As filed with the Securities and Exchange Commission on August 23, 1996
Securities Act File No. 33-38074
Investment Company Act File No. 811-6260
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 6 X
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 8 X
QUAKER INVESTMENT TRUST
(formerly Branch Cabell Investment Trust)
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
Telephone (919) 972-9922
AGENT FOR SERVICE:
C. Frank Watson, III
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
With copies to:
M. Guy Brooks, III, Esq.
Poyner & Spruill, L.L.P.
3600 Glenwood Avenue
Raleigh, North Carolina 27612
It is proposed that this filing will become effective:
75 days after filing pursuant to Rule 485(a)(2)
The issuer has previously registered an indefinite number of shares of its
series under the Securities Act of 1933, as amended, pursuant to Rule 24f-2
under the Investment Company Act of 1940, as amended. The Rule 24f-2 Notice for
the year ended March 31, 1995 was filed on May 25, 1995.
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PROSPECTUS
THE QUAKER FAMILY OF FUNDS
A Family of No Load Mutual Funds
The investment objective of the Quaker Enhanced Equity Index Fund, the Quaker
Core Equity Fund, the Quaker Aggressive Growth Fund, the Quaker Small-Cap Value
Fund, and the Quaker Sector Rotation Equity Fund is to provide long-term capital
growth. These Funds strive to achieve this objective by investing primarily in
equity securities of domestic U.S. companies, although each Fund pursues this
objective through a differing investment policy and portfolio composition. The
investment objective of the Quaker Fixed Income Fund is to generate current
income, preserve capital and maximize total returns through active management of
investment grade fixed income securities.
While there is no assurance that any of the Funds will achieve its investment
objective, each Fund endeavors to do so by following the investment policies
described in this Prospectus. Each Fund has a net asset value that will
fluctuate in accordance with the value of its portfolio securities. An investor
may invest, reinvest or redeem shares at any time.
Quaker Funds, Inc.
1288 Valley Forge Road
Post Office Box 987
Valley Forge, Pennsylvania 19482
The Funds are no load diversified series of the Quaker Investment Trust (the
"Trust"), a registered open-end management investment company. This Prospectus
sets forth the information about the Funds that a prospective investor should
know before investing. Investors should read this Prospectus and retain it for
future reference. Additional information about the Funds has been filed with the
Securities and Exchange Commission and is available upon request and without
charge. You may request the Statement of Additional Information, which is
incorporated in this Prospectus by reference, by writing the Funds at Post
Office Drawer 69, Rocky Mount, North Carolina 27802-0069, or by calling
800-220-8888.
Investment in any of the Funds involves risks, including the possible loss of
principal. Shares of the Funds are not deposits or obligations of, or guaranteed
or endorsed by, any financial institution, and such shares are not federally
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board,
or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus and the Statement of Additional Information is
November 1996.
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TABLE OF CONTENTS
PROSPECTUS SUMMARY............................... 2
SYNOPSIS OF COSTS AND EXPENSES................... 3
INVESTMENT OBJECTIVE AND POLICIES................ 4
RISK FACTORS..................................... 7
INVESTMENT LIMITATIONS........................... 8
FEDERAL INCOME TAXES............................. 9
DIVIDENDS AND DISTRIBUTIONS......................10
HOW SHARES ARE VALUED............................10
HOW SHARES MAY BE PURCHASED......................10
HOW SHARES MAY BE REDEEMED.......................13
MANAGEMENT OF THE FUNDS..........................15
OTHER INFORMATION................................17
This Prospectus is not an offering of the securities herein described in any
state in which the offering is unauthorized. No sales representative, dealer or
other person is authorized to give any information or make any representations
other than those contained in this Prospectus.
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PROSPECTUS SUMMARY
The Funds The Quaker Family of Funds (the "Funds") are no load
diversified series of the Quaker Investment Trust (the
"Trust"), a registered open-end management investment
company organized as a Massachusetts business trust. See
"Other Information - Description of Shares."
Offering Price Shares in the Funds are offered at net asset value. The
minimum initial investment is $25,000. The minimum
subsequent investment is $250. See "How Shares May be
Purchased."
Investment The Quaker Enhanced Equity Index Fund, the Quaker Core
Objectives Equity Fund, the Quaker Aggressive Growth Fund, the
Quaker Small-Cap Value Fund, and the Quaker Sector
Rotation Equity Fund (collectively herein the "Equity
Funds") are Funds which invest primarily in equity
securities of domestic U.S. companies. The primary
investment objective of each Equity Fund is to provide
shareholders with long-term capital growth. Realization
of current income is not a significant investment
consideration, and any income realized will be incidental
to each Funds' objective. The investment objective of the
Quaker Fixed Income Fund (the "Fixed Income Fund") is to
generate current income, preserve capital and maximize
total returns through active management of investment
grade fixed income securities. To the extent practicable,
the Fund generally will remain fully invested in fixed
income securities. The Fund intends to invest generally
in investment grade bonds. For more detailed information
regarding the investment objectives and policies of each
Fund, please see "Investment Objective and Policies."
Special Risk Although the Equity Funds will invest primarily in common
Considerations stocks traded in U.S. securities markets, they will each
focus on specific objectives which will present both
potential rewards and special risk considerations. Some
of the Equity Funds will focus on or include investments
in small capitalization companies. Accordingly these
Funds may be subject to greater fluctuations in net asset
value than those Funds which invest in larger
capitalization companies. The Aggressive Growth Fund may
also make short sales of securities, an investment
technique entailing greater than average risk to the
extent utilized. Short selling is considered to be of a
speculative nature.
While the Fixed Income Fund will invest primarily in
"high quality" investment grade bonds, some of the Fund's
investments may include mortgage and asset-backed
securities, collateralized mortgage obligations, and
other mortgage derivative products which involve certain
risks. All the Funds' investments may include illiquid
securities and securities purchased subject to a
repurchase agreement or on a "when-issued" basis, which
involve certain risks. The Funds may borrow only under
certain limited conditions (including to meet redemption
requests) and not to purchase securities. It is not the
intent of the Funds to borrow except for temporary cash
requirements. Borrowing, if done, would tend to
exaggerate the effects of market and interest rate
fluctuations on the Funds' net asset value until repaid.
See "Risk Factors."
Managers Subject to the general supervision of the Trust's Board
of Trustees and in accordance with each Fund's investment
policies, professional investment advisory firms have
been selected to direct the day to day investment
management of each Fund. Fiduciary Asset Management Co.
of St. Louis, Missouri manages both the Quaker Enhanced
Equity Index Fund and the Quaker Fixed Income Fund.
Fiduciary Asset Management manages over $2.6 billion in
assets. West Chester Capital Advisors, Inc. of West
Chester, Pennsylvania manages the Quaker Core Equity
Fund's investments. West Chester Capital manages over $54
million in assets. DG Capital Management, Inc. of
Wayland, Massachusetts manages the Quaker Aggressive
Growth Fund's investments. DG Capital Management is a new
investment advisory firm, although its principal has
significant investment management experience. Aronson +
Partners of Philadelphia, Pennsylvania manages the Quaker
Small-Cap Value Fund's investments. Aronson manages over
$660 million in assets. Logan Capital Management, Inc. of
Philadelphia, Pennsylvania manages the Quaker Sector
Rotation Equity Fund's investments. Logan Capital manages
over $175 million in assets. For its advisory services,
each Advisor receives a monthly fee based on the Fund's
daily net assets. For the Quaker Core Equity Fund, the
Quaker Aggressive Growth Fund, the Quaker Small-Cap Value
Fund, and the Quaker Sector Rotation Equity Fund, the
Advisors are compensated at the annual rate of 0.75%. For
the Quaker Enhanced Equity Index Fund the Advisor is
compensated at the annual rate of 0.50%. For the Quaker
Fixed Income Fund the Advisor is compensated at the
annual rate of 0.45%. See "Management of the Funds."
Dividends Capital gains, if any, are paid at least once each year
by each Fund. Income dividends, if any, are paid
quarterly by the Equity Funds. The Fixed Income Fund
intends to distribute a dividend monthly. Dividends and
capital gains distributions are automatically reinvested
in additional shares at net asset value unless the
shareholder elects to receive cash. See "Dividends and
Distributions."
Distributor and Quaker Securities, Inc. (the "Distributor") serves as
Distribution Plan distributor of shares of the Funds. Under the Funds'
Distribution Plan, expenditures by the Funds for
distribution activities may not exceed 0.25% of average
net assets annually and shall be funded entirely through
investment advisory fees otherwise payable to the Funds'
investment advisors. Shareholder service fees may not
exceed 0.25% of average net assets annually. The maximum
shareholder service fee for the Enhanced Equity Index
Fund and the Fixed Income Fund will not exceed 0.20% and
0.15% of average net assets respectively. Shareholder
servicing activities may be performed by Quaker Funds,
Inc. (the "Fund Sponsor"), an affiliate of the
Distributor. See "How Shares May Be Purchased" and
"Distribution Plan."
Redemption of There is no charge for redemptions, other than those
Shares charges associated with wire transfers of redemption
proceeds. Shares may be redeemed at any time at the net
asset value next determined after receipt of a redemption
request by a Fund. A shareholder who submits appropriate
written authorization may redeem shares by telephone. See
"How Shares May Be Redeemed."
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SYNOPSIS OF COSTS AND EXPENSES
The following tables set forth certain information in connection with the
expenses of the Funds for the current fiscal year. The information is intended
to assist the investor in understanding the various costs and expenses borne by
each Fund, and therefore indirectly by its investors, the payment of which will
reduce an investor's return on an annual basis.
Shareholder Transaction Expenses
Maximum sales load imposed on purchases
(as a percentage of offering price) NONE
Sales load imposed on reinvested dividends NONE
Deferred sales load NONE
Redemption fee * NONE
Exchange fee NONE
* Each Fund imposes a $10 charge for wiring redemption proceeds.
Annual Fund Operating Expenses - After Fee Waivers
and Expense Reimbursements(3)
(as a percentage of average net assets)
Core Equity
Aggressive Growth
Small-Cap Value Enhanced Fixed
& Sector Rotation Index Income
Investment advisory fees 0.75%1 0.50%(1) 0.45%(1)
Shareholder servicing fees 0.25%2 0.20%(2) 0.15%(2)
Other expenses 0.35% 0.35% 0.30%
----- ----- -----
Total operating expenses 1.35%3 1.05%(3) 0.90%(3)
EXAMPLE: You would pay the following expenses on a $1,000 investment, whether or
not you redeem at the end of the period, assuming a 5% annual return:
1 Year 3 Years
Core Equity Fund $14 $43
Aggressive Growth Fund $14 $43
Small-Cap Value Fund $14 $43
Sector Rotation Equity Fund $14 $43
Enhanced Equity Index Fund $11 $35
Fixed Income Fund $ 9 $29
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
(1) The investment advisory fee of 0.75% is higher than that paid by most other
investment companies. The Board of Trustees of the Trust believes the fee to
be comparable to fees paid by many funds having similar objectives and
policies. Up to 0.25% of each investment advisory fee may be paid for
distribution activities relating to the Funds.
(2) Each Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act"), which provides
that the Fund may pay certain distribution expenses and service fees up to
0.25% of its average net assets annually. The shareholder servicing fee will
be limited to 0.20% for the Enhanced Index Fund and 0.15% for the Fixed
Income Fund. See "How Shares May Be Purchased - Distribution Plan."
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(3) The "Total operating expenses" shown above are based upon contractual
amounts and other operating expenses estimated to be incurred by each Fund
for the current fiscal year. Each Advisor, the Administrator and the Fund
Sponsor have voluntarily agreed to a reduction in the fees payable to it and
to reimburse expenses of each Fund, if necessary, in an amount that limits
"Total operating expenses" (exclusive of interest, taxes, brokerage fees and
commissions, and extraordinary expenses) to the total expense ratios as a
percentage of net assets noted in each column. There can be no assurance
that the Advisor's, Administrator's and Fund Sponsor's voluntary fee waivers
and expense reimbursements will continue in the future.
See "How Shares May Be Purchased" and "Management of the Funds" below for more
information about the fees and costs of operating the Funds. The assumed 5%
annual return in the example is required by the Securities and Exchange
Commission. The hypothetical rate of return is not intended to be representative
of past or future performance of the Funds; the actual rate of return for the
Funds may be greater or less than 5%. Further information about the performance
of each Fund will be contained in the Annual Report of that Fund, a copy of
which, when available, may be obtained at no charge by calling the
Administrator.
INVESTMENT OBJECTIVE AND POLICIES
Quaker Enhanced Equity Index Fund
Investment Objective. The investment objective of the Quaker Enhanced Equity
Index Fund (the "Enhanced Equity Index Fund") is to provide shareholders with
long-term capital growth. Realization of current income will not be a
significant investment consideration, and any such income realized should be
considered incidental to the Enhanced Equity Index Fund's objective. The
Enhanced Equity Index Fund strives to achieve its investment objective by
investing primarily in equity securities of domestic U.S. companies. While there
is no guarantee that the Enhanced Equity Index Fund will meet its investment
objective, it seeks to achieve its objective through the investment policies and
techniques described herein. The Enhanced Equity Index Fund's investment
objective and fundamental investment limitations may not be altered without the
prior approval of a majority of the Enhanced Equity Index Fund's shareholders.
The Enhanced Equity Index Fund will seek to achieve this objective by investing
in a portfolio with a diversification, market capitalization and volatility risk
approximating the diversification, capitalization and volatility levels of the
S&P 500, while seeking to identify sectors and individual securities which offer
the opportunity to exceed the total return of the S&P 500 Index. The Fund
portfolio may contain up to 300 issues (40% fewer than the S&P 500 Index), and
may not contain a representation of all sectors comprising the S&P 500 Index.
Investment Selection. The Enhanced Equity Index Fund will seek to achieve its
objective through active security and sector analysis, utilizing a proprietary
statistical model of historical and current data and related correlation
predictions of equity price performance. The Fund seeks to develop a diverse
portfolio of stocks selected from approximately 1400 domestic equity securities
with market capitalizations within a similar range of the market capitalization
of those domestic equity securities comprising the S&P 500 Index. From this
universe of 1400 equities, Fiduciary Asset Management ("FAM"), investment
advisor to the Fund, will construct a portfolio of 200-300 equities utilizing a
number of quantitative and qualitative criteria, based on historical statistical
factors with quantifiable correlation to market equity valuation. Company
factors known as Common Factors including, but not limited to size;
earnings/price; book/price; financial leverage; foreign income; labor intensity
and dividend yield are examined.
