECURITY PROCEDURES SELECTION FORM
March 1, 1998
Please select one or more of the funds transfer security procedures indicated below.
[_] SWIFT SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a cooperative society owned and operated by member financial institutions that provides telecommunication services for its membership. Participation is limited to securities brokers and dealers, clearing and depository institutions, recognized exchanges for securities, and investment management institutions. SWIFT provides a number of security features through encryption and authentication to protect against unauthorized access, loss or wrong delivery of messages, transmission errors, loss of confidentiality and fraudulent changes to messages. Selection of this security procedure would be most appropriate for existing SWIFT members.
[_] REMOTE BATCH TRANSMISSION Wire transfer instructions are delivered via Computer-to-Computer (CPU-CPU) data communications between the Client and/or its agent and IFTC and/or its agent. Security procedures include encryption and/or the use of a test key by those individuals authorized as Automated Batch Verifiers or a callback procedure to those individuals. Clients selecting this option should have an existing facility for completing CPU-CPU transmissions. This delivery mechanism is typically used for highvolume business such as shareholder redemptions and dividend payments.
[X] TELEPHONE CONFIRMATION (CALL BACK) This procedure requires Clients to designate individuals as authorized initiators and authorized verifiers. IFTC will verify that the instruction contains the signature of an authorized person and prior to execution of the payment order, will contact someone other than the originator at the Client's location to authenticate the instruction. Selection of this alternative is appropriate for Clients who do not have the capability to use other security procedures.
[_] TEST KEY Test Key confirmation will be used to verify all non-repetitive funds transfer instructions received via facsimile or phone. IFTC will provide test keys if this option is chosen. IFTC will verify that the instruction contains the signature of an authorized person and prior to execution of the payment order, will authenticate the test key provided with the corresponding test key at IFTC. Selection of this alternative is appropriate for Clients who do not have the capability to use other security procedures.
[X] REPETITIVE WIRES For situations where funds are transferred periodically from an existing authorized account to the same payee (destination bank and account number) and only the date and currency amount are variable, a repetitive wire may be implemented. Repetitive wires will be subject to a $10 million limit. If the payment order exceeds the $10 million limit, the instruction will be confirmed by telephone or test key prior to execution. Repetitive wire instructions must be reconfirmed annually. Clients may establish Repetitive Wires by following the agreed upon security procedures as described by Telephone Confirmation (Call Back) or Test Key. This alternative is recommended whenever funds are frequently transferred between the same two accounts.
[_] STANDING INSTRUCTIONS Funds are transferred by IFTC to a counter party on the Client's established list of authorized counter parties. Only the date and the dollar amount are variable. Clients may establish Standby Instructions by following the agreed upon security procedures as described by Telephone Confirmation (Call Back) or Test Key. This option is used for transactions that include but are not limited to Foreign Exchange Contracts, Time Deposits and Tri-Parly Repurchase Agreements.
[_] AUTOMATED CLEARING HOUSE (ACH) IFTC or its agent receives an automated transmission from a Client for the initiation of payment (credit) or collection (debit) transactions through the ACH network. The transactions contained on each transmission or tape must be authenticated by the Client. The transmission is sent from the Client's or its agent's system to IFTC's or its agent's system with encryption.
KEY CONTACT INFORMATION
Whom shall we contact to implement your selection(s)?
CLIENT OPERATIONS CONTACT
ALTERNATE CONTACT
Schedule A 17f-5 Approval
The Board of Directors/Trustees of Quantitative Group of Funds - Quantitative Foreign Frontier Fund has approved certain foreign Banking institutions and foreign securities depositories within State Street's Global Custody Network for use as subcustodians for the Fund's securities, cash and cash equivalents held outside of the United States.
Board approval is as indicated by the Fund's Authorized Officer:
Fund officer
Initials Country Subcustodian Central Depository
________ State Street's entire Global Custody Network listed below
________ Argentina Citibank, N.A. Caja de Valores S.A.
________ Australia Westpac Banking Corporation Austraclear Limited;
Reserve Bank Information and
Transfer System (RITS)
________ Austria GiroCredit Bank Aktiengesellschaft Oesterreichischc Kontrollbank AG
der Sparkassen (Weripapiersammelbank Division)
________ Bahrain The British Bank of the Middle Fast None
(as delegate of the Hongkong and
Shan" Banking Corporation Limited)
________ Bangladesh Standard Chartered Bank None
________ Belgium Generale Bank Caisse Interprofessionnelle de
Depots et de Virements de Titres,
S.A. (CIK);
Banque Nationale de Belgique
________ Bermuda The Bank of Bermuda Limited None
________ Botswana Barclays Bank of Botswana Limited None
________ Brazil Citibank, N.A. Bolsa de Valores de Sao Paulo
(Bovespa);
Banco Central de Brasil, Systema
Especial de Liquidacao e Custodi
(SELIC)
________ Canada Canada tTrusteo Mortgage Company Canadian Depositor for
Securities Limited (CDS)
________ Chile Citibank, N.A. None
|
Schedule A: 17f.5 Approval
Fund officer
Initials Country Subcustodian Central Depository
_________ People's Republic The Hongkong and Shanghai Shanghai Securities Central Clearing and
of China Banking Corporations Limited Registration Corporation (SSCCRC);
Shanghai and Shenzhen branches
Shenzhen Securities Central Clearing Co., Ltd.
(SSCC)
_________ Colombia Cititrust Colombia SAL None
SociedaidFiduciaria
_________ Cyprus Barclays Bank PLC None
Cyprus Offshore Banking Unit
_________ Czech Republic Ceskoslovenska Obchodni Stredisko cennych papiru (SCP);
Banka A.S.
Czech National Bank (CNB)
_________ Denmark Den Danske Bank Vaardipapircentralen - The Danish
Securities Center (VP)
_________ Ecuador Citibank N.A. None
_________ Egypt National Bank of Egypt Misr Company for Clearing, Settlement,
and Central Depository (MCSD)
________ Finland Merita Bank Limited The Finnish Central Securities
Depository (CSD)
_________ France Banque Paribas Societe Interprofessionnelle
pour la Compensation des
Valeurs Mobilieres (SICOVAM);
Banque de France
Saturne System
________ Germany Dresdner Bank AG The Deutscher Kassenverein AG
________ Ghana Barclays Rank of Ghana Limited None
________ Greece National Bank of Greece S.A. The Central Securities Depository
(Apothetirion Titlon A.E.);
Bank of Greece
|
Schedule A- 17f-S Approval Page 3
Fund officer
Initials Country Subcustodian Central Depository
_______ Hong Kong Standard Chartered Bank The Central Clearing and Settlement
System (CCASS);
The Central Money Markets Unit (CMU)
_______ Hungary Citibanbk Budapest Rt. The Central Depository and Clearing
House(Budapest) Ltd. (KELER Ltd.)
_______ India Deutsche Bank AG None
The Hong Kong and Shanghai None
Banking Corporation Limited
_______ Indonesia Standard Chartered Bank None
_______ Ireland Bank of Ireland None;
The Central Bank of Ireland,
The Gift Settlement Office (GSO)
_______ Israel Bank Hapoalim B.M. The Clearing House of the
Tel Aviv Stock Exchange;
Bank of Israel
_______ Italy Banque Paribas Monre Titoli S.p.A.
Banca d'Italia.
_______ Ivory Coast Societe Generale de Banques None
en Cote D'Ivoire
_______ Japan The Daiwa Bank, Limited Japan Securities Depository
Center IASDEC
Bank of Japan Net System
The Fuji Bank, Limited Japan Securities Depository
Center IASDEC
Bank of Japan Net
The Sumitomo Trust Japan Securities Depository
& Banking Co., La Center JASDEC
Bank of Japan Net System
|
Schedule A: 17f.5 Approval
Fund officer
Initials Country Subcustodian Central Depository
_________ People's Republic The Hongkong and Shanghai Shanghai Securities Central Clearing and
of China Banking Corporations Limited Registration Corporation (SSCCRC);
Shanghai and Shenzhen branches
Shenzhen Securities Central Clearing Co., Ltd.
(SSCC)
_________ Colombia Cititrust Colombia SAL None
SociedaidFiduciaria
_________ Cyprus Barclays Bank PLC None
Cyprus Offshore Banking Unit
_________ Czech Republic Ceskoslovenska Obchodni Stredisko cennych papiru (SCP);
Banka A.S.
Czech National Bank (CNB)
_________ Denmark Den Danske Bank Vaardipapircentralen - The Danish
Securities Center (VP)
_________ Ecuador Citibank N.A. None
_________ Egypt National Bank of Egypt Misr Company for Clearing, Settlement,
and Central Depository (MCSD)
________ Finland Merita Bank Limited The Finnish Central Securities
Depository (CSD)
_________ France Banque Paribas Societe Interprofessionnelle
pour la Compensation des
Valeurs Mobilieres (SICOVAM);
Banque de France
Saturne System
________ Germany Dresdner Bank AG The Deutscher Kassenverein AG
________ Ghana Barclays Rank of Ghana Limited None
________ Greece National Bank of Greece S.A. The Central Securities Depository
(Apothetirion Titlon A.E.);
Bank of Greece
|
Schedule A- 17f-S Approval Page 3
Fund officer
Initials Country Subcustodian Central Depository
_______ Hong Kong Standard Chartered Bank The Central Clearing and Settlement
System (CCASS);
The Central Money Markets Unit (CMU)
_______ Hungary Citibanbk Budapest Rt. The Central Depository and Clearing
House(Budapest) Ltd. (KELER Ltd.)
_______ India Deutsche Bank AG None
The Hong Kong and Shanghai None
Banking Corporation Limited
_______ Indonesia Standard Chartered Bank None
_______ Ireland Bank of Ireland None;
The Central Bank of Ireland,
The Gift Settlement Office (GSO)
_______ Israel Bank Hapoalim B.M. The Clearing House of the
Tel Aviv Stock Exchange;
Bank of Israel
_______ Italy Banque Paribas Monre Titoli S.p.A.
Banca d'Italia.
_______ Ivory Coast Societe Generale de Banques None
en Cote D'Ivoire
_______ Japan The Daiwa Bank, Limited Japan Securities Depository
Center IASDEC
Bank of Japan Net System
The Fuji Bank, Limited Japan Securities Depository
Center IASDEC
Bank of Japan Net
The Sumitomo Trust Japan Securities Depository
& Banking Co., La Center JASDEC
Bank of Japan Net System
|
Schedule A- 17f-S Approval Page 3
Fund officer
Initials Country Subcustodian Central Depository
________ Jordan The British Bank of the Middle East None
(as Delegate of The HongKong and
Shanghai Banking Corporation Limited)
________ Kenya Barclays Bank of Kenya Limited None
________ Republic of Korea SEOULBANK Korea Securities Depository (KSD)
________ Lebanon The British Bank of the Middle East Custodian and Clearing Center of
(as delegate of the Hongkong and Financial Instruments for Lebanon
Shanghai Banking Corporation Ltd (midclear) S.A.L
The Central Bank of Lebanon
________ Malaysia Standard Chartered Bank Malaysia Central Depository
Malaysia Berhad Sdn Bhd (MCD);
Bank Negara Malaysia,
Scripless Securities Trading and
Safekeeping Systems (SSTS)
________ Mauritius The Hongkong and Shanghai The Central Depository &
Settlement Banking Corporation
Limited System (CDS)
________ Mexico Citibank Mexico, SA. S.D. INDEVAL, S.A.
(Instituto para el Deposito de
Valores)
________ Morocco Banque Commerciale de Maroc None
________ Netherlands MeesPierson N.V. Netherlands Centraal Instituut voor
Giraal Effectenverkeer B.V.
(NECIGEF);
De Nederlandsche Bank N.V.
________ New Zealand ANZ Banking Group New Zealand Central Securities
(New Zealand Limited) Depository Limited (NZCSD)
________ Norway Christiania Bank og Verdipapirscritralea - The
Norwegian Registry of Securities
(VPS)
|
Schedule A- 17f-S Approval Page 3
Fund officer
Initials Country Subcustodian Central Depository
________ Oman The British Bank of the Middle Muscat Securities Market (MSM)
East (as delegate of the Hongkong and
Shanghai Backing Corporaiton Limited)
________ Pakistan Deutsche Bank AG None
________ Peru Citibank, N.A. Caja do Valores y Liquidacioncs
(CAVALI S.A.)
________ Philippines Standard Chartered Bank The Philippines Central
Depository Inc. (PCD);
The Book-Entry-System (BES) of
Bangko Sentral ng Pilipinas The
Registry of Scripless Securities
(ROSS) of the Bureau of Treasury
________ Poland Citibank Poland S.A. The National Depository of
Securities (Kralowy
Depozyt Papier6w
Wartosciowych);
National Bank of Poland
_________ Portugal Banco Comercial Portugues Central de Valores Mobilidrios
(Central)
__________ Romania ING Bank, N.V. National Securities Clearing,
Settlement and Depository Company
(SNCDD)
__________ Russia Credit Suisse First Boston, Zurich None
via Credit Suisse First Boston
Limited, Moscow
_________ Singapore The Development Bank The Central Depository (Pte)
of Singapore Ltd. Limited (CDP)
_________ Slovak Republic Ceskoslovenska Obchodna Stredisko Cennych Papierov
Banka A.S. (SCP);
_________ South Africa Standard Bank of South Africa Limited The Central Depository Limited
|
Schedule A- 17f-S Approval Page 3
Fund officer
Initials Country Subcustodian Central Depository
________ Spain Banco Santander, S.A Servicio de Compensacion y
Liquidacion de Valores, S.A.
(SCLV);
Banco de Espana
Anotaciones en Cuenta
________ Sri Lanka The Hongkong and Shanghai Central Depository System
Banking Corporation Limited (Pvt) Limited
________ Swaziland Barclays Bank of Swaziland Limited None
________ Sweden Skandinavikka Enskilda, Banken Vardcpappscentralen VPC, AB -
The Swedish Central Securities
Depository
________ Switzerland Union Bank of Switzerland Schweizerische Effekten Giro
AG (SEGA);
INTERSETTLE
________ Taiwan - ROC. Central Trust Of China The Taiwan Securities Central
or Depository Company, Ltd.
(Client Designted Subcustodian)
________ Thailand Standard Chartered Bank Thailand Securities Depository
Company Limited (TSD)
________ Turkey Citibank, N.A. Takas ve Saklama Bankasi A.S
(TAKASBANK);
Central Bank of Turkey
________ United Kingdom State Street Bank and Trust None;
Company
The Bank of England
The Central Gilts Office (CGO)
The Central Moneymarkets Office
The European Settlements Office
________ Uruguay Citibank, N.A. None
________ Venezuela Citibank, N.A. None
|
Schedule A- 17f-S Approval Page 3
Fund officer Initials Country Subcustodian Central Depository ________ Zambia Barclays Bank of Zambia Limited Lusaka Central Depository (LCD) ________ Zimbabwe Barclays Bank of Zi,mbabwe Limited None ________ Euroclear (The Euroclear System)/State Street London Limited ________ Cedel (Cedel Bank, societe anonyme)/ State Street London Limited |
FIRST AMENDMENT
TO CUSTODY AND INVESTMENT ACCOUNTING AGREEMENT
THIS FIRST AMENDMENT TO CUSTODY AND INVESTMENT ACCOUNTING AGREEMENT (the "Amendment") is made and entered into as of March 1, 1998 by and among QUANTITATIVE GROUP OF FUNDS ("Client"), a Massachusetts business trust, and INVESTORS FIDUCIARY TRUST COMPANY, a Missouri trust company ("IFTC").
WITNESSETH:
WHEREAS, Client and IFTC are parties to that certain Custody and Investment Accounting Agreement dated as of January 19, 1998 (the "Agreement") ;and
WHEREAS, Client and IFTC desire to amend and supplement the Agreement upon the following terms and conditions.
NOW THEREFORE, for and in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Client and IFTC hereby agree that the Agreement is amended and supplemented as follows:
1 The Security Procedures Selection Form attached to the Agreement shall be replaced in its entirety by the Security Procedures Selection Form dated March 1, 1998 attached hereto and incorporated herein by this reference.
General Provisions. This Amendment is made in the State of Missouri, and will at all times and in all respects be construed, interpreted, and governed by the laws of the State of Missouri, without giving effect to the conflict of laws provisions thereof. This Amendment may be executed in any number of counterparts, each constituting an original and all considered one and the same agreement. This Amendment is intended to modify and amend the Agreement and the terms of this Amendment and the Agreement are to be construed to be cumulative and not exclusive of each other. Except as provided herein, the Agreement is hereby ratified and confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized officers to be effective as of the date first above written.
INVEST DU TRUST COMPANY
By:
Stephen R. Hilliard, Executive Vice President
QUANTITATIVE GROUP OF FUNDS
SECURITY PROCEDURES SELECTION FORM
Please select one or more of the funds transfer security procedures indicated below.
March 1, 1998
SWIFT SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a cooperative society owned and operated by member financial institutions that provides telecommunication services for its membership. Participation is limited to securities brokers and dealers, clearing and depository institutions, recognized exchanges for securities, and investment management institutions. SWIFT provides a number of security features through encryption and authentication to protect against unauthorized access, loss or wrong delivery of messages, transmission errors, loss of confidentiality and fraudulent changes to messages. Selection of this security procedure would be most appropriate for existing SWIFT members.
REMOTE BATCH TRANSMISSION Wire transfer instructions are delivered via Computer- to-Computer (CPU-CPU) data communications between the Client and/or its agent and IFTC and/or its agent. Security procedures include encryption and/or the use of a test key by those individuals authorized as Automated Batch Verifiers or a callback procedure to those individuals. Clients selecting this option should have an existing facility for completing CPU-CPU transmissions. This delivery mechanism is typically used for highvolume business such as shareholder redemptions and dividend payments.
TELEPHONE CONFIRMATION (CALL BACK) This procedure requires Clients to designate individuals as authorized initiators and authorized verifiers. IFTC will verify that the instruction contains the signature of an authorized person and prior to execution of the payment order, will contact someone other than the originator at the Client's location to authenticate the instruction. Selection of this alternative is appropriate for Clients who do not have the capability to use other security procedures.
TEST KEY Test Key confirmation will be used to verify all non-repetitive funds transfer instructions received via facsimile or phone. IFTC will provide test keys if this option is chosen. IFTC will verify that the instruction contains the signature of an authorized person and prior to execution of the payment order, will authenticate the test key provided with the corresponding test key at IFTC. Selection of this alternative is appropriate for Clients who do not have the capability to use other security procedures.
REPETITIVE WIRES For situations where funds are transferred periodically from an existing authorized account to the same payee (destination bank and account number) and only the date and currency amount are variable, a repetitive wire may be implemented. Repetitive wires will be subject to a $10 million limit. If the payment order exceeds the $10 million limit, the instruction will be confirmed by telephone or test key prior to execution. Repetitive wire instructions must be reconfirmed annually. Clients may establish Repetitive Wires by following the agreed upon security procedures as described by Telephone Confirmation (Call Back) or Test Key. This alternative is recommended whenever funds are frequently transferred between the same two accounts.
STANDING INSTRUCTIONS Funds are transferred by IFTC to a counter party on the Client's established list of authorized counter parties. Only the date and the dollar amount are variable. Clients may establish Standby Instructions by following the agreed upon security procedures as described by Telephone Confirmation (Call Back) or Test Key. This option is used for transactions that include but are not limited to Foreign Exchange Contracts, Time Deposits and Tri-Party Repurchase Agreements.
AUTOMATED CLEARING HOUSE (ACH) IFTC or its agent receives an automated
transmission from a Client for the initiation of payment (credit) or collection
(debit) transactions through the ACH network. The transactions contained on each
transmission or tape must be authenticated by the Client. The transmission is
sent from the Client's or its agent's system to IFTC's or its agent's system
with encryption.
KEY CONTACT INFORMATION
Whom shall we contact to implement your selection(s)?
CLIENT OPERATIONS CONTACT
Mariella Harrington
Name
Lincoln North
55 Old Bedford Road
Address
Lincoln MA 01773
City/State/Zip Code
(781) 259 - 1144
Telephone Number
SWIFT Number
ALTERNATE CONTACT
Joan Coco (1) Sheila Bennett
Lincoln North
55 Old Bedford Road
Address
Lincoln MA 01773
City/State/Zip Code
Telephone Number
EXHIBIT 22
TRANSFER AGENT AND SERVICE AGREEMENT
between
U.S. BOSTON INVESTMENT COMPANY
and
U.S. BOSTON INSTITUTIONAL SERVICES, INC.
TRANSFER AGENT AND SERVICE AGREEMENT
AGREEMENT made as of the 31st day of October, 1989, by and between U.S. BOSTON INVESTMENT COMPANY, a Massachusetts business trust, having its principal office and place of business at Six New England Executive Park, Burlington, Massachusetts 01803 (the "Fund"), and U.S. Boston Institutional Services Inc., a Massachusetts Corporation having its principal office and place of business at Six New England Executive Park, Burlington, Massachusetts 01803 ("USBIS") which is duly registered as a transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of 1934.
WHEREAS, the Fund is authorized to issue its shares of beneficial interest ("Shares") in separate Series, with each such Series representing interests in a separate portfolio of securities and other assets; and
WHEREAS, the Fund intends to presently offer Shares in two Series, as identified in Exhibit A attached hereto (such Series, together with all other Series subsequently established by the Fund and made subject to this Agreement in accordance with Article 13, being herein referred to as the "Series");
WHEREAS, the Fund desires to appoint USBIS as its transfer agent, dividend disbursing agent and agent in connection with certain other activities; and USBIS desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows:
1.1 Subject to the terms and conditions set forth in this Agreement, the Fund hereby employs and appoints USBIS to act as, and USBIS agrees to act as its transfer agent for the Shares, dividend disbursing agent and agent in connection with any accumulation, open-account or similar plans provided to the shareholders of the Fund ("Shareholders") and set out in the currently effective Prospectus or Statement of Additional Information of the Fund, including without limitation any periodic investment plan or periodic withdrawal program.
1.2 USBIS agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by agreement between the Fund and USBIS, USBIS shall:
(i) receive for acceptance, orders for the purchase of Shares of each Series and promptly deliver payment and appropriate documentation therefor to the Custodian of the Fund authorized pursuant to the Agreement and Declaration of Trust of the Fund (the "Custodian") and will instruct the Custodian as to the account of which Series such payment should be credited to;
(ii) Pursuant to purchase orders, issue the appropriate number of Shares and hold such Shares in the appropriate Shareholder account;
(iii) receive for acceptance redemption requests and redemption directions and deliver the appropriate documentation therefor to the Custodian identifying to the Custodian the Series whose Shares are being redeemed;
(iv) at the appropriate time as and when it receives monies paid to it by the Custodian with respect to any redemption, pay over or cause to be paid over in the appropriate manner such monies as instructed by the redeeming Shareholders;
(v) effect transfers of Shares by the registered owners thereof upon receipt of appropriate instructions;
(vi) prepare and transmit (or credit to the appropriate Shareholder account) payments for dividends and distributions declared with respect to each Series and
(vii) maintain records of account for and advise the Fund and its Shareholders as to the foregoing.
(b) In addition to and not in lieu of the services set forth in the above paragraph (a), USBIS shall:
(i) perform all of the customary services of a transfer agent, dividend disbursing agent and as relevant, agent in connection with accumulation, open-account or similar plans (including without limitation any periodic investment plan or periodic withdrawal program), including but not limited to : maintaining all Shareholder accounts, preparing Shareholder meeting lists, mailing proxies, receiving and tabulating proxies, mailing Shareholder reports and prospectuses to current Shareholders, withholding taxes on non- resident alien accounts, preparing and filing U.S. Treasury Department Forms 1099 and other appropriate forms required with respect to dividends and distributions by federal authorities for all Shareholders, preparing and mailing confirmation forms and statements of account to Shareholders for all purchases and redemptions of Shares and other confirmable transactions in Shareholder accounts, preparing and mailing activity statements for Shareholders, and providing Shareholder account information; and
(ii) provide a system which will enable the Fund to monitor the total number of Shares sold in each State. The Fund shall (A) identify to USBIS in writing those transactions to be treated as exempt from blue sky reporting for each state and (B) verify the establishment of transactions for each state on the system prior to activation and thereafter monitor the daily activity for each state. The responsibility of USBIS for the Fund's blue sky state registration status is solely limited to the initial establishment of transactions subject to blue sky compliance by the Fund and the reporting of such transactions to the Fund as provided above.
Procedures applicable to certain of these services may be established from time to time by agreement between the Fund and USBIS
2.1 For performance by USBIS pursuant to this Agreement, the Fund agrees to pay USBIS an annual maintenance fee for each Shareholder account as set out in the initial fee schedule attached hereto as Exhibit B. Such fees and out-of- pocket expenses and advances identified under Section 2.2 below may be changed from time to time subject to mutual written agreement between the Fund and USBIS.
2.2 In addition to the fee paid under 2.1 above, the Fund agrees to reimburse USBIS for out-of pocket expenses or advances incurred by USBIS for the items set out in the fee schedule attached hereto. In addition, any other expenses incurred by USBIS at the request or with the consent of the Fund will be reimbursed by the Fund.
2.3 The Fund agrees to pay all fees and reimbursable expenses within five days following the mailing of the respective billing notice. Postage for mailing of dividends, proxies, Fund reports and other mailings to all Shareholder accounts shall be advanced to USBIS by the Fund at least seven (7) days prior to the mailing date of such materials.
USBIS represents and warrants to the Fund that:
3.1 It is a corporation duly organized and existing and in good standing under the laws of the Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its business in the Commonwealth of Massachusetts.
3.3 It is empowered under applicable laws and by its charter and by-laws to enter into and perform this Agreement.
3.4 All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement.
3.5 It has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement.
The Fund represents and warrants to USBIS that:
4.1 It is a Massachusetts business trust duly organized and existing and in good standing under the laws of the Commonwealth of Massachusetts.
4.2 It is empowered under applicable laws and by its Agreement and Declaration of Trust and By-Laws to enter into and perform this Agreement.
4.3 All proceedings required by said Agreement and Declaration of Trust and By-Laws have been taken to authorize it to enter into and perform this Agreement.
4.4 It is an open-end and non-diversified management investment company registered under the Investment Company Act of 1940.
4.5 A registration statement under the Securities Act of 1933 with respect to all Shares of any Series being offered for sale will be effective before any Shares of any Series are issued and sold and will remain effective, and appropriate state securities law filings with respect to all Shares of any Series being offered for sale will have been made before any Shares of any Series are issued and sold and will continue to be made before any Shares of any Series are issued and sold.
5.1 USBIS shall not be responsible for, and the Fund shall indemnify and hold USBIS harmless from and against, any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to:
(a) All actions of USBIS or its agents or subcontractors required to be taken pursuant to this Agreement;
(b) The Fund's refusal or failure to comply with the terms of this Agreement, or which arise out of the Fund's lack of good faith, negligence or willful misconduct or which arise out of the breach of any representation or warranty of the Fund hereunder;
(c) The reliance on or use by USBIS or its agents or subcontractors of information, records and documents which (i) are received by USBIS or its agents or subcontractors and furnished to it by or on behalf of the Fund, and (ii) have been prepared and/or maintained by the Fund or any other person or firm on behalf of the Fund;
(d) The reliance on, or carrying out by USBIS or its agents or subcontractors of any instructions or requests of the Fund;
(e) The offer or sale of Shares in violation of any requirement under the federal securities laws or regulations or the securities laws or regulations of any State and that such Shares be registered in such State or in violation of any stop order or other determination or ruling by any federal agency or State with respect to the offer or sale of such Shares in such State unless such violation results from any action or omission by USBIS or any of its agents or subcontractors which fails to comply with written instructions of the Fund or any officer of the Fund that no offers or sales be made in general or to the residents of a particular State;
provided, however, that the Fund shall not indemnify or hold USBIS harmless from and against any losses, damages, costs, charges, counsel fees, payments, expenses or liability arising out of or attributable to any actions or omissions of USBIS taken or made in bad faith or resulting from USBIS's negligence or willful misconduct.
5.2 USBIS shall indemnify and hold the Fund harmless from and against any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to any action or failure or omission to act by USBIS as a result of USBIS's lack of good faith, negligence or willful misconduct,
5.3 At any time USBIS may apply to any officer of the Fund for instructions, and may consult with legal counsel with respect to any matter arising in connection with the services to be performed by USBIS under this Agreement, and USBIS and it agents or subcontractors shall not be liable and shall be indemnified by the Fund for any action taken or omitted by it in reliance upon such instructions or taken or omitted by it in reliance upon the opinion of such counsel. USBIS, it agents and subcontractors shall be protected and indemnified in acting upon any paper or document furnished by or on behalf of the Fund, reasonably believed to be genuine and to have been signed by the proper officer or agent of the Fund, or upon any instruction, information, data, records or documents provided USBIS or its agents or subcontractors by machine readable input, telex, CRT data entry or other similar means authorized by the Fund, and shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Fund. USBIS, its agents and subcontractors shall also be protected and indemnified in recognizing stock certificates which are reasonably believed to bear the proper manual or facsimile signatures of the officers of the Fund, and the proper countersignature of any former transfer agent or registrar, or of a co-transfer agent or co-registrar.
5.4 In the event either party is unable to perform its obligations under the terms of this Agreement because of acts of God, strikes, equipment or transmission failure or damage reasonably beyond its control, such party shall not be liable for damages to the other for any damages resulting from such failure to perform or otherwise from such causes.
5.5 Neither party to this Agreement shall be liable to the other party for consequential damages under any provision of this Agreement or for any act or failure to act hereunder.
5.6 In order for the indemnification provisions contained in this Article 5 to apply, upon the assertion of a claim for which either party may be required to indemnify the other, the party seeking indemnification shall promptly notify the other party of such assertion, and shall keep the other party advised with respect to all developments concerning such
claim. The party who may be required to indemnify shall have the option to participate with the party seeking indemnification in the defense of such claim. The party seeking indemnification shall in no case confess any claim or make any compromise in any case in which the other party may be required to indemnify it except with the other party's prior written consent.
6.1 The Fund shall promptly furnish to USBIS the following:
(a) A certified copy of the resolution of the Trustees of the Fund authorizing the appointment of USBIS and the execution and delivery of this Agreement.
(b) A copy of the Agreement and Declaration of Trust and By-Laws of the Fund and all amendments thereto.
6.2 USBIS hereby agrees to establish and maintain facilities and procedures reasonably acceptable to the Fund for safekeeping of stock certificates, check forms and facsimile signature imprinting devices, if any; and for the preparation or use, and for keeping account of, such certificates, forms and devices.
6.3 USBIS shall keep records relating to the services to be performed hereunder, in the form and manner as it may deem advisable. To the extent required by Section 31 of the Investment Company Act of 1940, as amended, and the Rules thereunder, USBIS agrees that all such records prepared or maintained by USBIS relating to the services to be performed by USBIS hereunder are the property of the Fund and will be preserved, maintained and made available in accordance with such Section and Rules, and will be surrendered promptly to the Fund on and in accordance with its request.
6.4 USBIS and the Fund agree that all books, records, information and data pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law.
6.5 In case of any requests or demands for the inspection of the Shareholder records of the Fund, USBIS will endeavor to notify the Fund and to secure instructions from an authorized officer of the Fund as to such inspection. USBIS reserves the right, however, to exhibit the Shareholder records to any person whenever it is advised by its counsel that it may be held liable for the failure to exhibit the Shareholder records to such person.
7.1 This Agreement may be terminated by either party upon one hundred twenty (120) days' written notice to the other.
7.2 Should this Agreement be terminated, all out-of-pocket expenses associated with the movement of records and material will be borne by the Fund. Additionally, USBIS reserves the right to charge for any other reasonable expenses associated with such termination.
8.1 Neither this Agreement nor any rights or obligations hereunder may assigned by USBIS without the written consent of the Fund.
8.2 This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns.
9.1 This Agreement may be amended or modified by a written agreement executed by both parties and authorized or approved by a resolution of the Trustees of the Fund.
10.1 This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the Commonwealth of Massachusetts.
11.1 This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written.
12.1 A copy of the Agreement and Declaration of Trust of the Fund is on file with the Secretary of the Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trustees of the Fund as Trustees and not individually, and that the obligations of or arising out of this instrument are not binding upon any of the Trustees or Shareholders individually but are binding only upon the assets and property of the Fund.
13.1 In the event that the Fund establishes one or more Series of Shares in addition to those identified in Exhibit A attached hereto with respect to which it desires to have USBIS render services as transfer agent under the terms hereof, it shall so notify USBIS in writing, and if USBIS agrees in writing to provide such services, such Series of Shares shall become a Series hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names and on their behalf under their seals by and through their duly authorized officers, as of the day and year first above written.
U.S. Boston Investment Company
By: Willard L. Umphrey, President
Attest:
U.S. Boston Institutional Services, Inc.
By: Ronald L. Castignetti, President
Attest:
AMENDED EXHIBIT A
July 23, 1992
Series of Shares
Boston Growth and Income
Boston Foreign Growth and Income
Boston Numeric
May 18, 1998
Quantitative Small Cap Fund
Quantitative Mid Cap Fund
Quantitative Growth and Income Fund
Quantitative International Equity Fund
Quantitative Emerging Markets Fund
Quantitative Foreign Value Fund
Amendment to Transfer Agent and Service Agreement (the "Agreement") dated as of October 31, 1989, by and between QUANTITATIVE GROUP OF FUNDS, formerly U.S. Boston Investment Company, a Massachusetts business trust (the "Trust"), U.S. BOSTON INSTITUTIONAL SERVICES, INC., a Massachusetts corporation ("USBIS"), and QUANTITATIVE ADVISORS, INC. d/b/a QUANTITATIVE INSTITUTIONAL SERVICES, a Massachusetts corporation ("QIS") dated as of July 11, 1995.
Witnesseth:
Whereas, USBIS desires to assign its rights and responsibilities under the Agreement to QIS, and the Trust and QIS desire to revise the fee for servicing the Trust under the Agreement-,
Now, therefore, in consideration of the mutual covenants set forth in the Agreement Trust, USBIS and QIS agree as follows:
1. USBIS hereby assigns its rights and responsibilities under the Agreement to QIS, QIS accepts such transfer, and the Trust hereby assents to such transfer, said assignment to become effective upon the effective registration of QIS as a transfer agent with the Securities and Exchange Commission.
2. The Agreement shall be amended by replacing Schedule B of the Agreement with the Schedule B attached hereto, such amendment to become effective retroactively to July 1, 1995.
IN WITNESS WHEREOF, QUANTITATIVE GROUP OF FUNDS, U.S. BOSTON INSTITUTIONAL SERVICES, INC., and QUANTITATIVE ADVISORS, INC. have each caused this instrument to be signed 'in triplicate 'in its behalf by its President thereunto duly authorized on this 11th day of July, 1995.
QUANTITATIVE GROUP OF FUNDS
By:
President
QUANTITATIVE ADVISORS, INC.
D/B/A QUANTITATIVE
INSTITUTIONAL SERVICES
By:
President
U.S. BOSTON INSTITUTIONAL SERVICES, INC.
By:
President
July 11, 1995
FEES:
Pursuant to the Transfer Agent and Service Agreement dated October 31, 1989, as amended (the "Agreement"), USBIS, and, upon assignment of the Agreement, QIS, shall be paid a fee, computed and paid monthly, at an annual rate of .13% of the aggregate average daily net asset value of each series of the Trust, such fee to be payable in arrears by the 15th of each month.
OUT-OF-POCKET EXPENSES:
Out-of-pocket expenses include, but are not limited to: legal fees, confirmation production, report preparation, postage, forms, telephone, microfilm or microfiche, and expenses incurred at the specific direction of the Fund, as agreed upon from time-to-time.
Quantitative Group of Funds
Attest
Edward L. Pittman, President
Attest: Quantitative Advisors, Inc.
Title: President
U.S. Boston Institutional Services, Inc.
Ronald Castignetti
President
|
October 1, 1994
Quantitative Growth and Income Fund
Quantitative International Equity Fund
Quantitative Numeric Fund
Disciplined Growth Fund
Foreign Frontier Fund
Quantitative Numeric II Fund
Quantitative Group of Funds
Attest:
Edward L. Pittman, President
U.S. Boston Institutional Services, Inc.
Attest:
Ronald L. Castignetti, President
October 1, 1994
FEES:
Pursuant to the Transfer Agent and Service Agreement dated October 31, 1989, as amended (the "Agreement"), USBIS shall be paid a fee of $9,583.333 per month ($115,000 annually), said fee to be payable in arrears by the 15th of each month. The fee will be allocated among the Series listed in Amended Exhibit A dated October --, 1994 as follows: 70% of the monthly fee will be allocated to the Ordinary Shares of the Series as a group, and 30% of the monthly fee will be allocated to the Institutional Shares of the Series as a group. Within each class of shares, Ordinary and Institutional, the fees shall be allocated on a proportionate basis among each Series and class based on the average daily net asset value represented by that Series and class for the month for which the fee is being paid.
USBIS will waive the fees attributable to an individual Series or class of shares of a Series under the following circumstances: (i) for the first six months after a Series commences its investment program; and (ii) to the extent required to reduce total payments of fees and expenses under this Agreement for any fiscal year to 0.10% of the class' average net assets. Out of pocket expenses, as set forth below, are not subject to the waiver described in subparagraph (i), and shall be allocated among the Series and classes of shares of a Series in the same fashion as fees stated above.
OUT-OF-POCKET EXPENSES:
Out-of-pocket expenses include, but are not limited to: confirmation production, postage, forms, telephone, microfilm or microfiche, and expenses incurred at the specific direction of the Fund, as agreed upon from time-to-time.
PRIOR AGREEMENTS:
Effective with the fees payable for the month of October 1994, this Amended Exhibit B supersedes and terminates all prior fee schedules set forth as exhibits to the Agreement.
Attest:
Quantitative Funds
Edward L. Pittman, President
U.S. Boston Institutional Services, Inc.
U.S. BOSTON INSTITUTIONAL SERVICES, INC.
SIX NEW ENGLAND EXECUTIVE PARK
BURLINGTON MASSACHUSETTS 01803
TEL: (617) 272-6420
FAX: (617) 272-Ml
GENERAL:
Transfer Agent and Service Agreement fees are based on a fixed monthly charge per series. Shares, except Class A Shares, of each Series shall have fees based on a fixed monthly charge of $1,750. Class A Shares of each Series shall have fees based on a fixed monthly charge of $250.
OUT-OF-POCKET:
Out-of-Pocket expenses include but are not limited to:
Confirmation production, Postage, Forms, Telephone, Microfilm or Microfiche, and Expenses at the specific direction of the Fund.
PAYMENT:
The above fees will be paid by approximately the 15th day in the calendar month.
EXHIBIT A
Series of Shares
Boston Growth and Income
Boston Foreign Growth and Income
EXHIBIT 23
Limited Agency Agreement for
Transfer Agency Services
WHEREAS, One or more open-end investment companies registered under the Investment Company Act of 1940, as amended (the "Act"), which are identified on the attached Exhibit A, as the same may be amended from time to time ("Funds") desire to use Fund Services, Inc. ("Limited Agent") to provide access to the Fund/SERV trade clearing system ("Fund/SERV") maintained by the National Securities Clearing Corporation ("NSCC");
WHEREAS, the Funds utilize an entity, identified on the attached Exhibit A, as the same may be amended from time to time ("Transfer Agent") to serve as transfer agent for Funds; and
WHEREAS, Limited Agent is a transfer agent registered under Section 17A(c)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and therefore qualified to serve as a sub-transfer agent to the Funds when delegated authority by the Transfer Agent; and
WHEREAS, Transfer Agent desires that Limited Agent serve as sub-transfer agent of the Funds, for the limited purposes set forth herein, with respect to transactions made through Fund/SERV;
NOW, THEREFORE, in consideration of the promises and the mutual covenants hereinafter contained, Funds, Transfer Agent, and Limited Agent hereby agree as follows:
1. Transfer Agent hereby appoints Limited Agent as a sub-transfer agent of the Funds, and Limited Agent hereby accepts such appointment on the terms set forth herein, for the limited purposes of (a) accepting and transmitting Orders from, broker-dealers using Fund/SERV for the purchase and redemption of Fund shares ("Orders"); and (b) communicating the acceptance of such Orders by the Funds to such broker-dealers ("Confirmations").
2. Funds represent and warrant that Transfer Agent has transfer agency authority for Funds and further that this authority can be delegated to Limited Agent.
3. Transfer Agent will establish a Fund/SERV account in each of the Funds. Limited Agent will place an aggregate Order, directly to each Fund, or its specified agent, in ,accordance with procedures mutually agreed upon from time to time by Transfer Agent and Limited Agent which procedures shall be attached hereto as Exhibit B and made a part hereof ("Procedures"). The Procedures shall be consistent with the terms of each Fund's prospectus and, the requirements of the Investment Company Act of 1940. Limited Agent shall be responsible for maintaining records relating to each broker-dealer placing Orders through Fund/SERV, and shall, upon request, provide Transfer Agent with information regarding the number of shares, and dollar value, purchased or sold by each broker-dealer, the date of the transaction and such other information as the Transfer Agent may reasonably request.
4. Orders will only be accepted and transmitted by Limited Agent hereunder on days that the New York Stock Exchange is open for business ("Business Day").
5. Limited Agent represents and warrants that all Orders accepted and transmitted by it hereunder will be based upon instructions that it receives through Fund/SERV. It is understood by the parties that Fund/SERV orders will be received after the close of trading (currently 4:00 p.m. ET) of the New York Stock Exchange on that Business Day ("Close of Trading") and will be based on orders received by the brokers utilizing Fund/SERV prior to the Close of Trading.
6. Funds will furnish Limited Agent by no later than price availability time specified in the Price Communication portion of the Procedures ("Price Communication Time") on each Business Day a confirmed net asset value per share for each Fund as of the Close of Trading of the previous Business Day.
7. Transfer Agent represents and warrants that, subject to compliance by Limited Agent with the representation and warranty set forth in Section 5 and (in the case of net purchases) receipt by the relevant Fund of payment in accordance with Section 9, Orders placed by the Trade Order Cutoff time established in the Procedures and in accordance with the Procedures on any Business Day will be accepted by each of the Funds at the net asset value price for such Fund as of the Close of Trading on that Business Day. However, redemptions of Ordinary Shares of certain Funds will be subject to a redemption fee, as described in the Funds' prospectus.
8. In the event that Orders are not entered by the Trade Order Cutoff time established in the Procedures, due to mechanical difficulties or other reasons beyond Limited Agent's reasonable control, As-Of trades will be accepted, subject to provisions in the Procedures. Transfer Agent represents and warrants that if an Order placed by Limited Agent on any Business Day is not received by the Trade Order Cutoff time due to mechanical difficulties or other reasons beyond Limited Agent's reasonable control, such Order shall nonetheless be accepted by the relevant Fund as if it had been received by such deadline, provided that Limited Agent resubmits the Order no later than 10:30 a.m. ET on the immediately following Business Day. Transfer Agent may require reasonable assurances that there was an attempt to place the Order by the Trade Order Cutoff time. Transfer Agent shall cause each Fund to immediately furnish Limited Agent confirmation with respect to any order which is resubmitted pursuant to the preceding sentence. Limited Agent shall make reasonable efforts to Inform Transfer Agent by 9:30 a.m. ET of any anticipated delay in placing orders by Trade Cutoff Time.
9. The Transfer Agent, based on information provided by the Limited Agent, and NSCC, and not the Limited Agent, will be responsible for arranging payments for net purchases and redemptions of shares in each Fund. Limited Agent's sole responsibility with respect to such shall be to forward information provided by NSCC to Transfer Agent with respect to net settlement amounts. Limited Agent will not receive funds from, or on behalf of, Transfer Agent and the Funds.
10. Transfer Agent shall cause each Fund to furnish Limited Agent a Confirmation with respect to each Order placed hereunder by no later than 12:00 PM ET on the Business Day immediately following placement of the Order ("Start of Trading"). Immediately upon receipt of each confirmation, Limited Agent shall verify its accuracy and shall notify Transfer Agent of any errors appearing thereon.
11. Funds shall promptly furnish Limited Agent notice of any dividends or distributions payable on the shares of each Fund. If such dividends and distributions are reinvested in additional shares of the Funds, Transfer Agent, shall notify Limited Agent as to the number of shares so issued.
12. Funds represent and warrant their shares are registered and authorized for issue in accordance with applicable Federal and State laws, but are not registered in all states. Attached as Exhibit D is a list of states in which the Funds' shares are registered and authorized for issue and trading,
13. Funds represent and warrant that broker-dealers may execute purchase and redemption transactions on each and every Business Day without regard for the number or market value of transactions executed in any prior time periods.
14. Limited Agent acknowledges that the records prepared by it of transactions in shares of the Funds are the sole property, and proprietary information, of the Funds. Except as may be necessary to discharge its obligations under this Agreement, or as otherwise authorized by this Agreement, Limited Agent will not communicate the information in those records to any third party without the express written permission of the Funds. Upon the request of Transfer Agent or any Fund, Limited Agent shall furnish or cause to be furnished copies of all records in Limited Agent's possession as may reasonably be requested to enable the Transfer Agent, the Fund or the Fund's representatives including, without limitation, its auditors, investment advisor, or distributor to comply with any request of a governmental body, self-regulatory organization, auditor, or shareholder.
15. In consideration for the services provided by Limited Agent, Funds shall pay Limited Agent the fees set forth in Exhibit C to this Agreement, Monthly fees shall not be payable until Funds utilize Limited Agent for Fund/SERV transactions, and shall not increase, except as set forth in Exhibit C, for a period of at least 12 months after the initial transaction.
16. Limited Agent shall not be responsible for any expenses of Transfer Agent or the Funds incident to this Agreement including, without limitation, expenses in connection with the registration of Fund shares, preparation of Fund prospectuses, proxy materials and reports, the distribution of such items to the beneficial holders of the Fund/SERV accounts, and the preparation of all statements and notices required by any Federal or State law,
No party shall charge the other any fee for bank wires executed pursuant to this agreement.
17. Each party shall be excused from performing any of its respective duties and obligations hereunder in the event that, and so long as, performance of such duties and obligations is prevented, delayed or hindered by Acts of God, fires earthquakes, extreme weather conditions, strikes, impossibility of obtaining materials or other events beyond the reasonable control of the party in question.
18. Limited Agent agrees to indemnify Transfer Agent, the Funds and each of their trustees, directors, officers, employees and agents and hold each of them harmless against any and all direct losses, damages, claims or liabilities resulting from or relating to the Limited Agent's performance of the duties and obligations, or breach of any representation or warranty, of Limited Agent hereunder.
Transfer Agent agrees to indemnify Limited Agent, and each of its directors, officers, employees, and agents and hold each of them harmless against any and all direct losses, damages, claims or liabilities resulting from or relating to the performance of the duties and obligations, or breach of any representation or warranty, of Transfer Agent hereunder.
Without limiting the foregoing to the extent the Transfer Agent is entitled to indemnification under its Transfer Agent Agreement with any of the Funds in connection with any loss, damage, claim, or liability arising from or relating to the investment of any broker-dealer in such Fund, Limited Agent and each of its directors, officers and employees and agents shall be afforded the same right of indemnification.
19. In order for the indemnification provisions contained in Section 18 of this agreement to apply, upon the assertion of a claim for which either party may be required to indemnify the other, the party seeking indemnification shall promptly notify the other party of such assertion, and shall keep the other party advised with respect to all developments concerning such claim. The party who may be required to indemnify shall have the option to participate, with the party seeking indemnification in the defense of such claim or to defend against said claim in its own name or in the name of the other party. The party seeking indemnification shall in no case confess any claim or make any compromise in any case which the other party may be required to indemnify it except with the other party's prior written consent.
20. Limited Agent agrees to notify Transfer Agent immediately in the event of
(a) the suspension or termination of its registration as a transfer agent,
or (b) Limited Agent's violation of any applicable federal or state law,
rule or regulation arising out of its service as Limited Agent in
connection with this Agreement, and (c) any other action by federal or
state regulators that may otherwise affect in any material way Limited
Agent's ability to act as Limited Agent in accordance with the terms of
this Agreement. The termination of Limited Agent's registration as a
transfer agent will automatically terminate this Agreement immediately
without notice.
21. Except as to matters governed by the prospectus of any Fund, this Agreement shall be construed in accordance with the laws of the Commonwealth of Massachusetts.
22. Every notice required by this Agreement shall be sufficiently given when sent in accordance with the Procedures.
23. This agreement shall not be amended except by written instrument signed by all parties, provided that changes to Exhibit A may be effected by Transfer Agent with written notice to Limited Agent. No party shall assign any of its rights, powers or duties under this Agreement without the other party's written consent.