FAM further tracks and examines criteria on each company relative to that
company's earnings; trading volume; analyst projected earnings per share;
diffusion of analysts' projection of earnings; relative strength of stock price;
among other criteria. Each company is also compared to financial and stock price
valuation criteria with peer companies in the same industry sectors. Relative
valuation and attractiveness is then determined to identify securities within
these industry sectors with expected superior possibilities of price strength.
Construction of the Enhanced Equity Index Fund is highly quantitative and is
dependent on extensive maintenance and analysis of statistical data relating to
each company in which the Enhanced Equity Index Fund may invest. In sharp
contrast to funds whose stated investment objective is a passive tracking of
performance to the S&P 500 Index, (funds whose investment objective is
maintenance of a portfolio substantially identical to the S&P 500 Index), the
Enhanced Equity Index
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Fund is actively managed with constant maintenance of proprietary models
designed to track the S&P 500 Index in risk and volatility, yet exceed the S&P
500 in potential price appreciation.
Quaker Core Equity Fund
Investment Objective. The investment objective of the Quaker Core Equity Fund
("Core Equity Fund") is to provide shareholders with long-term capital growth.
Realization of current income, while of secondary significance, will be an
investment consideration. Any such income realized should be considered
incidental to the Core Equity Fund's objective. The Core Equity Fund strives to
achieve its investment objective by investing primarily in equity securities of
domestic U.S. companies. While there is no guarantee that the Core Equity Fund
will meet its investment objective, it seeks to achieve its objective through
the investment policies and techniques described herein. The Core Equity Fund's
investment objective and fundamental investment limitations may not be altered
without the prior approval of a majority of the Core Equity Fund's shareholders.
Investment Selection. The Core Equity Fund will invest primarily in the equities
of large capitalization, well established companies, with substantial market
share in their respective industry groups and markets, favorable balance sheet
criteria, strong earnings and cash flows, and reasonable expectations for
continued profit growth. West Chester Capital Advisors ("West Chester"),
investment advisor to the Core Equity Fund, will conduct an ongoing analysis of
the financial health and prospects for share price increases of existing and
potential portfolio companies. This will include analysis of fundamental traits
associated with both growth companies (increasing revenues, earnings, cash
flows, market share) and value companies (low share price/book value, low
debt/asset, low price/earnings ratios) among other factors.
The majority of the holdings in the Core Equity Fund will be equity securities
of companies whose total market capitalization exceeds $5 billion, which in
aggregate will have trailing growth rates in excess of the S&P 500 average,
dividend yields in line with the S&P 500 average, and price/earnings ratios
approximating that of the S&P 500 average. The Fund places an emphasis on equity
securities of larger capitalization companies. The current yield (current
dividend divided by the current share price) is a secondary investment
criterion. Securities in the Fund portfolio will be selected from those equities
listed on major U.S. exchanges. UP to 25% of the Core Equity Fund may be
invested in securities that do not satisfy some or all of the above criteria.
The Core Equity Fund's portfolio will be constructed of 60-80 equity securities
representing the major industry group classifications which comprise the S&P 500
index. West Chester begins with an analysis of the recent price performance and
relative valuation of major industry groups within the S&P 500. Fund target
weighting for each industry group is then determined. The weighting of each
industry group will range from a minimum of one-half of the S&P 500 weighting in
a particular industry group, to a maximum weighting of twice the S&P 500
weighting in a particular industry group. West Chester will make determinations
as to the relative weightings among industry groups based on qualitative and
quantitative analysis of the industry groups themselves, and of individual
companies within each industry group. West Chester does not anticipate frequent
or aggressive shifting of industry group weightings within the portfolio.
Quaker Aggressive Growth Fund
Investment Objective. The investment objective of the Quaker Aggressive Growth
Fund ("Aggressive Growth Fund") is to provide shareholders with long-term
capital growth. Realization of current income will not be a significant
investment consideration, and any such income realized should be considered
incidental to the Aggressive Growth Fund's objective. The Aggressive Growth Fund
strives to achieve its investment objective by investing primarily in equity
securities of domestic U.S. companies. While there is no guarantee that the
Aggressive Growth Fund will meet its investment objective, it seeks to achieve
its objective through the investment policies and techniques described herein.
The Aggressive Growth Fund's investment objective and fundamental investment
limitations may not be altered without the prior approval of a majority of the
Aggressive Growth Fund's shareholders.
Investment Selection. The Aggressive Growth Fund's portfolio will include a
limited number of equity securities of those companies which DG Capital
Management ("DGCM"), investment advisor to the Aggressive Growth Fund, feels
show a high probability of superior prospects for growth. Many of the portfolio
companies will be small capitalization companies, which may exhibit more
volatility than medium and large capitalization companies.
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In selecting portfolio companies, DGCM relies heavily on developing and
maintaining contacts with management, customers, competitors and suppliers of
current and potential portfolio companies. DGCM attempts to invest in those
companies undergoing positive changes that have not been recognized by security
analysts and the financial press. Lack of recognition of these changes often
causes securities to be less efficiently priced. DGCM believes these companies
offer unique and potentially superior investment opportunities.
While portfolio securities are generally acquired for the long term, they may be
sold under any of the following circumstances:
a) the anticipated price appreciation has been achieved or is no longer
probable;
b) the company's fundamentals appear, in the analysis of DGCM, to be
deteriorating;
c) general market expectations regarding the company's future performance
exceed those expectations held by DGCM;
d) alternative investments offer, in the view of DGCM, superior potential
for appreciation.
The Aggressive Growth Fund also utilizes the investment strategy of short
selling securities in the universe of securities monitored by DGCM. DGCM
believes that the volatility of the Aggressive Growth Fund will be reduced, and
potential investment gain will be enhanced, through use of a conservative short
selling technique. The Aggressive Growth Fund will limit short selling to 25% of
its net assets. In addition, DGCM employs tight trading stops on securities sold
short to reduce the trading risk present in short selling. Short selling
involves the sale of borrowed securities. At the time a short sale is effected,
the Fund incurs an obligation to replace the security borrowed at whatever its
price may be at the time the Fund purchases the security for delivery to the
lender. When a short sale transaction is closed out by delivery of the
securities, any gain or loss on the transaction is taxable as a short term
capital gain or loss.
Since short selling can result in profits when stock prices generally decline,
the Aggressive Growth Fund in this manner can, to a certain extent, hedge the
market risk to the value of its other investments and protect its equity in a
declining market. To the extent that in a generally rising market the Fund
maintains short positions in securities rising with the market, the net asset
value of the Fund would be expected to increase to a lesser extent than the net
asset value of a fund that does not engage in short sales.
No short sale will be effected which will, at the time of making such short sale
transaction and giving effect thereto, cause the aggregate market value of all
securities sold short to exceed 25% of the value of the Aggressive Growth Fund's
net assets. The value of the securities of any one issuer that have been shorted
by the Fund is limited to the lesser of 2% of the value of the Aggressive Growth
Fund's net assets or 2% of the securities of any class of the issuer. To secure
the Fund's obligation to replace any borrowed security, the Fund will place in a
segregated account an amount of cash or U.S. Government Securities equal to the
difference between the market value of the securities sold short at the time of
the short sale and any cash or U.S. Government Securities originally deposited
with the broker in connection with the short sale (excluding the proceeds of the
short sale). The Fund will thereafter maintain daily the segregated amount at
such a level that the amount deposited in the account plus the amount originally
deposited with the broker as collateral will equal the greater of the current
market value of the securities sold short, or the market value of the securities
at the time they were sold short.
All of the Quaker Equity Funds may make short sales against the box, i.e. short
sales made when the Funds own securities identical tho those sold short.
The Aggressive Growth Fund may only engage in short sale transactions in
securities listed on one or more national securities exchanges or on the NASDAQ.
Quaker Small-Cap Value Fund
Investment Objective. The investment objective of the Quaker Small-Cap Value
Fund ("Small-Cap Value Fund") is to provide shareholders with long-term capital
growth. Realization of current income will not be a significant investment
consideration, and any such income realized should be considered incidental to
the Small-Cap Value Fund's objective. The Small-Cap Value Fund strives to
achieve its investment objective by investing primarily in equity securities of
domestic U.S. companies. While there is no guarantee that the Small-Cap Value
Fund will meet its investment objective, it seeks to achieve its objective
through the investment policies and techniques described herein. The Small-Cap
Value Fund's investment objective and fundamental investment limitations may not
be altered without the prior approval of a majority of the Small-Cap Value
Fund's shareholders.
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Investment Selection. The Small-Cap Value Fund's portfolio will include a
broadly diversified number of U.S. equity securities of those companies which
Aronson + Partners ("Aronson"), investment advisor to the Small-Cap Value Fund,
feels show a high probability of superior prospects for above average total
return. The portfolio companies will be small capitalization companies, which
may exhibit more volatility than medium and large capitalization companies. The
universe of securities eligible for inclusion in the Small-Cap Value Fund will
be those equity securities with market capitalizations consistent with the
universe of securities included in the Russell 2500 Index, with an ultimate
selection of 140-160 stocks for investment by the Small-Cap Value Fund.
In selecting portfolio companies, Aronson focuses on asset rich and earnings
rich companies, selling at relatively low market valuations, with attractive
growth and momentum characteristics. The Small-Cap Value Fund intends to remain
fully invested at all times, subject to a minimum cash balance maintained for
operational purposes.
The investment process is sequential, including data base screening,
classification of equities into peer groups or sectors, and, ultimately,
multifactor valuation.
A broad universe of U.S. securities is screened to identify a subset of issues
with ample trading volume, a number of years of operating history, and
capitalizations no larger than the companies in the Russell 2500 Index. The
resulting stocks are divided into 11 peer groups or sectors.
Within each group, the most attractive stocks are identified by considering a
number of balance sheet and income statement criteria, Wall Street analysts'
reports on book value, earnings (actual and forecasted), return on assets, and
price and earnings estimate revisions. The weight of each stock selection
variable is dependent on each stock's sector and fundamental characteristics. A
diversified portfolio is created with sector weights aligned to the Russell 2000
Index and individual security weightings determined to balance industry and
other risk characteristics.
Quaker Sector Rotation Equity Fund
Investment Objective. The investment objective of the Quaker Sector Rotation
Equity Fund ("Sector Rotation Fund") is to provide shareholders with long-term
capital growth. Realization of current income will not be a significant
investment consideration, and any such income realized should be considered
incidental to the Sector Rotation Fund's objective. The Sector Rotation Fund
strives to achieve its investment objective by investing primarily in equity
securities of domestic U.S. companies. While there is no guarantee that the
Sector Rotation Fund will meet its investment objective, it seeks to achieve its
objective through the investment policies and techniques described herein. The
Sector Rotation Fund's investment objective and fundamental investment
limitations may not be altered without the prior approval of a majority of the
Sector Rotation Fund's shareholders.
Investment Selection. The emphasis of the Sector Rotation Fund is, as the name
of the Fund suggests, to rotate the weightings in various industry sectors
within the Fund portfolio to take advantage of anticipated shifts in market
acceptance and valuation. The Fund will not own all sectors nor a broadly
diverse portfolio of many different issues. Rather, the Fund will focus on
specific sectors within the 198 various sectors monitored by Logan Capital
Management ("Logan Capital"), investment advisor to the Sector Rotation Fund,
concentrating on 25-40 issues, within a smaller universe of sectors. Logan
Capital will select individual securities in the Sector Rotation Fund from those
equity securities of companies whose total market capitalization is below the
average market capitalization of the S&P 500. Market capitalization is one
criterion for analysis within the Fund portfolio, effected with a shift from
larger to smaller capitalization securities, or smaller to larger capitalization
securities, based on anticipated shifts in the risk/reward ratio of each. Equity
securities will generally have trailing earnings growth rates in excess of the
S&P 500 average, dividend yields below the S&P 500 average, and Price to
Earnings (P/E) ratios greater than the S&P 500 average.
Logan Capital seeks to manage the Sector Rotation Fund by employing a portfolio
selection process which first examines macroeconomic trends and their potential
impact on both the overall U.S. economy and in turn the domestic and global
equity markets. Major components examined include the interest rate environment
and projections for rate changes; analysis of
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trends in Gross Domestic Product; trends in the Consumer Price Index; relative
strength or weakness of the U.S. dollar versus other major currencies; and
analysis of data relating to productivity in the U.S. workforce.
After constructing an internal model of projected macroeconomic trends and
factors, Logan Capital makes an analysis of the effect of the projected data on
specific sectors and specific industries. Upon identifying a universe of
potential securities derived from the above parameters, the Sector Rotation Fund
portfolio will be constructed of 25-40 equity securities representing Logan
Capital's target sector classifications and weightings. Logan Capital will make
determinations as to the relative weightings among sectors based on qualitative
and quantitative analysis of the sectors themselves, and of individual companies
within each sector.
Investment Securities Common to all Equity Funds
Each of the Funds described above is an equity fund (the "Equity Funds"). Stocks
held in the portfolios of the Equity Funds will generally be traded on either
the New York Stock Exchange, American Stock Exchange or the over-the-counter
market. Foreign securities may be held in the form of American Depository
Receipts ("ADRs"). ADRs are foreign securities denominated in U.S. dollars and
traded on U.S. securities markets.
The equity securities in which the Equity Funds may invest include common stock,
convertible preferred stock, straight preferred stock, and investment grade
convertible bonds. Each Equity Fund may also invest up to 5% of its net assets
in warrants or rights to acquire equity securities (other than those acquired in
units or attached to other securities). See "Investment Limitations."
Because of the inherent risk of foreign securities over domestic issues, the
Equity Funds will limit foreign investments to those traded domestically as
American Depository Receipts (ADRs). ADRs are receipts issued by a U.S. bank or
trust company evidencing ownership of securities of a foreign issuer. ADRs may
be listed on a national securities exchange or may trade on the over the counter
markets. The prices of ADRs are denominated in U.S. dollars while the underlying
security may be denominated in a foreign currency.
Under normal conditions, at least 90% of the Equity Funds' total assets will be
invested in equity securities. Warrants and rights will be excluded for purposes
of this calculation. As a temporary defensive measure, however, the Equity Funds
may invest up to 100% of their respective total assets in investment grade
bonds, U.S. Government Securities, repurchase agreements, or money market
instruments. When the Equity Funds invest their assets in investment grade
bonds, U.S. Government Securities, repurchase agreements, or money market
instruments as a temporary defensive measure, they are not pursuing their stated
investment objective. Under normal circumstances, however, the Equity Funds will
hold money market or repurchase agreement instruments for funds awaiting
investment, to accumulate cash for anticipated purchases of portfolio
securities, to allow for shareholder redemptions and to provide for Fund
operating expenses.