This Agreement shall become affective as of the date hereof It shall continue in effect for an initial term of one (1) year and thereafter from year to year after its initial term until terminated in accordance with the provisions hereof This Agreement may be terminated at any time by either party upon ninety (90) days written notice to the other party.
This agreement shall automatically be terminated upon revocation of transfer agency authority granted by Funds to Transfer Agent.
WITNESS the following signatures as of 4 June, 1997.
LIMITED AGENT:
Fund Services, Inc.
By:
Title: President
By:
Title: Vice
President
By:
Title: President
Exhibit A to
Limited Agency Agreement for
Transfer Agency Services
Amendment Number: 1 Effective Date- -5/18/98
Transfer Agent: Quantitative Institutional Services
Funds: Quantitative Group of Funds, consisting of
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Fund Name: CUSIP Symbol Ordinary Share Quantitative Small Cap Fund 74762R608 USBNX Quantitative Mid Cap Fund 74762R806 QNIIX Quantitative Growth and Income Fund 74762R202 USBOX Quantitative International Equity Fund 74762R400 USBFX Quantitative Emerging Markets Fund 74762R855 QFFOX Quantitative Foreign Value Fund 74762R830 Institutional Shares Quantitative Small Cap Fund 74762R509 QBNAX Quantitative Mid Cap Fund 74762R707 QNIAX Quantitative Growth and Income Fund 74762RI03 QGIAX Quantitative International Equity Fund 74762R301 QIEAX Quantitative Emerging Markets Fund 74762R863 QEMAX Quantitative Foreign Value Fund 74762R848 |
Exhibit B to Limited Agency Agreement for Transfer Agency Services
Operational Procedures
Price Communication
Price Communication Time: 9:00 a.m. ET of the subsequent Business Day
Price Information is Communicated by FAX to 804-285-8018.
Prior to Price Communication Time of each Business Day, the Fund will communicate to the Limited Agent that day's Net Asset Value and Offering Price (if different) and any appropriate accrual/dividend factors for all Funds on Exhibit A of this agreement.
If for any reason, the Transfer Agent processes purchases, redemptions, or income reinvestments with any different information than what was Communicated to the Limited Agent, the Fund is responsible for contacting the Limited Agent with a phone call and a follow-up fax containing the revised information by 12:00 p.m. ET of the Business Day next following the Business Day of the original communication. If the Transfer Agent does not identify a change in information until after 12:00 p.m. ET, the Transfer Agent will notify the Limited Agent immediately after identification of the change.
Trade Orders
Trade Order Cutoff. 9:30 a.m. ET of the following Business Day
Trade Orders are Communicated by FAX to 617-259-1166.
Each Business Day, after completion of receipt of Fund/SERV activity, the Limited Agent will transmit Trade Orders (purchases and redemptions) for each Fund to the Transfer Agent to be processed at that Business Day's Net Asset Value or Offering Price as appropriate for next-day settlement (trade date + 1 settlement). Trade Orders may be communicated in dollars or shares.
The Limited Agent will communicate all Trade Orders to the Transfer Agent by the Trade Order Cutoff above on each Business Day ("Trade Date"). On days where there are no Trade Orders, the communication will contain zeros in each field.
If the Transfer Agent does not receive the required communications prior to the Trade Order Cutoff on any Business Day and As-Of trading is authorized by the Agreement
above, the Transfer Agent will contact the Limited Agent by 12:00 p.m. ET of the following Business Day. The Limited Agent will then re-communicate the appropriate Trade Orders to the Transfer Agent for execution as of the Trade Date.
Trade Settlement
Settlement shall be made in accordance with the then-prevailing rules of the Fund/SERV system, which are incorporated herein by reference.
Notice
Any notice required under the Agreement shall be sent to the parties at the following addresses and fax numbers:
Quantitative Group of Funds
55 Old Bedford Road Lincoln, MA 01773 fax: (617) 259-1166
Quantitative Institutional Services 55 Old Bedford Road Lincoln, MA 0 1773 fax:
(617) 259-1166
Fund Services, Inc.
1500 Forest Ave., Suite 111
Richmond, VA 23229
Fax- (804) 285-8018
Exhibit C to
Limited Agency Agreement for
Transfer Agency Services
Amendment Number: Effective Date:
Fees: Access Server Upgrades and File Set-Up: Out of pocket costs, not
to exceed $3,500 Processing Fund/SERV trades: $500 per month for
the first six months of the Agreement, then $750 per month for the
next six months, plus National Securities Clearing Corporation
fees, communications fees and out-of-pocket expenses.
Payment Date: The monthly fee will be paid monthly in arrears by the 15 th of
the month, Out-of-pocket expenses within two weeks of submission,
subject to verification by the Transfer Agent
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Exhibit D to Limited Agency Agreement for Transfer Agency Services
Listed below are the states in which the Ordinary Shares of our five funds are registered and available for sale. The footnotes indicate that a fund is not registered in a given state.
Alabama 3,4,5,6
Arizona
California
Colorado
Connecticut
Delaware 3,4,5,6
District of Columbia
Florida
Georgia
Hawaii
Idaho 2,3,4,5,6
Illinois
Indiana
Iowa l,2,4,5,6
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Missouri
New Jersey
New Mexico 2,4,5,6
New York
North Carolina
Ohio
Oregon
Pennsylvania
Rhode Island
South Carolina 5
Tennessee
Texas
Utah
Virginia
Vermont 2
Washington
Wisconsin 3,4,5,6
1 Quantitative Small Cap Fund
2 Quantitative Mid Cap Fund
3 Quantitative Growth and Income Fund
4 Quantitative International Equity Fund
5 Quantitative Emerging Markets Fund
6 Quantitative Foreign Value Fund
Listed below are the states in which the Institutional Class of Shares of our five funds are registered and available for sale.
Alabama 3,4,5,6
Arizona 2,3,4,5,6
California
Colorado
Connecticut
Delaware 3,4,5,6
District of Columbia
Florida
Georgia
Hawaii
Idaho 2,3,4,5,6
Illinois
Indiana
Iowa l,2,4,5,6
Kansas l,3,4,5,6
Kentucky
Louisiana
Maine
Maryland 3,4,5,6
Massachusetts
Michigan 4,5,6
Minnesota
Missouri
Nevada l,3,4,5,6
New Jersey
New Mexico 2,4,5,6
New York
North Carolina
Ohio
Oregon
Pennsylvania
Rhode Island
South Carolina 3,5
Tennessee 4,5,6
Texas 4,5,6
Utah
Virginia
Washington 4,5,6
West Virginia 2,3,4,6
Wisconsin 2,3,4,5,6
1 Quantitative Small Cap Fund
2 Quantitative Mid Cap Fund
3 Quantitative Growth and Income Fund
4 Quantitative International Equity Fund
5 Quantitative Emerging Markets Fund
6 Quantitative Foreign Value Fund
Exhibit E to Limited Agency Agreement for Transfer Agency Services
Shares of any Fund may be exchanged for shares of the same class of any other Fund. Exchanges are not permitted between shares of different classes in either the same or different funds. Accordingly, transfers are permitted within each of the two following groups but not between the groups.
Fund Name: CUSIP Symbol Ordinary Shares --------------- Quantitative Small Cap Fund 74762R608 USBNX Quantitative Mid Cap Fund 74762R806 QNIIX Quantitative Growth and Income Fund 74762R202 USBOX Quantitative International Equity Fund 74762R400 USBFX Quantitative Emerging Markets Fund 74762R855 QFFOX Quantitative Foreign Value Fund 74762R830 Institutional Shares -------------------- Quantitative Small Cap Fund 74762R509 QBNAX Quantitative Mid Cap Fund 74762R707 QNIAX Quantitative Growth and Income Fund 74762RI03 QGIAX Quantitative International Equity Fund 74762R301 QIEAX Quantitative Emerging Markets Fund 74762R863 QEMAX Quantitative Foreign Value Fund 74762R848 |
Exhibit A to
Limited Agency Agreement for
Transfer Agency Services
Amendment Number: Effective Date:
Transfer Agent: Quantitative Institutional Services
Funds: Quantitative Group of Funds, consisting of
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Fund Name: CUSIP Symbol Ordinary Shares --------------- Quantitative Numeric Fund 74762R608 USBNX Quantitative Numeric 11 Fund 74762R806 QNIIX Quantitative Growth and Income Fund 74762R202 USBOX Quantitative International Equity Fund 74762R400 USBFX Quantitative Foreign Frontier Fund 74762R855 QFFOX Institutional Shares -------------------- Quantitative Numeric Fund 74762R509 QBNAX Quantitative Numeric 11 Fund 74762R707 Quantitative Growth and Income Fund 74762RI03 QGIAX Quantitative International Equity Fund 74762R301 QIEAX Quantitative Foreign Frontier Fund 74762R863 |
Exhibit D to Limited Agency Agreement for Transfer Agency Services
Listed below are the states in which the Ordinary Shares of our five funds are registered and available for sale. The footnotes indicate that a fund is not registered in a given state.
Alabama 3,4,5
Arizona
California
Colorado
Connecticut
Delaware 3,4,5
District of Columbia
Florida
Georgia
Hawaii
Idaho 2,3,4,5
Illinois
Indiana
Iowa l,2,4,5
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Minnesota
Missouri
New Jersey
New Mexico 2,4,5
New York
North Carolina
Ohio
Oregon
Pennsylvania
Rhode Island
South Carolina 3,5
Tennessee
Texas
Utah
Virginia
Vermont 2
Washington
Wisconsin 3,4,5
1 Quantitative Numeric Fund
2 Quantitative Numeric II Fund
3 Quantitative Growth and Income Fund
4 Quantitative International Equity Fund
5 Quantitative Foreign Frontier Fund
Listed below are the states in which the Institutional Class of Shares of our five funds are registered and available for sale.
Alabama 3,4,5
Arizona 2,3,4,5
California
Colorado
Connecticut
Delaware 3,4,5
District of Columbia
Florida
Georgia
Hawaii
Idaho 2,3 ,4,5
Illinois
Indiana
Iowa 1,2,4,5
Kansas 1, 3,4,5
Kentucky
Louisiana
Maryland 4,5
Massachusetts
Michigan 4,5
Minnesota
Missouri
Nevada l,3,4,5
New Hampshire 3,5
New Jersey
New Mexico 2,4,5
New York
North Carolina
Ohio
Oregon
Pennsylvania
Rhode Island
South Carolina 3,5
Tennessee 3,4,5
Texas 4,5
Utah
Vermont 2,3,5
Virginia
Washington 4,5
Wisconsin 2,3,4,5
1 Quantitative Numeric Fund
2 Quantitative Numeric 11 Fund
3 Quantitative Growth and Income Fund
4 Quantitative International Equity Fund
5 Quantitative Foreign Frontier Fund
Exhibit E to Limited Agency Agreement for Transfer Agency Services
Shares of any Fund may be exchanged for shares of the same class of any other Fund. Exchanges are not permitted between shares of different classes in either the same or different funds. Accordingly, transfers are permitted within each of the two following groups but not between the groups.
Fund Name: CUSIP Symbol Ordinary Shares --------------- Quantitative Numeric Fund 74762R608 USBNX Quantitative Numeric II Fund 74762R806 QNIIX Quantitative Growth and Income Fund 74762R202 USBOX Quantitative International Equity Fund 74762R400 USBFX Quantitative Foreign Frontier Fund 74762RS55 QFFOX Institutional Shares -------------------- Quantitative Numeric Fund 74762R509 QBNAX Quantitative Numeric II Fund 74762R707 Quantitative Growth and Income Fund 74762RI03 QGIAX Quantitative International Equity Fund 74762R301 QIEAX Quantitative Foreign Frontier Fund 74762R863 |
EXHIBIT 24
[Dechert Price & Rhoads letterhead]
July 28, 1999
Quantitative Group of Funds
55 Old Bedford Road
Lincoln, MA 01773
Gentlemen:
Quantitative Group of Funds (the "Trust") is a trust created under a written Agreement and Declaration of Trust dated June 27, 1983, and executed and delivered in Burlington, Massachusetts. The Declaration of Trust was amended by an Amended and Restated Agreement and Declaration of Trust dated April 2, 1990, which was most recently amended on July 18, 1993 (as amended, the "Declaration of Trust"). The beneficial interest thereunder is represented by transferable shares with no par value per share ("Shares"). The Trustees have the powers set forth in the Declaration of Trust, subject to the terms, provisions and conditions therein provided.
We are of the opinion that the legal requirements have been complied with in the creation of the Trust and that said Declaration of Trust is legal and valid.
Under Article III, Section 3 of the Declaration of Trust, the Trustees are empowered, in their discretion, from time to time, to issue Shares for such amount and type of consideration, at such time or times and on such terms as the Trustees may deem best. Under Article III, Section 1, it is provided that the number of Shares authorized to be issued under the Declaration of Trust is unlimited. Under Article III, Section 1, the Trustees may authorize the division of Shares into two or more series or classes.
By resolution of the Board of Trustees on April 17, 1985, the Trustees divided the Shares into four series, designated the Boston I Series, the Boston II Series, the Boston Index Plus Series and the Boston International Series of the Trust. By resolution of the Board of Trustees
on July 29, 1987, the Trustees redesignated the Boston I Series, the Boston II Series, the Boston Index Plus Series and the Boston International Series as the Boston Growth and Income Series, the Boston Performance Series, the Boston Foreign Growth and Income Series and the Boston Foreign Performance Series. By written consent of the Board of Trustees dated May 28, 1992, the Trustees redesignated the Boston Performance Series as the Boston Numeric Series. By resolution of the Board of Trustees on November 30, 1988, the Trustees abolished and dissolved the Boston Foreign Performance Series of the Trust. By resolution of the Board of Trustees dated May 17, 1994, the Trustees established and designated the Boston Numeric II Series, the Foreign Frontier Series and the Disciplined Growth Series of the Trust. By resolution of the Board of Trustees on July 13, 1994, the Trustees redesignated the Boston Growth and Income Series, the Boston Foreign Growth and Income Series, the Boston Numeric Series, the Boston Numeric II Series, the Disciplined Growth Series and the Foreign Frontier Series, respectively, as the Quantitative Growth and Income Fund, the Quantitative International Equity Fund, the Quantitative Numeric Fund, the Quantitative Numeric II Fund, the Quantitative Disciplined Growth Fund and the Quantitative Foreign Frontier Fund. By resolution of the Board of Trustees on April 7, 1998, the Trustees abolished and dissolved the Quantitative Disciplined Growth Fund of the Trust. By resolution of the Board of Trustees dated February 13, 1998, the Trustees established and designated the Quantitative Foreign Value Fund of the Trust. By resolution of the Board of Trustees on April 7, 1998, the Trustees redesignated the Quantitative Numeric Fund, the Quantitative Numeric II Fund and the Quantitative Foreign Frontier Fund, respectively, as the Quantitative Small Cap Fund, the Quantitative Mid Cap Fund and the Quantitative Emerging Markets Fund.
By resolution of the Board of Trustees on June 27, 1983, the Trustees of the Trust authorized the officers of the Trust, from time to time, to determine the appropriate number of Shares to be registered, and to register with the Securities and Exchange Commission, and to issue and sell to the public, such Shares.
We understand that you are about to file with the Securities and Exchange Commission, on Form N-1A, Post Effective Amendment No. 20 to the Trust's Registration Statement (the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), in connection with the continuous offering of the Shares. We understand that our opinion is required to be filed as an exhibit to the Registration Statement.
Based upon the foregoing and subject to compliance with the Securities Act, the Investment Company Act of 1940, as amended, and applicable state laws regulating the sale of securities, it is our opinion that the Shares have been duly authorized and, when issued and sold at the public offering price contemplated by the Registration Statement and delivered by the Trust against receipt of the net asset value of the Shares, will be issued as fully paid and nonassessable shares of the Trust.
We consent to your filing this opinion with the Securities and Exchange Commission as an exhibit to Post-Effective Amendment No. 20 to the Registration Statement.
Very truly yours,
DECHERT PRICE & RHOADS
EXHIBIT 25
This Plan (the "Plan") constitutes the Distribution Plan of U.S. BOSTON INVESTMENT COMPANY, a Massachusetts business trust (the "Trust").
A. That such agreement may be terminated at any time, without payment of any penalty, by vote of a majority of the Qualified Trustees or by vote of a majority of the Trust's outstanding voting securities, on not more than 60 days' written notice to any other party to the agreement; and That such agreement shall terminate automatically in the event of its assignment.
(b) As used in this Plan, the terms "assignment" and "interested person" shall have the respective meanings specified in the Act and the rules and regulations thereunder, subject to such exemptions as may be granted by the
Securities and Exchange Commission.
EXHIBIT 26
QUANTITATIVE GROUP OF FUNDS
SERVICE AGREEMENT
For Ordinary and Institutional Shares of the Quantitative Group of Funds
Ladies and Gentlemen:
U.S. Boston Capital Corporation is the exclusive underwriter and distributor (the "Distributor") of the Quantitative Group of Funds (each series a "Fund" and collectively the "Funds") an open-end management investment company registered under the Investment Company Act of 1940, as amended (the "Investment Company Act"), currently comprised of the Funds listed in Exhibit A to this Agreement. Each Fund offers both Institutional and Ordinary Shares, therefore, the current prospectus of each Fund should be read carefully.
Pursuant to a certain Ordinary and Institutional Share Selling Agreement between you and the Distributor dated ________________________, we have agreed to sell to you, to cover orders received from you as principal, Ordinary Shares of each of the Funds in those states in which shares of the Funds are currently qualified for sale, and in compliance with the Investment Company Act of 1940 and the Securities Act of 1933, as amended, and in accordance with the terms and conditions of this Agreement.
I. SERVICE FEES
Pursuant to the terms of this Service Agreement, and pursuant to the Fund's Distribution Plan which is permitted by Rule 12b-1 under the Investment Company Act (the "Distribution Plan"), we are authorized to pay to you service fees in connection with the accounts of your customers that hold Ordinary Shares of a Fund. Payment of such service fees is subject to your initial and continuing satisfaction of the following terms and conditions, which may be revised by us from time to time in our sole discretion:
A. Qualification Requirements
1. The aggregate asset value of the accounts in the Funds for which you are the dealer of record equals $25,000 or more.
2. You are the dealer of record for the accounts in the Funds on the last day of the period for which a service fee is to be paid.
3. One or more of your current employees must be designated as registered representative(s) on accounts in the Fund during the period for which a service fee is to be paid.
4. You will provide the following information and agree that we will be entitled to rely on the accuracy of such information in updating our records for determining the levels of service fees payable to you under the terms of this Agreement. You understand, however, that such payments will be based solely on the Funds' records.
a. For each Fund account registered in the name of one of your customers, you will provide the registered representative's identification number and branch number and you will provide updated information at least quarterly.
b. For each Fund account registered in your name (street name), you will provide the percentage allocation among the registered representative numbers and branch numbers and you will provide updated percentage allocations at least quarterly.
c. For each sub-account registered in your name (street name), you will provide the registered representative numbers and branch numbers and you will provide updated information at least quarterly.
B. Service Fees
1. If you meet the qualification requirements set forth above in
Section I. A., you will be paid a service fee on assets in the Funds for which
you are the dealer of record and which are serviced by a registered
representative of your firm meeting the registered representative requirements,
if any, as follows: on the last business day of the period you are the dealer
of record, a quarterly service fee in the amount set forth in Exhibit A, as
calculated by the Distributor, it being understood that no service fee will be
paid unless you are the dealer of record with respect to customer accounts
having an aggregate asset value of $25,000 or more in the Funds. Service fee
payments will be mailed to you within thirty (30) days of quarter end.
2. You understand and agree that:
a. all service fee payments to be made pursuant to this Agreement are contingent upon and are subject to the limitations contained in the Funds' Distribution Plan, which may be amended or discontinued at any time;
b. your failure to provide the services described in Section I. D. below as may be amended from time to time, or otherwise comply with the terms of this Agreement, will render you and your registered representatives ineligible to receive service fees; and
c. failure of an assigned registered representative to provide services required by this Agreement will render that representative's accounts ineligible as accounts on which service fees are paid.
d. the obligation of the Distributor to pay service fees under this agreement is conditioned upon the receipt by it of 12b-1 fees pursuant to the Funds' Distribution Agreement between the Fund and the Distributor.
C. Payments and Communications to Registered Representatives
You will pay to your registered representatives a significant share of the service fees paid to you pursuant to this Agreement, and, upon request by the Distributor, you will fully account for all such payments.
D. Required Services
1. You will assign one of your registered representatives to each Fund account on your records and reassign such account in the event that a representative to whom a particular Fund account has been assigned ceases to be employed by your firm as a registered representative.
2. You and your registered representative will assist us and our affiliates in providing the following services to shareholders of the Funds:
a. Maintain regular contact with shareholders in assigned-accounts and assist in answering inquiries concerning the Funds (customer name accounts).
b. Assist in distributing sales and service literature provided by us, particularly to the beneficial owners of accounts registered in your name (street name accounts).
c. Provide any other information or services as the customer or we may reasonably request.
3. You will support our marketing efforts by granting reasonable requests for visits to your offices by our representatives and by including any Fund(s) on your "approved" list.
4. Your compliance with the service requirements set forth in this Agreement will be evaluated by us from time to time by surveying shareholder satisfaction with service, by monitoring redemption levels of shareholder accounts assigned to you and by such other methods as we deem appropriate.
5. The provisions of this Section l. D. may be amended by us from time to time upon notice to you.
II. GENERAL
A. Amendment
We reserve the right to amend this Agreement including any Schedule hereto, and to implement any modification of this Agreement, by written notice delivered by us to you.
B. Effective Period and Termination
The provisions of this Agreement shall remain in effect for a period of not more than one year from the date of its execution or adoption and thereafter for successive annual periods only so long as such continuance is specifically approved at least annually by the Trustees of Funds in conformity with the requirements of Rule 12b-1 under the Investment Company Act. This Agreement shall automatically terminate in the event of its assignment (as defined in the Investment Company Act). In addition, this Agreement may be terminated at any time, without the payment of any penalty, by either party upon written notice delivered or mailed by registered mail, postage prepaid, to the other party, or, as provided in Rule 12b-1 under the Investment Company Act, the Trustees of the Funds, or by the vote of the holders of the outstanding voting securities of the Funds. We reserve the right to terminate this Agreement in the event of violation by you of any of its provisions or for any cause which, in our opinion, justifies such action. This Agreement shall terminate automatically in the event of your ceasing to be a member in good standing of the National Association of Securities Dealers, Inc. as you represent yourself to be.
C. Written Reports
The Trustees shall be provided with and shall review at least quarterly, a written report of the amounts paid to you under this Agreement and the purposes for which such expenditures were made.
You agree that this Agreement is made under and will be governed by the laws of the Commonwealth of Massachusetts.
Very truly yours,
U.S. BOSTON CAPITAL CORPORATION
By:______________________________ Title:___________________________
The undersigned hereby accepts this Agreement and agrees to abide by all of its terms and conditions.
Date:______________________19_____ By:_____________________________
Authorized Signature
__________________________________
Firm _____________________________
Please print name and title.
__________________________________
__________________________________ Phone:__________________________
Address
|
EXHIBIT A
to Service Agreement
Quantitative Group of Funds
Ordinary Shares
---------------
Ticker Annual
Fund Name CUSIP Symbol Fee
--------- --------- ------ ------
Quantitative Small Cap Fund 74762R608 USBNX 0.25%
Quantitative Mid Cap Fund 74762R806 QNIIX 0.25%
Quantitative Growth and Income Fund 74762R202 USBOX 0.25%
Quantitative International Equity Fund 74762R400 USBFX 0.25%
Quantitative Emerging Markets Fund 74762R855 QFFOX 0.25%
Quantitative Foreign Value Fund 74762R830 none 0.25%
Institutional Shares
--------------------
Ticker Annual
Fund Name CUSIP Symbol Fee
--------- --------- ------ ------
Quantitative Small Cap Fund 74762R509 QBNAX 0.00%
Quantitative Mid Cap Fund 74762R707 QNIAX 0.00%
Quantitative Growth and Income Fund 74762R103 QGIAX 0.00%
Quantitative International Equity Fund 74762R301 QIEAX 0.00%
Quantitative Emerging Markets Fund 74762R863 QEMAX 0.00%
Quantitative Foreign Value Fund 74762R848 none 0.00%
|
EXHIBIT 28
QUANTITATIVE GROUP OF FUNDS
SERVICE AGREEMENT
For Ordinary Shares of the Quantitative Group of Funds
(for No Transaction Fee Programs)
Ladies and Gentlemen:
U.S. Boston Capital Corporation is the exclusive underwriter and distributor (the "Distributor") of the Quantitative Group of Funds (each series listed on the attached Exhibit A a "Fund" and collectively the "Funds") an open- end management investment company registered under the Investment Company Act of 1940, as amended (the "Investment Company Act). Each Fund offers both Institutional and Ordinary Shares, therefore, the current prospectus of each Fund should be read carefully.
I. SERVICE FEES
Pursuant to the terms of this Service Agreement, and pursuant to the Fund's Distribution Plan which is permitted by Rule 12b-1 under the Investment Company Act (the "Distribution Plan"), we are authorized to pay to you service fees in connection with the accounts of your customers that hold Ordinary Shares of a Fund. Payment of such service fees is subject to your initial and continuing satisfaction of the following terms and conditions, which may be revised by us from time to time in our sole discretion:
A. Qualification Requirements
1. The aggregate asset value of the accounts in the Funds for which you are the dealer of record equals $25,000 or more.
2. You are the dealer of record for the accounts in the Funds on the last day of the period for which a service fee is to be paid.
3. One or more of your current employees must be designated as registered representative(s) on accounts in the Fund during the period for which a service fee is to be paid.
4. You will provide the following information and agree that we will be entitled to rely on the accuracy of such information in updating our records for determining the levels of service fees payable to you under the terms of this Agreement. You understand, however, that such payments will be based solely on the Funds' records.
a. For each Fund account registered in the name of one of your customers, you will provide the registered representative's identification number and branch number and you will provide updated information at least quarterly.
b. For each Fund account registered in your name (street name), you will provide the percentage allocation among the registered representative numbers and branch numbers and you will provide updated percentage allocations at least quarterly.
c. For each sub-account registered in your name (street name), you will provide the registered representative numbers and branch numbers and you will provide updated information at least quarterly.
B. Service Fees
1. If you meet the qualification requirements set forth above in Section I. A., you will be paid a service fee on assets in the Funds for which you are the dealer of record and which are serviced by a registered representative of your firm meeting the registered representative requirements, if any, as follows: on the last business day of the period you are the dealer of record, a quarterly service fee equal to .0625% of average assets (.25% annualized), as calculated by the Distributor, it being understood that no service fee will be paid unless you are the dealer of record with respect to customer accounts having an aggregate asset value of $25,000 or more in the Funds. Service fee payments will be mailed to you within thirty (30) days of quarter end.
2. You understand and agree that:
a. all service fee payments to be made pursuant to this Agreement are contingent upon and are subject to the limitations contained in the Funds' Distribution Plan, which may be amended or discontinued at any time;
b. your failure to provide the services described in Section I. D. below as may be amended from time to time, or otherwise comply with the terms of this Agreement, will render you and your registered representatives ineligible to receive service fees; and
c. failure of an assigned registered representative to provide services required by this Agreement will render that representative's accounts ineligible as accounts on which service fees are paid.
d. the obligation of the Distributor to pay service fees under this agreement is conditioned upon the receipt by it of 12b-1 fees pursuant to the Funds' Distribution Agreement between the Fund and the Distributor.
C. Payments and Communications to Registered Representatives
You will pay to your registered representatives a significant share of the service fees paid to you pursuant to this Agreement, and, upon request by the Distributor, you will fully account for all such payments.
D. Required Services
1. You will assign one of your registered representatives to each Fund account on your records and reassign such account in the event that a representative to whom a particular Fund account has been assigned ceases to be employed by your firm as a registered representative.
2. You and your registered representative will assist us and our affiliates in providing the following services to shareholders of the Funds:
a. Maintain regular contact with shareholders in assigned-accounts and assist in answering inquiries concerning the Funds (customer name accounts).
b. Assist in distributing sales and service literature provided by us, particularly to the beneficial owners of accounts registered in your name (street name accounts).
c. Provide any other information or services as the customer or we may reasonably request.
3. You will support our marketing efforts by granting reasonable requests for visits to your offices by our representatives and by including any Fund(s) on your "approved" list.
4. Your compliance with the service requirements set forth in this Agreement will be evaluated by us from time to time by surveying shareholder satisfaction with service, by monitoring redemption levels of shareholder accounts assigned to you and by such other methods as we deem appropriate.
5. The provisions of this Section l. D. may be amended by us from time to time upon notice to you.
II. GENERAL
A. Amendment
We reserve the right to amend this Agreement including any Schedule hereto, and to implement any modification of this Agreement, by written notice delivered by us to you.
B. Effective Period and Termination
The provisions of this Agreement shall remain in effect for a period of not more than one year from the date of its execution or adoption and thereafter for successive annual periods only so long as such continuance is specifically approved at least annually by the Trustees of Funds in conformity with the requirements of Rule 12b-1 under the Investment Company Act. This Agreement shall automatically terminate in the event of its assignment (as defined in the Investment Company Act). In addition, this Agreement may be terminated at any time, without the payment of any penalty, by either party upon written notice delivered or mailed by registered mail, postage prepaid, to the other party, or, as provided in Rule 12b-1 under the Investment Company Act, the Trustees of the Funds, or by the vote of the holders of the outstanding voting securities of the Funds. We reserve the right to terminate this Agreement in the event of violation by you of any of its provisions or for any cause which, in our opinion, justifies such action. This Agreement shall terminate automatically in the event of your ceasing to be a member in good standing of the National Association of Securities Dealers, Inc. as you represent yourself to be.
C. Written Reports
The Trustees shall be provided with and shall review at least quarterly, a written report of the amounts paid to you under this Agreement and the purposes for which such expenditures were made.
You agree that this Agreement is made under and will be governed by the laws of the Commonwealth of Massachusetts.
Very truly yours,
U.S. BOSTON CAPITAL CORPORATION
By:______________________________ Title:___________________________
The undersigned hereby accepts this Agreement and agrees to abide by all of its terms and conditions.
Date:______________________19_____ By:_____________________________
Authorized Signature
----------------------------------
---------------------------------- -----------------------------
Firm Please print name and title.
----------------------------------
Phone:
---------------------------------- -----------------------
Address
|
EXHIBIT A
SERVICE AGREEMENT
Quantitative Group of Funds
Ticker
Fund Name CUSIP Symbol
----------------------------------------- --------- ------
Quantitative Small Cap Fund 74762R608 USBNX
Quantitative Mid Cap Fund 74762R806 QNIIX
Quantitative Growth and Income Fund 74762R202 USBOX
Quantitative International Equity Fund 74762R400 USBFX
Quantitative Foreign Value Fund 74762R830 none
Quantitative Emerging Markets Fund 74762R855 QFFOX
|
EXHIBIT 29
QUANTITATIVE GROUP OF FUNDS
SERVICE AGREEMENT
For Ordinary Shares of the Quantitative Group of Funds
(fully disclosed accounts)
Ladies and Gentlemen:
U.S. Boston Capital Corporation is the exclusive underwriter and distributor (the "Distributor") of the Quantitative Group of Funds (each series a "Fund" and collectively the "Funds") an open-end management investment company registered under the Investment Company Act of 1940, as amended (the "Investment Company Act), currently comprised of the Funds listed in Exhibit A to this Agreement. Each Fund offers both Institutional and Ordinary Shares, therefore, the current prospectus of each Fund should be read carefully.
Pursuant to a certain Ordinary Share Selling Agreement between you and the Distributor dated ________________________, we have agreed to sell to you, to cover orders received from you as agent, Ordinary Shares of each of the Funds in those states in which shares of the Funds are currently qualified for sale, and in compliance with the Investment Company Act of 1940 and the Securities Act of 1933, as amended, and in accordance with the terms and conditions of this Agreement.
I. SERVICE FEES
Pursuant to the terms of this Service Agreement, and pursuant to the Fund's Distribution Plan which is permitted by Rule 12b-1 under the Investment Company Act (the "Distribution Plan"), we are authorized to pay to you service fees in connection with the accounts of your customers that hold Ordinary Shares of a Fund. Payment of such service fees is subject to your initial and continuing satisfaction of the following terms and conditions, which may be revised by us from time to time in our sole discretion:
A. Qualification Requirements
1. The aggregate asset value of the accounts in the Funds for which you are the dealer of record equals $25,000 or more.
2. You are the broker of record for the accounts in the Funds on the last day of the period for which a service fee is to be paid.
3. One or more of your current employees must be designated as registered representative(s) on accounts in the Fund during the period for which a service fee is to be paid.
4. You will provide the following information and agree that we will be entitled to rely on the accuracy of such information in updating our records for determining the levels of service fees payable to you under the terms of this Agreement. You understand, however, that such payments will be based solely on the Funds' records.
a. For each Fund account registered in the name of one of your customers, you will provide the registered representative's identification number and branch number and you will provide updated information at least quarterly.
b. For each Fund account registered in your name (street name), you will provide the percentage allocation among the registered representative numbers and branch numbers and you will provide updated percentage allocations at least quarterly.
c. For each sub-account registered in your name (street name), you will provide the registered representative numbers and branch numbers and you will provide updated information at least quarterly.
B. Service Fees
1. If you meet the qualification requirements set forth above in Section I. A., you will be paid a service fee on assets in the Funds for which you are the dealer of record and which are serviced by a registered representative of your firm meeting the registered representative requirements, if any, as follows: on the last business day of the period you are the dealer of record, a quarterly service fee equal to .0625% of average assets (.25% annualized), as calculated by the Distributor, it being understood that no service fee will be paid unless you are the dealer of record with respect to customer accounts having an aggregate asset value of $25,000 or more in the Funds. Service fee payments will be mailed to you within thirty (30) days of quarter end.
2. You understand and agree that:
a. all service fee payments to be made pursuant to this Agreement are contingent upon and are subject to the limitations contained in the Funds' Distribution Plan, which may be amended or discontinued at any time;
b. your failure to provide the services described in Section I. D. below as may be amended from time to time, or otherwise comply with the terms of this Agreement, will render you and your registered representatives ineligible to receive service fees; and
c. failure of an assigned registered representative to provide services required by this Agreement will render that representative's accounts ineligible as accounts on which service fees are paid.
d. the obligation of the Distributor to pay service fees under this agreement is conditioned upon the receipt by it of 12b-1 fees pursuant to the Funds' Distribution Agreement between the Fund and the Distributor.
C. Payments and Communications to Registered Representatives
You will pay to your registered representatives a significant share of the service fees paid to you pursuant to this Agreement, and, upon request by the Distributor, you will fully account for all such payments.
D. Required Services
1. You will assign one of your registered representatives to each Fund account on your records and reassign such account in the event that a representative to whom a particular Fund account has been assigned ceases to be employed by your firm as a registered representative.
2. You and your registered representative will assist us and our affiliates in providing the following services to shareholders of the Funds:
a. Maintain regular contact with shareholders in assigned-accounts and assist in answering inquiries concerning the Funds (customer name accounts).
b. Assist in distributing sales and service literature provided by us, particularly to the beneficial owners of accounts registered in your name (street name accounts).
c. Provide any other information or services as the customer or we may reasonably request.
3. You will support our marketing efforts by granting reasonable requests for visits to your offices by our representatives and by including any Fund(s) on your "approved" list.
4. Your compliance with the service requirements set forth in this Agreement will be evaluated by us from time to time by surveying shareholder satisfaction with service, by monitoring redemption levels of shareholder accounts assigned to you and by such other methods as we deem appropriate.
5. The provisions of this Section l. D. may be amended by us from time to time upon notice to you.
II. GENERAL
A. Amendment
We reserve the right to amend this Agreement including any Schedule hereto, and to implement any modification of this Agreement, by written notice delivered by us to you.
B. Effective Period and Termination
The provisions of this Agreement shall remain in effect for a period of not more than one year from the date of its execution or adoption and thereafter for successive annual periods only so long as such continuance is specifically approved at least annually by the Trustees of Funds in conformity with the requirements of Rule 12b-1 under the Investment Company Act. This Agreement shall automatically terminate in the event of its assignment (as defined in the Investment Company Act). In addition, this Agreement may be terminated at any time, without the payment of any penalty, by either party upon written notice delivered or mailed by registered mail, postage prepaid, to the other party, or, as provided in Rule 12b-1 under the Investment Company Act, the Trustees of the Funds, or by the vote of the holders of the outstanding voting securities of the Funds. We reserve the right to terminate this Agreement in the event of violation by you of any of its provisions or for any cause which, in our opinion, justifies such action. This Agreement shall terminate automatically in the event of your ceasing to be a member in good standing of the National Association of Securities Dealers, Inc. as you represent yourself to be.
C. Written Reports
The Trustees shall be provided with and shall review at least quarterly, a written report of the amounts paid to you under this Agreement and the purposes for which such expenditures were made.
[THIS SPACE INTENTIONALLY LEFT BLANK]
You agree that this Agreement is made under and will be governed by the laws of the State of Massachusetts.
Very truly yours,
U.S. BOSTON CAPITAL CORPORATION
By:______________________________ Title:___________________________
The undersigned hereby accepts this Agreement and agrees to abide by all of its terms and conditions.
Date:______________________19_____ By:_____________________________
Authorized Signature
_________________________________
Firm _______________________________
Please print name and title.
_________________________________
_________________________________ Phone:__________________________
Address
|
EXHIBIT A
to Service Agreement
Quantitative Group of Funds
Ticker Annual
Fund Name CUSIP Symbol Fee
--------- ----- ------ ------
Quantitative Small Cap Fund 74762R608 USBNX 0.25%
Quantitative Mid Cap Fund 74762R806 QNIIX 0.25%
Quantitative Growth and Income Fund 74762R202 USBOX 0.25%
Quantitative International Equity Fund 74762R400 USBFX 0.25%
Quantitative Emerging Markets Fund 74762R855 QFFOX 0.25%
Quantitative Foreign Value Fund 74762R830 - 0.25%
|
C. Clearing Agent
The Distributor acknowledges that Tucker Anthony is an introducing firm whose securities trading activities are cleared through the correspondent services of a clearing firm (the "Agent"). The Distributor agrees that one or more of the services specified herein may be performed on Tucker Anthony's behalf by the Agent and that such performance will not constitute an impermissible assignment under the terms of this Agreement nor will it affect in any way the payment of service fees to Tucker Anthony as set forth in this Agreement.
Exhibit 31
As filed with the Securities and Exchange Commission on August __, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
In the matter of
QUANTITATIVE GROUP OF FUNDS
and
QUANTITATIVE ADVISORS, INC.
55 Old Bedford Road
Lincoln, Massachusetts 01773
AMENDMENT NO. 1 TO APPLICATION FOR AN ORDER OF
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
SECTION 6(c) OF THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED, EXEMPTING APPLICANTS FROM C(Pounds)RTAIN
REQUIREMENTS OF SECTION 15(a) THEREOF AND RULE 18f-2
THEREUNDER
File No. 812-11144
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
__________________________________X
In the Matter of )
)
)
QUANTITATIVE GROUP OF FUNDS )
: ) AMENDMENT NO. 1 TO APPLICATION
and ) PURSUANT TO SECTION 6(c) OF THE
) INVESTMENT COMPANY ACT OF 1940, AS
QUANTITATIVE ADVISORS, INC. ) AMENDED, FOR AN ORDER OF
) EXEMPTION FROM CERTAIN
55 Old Bedford Road ) REQUIREMENTS OF SECTION 15(a)
Lincoln, MA 01733 ) THEREOF AND RULE 18f-2.
) THEREUNDER
)
File No. 812-11144 )
|
__________________________________X
Communications regarding this application should be directed to:
Mark A. Katzoff, Esq.
QUANTITATIVE GROUP OF FUNDS.
55 Old Bedford Road
Lincoln, Massachusetts 01773
(800) 331-1244
with a copy to:
Joseph R. Fleming, Esq.
DECHERT PRICE & RHOADS
10 Post Office Square, Suite 1230
Boston, MA 02109
(617) 728-7161
Quantitative Group of Funds (the "Trust") is an open-end, management investment company organized as a Massachusetts business trust and currently composed of six separate series
(each, a "Fund," and collectively, the "Funds"). Each Fund is managed as though it were a separate mutual fund issuing its own shares. The Trust is registered as an investment company under the Investment Company Act of 1940, as amended (the "Act").
The investment adviser to the Trust, Quantitative Advisors, Inc. ("Quantitative Advisors" or the "Adviser"), selects sub-advisers (each a "Fund Manager." and collectively, the "Fund Managers") to provide investment advice for the Funds. The Funds and their respective Fund Managers are identified in the discussion on page 6 below. The Adviser and the Fund Managers are each registered as investment advisers under the Investment Advisers Act of 1940.
The Trust and the Adviser are collectively referred to in this Application as "Applicants". Applicants seek the relief requested with respect to the Trust, the Funds, and any series of the Trust organized in the future and for any open-end management investment company in the future advised by the Adviser or by a person controlling, controlled by, or under common control (within the meaning of section 2(a)(9) of the Act) with the Adviser, provided that such investment company operates in substantially the same manner as the Trust and complies with the conditions to the order requested as is set forth below in Section II. B. All existing investment companies that currently intend to rely on the order have been named as applicants, and any other existing or future investment companies that subsequently rely on the order will comply with the terms and conditions of the application.
Quantitative Advisors is wholly owned by officers and trustees of the Trust. Quantitative Advisors has entered into an investment adviser agreement (the "Adviser Agreement" ) with the Trust and is responsible for conducting all operations of the Trust except those operations contracted to its transfer agent and custodian and certain other service providers. The Adviser Agreement obligates Quantitative Advisors to provide investment advisory services to the Funds, to furnish the Trust with
certain administrative, clerical, bookkeeping and statistical services, office space and facilities, and to pay the compensation, if any, of the officers of the Trust.
Quantitative Advisors has in turn entered into an agreement with each Fund Manager (each, a "Fund Manager's Agreement" and collectively the "Fund Manager's Agreements"). The Fund Manager's Agreements are substantially the same in all material respects, except for the names of the Fund Managers and the rates of compensation, which are a portion of the management fee that is paid by each Fund to Quantitative Advisors and which Quantitative Advisors pays to the Fund Managers.
It is the Advisor's responsibility under the Adviser Agreement to select, subject to the review and approval of the Board of Trustees of each Fund (the "Board"), Fund Managers who have distinguished themselves by able performance in their respective areas of expertise, and to review their continued performance. The oversight and management services provided by Quantitative Advisors include (i) supervising the Fund Managers' compliance with state and federal regulations, including the Act, (ii) evaluating the Fund Managers' performance, (iii) analyzing the composition of the investment portfolios of each Fund and preparing reports thereon for the Board or any committee of the Board, (iv) calculating each Fund's performance in comparison to similar mutual funds and other market information, (v) conducting searches, upon a request of the Board, for a replacement for any Fund Manager then serving the respective Fund, and (vi) preparing presentations to shareholders that analyze each Fund's overall investment program and performance. Furthermore, under the terms of the Advisory Contracts with the Fund Managers, the Adviser has the authority to terminate the contracts without prior approval by the Board. However, the Advisor has never exercised this right without first discussing the matter with the Board. The Board is kept fully apprised of actions of this type contemplated by the Adviser, and all such actions are subject to review by the Board.
The Funds' prospectus has consistently described the Advisor's oversight function.
"The Funds are managed by [the Advisor], which provides overall management and
administration of the Funds. Under the terms of the management agreement, the
[Advisor] may, subject to the approval of the Trustees, manage the Funds itself
or, subject to the approval by the Trustees and the shareholders, select [Fund
Managers] to manage certain of the Funds. In the latter case, the [Advisor]
monitors the [Fund Managers'] investment program and results, reviews brokerage
matters, oversees compliance by the Funds with various federal and state
statutes and carries out the directives of the Trustees." The Funds have
employed an Advisor/Fund Manager structure since their inception in 1985. The
Advisor monitors the performance of the Fund Managers on a daily basis and
reports quarterly to the Board regarding their performance, including their
relative performance to appropriate benchmarks and peer groups. The Manager
periodically reviews investment strategies with the Fund Managers and from time
to time has made recommendations to the Fund Managers regarding changes to those
strategies.
In selecting Fund Managers, the Advisor considers a number of different criteria, including the nature of the strategy employed by the Fund Manager, the performance of the Fund Manager in strategies with investment objectives similar to those used by the Funds, the Fund Manager's reputation in the investment community, and, to a lesser extent, the Fund Manager's ability to participate in the marketing of the Funds. To locate and evaluate Fund Managers, the Advisor has employed personal contacts and manager databases, as well as discussions with prospective Fund Managers and their existing clients. In determining whether an existing Fund Manager should be terminated, the Advisor primarily focuses on the relative performance of the Fund Manager.
The Adviser performs the management, supervisory, and administrative functions for the Funds, and the Fund Managers serve in a sub-advisory capacity to the respective Funds. Subject to the supervision and direction of the Adviser and, ultimately, the Board, each Fund Manager's responsibilities are limited to furnishing the Fund advice with respect to the investment and reinvestment of the assets of the Fund in accordance with investment objectives, restrictions and limitations of the Fund set forth in the Trust's Registration Statement on Form N-IA, and to direct securities transactions pursuant to such investment advice. A Fund may be managed by a single Fund Manager or may be allocated by the Adviser between or among more than one Fund Manager. Currently, no Fund has more than a single Fund Manager. None of the Fund Managers is an affiliated person of the Adviser within the meaning of Section 2(a)(3) of the Act.
The Fund Managers of the individual Funds are as follows:
currently is Independence International Associates, Inc. The Quantitative Small Cap Fund was formerly called the Quantitative Numeric Fund.
Applicants request that the Commission grant an exemption from Section 15(a) of the Act and Rule 18f-2 thereunder to permit the Adviser to enter into or make material changes to Fund Manager's Agreements with the Adviser, without obtaining shareholder approval therefor. The Adviser Agreement between the Adviser and the Funds would in all cases be subject to the shareholder voting requirements of Section 15(a). For the reasons set forth below, Applicants respectfully submit that the requested exemptions would be in accordance with the standards of Section 6(c) of the Act.
Section 15(a) of the Act provides, in part, that;
It shall be unlawful for any person to serve or act as investment advisor of a registered investment company, except pursuant to a written contract, which contract. whether with such registered company or with an investment adviser of such registered company, has been approved by the vote of a majority of the outstanding voting securities of such registered company....
Rule l8f-2 under the Act provides, in relevant part, that
(c)(1) With respect to the submission of an investment advisory contract to the holders of the outstanding voting securities of a series company for the approval required by Section 15(a) of the Act, such matter shall be deemed to be effectively acted upon with respect to any class or series of securities of such
company if a majority of the outstanding voting securities of such class or series vote for the approval of such matter, notwithstanding (A) that such matter has not been approved by the holders of a majority of the outstanding voting securities of any other class or series affected by such matter, and (B) that such matter has not been approved by the vote of a majority of the outstanding voting securities of such company....
Rule l8f-2 further provides that:
(c)(2) If any class or series of securities of a series company fails to approve an investment advisory contract in the manner required by subparagraph (1) of this paragraph, the investment adviser of such company may continue to serve or act in such capacity for the period of time pending such required approval of such contract, of a new contract with the same or different adviser, or other definitive action; provided that the compensation received by such investment adviser during such period is equal to no more than its actual costs incurred in furnishing investment advisory services to such class or series or the amount it would have received under the advisory contract, whichever is less.
Section 6(c) of the Act provides, in part, that;
The Commission ... by order upon application, may conditionally or unconditionally exempt any person or any class or classes of persons... from any provisions of (the Act] or of any rule or regulation thereunder, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with tile protection of investors and the purposes fairly intended by the policy and provisions of (the Act).
Applicants request that the Commission grant an exemption from Section 15(a) of the Act and Rule 18f-2 thereunder to permit the Adviser to enter into new or amended contracts with Fund Managers without obtaining shareholder approval therefor, including new Fund Manager's Agreements necessitated because the prior Fund Manager's Agreements were terminated as a result of an "assignment" (as defined in Section 2(a)(4) of the Act). In order to protect against the abuse that Section 15 addresses, and that may arise under arrangements such as those proposed in this Application -- the transfer of responsibility for management of a Fund's assets without Fund shareholders' acquiescence --
Applicants agree to the imposition of the conditions enumerated below to the granting of the exemptive order requested (the "Order"). The conditions proposed are intended to ensure that Fund shareholders receive adequate disclosure about the Fund Managers, permitting them to "vote with their feet" on the Adviser's decision to appoint a new Fund Manager or to change the terms of a Fund Manager's agreement.