Quaker Fixed Income Fund
Investment Objective. The investment objective of the Quaker Fixed Income Fund
("Fixed Income Fund") is to generate current income, preserve capital and
maximize total returns through a portfolio of investment grade fixed income
securities. While there is no guarantee that the Fixed Income Fund will meet its
investment objective, it seeks to achieve its objective through the investment
policies and techniques described in this Prospectus. The Fixed Income Fund's
investment objective and fundamental investment limitations described herein may
not be altered without the prior approval of a majority of the Fixed Income
Fund's shareholders.
The Fixed Income Fund is designed for tax-exempt institutional investors such as
pension and profit-sharing plans, endowments, foundations, employee benefit
trusts, and individuals. Corporations and individual investors may invest in the
Fixed Income Fund, although investment decisions of the Fixed Income Fund will
not be influenced by any federal tax considerations, other than those
considerations that apply to the Fixed Income Fund itself.
Investment Policies. Fiduciary Asset Management ("FAM"), investment advisor to
the Fund, focuses first on establishing the optimal duration target for the
Fixed Income Fund's portfolio. The target duration generally will be similar to
the duration of the popular bond market indices (e.g. Salomon Brother Broad
Investment Grade Index, Shearson Lehman
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Aggregate Index). The duration of the Fixed Income Fund portfolio may be
lengthened when yields appear abnormally high, and duration may be shortened
when yields are abnormally low.
FAM then looks for value in the shape of the yield curve. FAM attempts to target
cash flows (portfolio securities' maturities plus coupon payments) at the
incrementally high points of the yield curve.
FAM then examines the relative valuation of U.S. Treasury securities versus
mortgage backed securities, asset backed securities, corporate bonds and U.S.
agency securities using option adjusted yield spread analysis. These spreads are
compared against their historic spread ranges and current conditions which could
cause spreads to change. This process results in a relative ranking for each
sector, which then is used to determine which sectors should be over or under
weighted versus the broad bond market indices.
Within each sector individual security selection is based on qualitative and
quantitative analysis of that security's expected performance relative to its
corresponding sector. All securities will be of investment grade quality as
determined by Moody's Investors Service, Inc. ("Moodys"), Standard & Poor's
Ratings Group ("S&P"), Fitch Investors Service, Inc. ("Fitch"), or Duff & Phelps
("D&P"), or if no rating exists, of equivalent quality in the determination of
FAM.
Duration. Duration is an important concept in FAM's fixed income management
philosophy. `Duration' and `maturity' are different concepts and should not be
substituted for one another for purposes of understanding the investment
philosophy and limitations of the Fixed Income Fund. FAM believes that for most
fixed income securities `duration' provides a better measure of interest rate
sensitivity than maturity. Whereas maturity takes into account only the final
principal payments to determine the price risk of a particular fixed income
security, duration weights all potential cash flows - principal, interest and
reinvestment income - on an expected present value basis, to determine the
`effective life' of the security.
U.S. Government Securities. The Fixed Income Fund may invest a portion of its
portfolio in U.S. Government Securities, defined to be U.S. Government
obligations such as U.S. Treasury notes, U.S. Treasury bonds, and U.S. Treasury
bills, obligations guaranteed by the U.S. Government such as Government National
Mortgage Association ("GNMA") as well as obligations of U.S. Government
authorities, agencies and instrumentalities such as Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), Federal
Agricultural Mortgage Corporation ("FAMC"), Federal Home Administration ("FHA"),
Federal Farm Credit Bank ("FFCB"), Federal Home Loan Bank ("FHLB"), Student Loan
Marketing Association ("SLMA"), Resolution Trust Corporation, and The Tennessee
Valley Authority. U.S. Government Securities may be acquired subject to
repurchase agreements. While obligations of some U.S. Government sponsored
entities are supported by the full faith and credit of the U.S. Government (e.g.
GNMA), several are supported by the right of the issuer to borrow from the U.S.
Government (e.g. FNMA, FHLMC), and still others are supported only by the credit
of the issuer itself (e.g. SLMA, FFCB). No assurance can be given that the U.S.
Government will provide financial support to U.S. Government agencies or
instrumentalities in the future, other than as set forth above, since it is not
obligated to do so by law. The guarantee of the U.S. Government does not extend
to the yield or value of the Fund's shares.
Mortgage Pass-Through Certificates. Obligations of GNMA, FNMA and FHLMC include
direct pass-through certificates representing undivided ownership interests in
pools of mortgages. Such certificates are guaranteed as to payment of principal
and interest (but not as to price and yield) by the issuer. For securities
issued by GNMA, the payment of principal is backed by the full faith and credit
of the U.S. Government. Mortgage pass-through certificates issued by FNMA or
FHLMC are guaranteed as to payment of principal by the credit of the issuing
U.S. Government agency. Securities issued by other non-governmental entities
(such as commercial banks or mortgage bankers) may offer credit enhancement such
as guarantees, insurance, or letters of credit. Mortgage pass-through
certificates are subject to more rapid prepayment than their stated maturity
date would indicate; their rate of prepayment tends to accelerate during periods
of declining interest rates or increased property transfers and, as a result,
the proceeds from such prepayments may be reinvested in instruments which have
lower yields.
Collateralized Mortgage Obligations. The Fixed Income Fund intends to invest in
collateralized mortgage obligations ("CMOs"), which are generally backed by
mortgage pass-through securities or whole mortgage loans. CMOs are usually
structured into classes of varying maturities and principal payment priorities.
The prepayment sensitivity of each class may or may not resemble that of the
CMOs collateral depending on the maturity and structure of that class. CMOs pay
interest
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and principal (including prepayments) monthly, quarterly or semi-annually. Most
CMOs are AAA rated, reflecting the credit quality of the underlying collateral;
however, some classes carry greater price risk than that of their underlying
collateral. FAM will invest in CMO classes when its internal analyses indicate
their characteristics and interest rate sensitivity fit the investment objective
and policies of the Fixed Income Fund.
Other Mortgage Related Securities. In addition to the mortgage pass-through
securities and the CMOs mentioned above, the Fixed Income Fund may also invest
in other mortgage derivative products if FAM views them to be consistent with
the overall policies and objective of the Fixed Income Fund.
FAM expects that governmental, government-related and private entities may
create other mortgage-related securities offering mortgage pass-through and
mortgage collateralized instruments in addition to those described herein. As
new types of mortgage-related securities are developed and offered to the
investment community, FAM will, consistent with the Fixed Income Fund's
investment objective, policies and quality standards, consider making
investments in such new types of mortgage-related securities.
Asset-Backed Securities. In addition to CMOs, other asset-backed securities have
been offered to investors backed by loans such as automobile loans, credit card
receivables, marine loans, recreational vehicle loans and manufactured housing
loans. Typically asset-backed securities represent undivided fractional
interests in a trust whose assets consist of a pool of loans and security
interests in the collateral securing the loans. Payments of principal and
interest on asset-backed securities are passed through monthly to certificate
holders and are usually guaranteed up to a certain amount and time period by a
letter of credit issued by a financial institution. In some cases asset-backed
securities are divided into senior and subordinated classes so as to enhance the
quality of the senior class. Underlying loans are subject to prepayment, which
may reduce the overall return to certificate holders.
If the letter of credit is exhausted and the full amounts due on underlying
loans are not received because of unanticipated costs, depreciation, damage or
loss of the collateral securing the contracts, or other factors, certificate
holders may experience delays in payment or losses on asset-backed securities.
The Fixed Income Fund may invest in other asset-backed securities that may be
developed in the future. The Fixed Income Fund will invest only in asset-backed
securities rated A or better by Moody's S&P, Fitch, or D&P, or if not rated, of
equivalent quality as determined by FAM.
Floating Rate Securities. The Fixed Income Fund may invest in variable or
floating rate securities that adjust the interest rate paid at periodic
intervals based on an interest rate index. Typically floating rate securities
use as their benchmark an index such as the 1, 3 or 6 month LIBOR, 3, 6 or 12
month Treasury bills, or the Federal Funds rate. Resets of the rates can occur
at predetermined intervals or whenever changes in the benchmark index occur.
Corporate Bonds. The Fixed Income Fund's investments in corporate debt
securities will be based on Wall Street credit analysis and value determination
by FAM. FAM's selection of bonds or industries within the corporate bond sector
is determined by, among other factors, historical yield relationships between
bonds or industries, the current and anticipated credit of the borrower, and
call features as well as supply and demand factors. All corporate securities
will be of investment grade quality as determined by Moody's, S&P, Fitch, and
Duff & Phelps, or if no rating exists, of equivalent quality in the
determination of FAM. This limitation is described in greater detail in
"Investment Limitations - Investment Grade Securities." FAM will monitor
continuously the ratings of securities held by the Fixed Income Fund and the
creditworthiness of their issuers. For a more complete description of the
various bond ratings for Moody's, S&P, Fitch and D&P, see Appendix A to the
Statement of Additional Information.
Investment Securities Common to all Quaker Funds
Money Market Instruments. Money market instruments may be purchased for
temporary defensive purposes, to accumulate cash for anticipated purchases of
portfolio securities and to provide for shareholder redemptions and operating
expenses of each Fund. Money market instruments mature in thirteen months or
less from the date of purchase and may include U.S. Government Securities,
corporate debt securities (including those subject to repurchase agreements),
bankers acceptances and certificates of deposit of domestic branches of U.S.
banks, and commercial paper (including variable amount demand master notes)
rated in one of the two highest rating categories by any of the nationally
recognized statistical rating
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organizations or if not rated, of equivalent quality in the Advisor's opinion.
The Advisor may, when it believes that unusually volatile or unstable economic
and market conditions exist, depart from a Fund's investment approach and assume
temporarily a defensive portfolio posture, increasing a Fund's percentage
investment in money market instruments, even to the extent that 100% of the
Fund's total assets may be so invested.
U.S. Government Securities. Each Fund may invest a portion of its portfolio in
U.S. Government Securities, as defined under "Investment Objective and
Policies-Quaker Fixed Income Fund-U.S. Government Securities" above.
Repurchase Agreements. The Funds may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when a Fund acquires a security and simultaneously
resells it to the vendor (normally a member bank of the Federal Reserve or a
registered Government Securities dealer) for delivery on an agreed upon future
date. The repurchase price exceeds the purchase price by an amount which
reflects an agreed upon market interest rate earned by the Fund effective for
the period of time during which the repurchase agreement is in effect. Delivery
pursuant to the resale typically will occur within one to five days of the
purchase. The Funds will not enter into any repurchase agreement which will
cause more than 10% of their net assets to be invested in repurchase agreements
which extend beyond seven days or other illiquid securities. In the event of the
bankruptcy of the other party to a repurchase agreement, a Fund could experience
delays in recovering its cash or the securities lent. To the extent that in the
interim the value of the securities purchased may have declined, the Fund could
experience a loss. In all cases, the creditworthiness of the other party to a
transaction is reviewed and found satisfactory by the Advisor. Repurchase
agreements are, in effect, loans of Fund assets. The Funds will not engage in
reverse repurchase transactions, which are considered to be borrowings under the
1940 Act.
Investment Companies. In order to achieve its investment objective, each Fund
may invest up to 10% of the value of its total assets in securities of other
investment companies. A Fund will not acquire securities of any one investment
company if, immediately thereafter, the Fund would own more than 3% of such
company's total outstanding voting securities, securities issued by such company
would have an aggregate value in excess of 5% of the Fund's total assets, or
securities issued by such company and securities held by the Fund issued by
other investment companies would have an aggregate value in excess of 10% of the
Fund's total assets. The Funds will only invest in other investment companies by
purchase of such securities on the open market where no commission or profit to
a sponsor or dealer results from the purchase other than the customary broker's
commissions or when the purchase is part of a plan of merger, consolidation,
reorganization, or acquisition. To the extent a Fund invests in other investment
companies, the shareholders of that Fund would indirectly pay a portion of the
operating costs of the underlying investment companies. These costs include
management, brokerage, shareholder servicing and other operational expenses.
Shareholders of the Fund would then indirectly pay higher operational costs than
if they owned shares of the underlying investment companies directly. The
Advisor will waive its advisory fee for that portion of a Fund's assets invested
in other investment companies, except when such purchase is part of a plan of
merger, consolidation, reorganization, or acquisition.
Real Estate Securities. The Funds will not invest directly in real estate
(including limited partnership interests), but may invest in readily marketable
securities secured by real estate or interests therein or issued by companies
that invest in real estate or interests therein. The Funds may also invest in
readily marketable interests in real estate investment trusts ("REITs"). REITs
are generally publicly traded on the national stock exchanges and in the
over-the-counter market and have varying degrees of liquidity. Although the
Funds are not limited in the amount of these types of real estate securities
they may acquire, it is not presently expected that within the next 12 months a
Fund will have in excess of 5% of its total assets in real estate securities.
RISK FACTORS
Investment Policies and Techniques. Reference should be made to "Investment
Objective and Policies" above for a description of special risks presented by
the investment policies of the Funds and the specific securities and investment
techniques that may be employed by each Fund, including the risks associated
with repurchase agreements, and for the Fixed Income Fund, the risks associated
with mortgage and asset-backed securities, collateralized mortgage obligations,
and other mortgage derivative products. The Aggressive Growth Fund may also make
short sales of securities, an investment technique entailing greater than
average risk to the extent utilized, and considered to be of a speculative
nature. A more complete
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discussion of certain of these securities and investment techniques and their
associated risks is contained in the Statement of Additional Information.
Fluctuations in Value. To the extent that the major portion of each Equity
Fund's portfolio consists of common stocks, it may be expected that its net
asset value will be subject to greater fluctuation than a portfolio containing
mostly fixed income securities. Moreover, by focusing the Equity Funds'
investments on specific sectors of the market, the Equity Funds may be subject
to greater share price fluctuations than a more diversified fund. The Small-Cap
Value Fund will invest primarily in small capitalization companies while many of
the portfolio companies in the Aggressive Growth Fund will be small
capitalization companies. Moreover, the Sector Rotation Fund's investments will
include companies whose market capitalization is below the average market
capitalization of the S&P 500. Accordingly, these Funds may be subject to
greater fluctuations than funds that invest in larger capitalization companies.
Because there is risk in any investment, there can be no assurance that any Fund
will achieve its investment objective.