Applicants agree that any order granting the requested relief shall be subject to the following conditions:
a. The Advisor will provide general management and administrative services to the Funds, including overall supervisory responsibility for the general management and investment of the Fund's securities portfolios, and, subject to review and approval by each Board with respect to its respective Funds, will (i) set the Funds' overall investment strategies; (ii) select Fund Managers; (iii) monitor and evaluate the performance of Fund Managers; (iv) allocate and, when appropriate, reallocate a Fund's assets among its Fund Managers in those cases where the Advisor decides to select more than one Fund Manager for a particular Fund; and (v) ensure that the Fund Managers comply with the relevant Fund's investment objectives, policies, and restrictions.
b. Before a Fund may rely on the Order requested hereby, the operation of the Fund in the manner described in this Application will be approved by a majority of its outstanding voting securities, as defined in the Act, or, in the case of a new Fund whose public shareholders purchased shares on the basis of a prospectus containing the disclosure contemplated by condition (d) below, by the sole shareholder before offering of shares of such Fund to the public.
c. Within 90 days of the hiring of a new Fund Manager, each Fund will furnish to its shareholders all information about the new Fund Manager or Fund Manager Agreement that would be
included in a proxy statement, including any change in the disclosure required by the addition of a new Fund Manager. The information will include disclosure as to the level of fees to be paid to the Adviser and each Fund Manager. Each fund will meet this condition by providing shareholders, within 90 days of the hiring of a Fund Manager, with an information statement meeting the requirements of Regulation 14C and Schedule 14C under the Exchange Act. The information statement will also meet the requirements of Item 22 of Schedule 14A under the Exchange Act.
d. Each Fund will disclose in its prospectuses the existence, substance and effect of the Order granted pursuant to this Application. In addition, each Fund will hold itself out to the public as employing the "manager of managers" approach described in the application. The prospectus relating to a Fund will prominently disclose that the Adviser has ultimate responsibility for the investment performance of the Fund due to its responsibility to oversee Fund Managers and recommend their hiring, termination, and replacement.
e. No director, trustee or officer of the Funds or director or officer of the Adviser will own directly or indirectly (other than through a pooled investment vehicle that is not controlled by any such director, trustee or officer) any interest in any Fund Manager except for (i) ownership of interests in the Adviser or any entity that controls, is controlled by or is under common control with the Adviser, or (ii) ownership of less than 1% of the outstanding securities of any class of equity or debt of a publicly-traded company that is either a Fund Manager or any entity that controls, is controlled by or is under common control with a Fund Manager
f. The Adviser will not enter into a Fund Manager's Agreement with any Fund Manager that is an affiliated person, as defined in Section 2(a)(3) of the Act, of the Adviser or the Funds other
than by reason of serving as Fund Manager to one or more Funds ("Affiliated Fund Manager") without such agreement, including the compensation to he paid thereunder, being approved by the shareholders of the applicable Fund.
g. At all times, a majority of the members of the Board will be persons
each of whom is not an "interested person" of the respective Fund as defined in
Section 2(a)(19) of the Act ("Independent Trustee"), and the nomination of new
or additional Independent Trustees will be placed within the discretion of the
then existing Independent Trustees.
h. When a Fund Manager change is proposed for a Fund with an Affiliated Fund Manager, the Board, including a majority of the Independent Trustees, will make a separate finding. reflected in the Board's minutes, that such change is in the best interests of the Fund and its shareholders and does not involve a conflict of interest from which the Adviser or the Affiliated Fund Manager derives an inappropriate advantage.
As stated earlier, any contract between the Adviser and the Trust would remain subject to the shareholder voting requirements of Section 15(a) of the Act, Rule 18f-2 under the Act and related proxy disclosure requirements of Rule 20a-1 under the Act. Applicants are not seeking any exemptive relief with respect to such contracts. Rather, Applicants are requesting that the Adviser be permitted to enter into new or amended contracts with Fund Managers without seeking shareholder approval. This
exemption would permit the Adviser more efficiently to perform the functions the Funds are paying it to perform: that is, selecting Fund Managers, monitoring their performance, and making whatever changes in the roster of Fund Managers the Adviser deems appropriate, subject to the approval of the Board. To require that shareholders approve each new Fund Manager would not only result in unnecessary administrative expense to the Funds, but could result in harmful delays in executing changes in Fund Managers that the Adviser and the Board have determined are necessary. To the extent this occurred, shareholders of the Funds would be receiving less satisfactory service than would otherwise be the case, and their expectations would be frustrated.
It is in order to avoid the aforementioned expenses and delays that Applicants are requesting relief from Section 15(a) of the Act and Ru1e 18f-2 thereunder.
Primary responsibility for management of the Funds -- including in particular the selection and supervision of the Fund Managers - is vested in the Adviser, subject to oversight by the Board. The Advisor Agreement with the Trust will remain fully subject to the requirements of Section 15(a) of the Act and Rule 18f-2 thereunder, including the requirements for shareholder voting. Applicants believe it is consistent with the protection of investors to vest the selection and supervision of Fund Managers in the Adviser given the advisory structure of the Trust, as well as the Adviser's significant experience and experience in selecting Fund Managers. It is submitted that, within this structure and in view of such experience and expertise, the Adviser is in a better position to make an informed selection of a Fund Manager than individual investors. Significantly, the Trust's prospectus discloses information concerning the identity, ownership, qualifications and compensation of the Fund Managers in full compliance with
Form N-1A. Further, the information statements described above would provide shareholders with all information regarding a new Fund Manager or a material change in a Fund Manager's Agreement to the same extent as would be set forth in a proxy statement. Thus, investors would be in a position to make a fully informed investment decision as the purchase, redemption or retention of Fund shares.
These arrangements are consistent with the protection of investors because they both permit the Trust to avoid the administrative burden and expense associated with a formal proxy solicitation (which benefits all shareholders, including those that might redeem their shares after review of an information statement relating to a new Fund Manager or a material change in a Fund Manager Agreement they did not favor) and provide full disclosure to investors, permitting them to "vote with their feet," to the same extent as if a shareholder vote had approved the new contract - the result in most if not all such votes. In contrast, in the absence of the exemptive relief requested in this Application, all shareholders would bear the higher expenses associated with formal proxy solicitations that would provide no more meaningful disclosure to shareholders -- including those shareholders who might redeem their shares after shareholder approval of a new Fund Manager or a material change in a Fund Manager Agreement they did not favor. Moreover, Applicants note that mutual fund shareholders rarely if ever disapprove a proposed sub-advisory agreement that is recommended by management and the board of directors or trustees of the mutual fund.
Applicants' arrangements are sufficiently distinguishable from those of most other investment companies so that the exemptive relief being requested herein could not fairly be viewed as a precedent for similar relief for other investment companies that employ advisers in a conventional way. As stated above, the Adviser continuously monitors the performance of each Fund Manager and from time to time may recommend the replacement of a particular Fund Manager, or allocation of a portion of the assets of
a particular Fund to an additional Fund Manager (should the Advisor choose to employ multiple Fund Managers for a single Fund in the future). This "Manager of Managers" approach distinguishes the Funds from the vast majority of other investment companies which use internal management.
It is of course true that a sub-adviser to any registered investment company must serve pursuant to a contract that may be terminated by the company on not more than sixty days' notice. As a practical matter, however, persons buying shares of a particular mutual fund normally do so with the understanding that the fund's portfolio will be managed by the investment adviser and sub- adviser (if any) named in the prospectus. Indeed in the usual case the identity of the company or companies providing portfolio management is the primary basis for choosing among funds with similar investment objectives and policies. Thus, barring an extraordinary development, the advisory relationships described in a fund's prospectus are expected to be permanent.
For this reason, it is unlikely that most other investment companies would have any reason to apply for the type of exemptive order being sought by Applicants. To the contrary, there would be compelling business reasons not to do so. First, in the context of a conventional investment company, such an application would suggest that the investment adviser contemplated frustrating the expectations of the investors as to the fund's portfolio management. Second, it could have a corrosive effect upon the investment adviser's relationship with the sub-adviser as the sub-adviser might view the application as inconsistent with the sub-adviser's assumption that its relationship with the fund would not be terminated except in extraordinary circumstances.
In short, most of the mutual funds that employ sub-advisers do so under circumstances that give them no reason to seek the type of exemptive relief being sought by Applicants, and in fact give them good reasons not to seek such relief. These considerations are sufficient to ensure that granting Applicants the relief they seek will not lead to an excess of similar applications in the future.
The Trust currently has five Funds, with the registration statement for a sixth Fund pending effectiveness. Since May 9, 1985, the commencement of operations of the Trust, five changes in Fund Managers or material changes in Fund Manager's Agreements were submitted for shareholder approval. Attached hereto as Exhibit A is a table listing all meetings of the shareholders of the Funds previously held or to be held for the purpose of approving a new Fund Manager or material change in a Fund Manager's Agreement since commencement of operations of the respective Funds. Each of these meetings would not have taken place and shareholders would have been spared the expense and burden of repeat proxy solicitations, while receiving all relevant information that would have been included in a proxy statement, had the Order been in place. Shareholders could then have made an immediate decision to hold or redeem their shares without the delay associated with waiting for the completion of the proxy solicitation, the calculation of votes, the communication of the results and the determination by the shareholder of whether he or she regarded the result - in all cases, the approval of the arrangements proposed - as favorable or unfavorable.
The Adviser may wish to change the Fund Manager for a particular Fund for any number of reasons. First, the Adviser may determine that a Fund Manager is providing sub-standard performance over a period of time. In such a case, the Fund Manager might be replaced by a new Fund Manager, or, if another Fund Manager for a Fund with multiple Fund Managers (if the Advisor elects to use this approach in the future) is deemed to have superior performance, the assets managed by the under performing Fund Manager may be allocated to the superior Fund Manager. A second reason may be that the individual employee responsible for a Fund moves from employment with one Fund Manager to another, and the Adviser deems it advisable to stay with that individual. A third reason for a Fund Manager change may be when an entity undergoes a change in control that causes the Fund Manager's Agreement to terminate, and which the Adviser believes makes either advisable or inadvisable to
continue the relationship (in either case a shareholder vote on a new contract would be required by Section 15(a) of the Act). Change in control was the cause of the most recent proxies of the Funds relating to Fund Managers. The fourth category of change occurs with the Adviser decides to obtain further diversification of a Fund by hiring an additional Fund Manager without terminating any current Fund Manager. A final category of change is when, in the view of the Adviser, a change in investment style (for example, from a value manager to a growth manager) is warranted.
The purpose of the requirement that shareholders approve new advisory contracts can be inferred readily. The identity of a registered investment company's investment adviser, together with the company's fundamental investment policies and objectives, is one of the main features distinguishing one investment company from another. Clearly, the framers of the Act believed that if an investment company is to be managed by an investment advisor different from the one shareholders expected when they made their investment, the new investment adviser should be approved by shareholders. The exemption being requested herein would be fully consistent with this principle.
The primary party on which an investor in a Fund will rely will be the Adviser. Indeed, the first page of the Trust's prospectus makes perfectly clear that the Adviser is the primary service provider to the Fund, stating that the Adviser "provides overall management and operational services to the Funds", while the Fund Managers "are presently responsible for the day-to-day management of each Fund". In addition, the Management of the Funds section on page 11 of the prospectus expressly states that the Adviser "may ... select (Fund Managers) to manage certain of the Funds". Shareholders therefore understand and expect that the Adviser will change Fund Managers when appropriate, and, indeed, the Funds pay the Adviser to do exactly that, eliminating the potential need for shareholders to pay the
expenses and to experience the delay associated with formal proxy solicitations consistent with the purposes and provisions of the Act and the protection of investors, particularly where the proxy solicitation provides no greater or more meaningful information to investors than the use of the informal information statement in the manner described herein. Moreover, whenever a Fund Manager is added or a material change in a Fund Manager's Agreement is made, the relevant Fund's prospectus would be supplemented before it is provided to new investors to alert such investors of the change. The Fund would promptly notify all shareholders of an affected Fund of the change through the information statement to be mailed within ninety (90) days after the change. This arrangement is consistent with--indeed, even more accommodative to timely notification to shareholders than -- related strictures under the Act. For instance, in the absence of the exemptive relief requested, the Board could determine to terminate an existing Fund Manager's Agreement and immediately approve and implement a new Agreement with a new Fund Manager. In that event, pursuant to rule 15a-4 under the Act the new Fund Manager would be permitted to serve prior to approval by shareholders for a period of 120 days provided that the compensation to be received under the new Fund Manager's Agreement did not exceed that under the terminated Fund Manager's Agreement. Further, providing the informal information statement after a change in Fund Manager or a material change in a Fund Manager's Agreement would permit the Adviser to respond promptly to changed circumstances without leaving a Fund's assets in the hands of a Fund Manager having diminished capabilities (because of loss of key personnel or otherwise) or motivation (because of impending termination of its Fund Manager's Agreement) to manage the assets diligently.
Finally, in the unlikely event that a shareholder of a Fund is concerned about the selection of a particular Fund Manager by the Adviser, or a material change in a Fund Manager's Agreement, each as approved by the Board, that shareholder will be able to exchange his or her shares for shares of another
Fund in the Trust with a Fund Manager the shareho1der deems adequate, without the imposition of any additional charges; that shareholder may also choose to redeem his or her shares. In either event, the ultimate outcome for the dissatisfied shareholder would be no worse than if a vote were held and the new Fund Manager approved -the result in most if not all circumstances - minus the unnecessary expenses involved in a proxy vote. Therefore the requested exemption, far from permitting shareholders' expectations to be frustrated contrary to the purpose of the Act, would facilitate those expectations being met.
Pursuant to Rule 0-2(f) under the Act, Applicants state that their addresses are as indicated on the cover page of this application. Applicants further state that all written or other communications concerning this Application should be directed to:
Mark A. Katzoff, Esq.
Quantitative Group of Funds
55 Old Bedford Road
Lincoln, Massachusetts 01773
(800)331-1244
With a copy to:
Joseph R. Fleming, Esq.
Dechert Price & Rhoads
10 Post Office Square, Suite 1230
Boston, MA 02109
(617) 728-7161
Applicants desire that the Commission issue an order pursuant to Rule 0-5 under the Act without a hearing being held.
Each Applicant represents that the undersigned is authorized to file this Application in the name and on behalf of the Applicant. The resolutions and statements of authority required under Rule 0-2(c)(1) are attached hereto as Exhibit B.
The verification required by Rule 0-2(d) under the Act are attached hereto as Exhibit C.
For the foregoing reasons, Applicants request that the Commission enter an order pursuant to Section 6(c) of the Act granting the relief sought by this Application. Applicants submit that the requested exemption is necessary or appropriate in the public interest, consistent with the protection of investors, and consistent with the purpose fairly intended by the policy and provisions of the Act.
QUANTITATIVE GROUP OF FUNDS.
By:______________________
Mark A. Katzoff
Clerk
QUANTITATIVE ADVISORS, INC.
By:______________________
Mark A. Katzoff
Assistant Clerk
Dated: August 20, 1998
Set forth below is a table listing all meetings of public shareholders of the Funds previously held or scheduled to be held for the purpose of approving a new Fund Manager or a material change in a Fund Manager's Agreement since commencement of operations of the Trust (May 9, 1985).
Quantitative Group of Funds
Meeting Date Fund Fund Manager's Agreement Approvals
------------ ---- ---- --------- --------- ---------
April 2, 1990 Quantitative International Boston International Advisors, Inc.
Equity Fund*
October 28, 1998 Quantitative International Independence International Associates, Inc.
Equity Fund
October 28, 1998 Quantitative Emerging Independence International Associates, Inc.
Markets Fund**
October 28, 1998 Quantitative Small Cap Columbia Partners, LLC, Investment Management.
Fund***
October 28, 1998 Quantitative Mid Cap Columbia Partners, LLC, Investment Management.
Fund****
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*then called the Boston Foreign Growth and Income Series **then called the Quantitative Foreign Frontier Fund ***then called the Quantitative Numeric Fund ****then called the Quantitative Numeric II Fund
The undersigned, being duly elected Clerk of Quantitative Group of Funds, Inc.(the "Fund"), a business trust organized under the laws of Massachusetts, hereby certifies that (1) the attached resolutions are true and correct copies of the resolutions adopted by the Board of the Fund at a meeting of the Board held on February 13, 1998, at which meeting a quorum was at all times present and voting; and (ii) these resolutions have not been amended, modified or superseded in any way as of the date of this Certificate.
IN WITNESS WHEREOF, I have set my hand this day of August 20, 1998.
RESOLVED: That the President, Vice President or Clerk of the Fund be, and each of them hereby is, authorized and directed to complete, execute and file with the Securities and Exchange Commission in the name of and on behalf of the Fund, an Exemptive Application requesting relief from certain requirements of Section 15(a) and Rule 18f-2 of the Investment Company Act of 1940, and any and all exhibits and documents relating thereto, with such changes, additions and deletions as the officer or officers executing such application, on advice of counsel, may deem necessary or appropriate.
The undersigned, being duly elected Assistant Clerk of Quantitative Advisors, Inc. ("Quantitative Advisors"), a corporation organized under the laws of Massachusetts hereby certifies that (i) the attached resolutions are true and correct copies of the resolutions adopted by the Board of Quantitative Advisors at a regular meeting of the Board held on April 7, 1998, at which meeting a quorum was at all times present and voting; and (ii) these resolutions have not been amended, modified or superseded in any way as on the date of this Certificate.
IN WITNESS WHEREOF, I have set my hand this 20th day of August, 1998.
RESOLVED: That the President, Vice President, Clerk or Assistant Clerk of the Company be, and each of them hereby is, authorized and directed to complete, execute and file with the Securities and Exchange Commission in the name of and on behalf of the Fund, an Exemptive Application requesting relief from certain requirements of Section 15(a) and Rule 18f-2 of the Investment Company Act of 1940, and any and all exhibits and documents relating thereto, with such changes, additions and deletions as the officer or officers executing such application, on advice of counsel, may deem necessary or appropriate.
EXHIBIT C
------- -
Commonwealth of Massachusetts )
) ss:
County of Middlesex )
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The undersigned, being duly sworn, deposes and says that he has duly executed the attached Amended Application dated August 20, 1998 for and on behalf of Quantitative Group of Funds (the "Fund"), a Massachusetts business trust, that he is the Clerk of the Fund; and that all action by shareholders, directors, and other bodies necessary to authorize deponent to execute and file such instrument has been taken. Deponent further says that he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
Subscribed and sworn to before me a Notary Public this 20th day of August, 1998
Commonwealth of Massachusetts )
) ss:
County of Middlesex )
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The undersigned, being duly sworn, deposes and says that he has duly executed the attached Amended Application dated August 20, 1998 for and on behalf of Quantitative Advisors, Inc. (the "Advisor"), a Massachusetts corporation, that he is the Assistant Clerk of the Advisor and that all action by shareholders, directors1 and other bodies necessary to authorize deponent to execute and file such instrument has been taken. Deponent further says that he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
Subscribed and sworn to before me a Notary Public this 20th day of August, 1998.
Quantitative Group of Funds and Quantitative Advisors, Inc.
of a hearing by writing to the Secretary of the SEC, Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C. 20549. Each of the Applicants c/o Mark A. Katzoff. Esq., Quantitative Group of Funds., 55 Old Bedford Road, Lincoln, MA 01773.
complete Application is available for a fee from the SEC's Public Reference Branch. |
The Funds have each entered into an investment adviser's agreement
(each an "Adviser's Agreement" and collectively, the "Adviser's Agreements")
with the Adviser, which has entered into a Fund Manager's Agreement (a "Fund
Manager's Agreement") with each Fund Manager to the Funds. It is the Adviser's
responsibility under the Adviser's Agreements to select Fund Managers subject to
the review and approval of the Board of Trustees of the relevant Fund (the
"Board" or the "Trustees"), and to review their continued performance. A Fund
may be managed by a single Fund Manager or may be allocated by the Adviser
between or among two or more Fund Managers, although at present only one Fund
Manager manages each Fund. The oversight and management services provided by
Quantitative Advisors include (i) supervising the Fund Managers' compliance with
state and federal regulations, including the Act, (ii) evaluating the Fund
Managers' performance, (iii) analyzing the composition of the
investment portfolios of each Fund of the Trust and preparing reports thereon
for the Board or any committee of the Board, (iv) evaluating each Fund's
performance in comparison to similar mutual funds and other market information,
(v) conducting searches, upon a request of the Board, for a replacement for any
Fund Manager then serving the respective Fund, and (vi) preparing presentations
to shareholders which analyze each Fund's overall investment program and
performance. The Funds pay the Adviser a fee for its services that is based on
the value of the average daily net assets of each Fund. In turn, the Adviser
pays the fee of each Fund Manager. The Funds pay no fees directly to any Fund
Manager
Applicants request exemption from Section 15(a) of the Act and Rule 18f-2 thereunder, to permit the Adviser to enter into new or amended contracts with Fund Managers to the Funds without obtaining shareholder approval therefor, including new Fund Manager's Agreements necessitated because the prior Fund Manager's Agreements were terminated as a result of an "assignment" (as defined in Section 2(a)(4) of the Act).
a. The Adviser will provide general management and administrative services to the Funds, including overall supervisory responsibility for the general management and investment of the Funds' securities portfolios and, subject to review and approval by each Board with respect to its respective Funds, will (i) set the Funds' overall investment strategies; (ii) select Fund Managers; (iii) monitor and evaluate the performance of Fund Managers; (iv) allocate and, when appropriate, reallocate a Fund's assets among its Fund Managers in those cases where a Fund has more than one Fund Manager; and (v) implement procedures reasonably designed to ensure that the Fund Managers comply with the relevant Fund's investment objectives, policies, and restrictions.
b. Before a Fund may rely on the Order requested hereby, the
operation of the Fund in the manner described in this Application will be
approved by a majority of its outstanding voting securities, as defined in the
Act, or, in the case of a new Fund whose public shareholders purchased shares on
the basis of a prospectus containing the disclosure contemplated by condition
(d) below, by the sole shareholder before offering of shares of such Fund to the
public.
c. Each Fund will furnish to its shareholders all information about a new Fund Manager or Fund Manager's Agreement for one of its Funds that would be included in a proxy statement. Such information will include disclosure as to level of fees to be paid to the Adviser and each Fund Manager of the Fund and any change in such information caused by the addition of a new Fund Manager or any proposed material change in a Fund Manager's Agreement. Each Fund will meet this condition by providing its shareholders with an informal information statement complying with the provisions of Regulation 14C under the Exchange Act and Schedule 14C thereunder. With respect to a newly retained Fund Manager, or a change in a Fund Manager's Agreement, this information statement will be provided to shareholders of the Fund a maximum of ninety (90) days after the addition of the new Fund Manager or the implementation of any change in a Fund Manager's Agreement. The information statement will
also meet the requirements of Schedule 14A.
d. Each Fund will disclose in its prospectuses the existence, substance and effect of the Order granted pursuant to the Application. In addition, each Fund will hold itself out to the public as employing the "manager of managers" approach described in the application The prospectus and any sales materials or other shareholder communications relating to a Fund will prominently disclose that the Adviser has ultimate responsibility for the investment performance of the Fund due to its responsibility to oversee Fund Managers and recommend their hiring, termination, and replacement.
e. No director, trustee or officer of the Funds or director or officer of the Adviser will own directly or indirectly (other than through a pooled investment vehicle that is not controlled by any such director, trustee or officer) any interest in any Fund Manager except for (i) ownership of interests in the Adviser or any entity that controls, is controlled by or is under common control with the Adviser; or (ii) ownership of less than 1% of the outstanding securities of any class of equity or debt of a publicly traded company that is either a Fund Manager or any entity that controls, is controlled by or is under common control with a Fund Manager.
f. The Adviser will not enter into a Fund Manager's Agreement with any Fund Manager that is an affiliated person, as defined in Section 2(a)(3) of the Act, of the Adviser or the Funds other than by reason of serving as Fund Manager to one or more Funds ("Affiliated Fund Manager") without such agreement, including the compensation to be paid thereunder being approved by the shareholders of the applicable Fund.
g. At all times, a majority of the members of the Board will be persons each of whom is not an "interested person" of the respective Fund as defined in Section 2(a)(19) of the Act
("Independent Trustees"), and the nomination of new or additional Independent Trustees will be placed within the discretion of the then existing Independent Trustees.
Applicants submit that the requested shareholder voting exemption meets the standards of Section 6(c) of the Act.
Any Contracts between the Adviser and the Fund would remain subject to the shareholder voting requirements of Section 15(a) of the Act, Rule 18f-2 under the Act and related proxy disclosure requirements of Rule 20a-1 under the Act. This exemption would permit the Adviser more efficiently to perform the functions the Funds are paying it to perform: that is, selecting Fund Managers, monitoring their performance, and making whatever changes in the roster of Fund Managers the Adviser deems appropriate, subject to the approval of the Board. To require that shareholders approve each new Fund Manager would not only result in unnecessary administrative expense to the Funds, but could result in harmful delays in executing changes in Fund Managers that the Adviser and the Board have determined are necessary. It is in order to avoid the aforementioned expenses and delays that Applicants are requesting relief from Section 15(a) of the Act and Rule 18f-2 thereunder, an arrangement, Applicants contend, that would be necessary or appropriate in the public interest, as required under Section 6(c) of the Act.
Primary responsibility for management of the Funds including, in particular, selection and supervision of the Fund Managers -- is vested in the Adviser, subject to oversight by the Board. The Adviser's contracts with the Funds will remain fully subject to the requirements of Section 15(a) of the Act and Rule 18f-2 thereunder, including the requirements for shareholder voting. Applicants believe it is consistent with the protection of investors, pursuant to the requirements of Section 6(c) of the Act, to
vest the selection and supervision of Fund Managers in the Adviser given the advisory structure of the Funds, as well as the Adviser's significant experience and expertise in selecting Fund Managers. Significantly, the Funds' prospectuses disclose information concerning the identity, ownership, qualifications and compensation of the Fund Managers in full compliance with Form N-1A. Further, the information statements described above would provide shareholders with all information regarding a new Fund Manager or a material change in a Fund Manager's Agreement to the same extent as would be set forth in a proxy statement.
Applicants submit that under this policy, investors will be in a position to make a fully informed investment decision as to the purchase, redemption or retention of Fund shares. These arrangements are consistent with the protection of investors because they both permit the Funds to avoid the administrative burden and expense associated with a formal proxy solicitation (which benefits all shareholders, including those that might redeem their shares after review of an information statement relating to a new Fund Manager or a material change in a Fund Manager's Agreement they did not favor) and provide disclosure to investors, permitting them to "vote with their feet." In contrast, in the absence of the exemptive relief requested in this Application, all shareholders would bear the higher expenses associated with formal proxy solicitations that would provide no more meaningful disclosure to shareholders -- including those shareholders who might redeem their shares after shareholder approval of a new Fund Manager or a material change in a Fund Manager's Agreement they did not favor.
Finally, pursuant to Section 6(c) the shareholder voting exemption is consistent with the purposes fairly intended by the policy and provisions of the Act. The purpose of the requirement that shareholders approve new advisory contracts can be inferred readily. The identity of a registered investment company's investment adviser, together with the company's fundamental investment policies and objectives, is one of the main features distinguishing one investment company from another. Clearly,
the framers of the Act believed that if an investment company is to be managed by an investment adviser different from the one shareholders expected when they made their investment, the new investment adviser should he approved by shareholders The exemption being requested herein would be fully consistent with this principle.
Shareholders understand and expect that the Adviser will change Fund Managers when appropriate, and, indeed, the Funds pay the Adviser to do exactly that. Eliminating the potential need for shareholders to pay the expenses and to experience the delay associated with formal proxy solicitations is consistent with the purposes and provisions of the Act and the protection of investors, particularly where the proxy solicitations provides no greater or more meaningful information to investors than the use of the informal information statement in the manner described herein.
Whenever a Fund Manager is added or a material change in a Fund Manager's Agreement is made, the relevant Fund's prospectus would be supplemented before it is provided to new investors to alert such investors of the change. The Fund would notify promptly all shareholders of an affected Fund of the change through the information statement to be mailed within ninety (90) days after the change. This arrangement is consistent with -- indeed, even more accommodative to timely notification to shareholders than -- related strictures under the Act. For instance, in the absence of the exemptive relief requested, either Board could determine to terminate an existing Fund Manager's Advisory Agreement and immediately approve and implement a new Agreement with a new Fund Manager. In that event, pursuant to Rule 15a-4 under the Act, the new Fund Manager would be permitted to serve prior to approval by shareholders for a period of 120 days provided that the compensation to be received under the new Fund Manager's Agreement did not exceed that under the terminated Fund Manager's Agreement.
In the unlikely event that a shareholder of a Fund is concerned about the selection of a particular Fund Manager by the Adviser, or a material change in a Fund Manager's Agreement, each as approved by the Board, that shareholder will be able to exchange his or her shares for shares of another Fund with a Fund Manager the shareholder deems adequate, without the imposition of any additional charges; that shareholder may also choose to redeem his or her shares, subject to a redemption fee imposed on the Ordinary shares of certain Funds. In either event, the ultimate outcome for the dissatisfied shareholder would be no worse than if a vote were held and the new Fund Manager approved -- the result in most, if not all, circumstances -- minus the unnecessary expenses involved in a proxy vote. Therefore, the requested exemption, far from permitting shareholders' expectations to be frustrated contrary to the purpose of the Act, would facilitate those expectations being met.
For the Commission by the Division of Investment Management, pursuant to delegated authority.
Jonathan G. Katz Secretary
__________ 1998
EXHIBIT 32
As filed with the Securities and Exchange Commission on October __, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
In the matter of
QUANTITATIVE GROUP OF FUNDS
and
QUANTITATIVE ADVISORS, INC.
55 Old Bedford Road
Lincoln, Massachusetts 01773
AMENDMENT NO. 2 TO APPLICATION FOR AN ORDER OF
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
SECTION 6(c) OF THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED, EXEMPTING APPLICANTS FROM CERTAIN
REQUIREMENTS OF SECTION 15(a) THEREOF AND RULE I8f-2
THEREUNDER
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
__________________________________X
In the Matter of )
)
QUANTITATIVE GROUP OF FUNDS )
: ) AMENDMENT NO. 2 TO APPLICATION
and ) PURSUANT TO SECTION 6(c) OF THE
) INVESTMENT COMPANY ACT OF 1940, AS
QUANTITATIVE ADVISORS, INC. ) AMENDED, FOR AN ORDER OF
) EXEMPTION FROM CERTAIN
55 Old Bedford Road ) REQUIREMENTS OF SECTION 15(a)
Lincoln, MA 01733 ) THEREOF AND RULE 18f-2.
) THEREUNDER
File No. 812-11144 )
|
__________________________________X
Communications regarding this application should be directed to:
Mark A. Katzoff, Esq.
QUANTITATIVE GROUP OF FUNDS.
55 Old Bedford Road
Lincoln, Massachusetts 01773
(800) 331-1244
with a copy to:
Joseph R. Fleming, Esq.
DECHERT PRICE & RHOADS
10 Post Office Square, Suite 1230
Boston, MA 02109
(617) 728-7161
Quantitative Group of Funds (the "Trust") is an open-end, management investment company organized as a Massachusetts business trust and currently composed of six separate series
(each, a "Fund," and collectively, the "Funds"). Each Fund is managed as though it were a separate mutual fund issuing its own shares. The Trust is registered as an investment company under the Investment Company Act of 1940, as amended (the "Act").
The investment adviser to the Trust, Quantitative Advisors, Inc. ("Quantitative Advisors" or the "Adviser"), selects sub-advisers (each a "Fund Manager." and collectively, the "Fund Managers") to provide investment advice for the Funds. The Funds and their respective Fund Managers are identified in the discussion on page 6 below. The Adviser and the Fund Managers are each registered as investment advisers under the Investment Advisers Act of 1940.
The Trust and the Adviser are collectively referred to in this Application as "Applicants". Applicants seek the relief requested with respect to the Trust, the Funds, and any series of the Trust organized in the future and for any open- end management investment company in the future advised by the Adviser or by a person controlling, controlled by, or under common control (within the meaning of section 2(a)(9) of the Act) with the Adviser, provided that such investment company operates in substantially the same manner as the Trust and complies with the conditions to the order requested as is set forth below in Section II. B. All existing investment companies that currently intend to rely on the order have been named as applicants, and any other existing or future investment companies that subsequently rely on the order will comply with the terms and conditions of the application.
Quantitative Advisors is wholly owned by officers and trustees of the Trust. Quantitative Advisors has entered into an investment adviser agreement (the "Adviser Agreement" ) with the Trust and is responsible for conducting all operations of the Trust except those operations contracted to its transfer agent and custodian and certain other service providers. The Adviser Agreement obligates Quantitative Advisors to provide investment advisory services to the Funds, to furnish the Trust with
certain administrative, clerical, bookkeeping and statistical services, office space and facilities, and to pay the compensation, if any, of the officers of the Trust.
Quantitative Advisors has in turn entered into an agreement with each Fund Manager (each, a "Fund Manager's Agreement" and collectively the "Fund Manager's Agreements"). The Fund Manager's Agreements are substantially the same in all material respects, except for the names of the Fund Managers and the rates of compensation, which are a portion of the management fee that is paid by each Fund to Quantitative Advisors and which Quantitative Advisors pays to the Fund Managers.
It is the Advisor's responsibility under the Adviser Agreement to select,
subject to the review and approval of the Board of Trustees of each Fund (the
"Board"), Fund Managers who have distinguished themselves by able performance in
their respective areas of expertise, and to review their continued performance.
The oversight and management services provided by Quantitative Advisors include
(i) supervising the Fund Managers' compliance with state and federal
regulations, including the Act, (ii) evaluating the Fund Managers' performance,
(iii) analyzing the composition of the investment portfolios of each Fund and
preparing reports thereon for the Board or any committee of the Board, (iv)
calculating each Fund's performance in comparison to similar mutual funds and
other market information, (v) conducting searches, upon a request of the Board,
for a replacement for any Fund Manager then serving the respective Fund, and
(vi) preparing presentations to shareholders that analyze each Fund's overall
investment program and performance. Furthermore, under the terms of the Advisory
Contracts with the Fund Managers, the Adviser has the authority to terminate the
contracts without prior approval by the Board. However, the Advisor has never
exercised this right without first discussing the matter with the Board. The
Board is kept fully apprised of actions of this type contemplated by the
Adviser, and all such actions are subject to review by the Board. The Advisory
Contracts may also be terminated at any time by the Board or by the vote of a
majority of the Fund's outstanding voting
securities.
The Funds' prospectus has consistently described the Advisor's oversight function. "The Funds are managed by [the Advisor], which provides overall management and administration of the Funds. Under the terms of the management agreement, the [Advisor] may, subject to the approval of the Trustees, manage the Funds itself or, subject to the approval by the Trustees and the shareholders, select [Fund Managers] to manage certain of the Funds. In the latter case, the [Advisor] monitors the [Fund Managers'] investment program and results, reviews brokerage matters, oversees compliance by the Funds with various federal and state statutes and carries out the directives of the Trustees." The Funds have employed an Advisor/Fund Manager structure since their inception in 1985. The Advisor monitors the performance of the Fund Managers on a daily basis and reports quarterly to the Board regarding their performance, including their relative performance to appropriate benchmarks and peer groups. The Manager periodically reviews investment strategies with the Fund Managers and from time to time has made recommendations to the Fund Managers regarding changes to those strategies.
In selecting Fund Managers, the Advisor considers a number of different criteria, including the nature of the strategy employed by the Fund Manager, the performance of the Fund Manager in strategies with investment objectives similar to those used by the Funds, and the Fund Manager's reputation in the investment community. In choosing between otherwise equally qualified candidates, the Advisor may also consider the Fund Manager's ability to participate in the marketing of the Funds. While not directly related to the Fund Manager's primary responsibility of selecting investments for a Fund, the Advisor believes that employing a Fund Manager who takes an active role in assisting to market a Fund may benefit shareholders by facilitating the accumulation of assets in the Fund. This both makes it easier for the Fund Manager to fully employ its investment strategy and has the
potential to lower costs to shareholders as assets increase. To locate and evaluate Fund Managers, the Advisor has employed personal contacts and manager databases, as well as discussions with prospective Fund Managers and their existing clients. In determining whether an existing Fund Manager should be terminated, the Advisor primarily focuses on the relative performance of the Fund Manager.
The Adviser performs the management, supervisory, and administrative functions for the Funds, and the Fund Managers serve in a sub-advisory capacity to the respective Funds. Subject to the supervision and direction of the Adviser and, ultimately, the Board, each Fund Manager's responsibilities are limited to furnishing the Fund advice with respect to the investment and reinvestment of the assets of the Fund in accordance with investment objectives, restrictions and limitations of the Fund set forth in the Trust's Registration Statement on Form N-IA, and to direct securities transactions pursuant to such investment advice. A Fund may be managed by a single Fund Manager or may be allocated by the Adviser between or among more than one Fund Manager. Currently, no Fund has more than a single Fund Manager. None of the Fund Managers is an affiliated person of the Adviser within the meaning of Section 2(a)(3) of the Act.
The Fund Managers of the individual Funds are as follows:
currently is Independence International Associates, Inc. The Quantitative Small Cap Fund was formerly called the Quantitative Numeric Fund.
Applicants request that the Commission grant an exemption from Section 15(a) of the Act and Rule 18f-2 thereunder to permit the Adviser to enter into or make material changes to Fund Manager's Agreements with the Adviser, without obtaining shareholder approval therefor. The Adviser Agreement between the Adviser and the Funds would in all cases be subject to the shareholder voting requirements of Section 15(a). For the reasons set forth below, Applicants respectfully submit that the requested exemptions would be in accordance with the standards of Section 6(c) of the Act.
Section 15(a) of the Act provides, in part, that;
It shall be unlawful for any person to serve or act as investment advisor of a registered investment company, except pursuant to a written contract, which contract. whether with such registered company or with an investment adviser of such registered company, has been approved by the vote of a majority of the outstanding voting securities of such registered company....
Rule l8f-2 under the Act provides, in relevant part, that
(c)(1) With respect to the submission of an investment advisory contract to the holders of the outstanding voting securities of a series company for the approval required by Section 15(a) of the Act, such matter shall be deemed to be effectively acted upon with respect to any class or series of securities of such
company if a majority of the outstanding voting securities of such class or series vote for the approval of such matter, notwithstanding (A) that such matter has not been approved by the holders of a majority of the outstanding voting securities of any other class or series affected by such matter, and (B) that such matter has not been approved by the vote of a majority of the outstanding voting securities of such company....
Rule l8f-2 further provides that:
(c)(2) If any class or series of securities of a series company fails to approve an investment advisory contract in the manner required by subparagraph (1) of this paragraph, the investment adviser of such company may continue to serve or act in such capacity for the period of time pending such required approval of such contract, of a new contract with the same or different adviser, or other definitive action; provided that the compensation received by such investment adviser during such period is equal to no more than its actual costs incurred in furnishing investment advisory services to such class or series or the amount it would have received under the advisory contract, whichever is less.
Section 6(c) of the Act provides, in part, that;
The Commission ... by order upon application, may conditionally or unconditionally exempt any person or any class or classes of persons... from any provisions of (the Act] or of any rule or regulation thereunder, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with tile protection of investors and the purposes fairly intended by the policy and provisions of (the Act).
Applicants request that the Commission grant an exemption from Section 15(a) of the Act and Rule 18f-2 thereunder to permit the Adviser to enter into new or amended contracts with Fund Managers without obtaining shareholder approval therefor, including new Fund Manager's Agreements necessitated because the prior Fund Manager's Agreements were terminated as a result of an "assignment" (as defined in Section 2(a)(4) of the Act). In order to protect against the abuse that Section 15 addresses, and that may arise under arrangements such as those proposed in this Application -- the transfer of responsibility for management of a Fund's assets without Fund shareholders' acquiescence --
Applicants agree to the imposition of the conditions enumerated below to the granting of the exemptive order requested (the "Order"). The conditions proposed are intended to ensure that Fund shareholders receive adequate disclosure about the Fund Managers, permitting them to "vote with their feet" on the Adviser's decision to appoint a new Fund Manager or to change the terms of a Fund Manager's agreement.
Applicants agree that any order granting the requested relief shall be subject to the following conditions:
a. The Advisor will provide general management and administrative services to the Funds, including overall supervisory responsibility for the general management and investment of the Fund's securities portfolios, and, subject to review and approval by each Board with respect to its respective Funds, will (i) set the Funds' overall investment strategies; (ii) select Fund Managers; (iii) monitor and evaluate the performance of Fund Managers; (iv) allocate and, when appropriate, reallocate a Fund's assets among its Fund Managers in those cases where the Advisor decides to select more than one Fund Manager for a particular Fund; and (v) ensure that the Fund Managers comply with the relevant Fund's investment objectives, policies, and restrictions.
b. Before a Fund may rely on the Order requested hereby, the operation of the Fund in the manner described in this Application will be approved by a majority of its outstanding voting securities, as defined in the Act, or, in the case of a new Fund whose public shareholders purchased shares on the basis of a prospectus containing the disclosure contemplated by condition (d) below, by the sole shareholder before offering of shares of such Fund to the public.
c. Within 90 days of the hiring of a new Fund Manager, each Fund will furnish to its shareholders all information about the new Fund Manager or Fund Manager Agreement that would be
included in a proxy statement, including any change in the disclosure required by the addition of a new Fund Manager. The information will include disclosure as to the level of fees to be paid to the Adviser and each Fund Manager. Each fund will meet this condition by providing shareholders, within 90 days of the hiring of a Fund Manager, with an information statement meeting the requirements of Regulation 14C and Schedule 14C under the Exchange Act. The information statement will also meet the requirements of Item 22 of Schedule 14A under the Exchange Act.
d. Each Fund will disclose in its prospectuses the existence, substance and effect of the Order granted pursuant to this Application. In addition, each Fund will hold itself out to the public as employing the "manager of managers" approach described in the application. The prospectus relating to a Fund will prominently disclose that the Adviser has ultimate responsibility for the investment performance of the Fund due to its responsibility to oversee Fund Managers and recommend their hiring, termination, and replacement.
e. No director, trustee or officer of the Funds or director or officer of the Adviser will own directly or indirectly (other than through a pooled investment vehicle that is not controlled by any such director, trustee or officer) any interest in any Fund Manager except for (i) ownership of interests in the Adviser or any entity that controls, is controlled by or is under common control with the Adviser, or (ii) ownership of less than 1% of the outstanding securities of any class of equity or debt of a publicly-traded company that is either a Fund Manager or any entity that controls, is controlled by or is under common control with a Fund Manager
f. The Adviser will not enter into a Fund Manager's Agreement with any Fund Manager that is an affiliated person, as defined in Section 2(a)(3) of the Act, of the Adviser or the Funds other
than by reason of serving as Fund Manager to one or more Funds ("Affiliated Fund Manager") without such agreement, including the compensation to he paid thereunder, being approved by the shareholders of the applicable Fund.
g. At all times, a majority of the members of the Board will be persons
each of whom is not an "interested person" of the respective Fund as defined in
Section 2(a)(19) of the Act ("Independent Trustee"), and the nomination of new
or additional Independent Trustees will be placed within the discretion of the
then existing Independent Trustees.
h. When a Fund Manager change is proposed for a Fund with an Affiliated Fund Manager, the Board, including a majority of the Independent Trustees, will make a separate finding. reflected in the Board's minutes, that such change is in the best interests of the Fund and its shareholders and does not involve a conflict of interest from which the Adviser or the Affiliated Fund Manager derives an inappropriate advantage.
As stated earlier, any contract between the Adviser and the Trust would remain subject to the shareholder voting requirements of Section 15(a) of the Act, Rule 18f-2 under the Act and related proxy disclosure requirements of Rule 20a-1 under the Act. Applicants are not seeking any exemptive relief with respect to such contracts. Rather, Applicants are requesting that the Adviser be permitted to enter into new or amended contracts with Fund Managers without seeking shareholder approval. This
exemption would permit the Adviser more efficiently to perform the functions the Funds are paying it to perform: that is, selecting Fund Managers, monitoring their performance, and making whatever changes in the roster of Fund Managers the Adviser deems appropriate, subject to the approval of the Board. To require that shareholders approve each new Fund Manager would not only result in unnecessary administrative expense to the Funds, but could result in harmful delays in executing changes in Fund Managers that the Adviser and the Board have determined are necessary. To the extent this occurred, shareholders of the Funds would be receiving less satisfactory service than would otherwise be the case, and their expectations would be frustrated.
It is in order to avoid the aforementioned expenses and delays that Applicants are requesting relief from Section 15(a) of the Act and Ru1e 18f-2 thereunder.
Primary responsibility for management of the Funds -- including in particular the selection and supervision of the Fund Managers - is vested in the Adviser, subject to oversight by the Board. The Advisor Agreement with the Trust will remain fully subject to the requirements of Section 15(a) of the Act and Rule 18f-2 thereunder, including the requirements for shareholder voting. Applicants believe it is consistent with the protection of investors to vest the selection and supervision of Fund Managers in the Adviser given the advisory structure of the Trust, as well as the Adviser's significant experience and experience in selecting Fund Managers. It is submitted that, within this structure and in view of such experience and expertise, the Adviser is in a better position to make an informed selection of a Fund Manager than individual investors. Significantly, the Trust's prospectus discloses information concerning the identity, ownership, qualifications and compensation of the Fund Managers in full compliance with
Form N-1A. Further, the information statements described above would provide shareholders with all information regarding a new Fund Manager or a material change in a Fund Manager's Agreement to the same extent as would be set forth in a proxy statement. Thus, investors would be in a position to make a fully informed investment decision as the purchase, redemption or retention of Fund shares.
These arrangements are consistent with the protection of investors because they both permit the Trust to avoid the administrative burden and expense associated with a formal proxy solicitation (which benefits all shareholders, including those that might redeem their shares after review of an information statement relating to a new Fund Manager or a material change in a Fund Manager Agreement they did not favor) and provide full disclosure to investors, permitting them to "vote with their feet," to the same extent as if a shareholder vote had approved the new contract - the result in most if not all such votes. In contrast, in the absence of the exemptive relief requested in this Application, all shareholders would bear the higher expenses associated with formal proxy solicitations that would provide no more meaningful disclosure to shareholders -- including those shareholders who might redeem their shares after shareholder approval of a new Fund Manager or a material change in a Fund Manager Agreement they did not favor. Moreover, Applicants note that mutual fund shareholders rarely if ever disapprove a proposed sub-advisory agreement that is recommended by management and the board of directors or trustees of the mutual fund.
Applicants' arrangements are sufficiently distinguishable from those of most other investment companies so that the exemptive relief being requested herein could not fairly be viewed as a precedent for similar relief for other investment companies that employ advisers in a conventional way. As stated above, the Adviser continuously monitors the performance of each Fund Manager and from time to time may recommend the replacement of a particular Fund Manager, or allocation of a portion of the assets of
a particular Fund to an additional Fund Manager (should the Advisor choose to employ multiple Fund Managers for a single Fund in the future). This "Manager of Managers" approach distinguishes the Funds from the vast majority of other investment companies which use internal management.
It is of course true that a sub-adviser to any registered investment company must serve pursuant to a contract that may be terminated by the company on not more than sixty days' notice. As a practical matter, however, persons buying shares of a particular mutual fund normally do so with the understanding that the fund's portfolio will be managed by the investment adviser and sub- adviser (if any) named in the prospectus. Indeed in the usual case the identity of the company or companies providing portfolio management is the primary basis for choosing among funds with similar investment objectives and policies. Thus, barring an extraordinary development, the advisory relationships described in a fund's prospectus are expected to be permanent.
The Trust currently has six Funds. Since May 9, 1985, the commencement of operations of the Trust, five changes in Fund Managers or material changes in Fund Manager's Agreements were submitted for shareholder approval. Attached hereto as Exhibit A is a table listing all meetings of the shareholders of the Funds previously held or to be held for the purpose of approving a new Fund Manager or material change in a Fund Manager's Agreement since commencement of operations of the respective Funds. Each of these meetings would not have taken place and shareholders would have been spared the expense and burden of repeat proxy solicitations, while receiving all relevant information that would have been included in a proxy statement, had the Order been in place. Shareholders could then have made an immediate decision to hold or redeem their shares without the delay associated with waiting for the completion of the proxy solicitation, the calculation of votes, the communication of the results and the determination by the shareholder of whether he or she regarded the result - in all cases, the approval of the arrangements proposed - as favorable or unfavorable.