The fixed income securities in which the Fixed Income Fund will invest (and in
which the Equity Funds may invest) are subject to fluctuation in value. Such
fluctuations may be based on movements in interest rates or from changes in the
creditworthiness of the issuers, which may result from adverse business and
economic developments or proposed corporate transactions, such as a leveraged
buy-out or recapitalization of the issuer. The value of a Fund's fixed income
securities will be generally vary inversely with the direction of the prevailing
interest rate movements. Should interest rates increase or the creditworthiness
of an issuer deteriorate, the value of a Fund's fixed income securities would
decrease in value, which would have a depressing influence on the Fund's net
asset value. Although certain of the U.S. Government Securities in which the
Funds may invest are guaranteed as to timely payment of principal and interest,
the market value of the securities, upon which the Funds' net asset values are
based, will fluctuate due to the interest rat risks described above.
Additionally, not all U.S. Government Securities are backed by the full faith
and credit of the U.S. Government. Moreover, principal on the mortgages
underlying certain of the Fixed Income Fund's investments may be prepaid in
advance of maturity, which prepayments tend to increase when interest rates
decline, presenting the Fund with more principal to invest at lower interest
rates.
Portfolio Turnover. The Funds sell portfolio securities without regard to the
length of time they have been held in order to take advantage of new investment
opportunities. Nevertheless, each Fund's portfolio turnover generally will not
exceed 100% in any one year. The degree of portfolio activity affects the
brokerage costs of the Funds and other transaction costs related to the sale of
securities and the reinvestment in other securities. Portfolio turnover may also
have capital gain tax consequences.
Borrowing. Each Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and 15% of its total assets to meet redemption requests
which might otherwise require untimely disposition of portfolio holdings. To the
extent the Funds borrow for these purposes, the effects of market price
fluctuations on portfolio net asset value will be exaggerated. If, while such
borrowing is in effect, the value of a Fund's assets declines, the Fund could be
forced to liquidate portfolio securities when it is disadvantageous to do so.
The Fund would incur interest and other transaction costs in connection with
borrowing. The Funds will borrow only from a bank. No Fund will make any
investments if the borrowing exceeds 5% of its total assets until such time as
repayment has been made to bring the total borrowing below 5% of its total
assets.
Illiquid Investments. Each Fund may invest up to 10% of its net assets in
illiquid securities. Illiquid securities are those that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price at which they are valued. Under the supervision of the
Board of Trustees, each Advisor determines the liquidity of its Fund's
investments. The absence of a trading market can make it difficult to ascertain
a market value for illiquid investments. Disposing of illiquid securities before
maturity may be time consuming and expensive, and it may be difficult or
impossible for a Fund to sell illiquid investments promptly at an acceptable
price. Included within the category of illiquid securities will also be
restricted securities, which cannot be sold to the public without registration
under the federal securities laws. Unless registered for sale, these securities
can only be sold in privately negotiated transactions or pursuant to an
exemption from registration.
Forward Commitments and When-Issued Securities. The Fixed Income Fund may
purchase when-issued securities and commit to purchase securities for a fixed
price at a future date beyond customary settlement time. The Fixed Income Fund
is required to hold and maintain in a segregated account until the settlement
date, cash, U.S. Government Securities or high-grade debt obligations in an
amount sufficient to meet the purchase price. Purchasing securities on a
when-issued or forward commitment basis involves a risk of loss if the value of
the security to be purchased declines prior to the settlement date, which risk
is in addition to the risk of decline in value of the Fixed Income Fund's other
assets. In addition, no income accrues to the purchaser of when-issued
securities during the period prior to issuance. Although the Fixed Income Fund
would generally purchase securities on a when-issued or forward commitment basis
with the intention of acquiring securities for its portfolio, the Fixed Income
Fund may dispose of a when-issued security or forward commitment prior to
settlement if FAM deems it appropriate to do so. The Fixed Income Fund may
realize short-term gains or losses upon such sales.
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INVESTMENT LIMITATIONS
Investment Grade Securities. The Fixed Income Fund intends to limit its
investment purchases to high quality investment grade securities. The securities
industry defines investment grade securities as obligations which, in FAM's
opinion, have the characteristics described by S&P, Fitch, Moody's, D&P or other
recognized rating services in their four highest rating grades. For S&P, Fitch
and D&P those ratings are AAA, AA, A and BBB. For Moody's those ratings are Aaa,
Aa, A and Baa. For a description of each rating grade, see Appendix A to the
Statement of Additional Information. The Fixed Income Fund intends to limit its
portfolio to a more restrictive quality criteria, limiting portfolio investments
to those securities in the three highest ratings, rated at least A by Moody's,
S&P, Fitch or D&P, or if not rated, of equivalent quality as determined by FAM.
There may also be instances in which FAM purchases bonds that are rated A by one
rating agency and not rated or rated lower than A by other rating agencies. The
final determination of quality and value will remain with FAM.
Other Investment Limitations. To limit each Fund's exposure to risk, the Trust
has adopted certain investment limitations. Some of these restrictions are that
the Funds will not: (1) issue senior securities, borrow money or pledge their
assets, except that they may borrow from banks as a temporary measure (a) for
extraordinary or emergency purposes, in amounts not exceeding 5% of each Fund's
total assets or, (b) in order to meet redemption requests, in amounts not
exceeding 15% of their total assets (the Funds will not make any investments if
borrowing exceeds 5% of their respective total assets); (2) make loans of money
or securities, except that each Fund may invest in repurchase agreements (but
repurchase agreements having a maturity of longer than seven days are subject to
the limitation on investing in illiquid securities); (3) invest more than 10% of
their net assets in illiquid securities; (4) invest in securities of issuers
which have a record of less than three years' continuous operation (including
predecessors and, in the case of bonds, guarantors), if more than 5% of their
total assets would be invested in such securities; (5) purchase or sell
commodities, commodities contracts, real estate (including limited partnership
interests, but excluding readily marketable securities secured by real estate or
interests therein, readily marketable interests in real estate investment
trusts, or readily marketable securities issued by companies that invest in real
estate or interests therein) or interests in oil, gas, or other mineral
exploration or development programs or leases (although it may invest in readily
marketable securities of issuers that invest in or sponsor such programs or
leases); (6) with respect to 75% of Fund assets, invest more than 5% of their
total assets in the securities of any one issuer or purchase more than 10% of
the outstanding voting stock of any one issuer; (7) write, purchase, or sell
puts, calls, straddles, spreads, or combinations thereof, or futures contracts
or related options; and (8) invest more than 5% of their net assets in warrants.
Investment restrictions (1), (2), (5), (6), and (8) are deemed fundamental, that
is, they may not be changed without shareholder approval. See "Investment
Limitations" in the Statement of Additional Information for a complete list of
investment limitations.
If the Board of Trustees of the Trust determines that any Fund's investment
objective can best be achieved by a substantive change in a non-fundamental
investment limitation, the Board can make such change without shareholder
approval and will disclose any such material changes in the then current
Prospectus. Any limitation that is not specified in this Prospectus, or in the
Statement of Additional Information, as being fundamental, is non-fundamental.
If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in the value of
a Fund's portfolio securities will not constitute a violation of such
limitation. In order to permit the sale of the Funds' shares in certain states,
the Funds may make commitments that are more restrictive than the investment
policies and limitations described above and in the Statement of Additional
Information. Such commitments may have an effect on the investment performance
of the Funds. Should the Trust determine that any such commitment is no longer
in the best interests of the Funds, it may revoke the commitment and terminate
sales of its shares in the state involved.
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FEDERAL INCOME TAXES
Taxation of the Funds. The Internal Revenue Code of 1986, as amended (the
"Code"), treats each series in the Trust as a separate regulated investment
company. Each series of the Trust (each of the Funds) intends to qualify or
remain qualified as a regulated investment company under the Code by
distributing substantially all of its "net investment income" to shareholders
and meeting other requirements of the Code. For the purpose of calculating
dividends, net investment income consists of income accrued on portfolio assets,
less accrued expenses. Upon qualification, the Funds will not be liable for
federal income taxes to the extent earnings are distributed. The Board of
Trustees retains the right for any series of the Trust to determine for any
particular year if it is advantageous not to qualify as a regulated investment
company. Regulated investment companies, such as each series of the Trust, are
subject to a non-deductible 4% excise tax to the extent they do not distribute
the statutorily required amount of investment income, determined on a calendar
year basis, and capital gain net income, using an October 31 year end measuring
period. The Funds intend to declare or distribute dividends during the calendar
year in an amount sufficient to prevent imposition of the 4% excise tax.
Taxation of Shareholders. For federal income tax purposes, any dividends and
distributions from short-term capital gains that a shareholder receives in cash
from the Funds or which are re-invested in additional shares will be taxable
ordinary income. If a shareholder is not required to pay a tax on income, he
will not be required to pay federal income taxes on the amounts distributed to
him. A dividend declared in October, November or December of a year and paid in
January of the following year will be considered to be paid on December 31 of
the year of declaration.
Distributions paid by the Funds from long-term capital gains, whether received
in cash or reinvested in additional shares, are taxable as long-term capital
gains, regardless of the length of time an investor has owned shares in the
Funds. Capital gain distributions are made when a Fund realizes net capital
gains on sales of portfolio securities during the year. Dividends and capital
gain distributions paid by the Funds shortly after shares have been purchased,
although in effect a return of investment, are subject to federal income
taxation.
The sale of shares of each Fund is a taxable event and may result in a capital
gain or loss. Capital gain or loss may be realized from an ordinary redemption
of shares or an exchange of shares between two mutual funds (or two series of a
mutual fund).
The Trust will inform shareholders of each Fund of the source of their dividends
and capital gains distributions at the time they are paid and, promptly after
the close of each calendar year, will issue an information return to advise
shareholders of the federal tax status of such distributions and dividends.
Dividends and distributions may also be subject to state and local taxes.
Shareholders should consult their tax advisors regarding specific questions as
to federal, state or local taxes.
Federal income tax law requires investors to certify that the social security
number or taxpayer identification number provided to the Funds is correct and
that the investor is not subject to 31% withholding for previous under-reporting
to the Internal Revenue Service (the "IRS"). Investors will be asked to make the
appropriate certification on their application to purchase shares. If a
shareholder of any of the Funds has not complied with the applicable statutory
and IRS requirements, the Fund is generally required by federal law to withhold
and remit to the IRS 31% of reportable payments (which may include dividends and
redemption amounts).
DIVIDENDS AND DISTRIBUTIONS
Each Fund intends to distribute substantially all of its net investment income,
if any, in the form of dividends. Each Equity Fund will pay income dividends, if
any, quarterly. Each Fund will distribute net realized capital gains, if any, at
least annually. The Fixed Income Fund intends to pay income dividends, if any,
monthly.
Unless a shareholder elects to receive cash, dividends and capital gains will be
automatically reinvested in additional full and fractional shares of the
respective Fund at the net asset value per share next determined. Shareholders
wishing to receive their dividends or capital gains in cash may make their
request in writing to the Administrator at 105 North Washington Street, Post
Office Drawer 69, Rocky Mount, North Carolina 27802-0069. That request must be
received by the Administrator prior to the record date to be effective as to the
next dividend. Each shareholder will receive a quarterly
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summary of his or her account, including information as to any reinvested
dividends. Tax consequences to shareholders of dividends and distributions are
the same if received in cash or in additional shares of the Funds.
In order to satisfy certain requirements of the Code, each Fund may declare
special year-end dividend and capital gains distribution during December. Such
distributions, if received by shareholders by January 31, are deemed to have
been paid by the Funds and received by shareholders on December 31 of the prior
year.
There is no fixed dividend rate, and there can be no assurance of the payment of
any dividends or the realization of any gains.
HOW SHARES ARE VALUED
Net asset value of each Equity Fund is determined at 4:00 p.m., New York time,
Monday through Friday, except on business holidays when the New York Stock
Exchange is closed. Net asset value of the Fixed Income Fund is determined at
3:00 p.m., New York time, Monday through Friday, except on business holidays
when the New York Stock Exchange and/or the Federal Reserve Banking System is
closed. The net asset value of the shares of each Fund for purposes of pricing
sales and redemptions is equal to the total market value of its investments,
less all of its liabilities, divided by the number of its outstanding shares.
Securities that are listed on a securities exchange are valued at the last
quoted sales price at the time the valuation is made. Price information on
listed securities is taken from the exchange where the security is primarily
traded by each Fund. Securities that are listed on an exchange and which are not
traded on the valuation date are valued at the mean of the bid and asked prices.
Unlisted securities for which market quotations are readily available are valued
at the latest quoted sales price, if available, at the time of valuation,
otherwise, at the latest quoted bid price. Temporary cash investments with
maturities of 60 days or less will be valued at amortized cost, which
approximates market value. Securities for which no current quotations are
readily available are valued at fair value as determined in good faith using
methods approved by the Board of Trustees of the Trust. Securities may be valued
on the basis of prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities.
Fixed income securities will ordinarily be traded on the over-the-counter
market. When market quotations are not readily available, fixed income
securities may be valued based on prices provided by a pricing service. The
prices provided by the pricing service are generally determined with
consideration given to institutional bid and last sale prices and take into
account securities prices, yields, maturities, call features, ratings,
institutional trading in similar groups of securities, and developments related
to specific securities. Such fixed income securities may also be priced based
upon a matrix system of pricing similar bonds and other fixed income securities.
Such matrix system may be based upon the considerations described above used by
other pricing services and information obtained by the pricing agent from the
Advisors and other pricing sources deemed relevant by the pricing agent.
HOW SHARES MAY BE PURCHASED
Assistance in opening accounts and a purchase application may be obtained by
calling 800-220-8888, or by writing to the Administrator at the address shown
below for purchases by mail. Assistance is also available through any
broker-dealer authorized to sell shares in the Funds. Payment for shares
purchased may also be made through your account at the broker-dealer processing
your application and order to purchase. Your investment will purchase shares at
each Fund's net asset value next determined after your order is received by the
Administrator in proper form as indicated herein. Since the Quaker Family of
Funds are offered only on a no-load basis, a broker dealer may charge a
transaction fee for settlement services.
The minimum initial investment is $25,000 in the Trust. Investors may allocate
their investment among the various series (Funds) of the Trust. If an initial
investment is made in only one Fund, the minimum initial investment is $25,000.
The minimum subsequent investment is $250. The Funds may, in the Distributor's
sole discretion, accept certain accounts with less than the stated minimum
initial investment. You may invest in the following ways:
Purchases by Mail. Shares may be purchased initially by completing the
application accompanying this Prospectus and mailing it, together with a check
payable and addressed to the applicable Fund, 105 North Washington Street, Post
Office Drawer 69, Rocky Mount, North Carolina 27802-0069.