The Adviser may wish to change the Fund Manager for a particular Fund for any number of reasons. First, the Adviser may determine that a Fund Manager is providing sub-standard performance over a period of time. In such a case, the Fund Manager might be replaced by a new Fund Manager, or, if another Fund Manager for a Fund with multiple Fund Managers (if the Advisor elects to use this approach in the future) is deemed to have superior performance, the assets managed by the under performing Fund Manager may be allocated to the superior Fund Manager. A second reason may be that the individual employee responsible for a Fund moves from employment with one Fund Manager to another, and the Adviser deems it advisable to stay with that individual. A third reason for a Fund Manager change may be when an entity undergoes a change in control that causes the Fund Manager's Agreement to terminate, and which the Adviser believes makes either advisable or inadvisable to continue the relationship (in either case a shareholder vote on a new contract would be required by Section 15(a) of the Act). Change in control was the cause of the most recent proxies of the Funds relating to Fund Managers. The fourth category of change occurs with the Adviser decides to obtain further diversification of a Fund by hiring an additional Fund Manager without terminating any current Fund Manager. A final category of change is when, in the view of the Adviser, a change in investment style (for example, from a value manager to a growth manager) is warranted.
The purpose of the requirement that shareholders approve new advisory contracts can be inferred readily. The identity of a registered investment company's investment adviser, together with the company's fundamental investment policies and objectives, is one of the main features distinguishing one investment company from another. Clearly, the framers of the Act believed that if an investment company is to be managed by an investment advisor different from the one shareholders expected when
they made their investment, the new investment adviser should be approved by shareholders. The exemption being requested herein would be fully consistent with this principle.
The primary party on which an investor in a Fund will rely will be the Adviser. Indeed, the first page of the Trust's prospectus makes perfectly clear that the Adviser is the primary service provider to the Fund, stating that the Adviser "provides overall management and operational services to the Funds", while the Fund Managers "are presently responsible for the day-to-day management of each Fund". In addition, the Management of the Funds section on page 11 of the prospectus expressly states that the Adviser "may ... select (Fund Managers) to manage certain of the Funds". Shareholders therefore understand and expect that the Adviser will change Fund Managers when appropriate, and, indeed, the Funds pay the Adviser to do exactly that, eliminating the potential need for shareholders to pay the expenses and to experience the delay associated with formal proxy solicitations consistent with the purposes and provisions of the Act and the protection of investors, particularly where the proxy solicitation provides no greater or more meaningful information to investors than the use of the informal information statement in the manner described herein. Moreover, whenever a Fund Manager is added or a material change in a Fund Manager's Agreement is made, the relevant Fund's prospectus would be supplemented before it is provided to new investors to alert such investors of the change. The Fund would promptly notify all shareholders of an affected Fund of the change through the information statement to be mailed within ninety (90) days after the change. This arrangement is consistent with--indeed, even more accommodative to timely notification to shareholders than -- related strictures under the Act. For instance, in the absence of the exemptive relief requested, the Board could determine to terminate an existing Fund Manager's Agreement and immediately approve and implement a new Agreement with a new Fund Manager. In that event, pursuant to rule 15a-4 under the Act the new Fund Manager would be permitted to serve prior to approval by shareholders for a period of 120 days provided
that the compensation to be received under the new Fund Manager's Agreement did not exceed that under the terminated Fund Manager's Agreement. Further, providing the informal information statement after a change in Fund Manager or a material change in a Fund Manager's Agreement would permit the Adviser to respond promptly to changed circumstances without leaving a Fund's assets in the hands of a Fund Manager having diminished capabilities (because of loss of key personnel or otherwise) or motivation (because of impending termination of its Fund Manager's Agreement) to manage the assets diligently.
Finally, in the unlikely event that a shareholder of a Fund is concerned about the selection of a particular Fund Manager by the Adviser, or a material change in a Fund Manager's Agreement, each as approved by the Board, that shareholder will be able to exchange his or her shares for shares of another Fund in the Trust with a Fund Manager the shareho1der deems adequate, without the imposition of any additional charges; that shareholder may also choose to redeem his or her shares. In either event, the ultimate outcome for the dissatisfied shareholder would be no worse than if a vote were held and the new Fund Manager approved -the result in most if not all circumstances - minus the unnecessary expenses involved in a proxy vote. Therefore the requested exemption, far from permitting shareholders' expectations to be frustrated contrary to the purpose of the Act, would facilitate those expectations being met.
Pursuant to Rule 0-2(f) under the Act, Applicants state that their addresses are as indicated on the cover page of this application. Applicants further state that all written or other communications
concerning this Application should be directed to:
Mark A. Katzoff, Esq.
Quantitative Group of Funds
55 Old Bedford Road
Lincoln, Massachusetts 01773
(800)331-1244
With a copy to:
Joseph R. Fleming, Esq.
Dechert Price & Rhoads
10 Post Office Square, Suite 1230
Boston, MA 02109
(617) 728-7161
Applicants desire that the Commission issue an order pursuant to Rule 0-5 under the Act without a hearing being held.
Each Applicant represents that the undersigned is authorized to file this Application in the name and on behalf of the Applicant. The resolutions and statements of authority required under Rule 0-2(c)(1) are attached hereto as Exhibit B.
The verification required by Rule 0-2(d) under the Act are attached hereto as Exhibit C.
For the foregoing reasons, Applicants request that the Commission enter an order pursuant to Section 6(c) of the Act granting the relief sought by this Application. Applicants submit that the requested exemption is necessary or appropriate in the public interest, consistent with the protection of investors, and consistent with the purpose fairly intended by the policy and provisions of the Act.
QUANTITATIVE GROUP OF FUNDS.
Mark A. Katzoff Clerk
QUANTITATIVE ADVISORS, INC.
Dated: August 20, 1998
Set forth below is a table listing all meetings of public shareholders of the Funds previously held or scheduled to be held for the purpose of approving a new Fund Manager or a material change in a Fund Manager's Agreement since commencement of operations of the Trust (May 9, 1985).
Quantitative Group of Funds
Meeting Date Fund Fund Manager's Agreement Approvals
------------ ---- ----------------------------------
April 2, 1990 Quantitative International Boston International Advisors, Inc.
Equity Fund*
October 28, 1998 Quantitative International Independence InternationalAssociates, Inc.
Equity Fund
October 28, 1998 Quantitative Emerging Independence InternationalAssociates, Inc.
Markets Fund**
October 28, 1998 Quantitative Small Cap Columbia Partners, LLC, Investment
Fund*** Management.
October 28, 1998 Quantitative Mid Cap Columbia Partners, LLC, Investment
Fund**** Management.
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*then called the Boston Foreign Growth and Income Series **then called the Quantitative Foreign Frontier Fund ***then called the Quantitative Numeric Fund ****then called the Quantitative Numeric II Fund
The undersigned, being duly elected Clerk of Quantitative Group of Funds, Inc.(the "Fund"), a business trust organized under the laws of Massachusetts, hereby certifies that (1) the attached resolutions are true and correct copies of the resolutions adopted by the Board of the Fund at a meeting of the Board held on February 13, 1998, at which meeting a quorum was at all times present and voting; and (ii) these resolutions have not been amended, modified or superseded in any way as of the date of this Certificate.
IN WITNESS WHEREOF, I have set my hand this day of August 20, 1998.
RESOLVED: That the President, Vice President or Clerk of the Fund be, and each of them hereby is, authorized and directed to complete, execute and file with the Securities and Exchange Commission in the name of and on behalf of the Fund, an Exemptive Application requesting relief from certain requirements of Section 15(a) and Rule 18f-2 of the Investment Company Act of 1940, and any and all exhibits and documents relating thereto, with such changes, additions and deletions as the officer or officers executing such application, on advice of counsel, may deem necessary or appropriate.
The undersigned, being duly elected Assistant Clerk of Quantitative Advisors, Inc. ("Quantitative Advisors"), a corporation organized under the laws of Massachusetts hereby certifies that (i) the attached resolutions are true and correct copies of the resolutions adopted by the Board of Quantitative Advisors at a regular meeting of the Board held on April 7, 1998, at which meeting a quorum was at all times present and voting; and (ii) these resolutions have not been amended, modified or superseded in any way as on the date of this Certificate.
IN WITNESS WHEREOF, I have set my hand this 20th day of August, 1998.
RESOLVED: That the President, Vice President, Clerk or Assistant Clerk of the Company be, and each of them hereby is, authorized and directed to complete, execute and file with the Securities and Exchange Commission in the name of and on behalf of the Fund, an Exemptive Application requesting relief from certain requirements of Section 15(a) and Rule 18f-2 of the Investment Company Act of 1940, and any and all exhibits and documents relating thereto, with such changes, additions and deletions as the officer or officers executing such application, on advice of counsel, may deem necessary or appropriate.
Commonwealth of Massachusetts )
) ss:
County of Middlesex )
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The undersigned, being duly sworn, deposes and says that he has duly executed the attached Amended Application dated August 20, 1998 for and on behalf of Quantitative Group of Funds (the "Fund"), a Massachusetts business trust, that he is the Clerk of the Fund; and that all action by shareholders, directors, and other bodies necessary to authorize deponent to execute and file such instrument has been taken. Deponent further says that he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
Subscribed and sworn to before me a Notary Public this 20th day of August, 1998
Commonwealth of Massachusetts )
) ss:
County of Middlesex )
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The undersigned, being duly sworn, deposes and says that he has duly executed the attached Amended Application dated August 20, 1998 for and on behalf of Quantitative Advisors, Inc. (the "Advisor"), a Massachusetts corporation, that he is the Assistant Clerk of the Advisor and that all action by shareholders, directors1 and other bodies necessary to authorize deponent to execute and file such instrument has been taken. Deponent further says that he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
Subscribed and sworn to before me a Notary Public this 20th day of August, 1998.
of a hearing by writing to the Secretary of the SEC, Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C. 20549. Each of the Applicants c/o Mark A. Katzoff. Esq., Quantitative Group of Funds., 55 Old Bedford Road, Lincoln, MA 01773.
complete Application is available for a fee from the SEC's Public Reference Branch. |
The Funds have each entered into an investment adviser's agreement
(each an "Adviser's Agreement" and collectively, the "Adviser's Agreements")
with the Adviser, which has entered into a Fund Manager's Agreement (a "Fund
Manager's Agreement") with each Fund Manager to the Funds. It is the Adviser's
responsibility under the Adviser's Agreements to select Fund Managers subject to
the review and approval of the Board of Trustees of the relevant Fund (the
"Board" or the "Trustees"), and to review their continued performance. A Fund
may be managed by a single Fund Manager or may be allocated by the Adviser
between or among two or more Fund Managers, although at present only one Fund
Manager manages each Fund. The oversight and management services provided by
Quantitative Advisors include (i) supervising the Fund Managers' compliance with
state and federal regulations, including the Act, (ii) evaluating the Fund
Managers' performance, (iii) analyzing the composition of the
investment portfolios of each Fund of the Trust and preparing reports thereon
for the Board or any committee of the Board, (iv) evaluating each Fund's
performance in comparison to similar mutual funds and other market information,
(v) conducting searches, upon a request of the Board, for a replacement for any
Fund Manager then serving the respective Fund, and (vi) preparing presentations
to shareholders which analyze each Fund's overall investment program and
performance. The Funds pay the Adviser a fee for its services that is based on
the value of the average daily net assets of each Fund. In turn, the Adviser
pays the fee of each Fund Manager. The Funds pay no fees directly to any Fund
Manager
Applicants request exemption from Section 15(a) of the Act and Rule 18f-2 thereunder, to permit the Adviser to enter into new or amended contracts with Fund Managers to the Funds without obtaining shareholder approval therefor, including new Fund Manager's Agreements necessitated because the prior Fund Manager's Agreements were terminated as a result of an "assignment" (as defined in Section 2(a)(4) of the Act).
a. The Adviser will provide general management and administrative services to the Funds, including overall supervisory responsibility for the general management and investment of the Funds' securities portfolios and, subject to review and approval by each Board with respect to its respective Funds, will (i) set the Funds' overall investment strategies; (ii) select Fund Managers; (iii) monitor and evaluate the performance of Fund Managers; (iv) allocate and, when appropriate, reallocate a Fund's assets among its Fund Managers in those cases where a Fund has more than one Fund Manager; and (v) implement procedures reasonably designed to ensure that the Fund Managers comply with the relevant Fund's investment objectives, policies, and restrictions.
b. Before a Fund may rely on the Order requested hereby, the
operation of the Fund in the manner described in this Application will be
approved by a majority of its outstanding voting securities, as defined in the
Act, or, in the case of a new Fund whose public shareholders purchased shares on
the basis of a prospectus containing the disclosure contemplated by condition
(d) below, by the sole shareholder before offering of shares of such Fund to the
public.
c. Each Fund will furnish to its shareholders all information about a new Fund Manager or Fund Manager's Agreement for one of its Funds that would be included in a proxy statement. Such information will include disclosure as to level of fees to be paid to the Adviser and each Fund Manager of the Fund and any change in such information caused by the addition of a new Fund Manager or any proposed material change in a Fund Manager's Agreement. Each Fund will meet this condition by providing its shareholders with an informal information statement complying with the provisions of Regulation 14C under the Exchange Act and Schedule 14C thereunder. With respect to a newly retained Fund Manager, or a change in a Fund Manager's Agreement, this information statement will be provided to shareholders of the Fund a maximum of ninety (90) days after the addition of the new Fund Manager or the implementation of any change in a Fund Manager's Agreement. The information statement will
also meet the requirements of Schedule 14A.
d. Each Fund will disclose in its prospectuses the existence, substance and effect of the Order granted pursuant to the Application. In addition, each Fund will hold itself out to the public as employing the "manager of managers" approach described in the application The prospectus and any sales materials or other shareholder communications relating to a Fund will prominently disclose that the Adviser has ultimate responsibility for the investment performance of the Fund due to its responsibility to oversee Fund Managers and recommend their hiring, termination, and replacement.
e. No director, trustee or officer of the Funds or director or officer of the Adviser willown directly or indirectly (other than through a pooled investment vehicle that is not controlled by any such director, trustee or officer) any interest in any Fund Manager except for (i) ownership of interests in the Adviser or any entity that controls, is controlled by or is under common control with the Adviser; or (ii) ownership of less than 1% of the outstanding securities of any class of equity or debt of a publicly traded company that is either a Fund Manager or any entity that controls, is controlled by or is under common control with a Fund Manager.
f. The Adviser will not enter into a Fund Manager's Agreement with any Fund Manager that is an affiliated person, as defined in Section 2(a)(3) of the Act, of the Adviser or the Funds other than by reason of serving as Fund Manager to one or more Funds ("Affiliated Fund Manager") without such agreement, including the compensation to be paid thereunder being approved by the shareholders of the applicable Fund.
g. At all times, a majority of the members of the Board will be persons each of whom is not an "interested person" of the respective Fund as defined in Section 2(a)(19) of the Act
("Independent Trustees"), and the nomination of new or additional Independent Trustees will be placed within the discretion of the then existing Independent Trustees.
Any Contracts between the Adviser and the Fund would remain subject to the shareholder voting requirements of Section 15(a) of the Act, Rule 18f-2 under the Act and related proxy disclosure requirements of Rule 20a-1 under the Act. This exemption would permit the Adviser more efficiently to perform the functions the Funds are paying it to perform: that is, selecting Fund Managers, monitoring their performance, and making whatever changes in the roster of Fund Managers the Adviser deems appropriate, subject to the approval of the Board. To require that shareholders approve each new Fund Manager would not only result in unnecessary administrative expense to the Funds, but could result in harmful delays in executing changes in Fund Managers that the Adviser and the Board have determined are necessary. It is in order to avoid the aforementioned expenses and delays that Applicants are requesting relief from Section 15(a) of the Act and Rule 18f-2 thereunder, an arrangement, Applicants contend, that would be necessary or appropriate in the public interest, as required under Section 6(c) of the Act.
Primary responsibility for management of the Funds including, in particular, selection and supervision of the Fund Managers -- is vested in the Adviser, subject to oversight by the Board. The Adviser's contracts with the Funds will remain fully subject to the requirements of Section 15(a) of the Act and Rule 18f-2 thereunder, including the requirements for shareholder voting. Applicants believe it is consistent with the protection of investors, pursuant to the requirements of Section 6(c) of the Act, to
vest the selection and supervision of Fund Managers in the Adviser given the advisory structure of the Funds, as well as the Adviser's significant experience and expertise in selecting Fund Managers. Significantly, the Funds' prospectuses disclose information concerning the identity, ownership, qualifications and compensation of the Fund Managers in full compliance with Form N-1A. Further, the information statements described above would provide shareholders with all information regarding a new Fund Manager or a material change in a Fund Manager's Agreement to the same extent as would be set forth in a proxy statement.
Applicants submit that under this policy, investors will be in a position to make a fully informed investment decision as to the purchase, redemption or retention of Fund shares. These arrangements are consistent with the protection of investors because they both permit the Funds to avoid the administrative burden and expense associated with a formal proxy solicitation (which benefits all shareholders, including those that might redeem their shares after review of an information statement relating to a new Fund Manager or a material change in a Fund Manager's Agreement they did not favor) and provide disclosure to investors, permitting them to "vote with their feet." In contrast, in the absence of the exemptive relief requested in this Application, all shareholders would bear the higher expenses associated with formal proxy solicitations that would provide no more meaningful disclosure to shareholders -- including those shareholders who might redeem their shares after shareholder approval of a new Fund Manager or a material change in a Fund Manager's Agreement they did not favor.
Finally, pursuant to Section 6(c) the shareholder voting exemption is consistent with the purposes fairly intended by the policy and provisions of the Act. The purpose of the requirement that shareholders approve new advisory contracts can be inferred readily. The identity of a registered investment company's investment adviser, together with the company's fundamental investment policies and objectives, is one of the main features distinguishing one investment company from another. Clearly,
the framers of the Act believed that if an investment company is to be managed by an investment adviser different from the one shareholders expected when they made their investment, the new investment adviser should he approved by shareholders The exemption being requested herein would be fully consistent with this principle.
Shareholders understand and expect that the Adviser will change Fund Managers when appropriate, and, indeed, the Funds pay the Adviser to do exactly that. Eliminating the potential need for shareholders to pay the expenses and to experience the delay associated with formal proxy solicitations is consistent with the purposes and provisions of the Act and the protection of investors, particularly where the proxy solicitations provides no greater or more meaningful information to investors than the use of the informal information statement in the manner described herein.
Whenever a Fund Manager is added or a material change in a Fund Manager's Agreement is made, the relevant Fund's prospectus would be supplemented before it is provided to new investors to alert such investors of the change. The Fund would notify promptly all shareholders of an affected Fund of the change through the information statement to be mailed within ninety (90) days after the change. This arrangement is consistent with -- indeed, even more accommodative to timely notification to shareholders than -- related strictures under the Act. For instance, in the absence of the exemptive relief requested, either Board could determine to terminate an existing Fund Manager's Advisory Agreement and immediately approve and implement a new Agreement with a new Fund Manager. In that event, pursuant to Rule 15a-4 under the Act, the new Fund Manager would be permitted to serve prior to approval by shareholders for a period of 120 days provided that the compensation to be received under the new Fund Manager's Agreement did not exceed that under the terminated Fund Manager's Agreement.
In the unlikely event that a shareholder of a Fund is concerned about the selection of a particular Fund Manager by the Adviser, or a material change in a Fund Manager's Agreement, each as approved by the Board, that shareholder will be able to exchange his or her shares for shares of another Fund with a Fund Manager the shareholder deems adequate, without the imposition of any additional charges; that shareholder may also choose to redeem his or her shares, subject to a redemption fee imposed on the Ordinary shares of certain Funds. In either event, the ultimate outcome for the dissatisfied shareholder would be no worse than if a vote were held and the new Fund Manager approved - the result in most, if not all, circumstances-minus the unnecessary expenses involved in a proxy vote. Therefore, the requested exemption, far from permitting shareholders' expectations to be frustrated contrary to the purpose of the Act, would facilitate those expectations being met.
For the Commission by the Division of Investment Management, pursuant to delegated authority.
Jonathan G. Katz Secretary
__________ 1998
EXHIBIT 33
As filed with the Securities and Exchange Commission on January __, 1999
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
In the matter of
QUANTITATIVE GROUP OF FUNDS
and
QUANTITATIVE ADVISORS, INC.
55 Old Bedford Road
Lincoln, Massachusetts 01773
AMENDMENT NO. 3 TO APPLICATION FOR AN ORDER OF
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
SECTION 6(c) OF THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED, EXEMPTING APPLICANTS FROM C(Pounds)RTAIN
REQUIREMENTS OF SECTION 15(a) THEREOF AND RULE I8f-2
THEREUNDER
File No. 812-11144
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
----------------------------------X
In the Matter of )
)
QUANTITATIVE GROUP OF FUNDS )
) AMENDMENT NO. 3 TO APPLICATION
and ) PURSUANT TO SECTION 6(c) OF THE
) INVESTMENT COMPANY ACT OF 1940, AS
QUANTITATIVE ADVISORS, INC. ) AMENDED, FOR AN ORDER OF
) EXEMPTION FROM CERTAIN
55 Old Bedford Road ) REQUIREMENTS OF SECTION 15(a)
Lincoln, MA 01733 ) THEREOF AND RULE 18f-2.
) THEREUNDER
File No. 812-11144 )
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----------------------------------X
Communications regarding this application should be directed to:
Mark A. Katzoff, Esq.
QUANTITATIVE GROUP OF FUNDS.
55 Old Bedford Road
Lincoln, Massachusetts 01773
(800) 331-1244
with a copy to:
Joseph R. Fleming, Esq.
DECHERT PRICE & RHOADS
10 Post Office Square, Suite 1230
Boston, MA 02109
(617) 728-7161
Quantitative Group of Funds (the "Trust") is an open-end, management investment company organized as a Massachusetts business trust and currently composed of six separate series
(each, a "Fund," and collectively, the "Funds"). Each Fund is managed as though it were a separate mutual fund issuing its own shares. The Trust is registered as an investment company under the Investment Company Act of 1940, as amended (the "Act").
The investment adviser to the Trust, Quantitative Advisors, Inc. ("Quantitative Advisors" or the "Adviser"), selects sub-advisers (each a "Fund Manager." and collectively, the "Fund Managers") to provide investment advice for the Funds. The Funds and their respective Fund Managers are identified in the discussion on page 6 below. The Adviser and the Fund Managers are each registered as investment advisers under the Investment Advisers Act of 1940.
The Trust and the Adviser are collectively referred to in this Application as "Applicants". Applicants seek the relief requested with respect to the Trust, the Funds, and any series of the Trust organized in the future and for any open-end management investment company in the future advised by the Adviser or by a person controlling, controlled by, or under common control (within the meaning of section 2(a)(9) of the Act) with the Adviser, provided that such investment company operates in substantially the same manner as the Trust and complies with the conditions to the order requested as is set forth below in Section II. B. All existing investment companies that currently intend to rely on the order have been named as applicants, and any other existing or future investment companies that subsequently rely on the order will comply with the terms and conditions of the application.
Quantitative Advisors is wholly owned by officers and trustees of the Trust. Quantitative Advisors has entered into an investment adviser agreement (the "Adviser Agreement" ) with the Trust and is responsible for conducting all operations of the Trust except those operations contracted to its transfer agent and custodian and certain other service providers. The Adviser Agreement obligates Quantitative Advisors to provide investment advisory services to the Funds, to furnish the Trust with
certain administrative, clerical, bookkeeping and statistical services, office space and facilities, and to pay the compensation, if any, of the officers of the Trust.
Quantitative Advisors has in turn entered into an agreement with each Fund Manager (each, a "Fund Manager's Agreement" and collectively the "Fund Manager's Agreements"). The Fund Manager's Agreements are substantially the same in all material respects, except for the names of the Fund Managers and the rates of compensation, which are a portion of the management fee that is paid by each Fund to Quantitative Advisors and which Quantitative Advisors pays to the Fund Managers.
It is the Advisor's responsibility under the Adviser Agreement to select, subject to the review and approval of the Board of Trustees of each Fund (the "Board"), Fund Managers who have distinguished themselves by able performance in their respective areas of expertise, and to review their continued performance. The oversight and management services provided by Quantitative Advisors include (i) supervising the Fund Managers' compliance with state and federal regulations, including the Act, (ii) evaluating the Fund Managers' performance, (iii) analyzing the composition of the investment portfolios of each Fund and preparing reports thereon for the Board or any committee of the Board, (iv) calculating each Fund's performance in comparison to similar mutual funds and other market information, (v) conducting searches, upon a request of the Board, for a replacement for any Fund Manager then serving the respective Fund, and (vi) preparing presentations to shareholders that analyze each Fund's overall investment program and performance. Furthermore, under the terms of the Advisory Contracts with the Fund Managers, the Adviser has the authority to terminate the contracts without prior approval by the Board. However, the Advisor has never exercised this right without first discussing the matter with the Board. The Board is kept fully apprised of actions of this type contemplated by the Adviser, and all such actions are subject to review by the Board. The Advisory Contracts may also be terminated at any time by the Board or by the vote of a majority of the Fund's outstanding voting
securities.
The Funds' prospectus has consistently described the Advisor's oversight function. "The Funds are managed by [the Advisor], which provides overall management and administration of the Funds. Under the terms of the management agreement, the [Advisor] may, subject to the approval of the Trustees, manage the Funds itself or, subject to the approval by the Trustees and the shareholders, select [Fund Managers] to manage certain of the Funds. In the latter case, the [Advisor] monitors the [Fund Managers'] investment program and results, reviews brokerage matters, oversees compliance by the Funds with various federal and state statutes and carries out the directives of the Trustees." The Funds have employed an Advisor/Fund Manager structure since their inception in 1985. The Advisor monitors the performance of the Fund Managers on a daily basis and reports quarterly to the Board regarding their performance, including their relative performance to appropriate benchmarks and peer groups. The Manager periodically reviews investment strategies with the Fund Managers and from time to time has made recommendations to the Fund Managers regarding changes to those strategies.
In selecting Fund Managers, the Advisor considers a number of different criteria, including the nature of the strategy employed by the Fund Manager, the performance of the Fund Manager in strategies with investment objectives similar to those used by the Funds, and the Fund Manager's reputation in the investment community. In choosing between otherwise equally qualified candidates, the Advisor may also consider the Fund Manager's ability to participate in the marketing of the Funds. While not directly related to the Fund Manager's primary responsibility of selecting investments for a Fund, the Advisor believes that employing a Fund Manager who takes an active role in assisting to market a Fund may benefit shareholders by facilitating the accumulation of assets in the Fund. This both makes it easier for the Fund Manager to fully employ its investment strategy and has the
potential to lower costs to shareholders as assets increase. To locate and evaluate Fund Managers, the Advisor has employed personal contacts and manager databases, as well as discussions with prospective Fund Managers and their existing clients. In determining whether an existing Fund Manager should be terminated, the Advisor primarily focuses on the relative performance of the Fund Manager.
The Adviser performs the management, supervisory, and administrative functions for the Funds, and the Fund Managers serve in a sub-advisory capacity to the respective Funds. Subject to the supervision and direction of the Adviser and, ultimately, the Board, each Fund Manager's responsibilities are limited to furnishing the Fund advice with respect to the investment and reinvestment of the assets of the Fund in accordance with investment objectives, restrictions and limitations of the Fund set forth in the Trust's Registration Statement on Form N-IA, and to direct securities transactions pursuant to such investment advice. A Fund may be managed by a single Fund Manager or may be allocated by the Adviser between or among more than one Fund Manager. Currently, no Fund has more than a single Fund Manager. None of the Fund Managers is an affiliated person of the Adviser within the meaning of Section 2(a)(3) of the Act.
The Fund Managers of the individual Funds are as follows:
currently is Independence International Associates, Inc. The Quantitative Small Cap Fund was formerly called the Quantitative Numeric Fund.
Applicants request that the Commission grant an exemption from Section 15(a) of the Act and Rule 18f-2 thereunder to permit the Adviser to enter into or make material changes to Fund Manager's Agreements with the Adviser, without obtaining shareholder approval therefor. The Adviser Agreement between the Adviser and the Funds would in all cases be subject to the shareholder voting requirements of Section 15(a). For the reasons set forth below, Applicants respectfully submit that the requested exemptions would be in accordance with the standards of Section 6(c) of the Act.
Section 15(a) of the Act provides, in part, that;
It shall be unlawful for any person to serve or act as investment advisor of a registered investment company, except pursuant to a written contract, which contract. whether with such registered company or with an investment adviser of such registered company, has been approved by the vote of a majority of the outstanding voting securities of such registered company....
Rule l8f-2 under the Act provides, in relevant part, that
(c)(1) With respect to the submission of an investment advisory contract to the holders of the outstanding voting securities of a series company for the approval required by Section 15(a) of the Act, such matter shall be deemed to be effectively acted upon with respect to any class or series of securities of such
company if a majority of the outstanding voting securities of such class or series vote for the approval of such matter, notwithstanding (A) that such matter has not been approved by the holders of a majority of the outstanding voting securities of any other class or series affected by such matter, and (B) that such matter has not been approved by the vote of a majority of the outstanding voting securities of such company....
Rule l8f-2 further provides that:
(c)(2) If any class or series of securities of a series company fails to approve an investment advisory contract in the manner required by subparagraph (1) of this paragraph, the investment adviser of such company may continue to serve or act in such capacity for the period of time pending such required approval of such contract, of a new contract with the same or different adviser, or other definitive action; provided that the compensation received by such investment adviser during such period is equal to no more than its actual costs incurred in furnishing investment advisory services to such class or series or the amount it would have received under the advisory contract, whichever is less.
Section 6(c) of the Act provides, in part, that;
The Commission ... by order upon application, may conditionally or unconditionally exempt any person or any class or classes of persons... from any provisions of (the Act] or of any rule or regulation thereunder, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with tile protection of investors and the purposes fairly intended by the policy and provisions of (the Act).
Applicants request that the Commission grant an exemption from Section
15(a) of the Act and Rule 18f-2 thereunder to permit the Adviser to enter into
new or amended contracts with Fund Managers without obtaining shareholder
approval therefor, including new Fund Manager's Agreements necessitated because
the prior Fund Manager's Agreements were terminated as a result of an
"assignment" (as defined in Section 2(a)(4) of the Act). In order to protect
against the abuse that Section 15 addresses, and that may arise under
arrangements such as those proposed in this Application -- the transfer of
responsibility for management of a Fund's assets without Fund shareholders'
acquiescence --
Applicants agree to the imposition of the conditions enumerated below to the granting of the exemptive order requested (the "Order"). The conditions proposed are intended to ensure that Fund shareholders receive adequate disclosure about the Fund Managers, permitting them to "vote with their feet" on the Adviser's decision to appoint a new Fund Manager or to change the terms of a Fund Manager's agreement.
Applicants agree that any order granting the requested relief shall be subject to the following conditions:
a. The Advisor will provide general management and administrative services to the Funds, including overall supervisory responsibility for the general management and investment of the Fund's securities portfolios, and, subject to review and approval by each Board with respect to its respective Funds, will (i) set the Funds' overall investment strategies; (ii) select Fund Managers; (iii) monitor and evaluate the performance of Fund Managers; (iv) allocate and, when appropriate, reallocate a Fund's assets among its Fund Managers in those cases where the Advisor decides to select more than one Fund Manager for a particular Fund; and (v) ensure that the Fund Managers comply with the relevant Fund's investment objectives, policies, and restrictions.
b. Before a Fund may rely on the Order requested hereby, the operation of the Fund in the manner described in this Application will be approved by a majority of its outstanding voting securities, as defined in the Act, or, in the case of a new Fund whose public shareholders purchased shares on the basis of a prospectus containing the disclosure contemplated by condition (d) below, by the sole shareholder before offering of shares of such Fund to the public.
c. Within 90 days of the hiring of a new Fund Manager, each Fund will furnish to its shareholders all information about the new Fund Manager or Fund Manager Agreement that would be
included in a proxy statement, including any change in the disclosure required by the addition of a new Fund Manager. The information will include disclosure as to the level of fees to be paid to the Adviser and each Fund Manager. Each fund will meet this condition by providing shareholders, within 90 days of the hiring of a Fund Manager, with an information statement meeting the requirements of Regulation 14C and Schedule 14C under the Exchange Act. The information statement will also meet the requirements of Item 22 of Schedule 14A under the Exchange Act.
d. Each Fund will disclose in its prospectuses the existence, substance and effect of the Order granted pursuant to this Application. In addition, each Fund will hold itself out to the public as employing the "manager of managers" approach described in the application. The prospectus relating to a Fund will prominently disclose that the Adviser has ultimate responsibility for the investment performance of the Fund due to its responsibility to oversee Fund Managers and recommend their hiring, termination, and replacement.
e. No director, trustee or officer of the Funds or director or officer of the Adviser will own directly or indirectly (other than through a pooled investment vehicle that is not controlled by any such director, trustee or officer) any interest in any Fund Manager except for (i) ownership of interests in the Adviser or any entity that controls, is controlled by or is under common control with the Adviser, or (ii) ownership of less than 1% of the outstanding securities of any class of equity or debt of a publicly-traded company that is either a Fund Manager or any entity that controls, is controlled by or is under common control with a Fund Manager
f. The Adviser will not enter into a Fund Manager's Agreement with any Fund Manager that is an affiliated person, as defined in Section 2(a)(3) of the Act, of the Adviser or the Funds other
than by reason of serving as Fund Manager to one or more Funds ("Affiliated Fund Manager") without such agreement, including the compensation to he paid thereunder, being approved by the shareholders of the applicable Fund.
g. At all times, a majority of the members of the Board will be persons
each of whom is not an "interested person" of the respective Fund as defined in
Section 2(a)(19) of the Act ("Independent Trustee"), and the nomination of new
or additional Independent Trustees will be placed within the discretion of the
then existing Independent Trustees.
h. When a Fund Manager change is proposed for a Fund with an Affiliated Fund Manager, the Board, including a majority of the Independent Trustees, will make a separate finding. reflected in the Board's minutes, that such change is in the best interests of the Fund and its shareholders and does not involve a conflict of interest from which the Adviser or the Affiliated Fund Manager derives an inappropriate advantage.
As stated earlier, any contract between the Adviser and the Trust would remain subject to the shareholder voting requirements of Section 15(a) of the Act, Rule 18f-2 under the Act and related proxy disclosure requirements of Rule 20a-1 under the Act. Applicants are not seeking any exemptive relief with respect to such contracts. Rather, Applicants are requesting that the Adviser be permitted to enter into new or amended contracts with Fund Managers without seeking shareholder approval. This
exemption would permit the Adviser more efficiently to perform the functions the Funds are paying it to perform: that is, selecting Fund Managers, monitoring their performance, and making whatever changes in the roster of Fund Managers the Adviser deems appropriate, subject to the approval of the Board. To require that shareholders approve each new Fund Manager would not only result in unnecessary administrative expense to the Funds, but could result in harmful delays in executing changes in Fund Managers that the Adviser and the Board have determined are necessary. To the extent this occurred, shareholders of the Funds would be receiving less satisfactory service than would otherwise be the case, and their expectations would be frustrated.
It is in order to avoid the aforementioned expenses and delays that Applicants are requesting relief from Section 15(a) of the Act and Ru1e 18f-2 thereunder.
Primary responsibility for management of the Funds -- including in particular the selection and supervision of the Fund Managers - is vested in the Adviser, subject to oversight by the Board. The Advisor Agreement with the Trust will remain fully subject to the requirements of Section 15(a) of the Act and Rule 18f-2 thereunder, including the requirements for shareholder voting. Applicants believe it is consistent with the protection of investors to vest the selection and supervision of Fund Managers in the Adviser given the advisory structure of the Trust, as well as the Adviser's significant experience and experience in selecting Fund Managers. It is submitted that, within this structure and in view of such experience and expertise, the Adviser is in a better position to make an informed selection of a Fund Manager than individual investors. Significantly, the Trust's prospectus discloses information concerning the identity, ownership, qualifications and compensation of the Fund Managers in full compliance with
Form N-1A. Further, the information statements described above would provide shareholders with all information regarding a new Fund Manager or a material change in a Fund Manager's Agreement to the same extent as would be set forth in a proxy statement. Thus, investors would be in a position to make a fully informed investment decision as the purchase, redemption or retention of Fund shares.
These arrangements are consistent with the protection of investors because they both permit the Trust to avoid the administrative burden and expense associated with a formal proxy solicitation (which benefits all shareholders, including those that might redeem their shares after review of an information statement relating to a new Fund Manager or a material change in a Fund Manager Agreement they did not favor) and provide full disclosure to investors, permitting them to "vote with their feet," to the same extent as if a shareholder vote had approved the new contract - the result in most if not all such votes. In contrast, in the absence of the exemptive relief requested in this Application, all shareholders would bear the higher expenses associated with formal proxy solicitations that would provide no more meaningful disclosure to shareholders -- including those shareholders who might redeem their shares after shareholder approval of a new Fund Manager or a material change in a Fund Manager Agreement they did not favor. Moreover, Applicants note that mutual fund shareholders rarely if ever disapprove a proposed sub-advisory agreement that is recommended by management and the board of directors or trustees of the mutual fund.
Applicants' arrangements are sufficiently distinguishable from those of most other investment companies so that the exemptive relief being requested herein could not fairly be viewed as a precedent for similar relief for other investment companies that employ advisers in a conventional way. As stated above, the Adviser continuously monitors the performance of each Fund Manager and from time to time may recommend the replacement of a particular Fund Manager, or allocation of a portion of the assets of
a particular Fund to an additional Fund Manager (should the Advisor choose to employ multiple Fund Managers for a single Fund in the future). This "Manager of Managers" approach distinguishes the Funds from the vast majority of other investment companies which use internal management.
It is of course true that a sub-adviser to any registered investment company must serve pursuant to a contract that may be terminated by the company on not more than sixty days' notice. As a practical matter, however, persons buying shares of a particular mutual fund normally do so with the understanding that the fund's portfolio will be managed by the investment adviser and sub- adviser (if any) named in the prospectus. Indeed in the usual case the identity of the company or companies providing portfolio management is the primary basis for choosing among funds with similar investment objectives and policies. Thus, barring an extraordinary development, the advisory relationships described in a fund's prospectus are expected to be permanent.
The Trust currently has six Funds. Since May 9, 1985, the commencement of operations of the Trust, five changes in Fund Managers or material changes in Fund Manager's Agreements were submitted for shareholder approval. Attached hereto as Exhibit A is a table listing all meetings of the shareholders of the Funds previously held or to be held for the purpose of approving a new Fund Manager or material change in a Fund Manager's Agreement since commencement of operations of the respective Funds. Each of these meetings would not have taken place and shareholders would have been spared the expense and burden of repeat proxy solicitations, while receiving all relevant information that would have been included in a proxy statement, had the Order been in place. Shareholders could then have made an immediate decision to hold or redeem their shares without the delay associated with waiting for the completion of the proxy solicitation, the calculation of votes, the communication of the results and the determination by the shareholder of whether he or she regarded the result - in all cases, the approval of the arrangements proposed - as favorable or unfavorable.
The Adviser may wish to change the Fund Manager for a particular Fund for any number of reasons. First, the Adviser may determine that a Fund Manager is providing sub-standard performance over a period of time. In such a case, the Fund Manager might be replaced by a new Fund Manager, or, if another Fund Manager for a Fund with multiple Fund Managers (if the Advisor elects to use this approach in the future) is deemed to have superior performance, the assets managed by the under performing Fund Manager may be allocated to the superior Fund Manager. A second reason may be that the individual employee responsible for a Fund moves from employment with one Fund Manager to another, and the Adviser deems it advisable to stay with that individual. A third reason for a Fund Manager change may be when an entity undergoes a change in control that causes the Fund Manager's Agreement to terminate, and which the Adviser believes makes either advisable or inadvisable to continue the relationship (in either case a shareholder vote on a new contract would be required by Section 15(a) of the Act). Change in control was the cause of the most recent proxies of the Funds relating to Fund Managers. The fourth category of change occurs with the Adviser decides to obtain further diversification of a Fund by hiring an additional Fund Manager without terminating any current Fund Manager. A final category of change is when, in the view of the Adviser, a change in investment style (for example, from a value manager to a growth manager) is warranted.
The purpose of the requirement that shareholders approve new advisory contracts can be inferred readily. The identity of a registered investment company's investment adviser, together with the company's fundamental investment policies and objectives, is one of the main features distinguishing one investment company from another. Clearly, the framers of the Act believed that if an investment company is to be managed by an investment advisor different from the one shareholders expected when
they made their investment, the new investment adviser should be approved by shareholders. The exemption being requested herein would be fully consistent with this principle.
The primary party on which an investor in a Fund will rely will be the Adviser. Indeed, the first page of the Trust's prospectus makes perfectly clear that the Adviser is the primary service provider to the Fund, stating that the Adviser "provides overall management and operational services to the Funds", while the Fund Managers "are presently responsible for the day-to-day management of each Fund". In addition, the Management of the Funds section on page 11 of the prospectus expressly states that the Adviser "may ... select (Fund Managers) to manage certain of the Funds". Shareholders therefore understand and expect that the Adviser will change Fund Managers when appropriate, and, indeed, the Funds pay the Adviser to do exactly that, eliminating the potential need for shareholders to pay the expenses and to experience the delay associated with formal proxy solicitations consistent with the purposes and provisions of the Act and the protection of investors, particularly where the proxy solicitation provides no greater or more meaningful information to investors than the use of the informal information statement in the manner described herein. Moreover, whenever a Fund Manager is added or a material change in a Fund Manager's Agreement is made, the relevant Fund's prospectus would be supplemented before it is provided to new investors to alert such investors of the change. The Fund would promptly notify all shareholders of an affected Fund of the addition of a Fund Manager through the information statement to be mailed within ninety (90) days after a Fund Manager is added. This arrangement is consistent with -- indeed, even more accommodative to timely notification to shareholders than -- related strictures under the Act. For instance, in the absence of the exemptive relief requested, the Board could determine to terminate an existing Fund Manager's Agreement and immediately approve and implement a new Agreement with a new Fund Manager. In that event, pursuant to rule 15a-4 under the Act the new Fund Manager would be permitted to serve prior to
approval by shareholders for a period of 120 days provided that the compensation to be received under the new Fund Manager's Agreement did not exceed that under the terminated Fund Manager's Agreement. Further, providing the informal information statement after a change in Fund Manager would permit the Adviser to respond promptly to changed circumstances without leaving a Fund's assets in the hands of a Fund Manager having diminished capabilities (because of loss of key personnel or otherwise) or motivation (because of impending termination of its Fund Manager's Agreement) to manage the assets diligently.
Finally, in the unlikely event that a shareholder of a Fund is concerned about the selection of a particular Fund Manager by the Adviser, or a material change in a Fund Manager's Agreement, each as approved by the Board, that shareholder will be able to exchange his or her shares for shares of another Fund in the Trust with a Fund Manager the shareho1der deems adequate, without the imposition of any additional charges; that shareholder may also choose to redeem his or her shares. In either event, the ultimate outcome for the dissatisfied shareholder would be no worse than if a vote were held and the new Fund Manager approved - the result in most if not all circumstances - minus the unnecessary expenses involved in a proxy vote. Therefore the requested exemption, far from permitting shareholders' expectations to be frustrated contrary to the purpose of the Act, would facilitate those expectations being met.
Pursuant to Rule 0-2(f) under the Act, Applicants state that their addresses are as indicated on the cover page of this application. Applicants further state that all written or other communications
concerning this Application should be directed to:
Mark A. Katzoff, Esq.
Quantitative Group of Funds
55 Old Bedford Road
Lincoln, Massachusetts 01773
(800)331-1244
With a copy to:
Joseph R. Fleming, Esq.
Dechert Price & Rhoads
10 Post Office Square, Suite 1230
Boston, MA 02109
(617) 728-7161
Applicants desire that the Commission issue an order pursuant to Rule 0-5 under the Act without a hearing being held.
Each Applicant represents that the undersigned is authorized to file this Application in the name and on behalf of the Applicant. The resolutions and statements of authority required under Rule 0-2(c)(1) are attached hereto as Exhibit B.
The verification required by Rule 0-2(d) under the Act are attached hereto as Exhibit C.
For the foregoing reasons, Applicants request that the Commission enter an order pursuant to Section 6(c) of the Act granting the relief sought by this Application. Applicants submit that the requested exemption is necessary or appropriate in the public interest, consistent with the protection of investors, and consistent with the purpose fairly intended by the policy and provisions of the Act.
QUANTITATIVE GROUP OF FUNDS.
QUANTITATIVE ADVISORS, INC.
Dated: January 4, 1999
Set forth below is a table listing all meetings of public shareholders of the Funds previously held or scheduled to be held for the purpose of approving a new Fund Manager or a material change in a Fund Manager's Agreement since commencement of operations of the Trust (May 9, 1985).
Quantitative Group of Funds
Meeting Date Fund Fund Manager's Agreement Approvals
------------ ---- ----------------------------------
April 2, 1990 Quantitative International Boston International Advisors, Inc.
Equity Fund*
October 28, 1996 Quantitative International Independence International Associates, Inc.
Equity Fund
October 28, 1996 Quantitative Emerging Independence International Associates, Inc.
Markets Fund**
October 28, 1996 Quantitative Small Cap Columbia Partners, LLC, Investment
Fund*** Management.
October 28, 1996 Quantitative Mid Cap Columbia Partners, LLC, Investment
Fund**** Management.
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* then called the Boston Foreign Growth and Income Series ** then called the Quantitative Foreign Frontier Fund *** then called the Quantitative Numeric Fund **** then called the Quantitative Numeric II Fund
The undersigned, being duly elected Clerk of Quantitative Group of Funds, Inc.(the "Fund"), a business trust organized under the laws of Massachusetts, hereby certifies that (1) the attached resolutions are true and correct copies of the resolutions adopted by the Board of the Fund at a meeting of the Board held on February 13, 1998, at which meeting a quorum was at all times present and voting; and (ii) these resolutions have not been amended, modified or superseded in any way as of the date of this Certificate.
IN WITNESS WHEREOF, I have set my hand this day of January 4, 1999.
RESOLVED: That the President, Vice President or Clerk of the Fund be, and each of them hereby is, authorized and directed to complete, execute and file with the Securities and Exchange Commission in the name of and on behalf of the Fund, an Exemptive Application requesting relief from certain requirements of Section 15(a) and Rule 18f-2 of the Investment Company Act of 1940, and any and all exhibits and documents relating thereto, with such changes, additions and deletions as the officer or officers executing such application, on advice of counsel, may deem necessary or appropriate.
The undersigned, being duly elected Assistant Clerk of Quantitative Advisors, Inc. ("Quantitative Advisors"), a corporation organized under the laws of Massachusetts hereby certifies that (i) the attached resolutions are true and correct copies of the resolutions adopted by the Board of Quantitative Advisors at a regular meeting of the Board held on April 7, 1998, at which meeting a quorum was at all times present and voting; and (ii) these resolutions have not been amended, modified or superseded in any way as on the date of this Certificate.
IN WITNESS WHEREOF, I have set my hand this 4h day of January, 1999.
RESOLVED: That the President, Vice President, Clerk or Assistant Clerk of the Company be, and each of them hereby is, authorized and directed to complete, execute and file with the Securities and Exchange Commission in the name of and on behalf of the Fund, an Exemptive Application requesting relief from certain requirements of Section 15(a) and Rule 18f-2 of the Investment Company Act of 1940, and any and all exhibits and documents relating thereto, with such changes, additions and deletions as the officer or officers executing such application, on advice of counsel, may deem necessary or appropriate.
Commonwealth of Massachusetts )
) ss:
County of Middlesex )
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The undersigned, being duly sworn, deposes and says that he has duly executed the attached Amended Application dated January 4, 1999 for and on behalf of Quantitative Group of Funds (the "Fund"), a Massachusetts business trust, that he is the Clerk of the Fund; and that all action by shareholders, directors, and other bodies necessary to authorize deponent to execute and file such instrument has been taken. Deponent further says that he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
Subscribed and sworn to before me a Notary Public this 4th day of January, 1999.
Commonwealth of Massachusetts )
) ss:
County of Middlesex )
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The undersigned, being duly sworn, deposes and says that he has duly executed the attached Amended Application dated January 4, 1999 for and on behalf of Quantitative Advisors, Inc. (the "Advisor"), a Massachusetts corporation, that he is the Assistant Clerk of the Advisor and that all action by shareholders, directors and other bodies necessary to authorize deponent to execute and file such instrument has been taken. Deponent further says that he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
Subscribed and sworn to before me a Notary Public this 4th day of January, 1999.