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Subsequent investments in an existing account in any Fund may be made at any
time in minimum amounts of $250 by sending a check payable and addressed to the
Fund, 105 North Washington Street, Post Office Drawer 69, Rocky Mount, North
Carolina 27802-0069. Please enclose the stub of your account statement and
include the amount of the investment, the name of the account for which the
investment is to be made and the account number.
Purchases by Wire. To purchase shares by wiring federal funds, the Administrator
must first be notified by calling 800- 220-8888 to request an account number and
furnish the Administrator with your tax identification number. Following
notification to the Administrator federal funds and registration instructions
should be wired through the Federal Reserve System to:
Wachovia Bank of North Carolina, N.A.
Winston-Salem, North Carolina
ABA # 053100494
For credit to the Rocky Mount Office
For the Quaker Sector Rotation Equity Fund
Acct #6761-021090
For the Quaker Core Equity Fund
Acct #6761-021091
For the Quaker Aggressive Growth Fund
Acct #6761-021092
For the Quaker Small-Cap Fund
Acct #6761-021093
For the Quaker Enhanced Equity Index Fund
Acct #6761-021094
For the Quaker Fixed Income Fund
Acct #6761-021095
For further credit to (shareholder's name and SS# or EIN#)
It is important that the wire contain all the information and that the
Administrator receive prior telephone notification to ensure proper credit. A
completed application with signature(s) of registrant(s) must be mailed to the
Administrator immediately after the initial wire as described under "Purchases
by Mail" above. Investors should be aware that some banks may impose a wire
service fee.
General. All purchases of shares are subject to acceptance and are not binding
until accepted. The Administrator reserves the right to reject any application
or investment. Orders become effective, and shares are purchased at, the next
determined net asset value per share after an investment has been received by
the Administrator, which is as of 4:00 p.m., New York time, Monday through
Friday, exclusive of business holidays. Orders received by the Administrator and
effective prior to such 4:00 p.m. time will purchase shares at the net asset
value determined at that time. Otherwise, your order will purchase shares as of
such 4:00 p.m. time on the next business day. For purposes of the Fixed Income
Fund, the foregoing references to 4:00 p.m. will instead be to 3:00 p.m., New
York time, Monday through Friday, exclusive of business holidays. For orders
placed through a qualified broker-dealer, such firm is responsible for promptly
transmitting purchase orders to the Administrator.
If checks are returned unpaid due to nonsufficient funds, stop payment or other
reasons, the Trust will charge $20. To recover any such loss or charge, the
Trust reserves the right, without further notice, to redeem shares of any Fund
of the Trust already owned by any purchaser whose order is cancelled, and such a
purchaser may be prohibited from placing further orders unless investments are
accompanied by full payment by wire or cashier's check.
Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. Under certain circumstances the Distributor, at its sole
discretion, may allow payment in kind for Fund shares purchased by accepting
securities in lieu of cash. Any securities so accepted would be valued on the
date received and included in the calculation of the net asset value of the
Fund. See the Statement of Additional Information for additional information on
purchases in kind.
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The Administrator is required by federal law to withhold and remit to the IRS
31% of the dividends, capital gains distributions and, in certain cases,
proceeds of redemptions paid to any shareholder who fails to furnish the
Administrator with a correct taxpayer identification number, who under-reports
dividend or interest income or who fails to provide certification of tax
identification number. Instructions to exchange or transfer shares held in
established accounts will be refused until the certification has been provided.
In order to avoid this withholding requirement, you must certify on your
application, or on a separate W-9 Form supplied by the Administrator, that your
taxpayer identification number is correct and that you are not currently subject
to backup withholding or you are exempt from backup withholding. For
individuals, your taxpayer identification number is your social security number.
Distribution Plan. Quaker Securities, Inc., 1288 Valley Forge Road, Post Office
Box 987, Valley Forge, Pennsylvania 19482 (the "Distributor"), is the national
distributor for the Funds under a Distribution Agreement with the Trust. The
Distributor may sell Fund shares to or through qualified securities dealers or
others. Jeffry H. King, a Trustee of the Trust, controls the Distributor.
The Trust has adopted a Distribution Plan (the "Plan") for all Funds pursuant to
Rule 12b-1 under the 1940 Act. Under the Plan the Funds may reimburse any
expenditures to finance any activity primarily intended to result in sale of the
shares of the Funds or the servicing of shareholder accounts, including, but not
limited to, the following: (i) payments to the Distributor and its agents,
securities dealers, and others for the sale of shares of the Funds; (ii) payment
of compensation to and expenses of personnel who engage in or support
distribution of shares of the Funds or who render shareholder support services
not otherwise provided by the Administrator or Custodian; and (iii) formulation
and implementation of marketing and promotional activities. The categories of
expenses for which reimbursement is made are approved by the Board of Trustees
of the Trust. Expenditures by the Funds pursuant to the Plan are accrued based
on the average daily net assets of each Fund, except as provided below, may not
exceed 0.25% of average net assets for each year elapsed subsequent to adoption
of the Plan. Expenditures under (ii) above will be funded entirely from
investment advisory fees otherwise payable to the Funds' investment advisors.
The Investment Advisory Agreements entered into by the Funds and each of the
investment advisors provides for the payment of such distribution fees and
expenses from the investment advisory fees otherwise payable thereunder. Such
expenditures paid as service fees to any person who sells Fund shares may not
exceed 0.25% of the average annual net asset value of such shares. The Funds
anticipate that service fees will be paid by the Funds under the Plan for each
Fund to the Funds' Sponsor, Quaker Funds, Inc., an affiliate of the Distributor,
for shareholder servicing and Trust administration activities. The shareholder
servicing fees may not exceed 0.25% of average net assets of each Fund.
Expenditures on behalf of the Enhanced Equity Index Fund and the Fixed Income
Fund will not exceed 0.20% and 0.15% respectively. Laurie Keyes, Jeffry H. King
and Peter F. Waitneight, all Trustees of the Trust, control Quaker Funds, Inc.
The Plan may not be amended to increase materially the amount to be spent under
the Plan without shareholder approval. The continuation of the Plan must be
approved by the Board of Trustees annually. At least quarterly the Board of
Trustees must review a written report of amounts expended pursuant to the Plan
and the purposes for which such expenditures were made.
The Distributor, at its expense, may also provide additional compensation to
dealers in connection with sales of shares of the Funds. Compensation may
include financial assistance to dealers in connection with conferences, sales or
training programs for their employees, seminars for the public, advertising
campaigns regarding the Funds, and/or other dealer-sponsored special events. In
some instances, this compensation may be made available only to certain dealers
whose representatives have sold or are expected to sell a significant amount of
such shares. Compensation may include payment for travel expenses, including
lodging, incurred in connection with trips taken by invited registered
representatives and members of their families to locations within or outside of
the United States for meetings or seminars of a business nature. Dealers may not
use sales of the Funds' shares to qualify for this compensation to the extent
such may be prohibited by the laws of any state or any self-regulatory agency,
such as the National Association of Securities Dealers, Inc. None of the
aforementioned compensation is paid for by the Funds or their shareholders.
Exchange Feature. Investors will have the privilege of exchanging shares of any
Fund for shares of any other Fund of the Trust. An exchange involves the
simultaneous redemption of shares of one series and purchase of shares of
another series at the respective closing net asset value next determined after a
request for redemption has been received, and is a taxable transaction. Shares
of each Fund may be exchanged for shares of any other series of the Trust at the
net asset value plus
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that series' sales charge, if any. Exchanges may only be made by investors in
states where shares of the other series are qualified for sale. An investor may
direct the Administrator to exchange his shares by writing to the Administrator
at its principal office. The request must be signed exactly as the investor's
name appears on the account, and it must also provide the account number, number
of shares to be exchanged, the name of the series to which the exchange will
take place and a statement as to whether the exchange is a full or partial
redemption of existing shares.
A pattern of frequent exchange transactions may be deemed by the Distributor to
be an abusive practice that is not in the best interests of the shareholders of
the Funds. Such a pattern may, at the discretion of the Distributor, be limited
by that Fund's refusal to accept further purchase and/or exchange orders from an
investor, after providing the investor with 60 days prior notice. The
Distributor will consider all factors it deems relevant in determining whether a
pattern of frequent purchases, redemptions and/or exchanges by a particular
investor is abusive and not in the best interests of the Funds or its other
shareholders.
A shareholder should consider the investment objectives and policies of any
series into which the shareholder will be making an exchange, as described in
the prospectus. The Board of Trustees of the Trust reserves the right to suspend
or terminate, or amend the terms of, the exchange privilege upon 60 days written
notice to the shareholders.
Automatic Investment Plan. The automatic investment plan enables shareholders to
make regular monthly or quarterly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Administrator will automatically charge the checking account for
the amount specified ($100 minimum), which will be automatically invested in
shares at the public offering price on or about the 21st day of the month. The
shareholder may change the amount of the investment or discontinue the plan at
any time by writing to the Administrator.
Stock Certificates. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
that will show the number of shares owned.
HOW SHARES MAY BE REDEEMED
Shares of each Fund may be redeemed (the Funds will repurchase them from
shareholders) by mail or telephone. Any redemption may be more or less than the
purchase price of your shares depending on the market value of the Fund's
portfolio securities. All redemption orders received in proper form, as
indicated herein, by the Administrator, whether by mail or telephone, prior to
4:00 p.m. New York time, Monday through Friday, except for business holidays,
will redeem shares at the net asset value determined at that time. Otherwise,
your order will redeem shares as of such 4:00 p.m. time on the next business
day. For purposes of the Fixed Income Fund, the foregoing references to 4:00
p.m. will instead be to 3:00 p.m., New York time, Monday through Friday
exclusive of business holidays. There is no charge for redemptions from the
Funds, other than the charges for wiring of redemption proceeds. You may also
redeem your shares through a broker-dealer or other institution, who may charge
you a fee for its services.
The Board of Trustees reserves the right to involuntarily redeem any account
having a net asset value of less than $25,000 (due to redemptions, exchanges or
transfers, and not due to market action) upon 30 days written notice. If the
shareholder brings his account net asset value up to $25,000 or more during the
notice period, the account will not be redeemed. Redemptions from retirement
plans may be subject to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Administrator at 800-220-8888, or write to the address shown below.
Regular Mail Redemptions. Your request should be addressed to The Nottingham
Company, 105 North Washington Street, Post Office Drawer 69, Rocky Mount, North
Carolina 27802-0069. Your request for redemption must include:
1) Your letter of instruction specifying the account number, and the number of
shares or dollar amount to be redeemed. This request must be signed by all
registered shareholders in the exact names in which they are registered;
2) Any required signature guarantees (see "Signature Guarantees" below); and
3) Other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.
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Your redemption proceeds will be sent to you within seven days after receipt of
your redemption request. However, the Funds may delay forwarding a redemption
check for recently purchased shares while they determine whether the purchase
payment will be honored. Such delay (which may take up to 15 days from the date
of purchase) may be reduced or avoided if the purchase is made by certified
check or wire transfer. In all cases the net asset value next determined after
the receipt of the request for redemption will be used in processing the
redemption. The Funds may suspend redemption privileges or postpone the date of
payment (i) during any period that the New York Stock Exchange is closed, or
trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission (the "Commission"), (ii) during any period
when an emergency exists as defined by the rules of the Commission as a result
of which it is not reasonably practicable for the Funds to dispose of securities
owned by them, or to fairly determine the value of their assets, and (iii) for
such other periods as the Commission may permit.
Telephone and Bank Wire Redemptions. The Funds offer shareholders the option of
redeeming shares by telephone under certain limited conditions. The Funds will
redeem shares when requested by the shareholder if, and only if, the shareholder
confirms redemption instructions in writing.
The Funds may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 919-972-1908). The confirmation instructions must include:
1) Shareholder name and account number;
2) Number of shares or dollar amount to be redeemed;
3) Instructions for transmittal of redemption funds to the shareholder; and
4) Shareholder signature as it appears on the application then on file with
the Funds.
The net asset value used in processing the redemption will be the net asset
value next determined after the telephone request is received. Redemption
proceeds will not be distributed until written confirmation of the redemption
request is received, per the instructions above. You can choose to have
redemption proceeds mailed to you at your address of record, your bank, or to
any other authorized person, or you can have the proceeds sent by bank wire to
your bank ($5,000 minimum). Shares of the Funds may not be redeemed by wire on
days on which your bank, and/or the Funds' Custodian, is not open for business.
You can change your redemption instructions anytime you wish by filing a letter
including your new redemption instructions with the Administrator. (See
"Signature Guarantees" below.) The Distributor reserves the right to restrict or
cancel telephone and bank wire redemption privileges for shareholders, without
notice, if the Distributor believes it to be in the best interest of the
shareholders to do so. During drastic economic and market conditions, telephone
redemption privileges may be difficult to implement.
There is currently a $10 charge by the Funds for wire redemptions, to cover the
Funds' cost of executing the wire transfer. This charge will be automatically
deducted from the shareholder's account by redemption of shares in the account.
The shareholder's bank or brokerage firm may also impose a charge for processing
the wire. If wire transfer of funds is impossible or impractical, the redemption
proceeds will be sent by mail to the designated account.
You may redeem shares, subject to the procedures outlined above, by calling the
Administrator at 800-220-8888. Redemption proceeds will only be sent to the bank
account or person named in your Fund Shares Application currently on file with
the Administrator. Telephone redemption privileges authorize the Administrator
to act on telephone instructions from any person representing himself or herself
to be the investor and reasonably believed by the Administrator to be genuine.
The Funds will employ reasonable procedures, such as requiring a form of
personal identification, to confirm that instructions are genuine, and if they
do not follow such procedures, the Funds will be liable for any losses due to
fraudulent or unauthorized instructions. The Funds will not be liable for
following telephone instructions reasonably believed to be genuine.
Systematic Withdrawal Plan. A shareholder who owns shares of one of the Funds
valued at $10,000 or more at current net asset value may establish a Systematic
Withdrawal Plan to receive a monthly or quarterly check in a stated amount not
less than $100. Each month or quarter as specified, the Fund will automatically
redeem sufficient shares from your account to meet the specified withdrawal
amount. Call or write the Fund for an application form. See the Statement of
Additional Information for further details.
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Signature Guarantees. To protect your account and the Funds from fraud,
signature guarantees are required to be sure that you are the person who has
authorized a change in registration, or standing instructions, for your account.
Signature guarantees are required for (1) change of registration requests, (2)
requests to establish or change exchange privileges or telephone redemption
service other than through your initial account application, and (3) requests
for redemptions in excess of $50,000. Signature guarantees are acceptable from a
member bank of the Federal Reserve System, a savings and loan institution,
credit union (if authorized under state law), registered broker-dealer,
securities exchange or association clearing agency, and must appear on the
written request for redemption, establishment or change in exchange privileges,
or change of registration.
MANAGEMENT OF THE FUNDS
Trustees and Officers. Each Fund is a series of the Quaker Investment Trust (the
"Trust"), an investment company organized as a Massachusetts business trust in
1990. The Board of Trustees of the Trust is responsible for the management of
the business and affairs of the Trust. The Trustees and executive officers of
the Trust and their principal occupations for the last five years are set forth
in the Statement of Additional Information under "Management of the Fund -
Trustees and Officers." The Board of Trustees of the Trust is primarily
responsible for overseeing the conduct of the Trust's business. The Board of
Trustees elects the officers of the Trust who are responsible for its and the
Funds' day-to-day operations.
Advisor to the Quaker Enhanced Equity Index Fund & the Quaker Fixed Income Fund.
Subject to the authority of the Board of Trustees, Fiduciary Asset Management
Co. ("FAM") provides the Enhanced Equity Index Fund and the Fixed Income Fund
(for purposes of this section, the "Funds") with a continuous program of
supervision of the Funds' assets, including the composition of each Fund's
portfolio, and furnishes advice and recommendations with respect to investments,
investment policies and the purchase and sale of securities, pursuant to an
Investment Advisory Agreement ("Advisory Agreement") with the Trust.
FAM is registered under the Investment Advisors Act of 1940. Registration of FAM
does not involve any supervision of management or investment practices or
policies by the Securities and Exchange Commission. FAM was established as a
Missouri corporation in 1994. FAM currently serves as investment advisor to over
$2.6 billion in assets. While it has no prior experience advising an investment
company, FAM has been rendering investment counsel, utilizing investment
strategies substantially similar to that of the Funds, to individuals, banks and
thrift institutions, pension and profit sharing plans, trusts, estates,
charitable organizations and corporations since its inception in 1994. FAM's
address is 8112 Maryland Avenue, Suite 310, Clayton, Missouri 63105. FAM is
controlled by John L. Dorian and Charles D. Walbrandt.
John L. Dorian has been responsible for day-to-day management of the Enhanced
Equity Index Fund's portfolio since its inception. Mr. Dorian has been with FAM
since April 1995. Previously Mr. Dorian was a Managing Director and Portfolio
Manager with First Quadrant Corp., Pasadena, California.
Wiley D. Angell has been responsible for day-to-day management of the Fixed
Income Fund's portfolio since its inception. Mr. Angell has been with FAM since
its inception in June 1994. Previously Mr. Angell was Corporate Director, Fixed
Income Portfolio Manager with General Dynamics Corporation.
Under the Advisory Agreement with the Trust, FAM receives a monthly management
fee equal to an annual rate of 0.50% of the average daily net asset value of the
Enhanced Equity Index Fund. FAM may periodically voluntarily waive or reduce its
advisory fee to increase the net income of the Fund.
Under the Advisory Agreement with the Trust, FAM receives a monthly management
fee equal to an annual rate of 0.45% of the average daily net asset value of the
Fixed Income Fund. FAM may periodically voluntarily waive or reduce its advisory
fee to increase the net income of the Fixed Income Fund.
Advisor to the Quaker Core Equity Fund. Subject to the authority of the Board of
Trustees, West Chester Capital Advisors, Inc. ("West Chester") provides the Core
Equity Fund with a continuous program of supervision of the Core Equity Fund's
assets, including the composition of its portfolio, and furnishes advice and
recommendations with respect to investments, investment policies and the
purchase and sale of securities, pursuant to an Investment Advisory Agreement
("Advisory Agreement") with the Trust.
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West Chester is registered under the Investment Advisors Act of 1940.
Registration of West Chester does not involve any supervision of management or
investment practices or policies by the Securities and Exchange Commission. West
Chester was established as a Pennsylvania corporation in 1994. West Chester
currently serves as investment advisor to over $54 million in assets. While it
has no prior experience advising an investment company, West Chester has been
rendering investment counsel, utilizing investment strategies substantially
similar to that of the Core Equity Fund, to individuals, banks and thrift
institutions, pension and profit sharing plans, trusts, estates, charitable
organizations and corporations since its inception in 1994. West Chester's
address is 106 South Church Street, West Chester, Pennsylvania 19382. West
Chester is controlled by Bruce L. Marra, CFA and Thomas F. McKeon.
Messrs. Marra and McKeon have shared responsibility for day-to-day management of
the Fund's portfolio since its inception. Both have been with West Chester since
October 1994. Previously Mr. Marra was a Principal with Valley Forge Asset
Management; and Chief Investment Officer with Wilmington Trust. Mr. McKeon was
previously a portfolio manager with Valley Forge Asset Management; a registered
representative with New England Securities; and a market maker on the floor of
the Philadelphia Stock Exchange.
Under the Advisory Agreement with the Trust, West Chester receives a monthly
management fee equal to an annual rate of 0.75% of the average daily net asset
value of the Fund. Although the investment advisory fee is higher than that paid
by most other investment companies, the Board of Trustees believes the fee to be
comparable to advisory fees paid by many funds having similar objectives and
policies. West Chester may periodically voluntarily waive or reduce its advisory
fee to reduce the expenses charged to the Fund, which will in turn increase the
net income of the Fund.
Advisor to the Quaker Aggressive Growth Fund. Subject to the authority of the
Board of Trustees, DG Capital Management, Inc. ("DGCM") provides the Aggressive
Growth Fund with a continuous program of supervision of the Aggressive Growth
Fund's assets, including the composition of its portfolio, and furnishes advice
and recommendations with respect to investments, investment policies and the
purchase and sale of securities, pursuant to an Investment Advisory Agreement
("Advisory Agreement") with the Trust.
DGCM is registered under the Investment Advisors Act of 1940. Registration of
DGCM does not involve any supervision of management or investment practices or
policies by the Securities and Exchange Commission. DGCM was established as a
Massachusetts corporation in 1996. DGCM is a newly formed investment advisory
firm. While it has no prior experience advising an investment company, the
principal of DGCM has been rendering investment counsel, utilizing investment
strategies substantially similar to that of the Aggressive Growth Fund, to
individuals, banks and thrift institutions, pension and profit sharing plans,
trusts, estates, charitable organizations and corporations since 1985. DGCM's
address is 8 Waybridge Lane, Wayland, Massachusetts. DGCM is controlled by Manu
Daftary.
Mr. Daftary has been responsible for day-to-day management of the Fund's
portfolio since its inception. He has been with DGCM since July 1996. Previously
Mr. Daftary was a portfolio manager with Greenville Capital Management during
1995 and early 1996; was Senior Vice President/Portfolio Manager with Hellman,
Jordan Management Company from 1993-1995; was co-manager of the institutional
growth stock portfolio with Geewax, Terker & Company from 1988-1993.
Under the Advisory Agreement with the Trust, DGCM receives a monthly management
fee equal to an annual rate of 0.75% of the average daily net asset value of the
Fund. Although the investment advisory fee is higher than that paid by most
other investment companies, the Board of Trustees believes the fee to be
comparable to advisory fees paid by many funds having similar objectives and
policies. DGCM may periodically voluntarily waive or reduce its advisory fee to
reduce the expenses charged to the Fund, which will in turn increase the net
income of the Fund.
Advisor to the Quaker Small-Cap Value Fund. Subject to the authority of the
Board of Trustees, Aronson + Partners ("Aronson") provides the Small-Cap Value
Fund with a continuous program of supervision of the Small-Cap Value Fund's
assets, including the composition of its portfolio, and furnishes advice and
recommendations with respect to investments, investment policies and the
purchase and sale of securities, pursuant to an Investment Advisory Agreement
("Advisory Agreement") with the Trust.
Aronson is registered under the Investment Advisors Act of 1940. Registration of
Aronson does not involve any supervision of management or investment practices
or policies by the Securities and Exchange Commission. Aronson was established
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as a Pennsylvania corporation in 1984. Aronson currently serves as investment
advisor to over $660 million in assets. While it has no prior experience
advising an investment company, Aronson has been rendering investment counsel,
utilizing investment strategies substantially similar to that of the Small-Cap
Value Fund, to individuals, banks and thrift institutions, pension and profit
sharing plans, trusts, estates, charitable organizations and corporations since
its inception in 1984. Aronson's address is 230 South Broad Street, 20th Floor,
Philadelphia, Pennsylvania. Aronson is controlled by Theodore R. Aronson.
Mr. Aronson has been responsible for day-to-day management of the Fund's
portfolio since its inception. He has been with Aronson since August 1984.
Previously Mr. Aronson was a partner with Addison Capital Management.
Under the Advisory Agreement with the Trust, Aronson receives a monthly
management fee equal to an annual rate of 0.75% of the average daily net asset
value of the Fund. Although the investment advisory fee is higher than that paid
by most other investment companies, the Board of Trustees believes the fee to be
comparable to advisory fees paid by many funds having similar objectives and
policies. Aronson may periodically voluntarily waive or reduce its advisory fee
to reduce the expenses charged to the Fund, which will in turn increase the net
income of the Fund.
Advisor to the Quaker Sector Rotation Equity Fund. Subject to the authority of
the Board of Trustees, Logan Capital Management, Inc. ("Logan Capital") provides
the Sector Rotation Fund with a continuous program of supervision of the Sector
Rotation Fund's assets, including the composition of its portfolio, and
furnishes advice and recommendations with respect to investments, investment
policies and the purchase and sale of securities, pursuant to an Investment
Advisory Agreement ("Advisory Agreement") with the Trust.
Logan Capital is registered under the Investment Advisors Act of 1940.
Registration of Logan Capital does not involve any supervision of management or
investment practices or policies by the Securities and Exchange Commission. The
Advisor was established as a Pennsylvania corporation in 1993. Logan Capital
currently serves as investment advisor to over $175 million in assets. While it
has no prior experience advising an investment company, Logan Capital has been
rendering investment counsel, utilizing investment strategies substantially
similar to that of the Sector Rotation Fund, to individuals, banks and thrift
institutions, pension and profit sharing plans, trusts, estates, charitable
organizations and corporations since its inception in 1993. Logan Capital's
address is One Liberty Place, Suite 2700, Philadelphia, Pennsylvania 19103.
Logan Capital is controlled by Al D. Besse, Charles A. Knott, Jr., David P.
Harrison, Dana H. Stewardson, and Stephen S. Lee.
Charles A. Knott, Jr. has been responsible for day-to-day management of the
Fund's portfolio since its inception. Mr. Knott has been with Logan Capital
since its inception in November 1993. Previously Mr. Knott was Chief Investment
Strategist with Mercer Capital Management, Philadelphia, Pennsylvania. Prior to
November 1993, Mr. Knott was Senior Investment Officer at Fidelity Bank,
Philadelphia, Pennsylvania.
Under the Advisory Agreement with the Trust, Logan Capital receives a monthly
management fee equal to an annual rate of 0.75% of the average daily net asset
value of the Fund. Although the investment advisory fee is higher than that paid
by most other investment companies, the Board of Trustees believes the fee to be
comparable to advisory fees paid by many funds having similar objectives and
policies. Logan Capital may periodically voluntarily waive or reduce its
advisory fee to reduce the expenses charged to the Fund, which will in turn
increase the net income of the Fund.
Each Advisor supervises and implements the investment activities of their
respective Fund, including the making of specific decisions as to the purchase
and sale of portfolio investments. Among the responsibilities of each Advisor
under the Advisory Agreement is the selection of brokers and dealers through
whom transactions in the Funds' portfolio investments will be effected. Each
Advisor attempts to obtain the best execution for all such transactions. If it
is believed that more than one broker is able to provide the best execution,
each Advisor will consider the receipt of quotations and other market services
and of research, statistical and other data and the sale of shares of the Fund
in selecting a broker. Research services obtained through Fund brokerage
transactions may be used by the Advisor for its other clients and, conversely,
each Fund may benefit from research services obtained through the brokerage
transactions of the Advisor's other clients. The Advisors may also utilize a
brokerage firm affiliated with the Trust if it believes it can obtain the best
execution of transactions from such broker. For further information, see
"Investment Objective and Policies - Investment Transactions" in the Statement
of Additional Information.
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Administration. The Trust has entered into a Fund Administration Agreement with
The Nottingham Company (the "Administrator"), 105 North Washington Street, Post
Office Drawer 69, Rocky Mount, North Carolina 27802-0069. Subject to the
authority of the Board of Trustees, the services the Administrator provides to
each Fund include coordinating and monitoring any third parties furnishing
services to the Funds; providing the necessary office space, equipment and
personnel to perform administrative and clerical functions for the Funds;
preparing, filing and distributing proxy materials, periodic reports to
shareholders, registration statements and other documents; and responding to
shareholder inquiries. For these administrative and oversight services, the
Administrator receives a fee at the annual rate of 0.175% of the average daily
net assets of each Fund on the first $50 million; 0.150% of the next $50
million; and 0.125% of its average daily net assets in excess of $100 million.
The Administrator also serves as the Funds' transfer agent. As transfer agent,
it maintains the records of each shareholder's account, answers shareholder
inquiries concerning accounts, processes purchases and redemptions of the Funds'
shares, acts as dividend and distribution disbursing agent and performs other
shareholder services functions for a monthly fee based on the number of
shareholders in each Fund, subject to a monthly minimum of $500.
The Administrator also performs certain accounting and pricing services for the
Fund as pricing agent, including the daily calculation of each Fund's net asset
value. For these services, the Administrator currently receives a base monthly
fee of $2,000 for accounting and recordkeeping services for each Fund. The
Administrator also charges each Fund for certain costs involved with the daily
valuation of investment securities and is reimbursed for out-of-pocket expenses.
The Administrator charges a minimum fee of $3,000 per month, analyzed monthly.
The Administrator may periodically voluntarily waive or reduce its fee to reduce
the expenses charged to each Fund, which will in turn increase the net income of
that Fund.
The Administrator was formed as a North Carolina corporation in 1988, and
converted to a North Carolina limited liability corporation in 1995. With it
affiliates and predecessors, the Administrator has been operating as a financial
services firm since 1985. Frank P. Meadows III is the firm's Managing Director
and controlling member.
Sponsor of the Funds. Quaker Funds, Inc., an entity affiliated with the Funds'
Distributor, will also engage in shareholder servicing activities for the Funds
not otherwise provided by the Funds' Administrator, for which it will receive a
fee at the annual rate of 0.25% of the average daily net assets of the Funds.
See "How Shares May Be Purchased-Distribution Plan". Laurie Keyes, Jeffry H.
King and Peter F. Waitneight, each of whom is a Trustee of the Trust, control
Quaker Funds, Inc. Quaker Funds, Inc. was formed as a Pennsylvania corporation
in 1996 and is located at 1288 Valley Forge Road, Post Office Box 978, Valley
Forge, Pennsylvania.
Custodian. Wachovia Bank of North Carolina, N.A. (the "Custodian"), 301 North
Main Street, Winston-Salem, North Carolina 27102, serves as Custodian of the
Funds' assets. The Custodian acts as the depository for the Funds, provides
safekeeping for their portfolio securities, collects all income and other
payments with respect to portfolio securities, disburses monies at the Funds'
request and maintains records in connection with its duties.
Other Expenses. Each Fund is responsible for the payment of its expenses. These
include, for example, the fees payable to the Advisor, or expenses otherwise
incurred in connection with the management of the investment of the Funds'
assets, the fees and expenses of the Custodian, the fees and expenses of the
Administrator, the fees and expenses of Trustees, outside auditing and legal
expenses, all taxes and corporate fees payable by each Fund, Securities and
Exchange Commission fees, state securities qualification fees, costs of
preparing and printing prospectuses for regulatory purposes and for distribution
to shareholders, costs of shareholder reports and shareholder meetings, and any
extraordinary expenses. Each Fund also pays for brokerage commissions and
transfer taxes (if any) in connection with the purchase and sale of portfolio
securities. Expenses attributable to a particular series of the Trust will be
charged to that series, and expenses not readily identifiable as belonging to a
particular series will be allocated by or under procedures approved by the Board
of Trustees among one or more series in such a manner as it deems fair and
equitable.
OTHER INFORMATION
Description of Shares. The Trust was organized as a Massachusetts business trust
on October 24, 1990 under a Declaration of Trust. The Declaration of Trust
permits the Board of Trustees to issue an unlimited number of full and
fractional shares and to create an unlimited number of series of shares. The
Board of Trustees may also classify and reclassify any unissued shares into one
or more classes of shares.
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When issued, the shares of each series of the Trust will be fully paid,
nonassessable and redeemable. The Trust does not intend to hold annual
shareholder meetings; it may, however, hold special shareholder meetings for
purposes such as changing fundamental policies or electing Trustees. The Board
of Trustees shall promptly call a meeting for the purpose of electing or
removing Trustees when requested in writing to do so by the record holders of a
least 10% of the outstanding shares of the Trust. The term of office of each
Trustee is of unlimited duration. The holders of at least two-thirds of the
outstanding shares of the Trust may remove a Trustee from that position either
by declaration in writing filed with the Custodian or by votes cast in person or
by proxy at a meeting called for that purpose.
Shareholders of the Trust will vote in the aggregate and not by series (Fund) or
class, except as otherwise required by the 1940 Act or when the Board of
Trustees determines that the matter to be voted on affects only the interests of
the shareholders of a particular series or class. Matters affecting an
individual series, include, but are not limited to, the investment objectives,
policies and restrictions of that series. Shares have no subscription,
preemptive or conversion rights. Share certificates will not be issued. Each
share is entitled to one vote (and fractional shares are entitled to
proportionate fractional votes) on all matters submitted for a vote, and shares
have equal voting rights except that only shares of a particular series are
entitled to vote on matters affecting only that series. Shares do not have
cumulative voting rights. Therefore, the holders of more than 50% of the
aggregate number of shares of all series of the Trust may elect all the
Trustees.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
trust. The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability. See "Description of the Trust" in the
Statement of Additional Information for further information about the Trust and
its shares.
Reporting to Shareholders. Each Fund will send to its shareholders annual and
semi-annual reports; the financial statements appearing in annual reports for
each Fund will be audited by independent accountants. In addition, the
Administrator, as transfer agent, will send to each shareholder having an
account directly with that Fund a quarterly statement showing transactions in
the account, the total number of shares owned and any dividends or distributions
paid. Inquiries regarding any Fund may be directed in writing to 105 North
Washington Street, Post Office Drawer 69, Rocky Mount, North Carolina 27802-0069
or by calling 800-220-8888.
Calculation of Performance Data. From time to time the Funds may advertise their
average annual total return. The "average annual total return" of each Fund
refers to the average annual compounded rates of return over 1, 5 and 10 year
periods that would equate an initial amount invested at the beginning of a
stated period to the ending redeemable value of the investment. The calculation
assumes the reinvestment of all dividends and distributions, includes all
recurring fees that are charged to all shareholder accounts and deducts all
nonrecurring charges at the end of each period. If the Fund has been operating
less than 1, 5 or 10 years, the time period during which the Fund has been
operating is substituted.
In addition, each Fund may advertise other total return performance data. This
data shows as a percentage rate of return encompassing all elements of return
(i.e. income and capital appreciation or depreciation); it assumes reinvestment
of all dividends and capital gain distributions. Such other total return data
may be quoted for the same or different periods as those for which average
annual total return is quoted. This data may consist of a cumulative percentage
rate of return, actual year-by-year rates or any combination thereof. Cumulative
total return represents the cumulative change in value of an investment in each
Fund for various periods.
From time to time the Fixed Income Fund may also advertise its yield. The
"yield" of a Fund is computed by dividing the net investment income per share
earned during the most recent practicable period stated in the advertisement by
the maximum offering price per share on the last day of the period (using the
average number of shares entitled to receive dividends). For the purpose of
determining net investment income, the calculation includes among expenses of
the Fund all recurring fees that are charged to all shareholder accounts and any
nonrecurring charges for the period stated.
The total return and yield of each Fund could be increased to the extent the
Advisor may waive all or a portion of its fees or may reimburse all or a portion
of that Fund's expenses. Total return and yield 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. The Funds'
quotations may from time to time be used in advertisements, sales literature,
shareholder reports, or other communications. For further information, see
"Additional Information on Performance" in the Statement of Additional
Information.
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<PAGE>
THE QUAKER FAMILY OF FUNDS
PROSPECTUS
November 1996
DISTRIBUTOR
Quaker Securities, Inc.
1288 Valley Forge Road
Suite 75
Valley Forge, Pennsylvania 19482
CUSTODIAN
Wachovia Bank of North Carolina, N.A.
301 N. Main Street
Winston-Salem, North Carolina 27102
ADMINISTRATOR
& TRANSFER AGENT
The Nottingham Company
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
INDEPENDENT AUDITORS
Deloitte & Touche
2500 One PPG Place
Pittsburgh, Pennsylvania
FUND SPONSOR
Quaker Funds, Inc.
1288 Valley Forge Road
Suite 76
Valley Forge, Pennsylvania 19482
INVESTMENT ADVISORS
Aronson + Partners
Philadelphia, Pennsylvania
DG Capital Management
Wayland, Massachusetts
Fiduciary Asset Management
St. Louis, Missouri
Bellevue, Washington
Logan Capital Management
Philadelphia, Pennsylvania
West Chester Capital Advisors
West Chester, Pennsylvania
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<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE QUAKER FAMILY OF FUNDS
October __, 1996
Series of
QUAKER INVESTMENT TRUST
105 North Washington Street, Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
Telephone 800-220-8888
Table of Contents
INVESTMENT OBJECTIVE AND POLICIES................................... 2
INVESTMENT LIMITATIONS.............................................. 4
NET ASSET VALUE..................................................... 6
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...................... 6
DESCRIPTION OF THE TRUST............................................ 7
ADDITIONAL INFORMATION CONCERNING TAXES............................. 8
MANAGEMENT OF THE FUNDS............................................. 9
SPECIAL SHAREHOLDER SERVICES........................................ 12
ADDITIONAL INFORMATION ON PERFORMANCE............................... 14
APPENDIX A - DESCRIPTION OF RATINGS................................. 16
This Statement of Additional Information (the "Additional Statement") is meant
to be read in conjunction with the Prospectus dated November 1996 for the Quaker
Enhanced Equity Index Fund, the Quaker Core Equity Fund, the Quaker Aggressive
Growth Equity Fund, the Quaker Small Cap Value Fund, the Quaker Sector Rotation
Equity Fund, and the Quaker Fixed Income Fund (individually a "Fund" and
collectively the "Funds"), as the Prospectus may be amended or supplemented from
time to time, and is incorporated by reference in its entirety into the
Prospectus. Because this Additional Statement is not itself a prospectus, no
investment in shares of the Funds should be made solely upon the information
contained herein. Copies of the Funds' Prospectus may be obtained at no charge
by writing or calling the Funds at the address and phone number shown above.
Capitalized terms used but not defined herein have the same meanings as in the
Prospectus.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The following policies supplement each Fund's investment objective and policies
as set forth in the Prospectus for each Fund. The Funds, organized in 1996, have
no prior operating history.
Additional Information on Fund Instruments. Attached to this Additional
Statement is Appendix A, which contains descriptions of the rating symbols used
by Rating Agencies for fixed income securities in which the Funds may invest.
Investment Transactions. Subject to the general supervision of the Trust's Board
of Trustees, the Advisor to each Fund is responsible for, makes decisions with
respect to, and places orders for all purchases and sales of portfolio
securities for the Fund managed by such Advisor.
The annualized portfolio turnover rate for each Fund is calculated by dividing
the lesser of purchases or sales of portfolio securities for the reporting
period by the monthly average value of the portfolio securities owned during the
reporting period. The calculation excludes all securities whose maturities or
expiration dates at the time of acquisition are one year or less. Portfolio
turnover of each Fund may vary greatly from year to year as well as within a
particular year, and may be affected by cash requirements for redemption of
shares and by requirements that enable the Fund to receive favorable tax
treatment. Portfolio turnover will not be a limiting factor in making Fund
decisions, and each Fund may engage in short term trading to achieve its
investment objectives.
Purchases of money market instruments by the Funds are made from dealers,
underwriters and issuers. The Funds currently do not expect to incur any
brokerage commission expense on such transactions because money market
instruments are generally traded on a "net" basis by a dealer acting as
principal for its own account without a stated commission. The price of the
security, however, usually includes a profit to the dealer. Securities purchased
in underwritten offerings include a fixed amount of compensation to the
underwriter, generally referred to as the underwriter's concession or discount.
When securities are purchased directly from or sold directly to an issuer, no
commissions or discounts are paid.
Transactions on U.S. stock exchanges involve the payment of negotiated brokerage
commissions. On exchanges on which commissions are negotiated, the cost of
transactions may vary among different brokers. Transactions in the
over-the-counter market are generally on a net basis (i.e., without commission)
through dealers, which may include a dealer mark-up, or otherwise involve
transactions directly with the issuer of an instrument.
Normally, most of the Funds' fixed income portfolio transactions will be
principal transactions executed in over the counter markets and will be executed
on a "net" basis, which may include a dealer mark-up. With respect to securities
traded only in the over the counter market, orders will be executed on a
principal basis with primary market makers in such securities except where
better prices or executions may be obtained on an agency basis or by dealing
with other than a primary market maker.
The Funds may participate, if and when practicable, in bidding for the purchase
of Fund securities directly from an issuer in order to take advantage of the
lower purchase price available to members of a bidding group. A Fund will engage
in this practice, however, only when the Advisor to each Fund, in its sole
discretion, believes such practice to be otherwise in the Fund's interest.
In executing Fund transactions and selecting brokers or dealers, the Advisor to
each Fund will seek to obtain the best overall terms available for each Fund. In
assessing the best overall terms available for any transaction, each Advisor
shall consider factors it deems relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis. The sale of
Fund shares may be considered when determining the firms that are to execute
brokerage transactions for the Funds. In addition, the Advisor to each Fund is
authorized to cause the Fund to pay a broker-dealer which furnishes brokerage
and research services a higher commission than that which might be charged by
another broker-dealer for effecting the same transaction, provided that the
Advisor determines in good faith that such commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either the particular transaction or the
overall responsibilities of the Advisor to the Fund. Such brokerage and research
services might consist of reports and statistics relating to specific companies
or industries, general summaries
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<PAGE>
of groups of stocks or bonds and their comparative earnings and yields, or broad
overviews of the stock, bond and government securities markets and the economy.
Supplementary research information so received is in addition to, and not in
lieu of, services required to be performed by the Advisor to each Fund and does
not reduce the advisory fees payable by the Funds. The Trustees will
periodically review any commissions paid by the Funds to consider whether the
commissions paid over representative periods of time appear to be reasonable in
relation to the benefits inuring to the Funds. It is possible that certain of
the supplementary research or other services received will primarily benefit one
or more other investment companies or other accounts for which investment
discretion is exercised by an Advisor. Conversely, the Funds may be the primary
beneficiary of the research or services received as a result of securities
transactions effected for such other account or investment company.
The Advisor to each Fund may also utilize a brokerage firm affiliated with the
Trust or the Advisor if it believes it can obtain the best execution of
transactions from such broker. Since the Distributor is a registered securities
broker-dealer, it is anticipated that the Distributor may execute transactions
on behalf of the Funds, for which it will receive brokerage commissions and
fees, subject to the obligations of best execution.
The Funds will not execute portfolio transactions through, acquire securities
issued by, make savings deposits in or enter into repurchase agreements with an
Advisor or an affiliated person of an Advisor (as such term is defined in the
1940 Act) acting as principal, except to the extent permitted by the Securities
and Exchange Commission ("SEC"). In addition, a Fund will not purchase
securities during the existence of any underwriting or selling group relating
thereto of which the Advisor to the Fund, or an affiliated person of the Advisor
to the Fund, is a member, except to the extent permitted by the SEC. Under
certain circumstances, the Funds may be at a disadvantage because of these
limitations in comparison with other investment companies that have similar
investment objectives but are not subject to such limitations.
Investment decisions for each Fund will be made independently from those for any
other Fund and any other series of the Trust, if any, and for any other
investment companies and accounts advised or managed by the Advisor to each
Fund. Such other investment companies and accounts may also invest in the same
securities as a Fund. To the extent permitted by law, an Advisor may aggregate
the securities to be sold or purchased for a Fund with those to be sold or
purchased for another Fund or other investment companies or accounts in
executing transactions. When a purchase or sale of the same security is made at
substantially the same time on behalf of a Fund and another Fund or another
investment company or account, the transaction will be averaged as to price and
available investments allocated as to amount, in a manner which the Advisor to
each Fund believes to be equitable to the Funds and such other investment
company or account. In some instances, this investment procedure may adversely
affect the price paid or received by a Fund or the size of the position obtained
or sold by a Fund.
Repurchase Agreements. Each Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
transaction occurs when, at the time the Fund purchases a security (normally a
U.S. Treasury obligation), it also resells it to the vendor (normally a member
bank of the Federal Reserve or a registered Government Securities dealer) and
must deliver the security (and/or securities substituted for them under the
repurchase agreement) to the vendor on an agreed upon date in the future. The
repurchase price exceeds the purchase price by an amount which reflects an
agreed upon market interest rate effective for the period of time during which
the repurchase agreement is in effect. Delivery pursuant to the resale will
occur within one to five days of the purchase.
Repurchase agreements are considered "loans" under the Investment Company Act of
1940, as amended (the "1940 Act"), collateralized by the underlying security.
The Trust will implement procedures to monitor on a continuous basis the value
of the collateral serving as security for repurchase obligations. Additionally,
the Advisor to each Fund will consider the creditworthiness of the vendor. If
the vendor fails to pay the agreed upon resale price on the delivery date, the
Fund will retain or attempt to dispose of the collateral. A Fund's risk is that
such default may include any decline in value of the collateral to an amount
which is less than 100% of the repurchase price, any costs of disposing of such
collateral, and any loss resulting from any delay in foreclosing on the
collateral. The Funds will not enter into any repurchase agreement which will
cause more than 10% of their net assets to be invested in repurchase agreements
which extend beyond seven days and other illiquid securities.
3
<PAGE>
Description of Money Market Instruments. Money market instruments may include
U.S. Government Securities or corporate debt securities (including those subject
to repurchase agreements), provided that they mature in thirteen months or less
from the date of acquisition and are otherwise eligible for purchase by the
Funds. Money market instruments also may include Banker's Acceptances and
Certificates of Deposit of domestic branches of U.S. banks, Commercial Paper and
Variable Amount Demand Master Notes ("Master Notes"). Banker's Acceptances are
time drafts drawn on and "accepted" by a bank. When a bank "accepts" such a time
draft, it assumes liability for its payment. When a Fund acquires a Banker's
Acceptance the bank which "accepted" the time draft is liable for payment of
interest and principal when due. The Banker's Acceptance carries the full faith
and credit of such bank. A Certificate of Deposit ("CD") is an unsecured
interest bearing debt obligation of a bank. Commercial Paper is an unsecured,
short term debt obligation of a bank, corporation or other borrower. Commercial
Paper maturity generally ranges from two to 270 days and is usually sold on a
discounted basis rather than as an interest bearing instrument. The Funds will
invest in Commercial Paper only if it is rated one of the top two rating
categories by Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Ratings Group ("S&P"), Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps
("D&P") or, if not rated, of equivalent quality in the Advisor's opinion.
Commercial Paper may include Master Notes of the same quality. Master Notes are
unsecured obligations which are redeemable upon demand of the holder and which
permit the investment of fluctuating amounts at varying rates of interest.
Master Notes are acquired by the Funds only through the Master Note program of
the Funds' custodian bank, acting as administrator thereof. The Advisor to each
Fund will monitor, on a continuous basis, the earnings power, cash flow and
other liquidity ratios of the issuer of a Master Note held by a Fund.
Illiquid Investments. Each Fund may invest up to 10% of its net assets in
illiquid securities, which are investments that cannot be sold or disposed of in
the ordinary course of business within seven days at approximately the prices at
which they are valued. Under the supervision of the Board of Trustees, the
Advisor to each Fund determines the liquidity of a Fund's investments and,
through reports from each Advisor, the Board monitors investments in illiquid
instruments. In determining the liquidity of a Fund's investments, the Advisor
to each Fund may consider various factors including (1) the frequency of trades
and quotations, (2) the number of dealers and prospective purchasers in the
marketplace, (3) dealer undertakings to make a market, (4) the nature of the
security (including any demand or tender features) and (5) the nature of the
marketplace for trades (including the ability to assign or offset the Fund's
rights and obligations relating to the investment). Investments currently
considered by the Funds to be illiquid include repurchase agreements not
entitling the holder to payment of principal and interest within seven days. If
through a change in values, net assets or other circumstances, a Fund were in a
position where more than 10% of its net assets were invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
Restricted Securities. Within its limitation on investment in illiquid
securities, the Fund may purchase restricted securities that generally can be
sold in privately negotiated transactions, pursuant to an exemption from
registration under the federal securities laws, or in a registered public
offering. Where registration is required, the Fund may be obligated to pay all
or part of the registration expense and a considerable period may elapse between
the time it decides to seek registration and the time the Fund may be permitted
to sell a security under an effective registration statement. If during such a
period, adverse market conditions were to develop, the Fund might obtain a less
favorable price than prevailed when it decided to seek registration of the
security.
INVESTMENT LIMITATIONS
Each Fund has adopted the following fundamental investment limitations, which
cannot be changed without approval by holders of a majority of the outstanding
voting shares of the Fund. A "majority" for this purpose, means, with respect to
a Fund, the lesser of (i) 67% of the Fund's outstanding shares represented in
person or by proxy at a meeting at which more than 50% of its outstanding shares
are represented, or (ii) more than 50% of its outstanding shares. Unless
otherwise indicated, percentage limitations apply at the time of purchase.
As a matter of fundamental policy, each Fund may not:
(1) Issue senior securities, borrow money, or pledge its assets, except that
it may borrow from banks as a temporary measure (a) for extraordinary or
emergency purposes, in amounts not exceeding 5% of its total assets or
(b) in order to meet redemption requests, in amounts not exceeding 15%
of its total assets; the Fund will not make any investments if borrowing
exceeds 5% of its total assets until such time as total borrowing
represents less than 5% of Fund assets (except that the Aggressive
Growth Fund may engage in short sales of securities to the extent
described in the Prospectus);
(2) With respect to 75% of its assets, invest more than 5% of the value of
its total assets in the securities of any one issuer or purchase more
than 10% of the outstanding voting securities of any class of securities
of any one issuer (except that securities of the U.S. Government, its
agencies and instrumentalities are not subject to this limitation);
4
<PAGE>
(3) Invest 25% or more of the value of its total assets in any one industry
or group of industries (except that securities of the U.S. Government,
its agencies and instrumentalities are not subject to this limitation);
(4) Invest for the purpose of exercising control or management of another
issuer;
(5) Purchase or sell commodities or commodities contracts, real estate
(including limited partnership interests, but excluding readily
marketable securities secured by real estate or interests therein,
readily marketable interests in real estate investment trusts, readily
marketable securities issued by companies that invest in real estate or
interests therein, or mortgage backed securities for the Fixed Income
Fund as described in the Prospectus) or interests in oil, gas, or other
mineral exploration or development programs or leases (although it may
invest in readily marketable securities of issuers that invest in or
sponsor such programs or leases);
(6) Underwrite securities issued by others except to the extent that the
disposition of portfolio securities, either directly from an issuer or
from an underwriter for an issuer may be deemed to be an underwriter
under the federal securities laws;
(7) Invest in warrants, valued at the lower of cost or market, exceeding
more than 5% of the value of the Fund's net assets; included within this
amount, but not to exceed 2% of the value of the Fund's net assets, may
be warrants which are not listed on the New York or American Stock
Exchange; warrants acquired by the Fund in units or attached to
securities may be deemed to be without value;
(8) Participate on a joint or joint and several basis in any trading account
in securities; or
(9) Make loans of money or securities, except that the Fund may (i) invest
in repurchase agreements and commercial paper; (ii) purchase a portion
of an issue of publicity distributed bonds, debentures or other debt
securities; and (iii) acquire private issues of debt securities subject
to the limitations on investments in illiquid securities.
The following investment limitations are not fundamental, and may be changed
without shareholder approval. As a matter of non-fundamental policy, each Fund
may not:
(1) Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors) if more than 5% of its total assets would be invested
in such securities;
(2) Invest more than 10% of its net assets in illiquid securities; for this
purpose, illiquid securities include, among others (a) securities for
which no readily available market exists or which have legal or
contractual restrictions on resale, (b) fixed time deposits that are
subject to withdrawal penalties and have maturities of more than seven
days, and (c) repurchase agreements not terminable within seven days;
(3) Invest in the securities of any issuer if those officers or Trustees of
the Trust and those officers and directors of the Advisor who
individually own more than 1/2 of 1% of the outstanding securities of
such issuer together own more than 5% of such issuer's securities;
(4) Write, purchase, or sells puts, calls, straddles, spreads, or
combinations thereof or futures contracts or related options;
5
<PAGE>
(5) Make short sales of securities or maintain a short position, except
short sales "against the box", and except that the Aggressive Growth
Fund may engage in short sales of securities to the extent described in
the Prospectus; (a short sale is made by selling a security the Fund
does not own; a short sale is "against the box" to the extent that the
Fund contemporaneously owns or has the right to obtain at no additional
cost securities identical to those sold short) (while the Fund has
reserved the right to make short sales "against the box", the Advisor to
each Fund (other than the Aggressive Growth Fund) has no present
intention of engaging in such transactions at this time or during the
coming year); or
(6) Purchase any securities on margin except in connection with such
short-term credits as may be necessary for the clearance of
transactions.
Whenever any fundamental investment policy or investment restriction states a
maximum percentage of assets, it is intended that if the percentage limitation
is met at the time the investment is made, a later change in percentage
resulting from changing total or net assets values will not be considered a
violation of such policy.
NET ASSET VALUE
The net asset value per share of each Fund is determined at 4:00 p.m. (3:00 p.m.
for the Fixed Income Fund), New York time, Monday through Friday, except on
business holidays when the New York Stock Exchange, or the Federal Reserve
Banking System for the Fixed Income Fund, is closed. The New York Stock Exchange
recognizes the following holidays: New Year's Day, President's Day, Good Friday,
Memorial Day, Fourth of July, Labor Day, Thanksgiving Day, and Christmas Day.
Any other holiday recognized by the New York Stock Exchange will be considered a
business holiday on which each Fund's net asset value will not be determined.
The net asset value per share of each Fund is calculated separately by adding
the value of the Fund's securities and other assets belonging to the Fund,
subtracting the liabilities charged to the Fund, and dividing the result by the
number of outstanding shares. "Assets belonging to" a Fund consist of the
consideration received upon the issuance of shares of the Fund together with all
net investment income, realized gains/losses and proceeds derived from the
investment thereof, including any proceeds from the sale of such investments,
any funds or payments derived from any reinvestment of such proceeds, and a
portion of any general assets of the Trust not belonging to a particular
investment Fund. Assets belonging to a Fund are charged with the direct
liabilities of the Fund and with a share of the general liabilities of the
Trust, which are normally allocated in proportion to the number of or the
relative net asset values of all of the Trust's series at the time of allocation
or in accordance with other allocation methods approved by the Board of
Trustees. Subject to the provisions of the Declaration of Trust, determinations
by the Board of Trustees as to the direct and allocable liabilities, and the
allocable portion of any general assets, with respect to a Fund are conclusive.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Purchases. Shares of each Fund are offered and sold on a continuous basis and
may be purchased through authorized investment dealers or directly by contacting
the Distributor or the Funds. Selling dealers have the responsibility of
transmitting orders promptly to the Funds. The public offering price of shares
of each Fund equals net asset value. Quaker Securities, Inc. (the
"Distributor") serves as Distributor of shares of the Funds. See "How Shares
May Be Purchased" in the Prospectus.
Plan Under Rule 12b-1. The Trust has adopted a Plan of Distribution (the "Plan")
for each Fund pursuant to Rule 12b-1 under the 1940 Act (see "How Shares May Be
Purchased - Distribution Plan" in the Prospectus). Under the Plan each Fund may
expend up to 0.25% (0.20% and 0.15% of the Enhanced Equity Index Fund and Fixed
Income Fund resepectively) of their average net assets annually to finance any
activity which is primarily intended to result in the sale of shares of the Fund
and the servicing of shareholder accounts, provided the Trust's Board of
Trustees has approved the category of expenses for which payment is being made.
Such expenditures paid as service fees to any person who sells shares of a Fund
may not exceed 0.25% (or 0.20% or 0.15% as applicable) of the average annual net
asset value of such shares. Potential benefits of the Plan to the Funds include
improved shareholder servicing, savings to the Funds in transfer agency costs,
benefits to the investment process from growth and stability of assets and
maintenance of a financially healthy sponsoring organization.
6
<PAGE>
All of the distribution expenses incurred by the Distributor and others, such as
broker-dealers, in excess of the amount paid by the Funds will be borne by such
persons without any reimbursement from the Funds. Subject to seeking best price
and execution, the Funds may, from time to time, buy or sell portfolio
securities from or to firms that receive payments under the Plan.
From time to time the Distributor may pay additional amounts from its own
resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plan for each Fund and the Distribution Agreement with the Distributor have
been approved by the Board of Trustees of the Trust, including a majority of the
Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Trust and who have no direct or indirect financial interest in the Plan or any
related agreements, by vote cast in person or at a meeting duly called for the
purpose of voting on the Plan and such Agreement. Continuation of the Plan and
the Distribution Agreement must be approved annually by the Board of Trustees in
the same manner as specified above.
Each year the Trustees must determine whether continuation of the Plan with
respect to each Fund is in the best interest of shareholders of that Fund and
that there is a reasonable likelihood of its providing a benefit to such Fund,
and the Board of Trustees has made such a determination for the current year of
operations under the Plan. The Plan and the Distribution Agreement may be
terminated at any time without penalty by a majority of those trustees who are
not "interested persons" or by a majority vote of the Fund's outstanding voting
stock. Any amendment materially increasing the maximum percentage payable under
the Plan must likewise be approved with respect to any Fund by a majority vote
of the Fund's outstanding voting stock, as well as by a majority vote of those
trustees who are not "interested persons." Also, any other material amendment to
the Plan must be approved by a majority vote of the trustees including a
majority of the independent Trustees of the Trust having no interest in the
Plan. In addition, in order for the Plan to remain effective, the selection and
nomination of Trustees who are not "interested persons" of the Trust must be
effected by the Trustees who themselves are not "interested persons" and who
have no direct or indirect financial interest in the Plan. Persons authorized to
make payments under the Plan must provide written reports at least quarterly to
the Board of Trustees for their review.
Redemptions. Under the 1940 Act, each Fund may suspend the right of redemption
or postpone the date of payment for shares during any period when (a) trading on
the New York Stock Exchange is restricted by applicable rules and regulations of
the SEC; (b) the Exchange is closed for other than customary weekend and holiday
closings; (c) the SEC has by order permitted such suspension; or (d) an
emergency exists as determined by the SEC. Each Fund may also suspend or
postpone the recordation of the transfer of shares upon the occurrence of any of
the foregoing conditions.
In addition to the situations described in the Prospectus under "How Shares may
be Redeemed," each Fund may redeem shares involuntarily to reimburse the Fund
for any loss sustained by reason of the failure of a shareholder to make full
payment for shares purchased by the shareholder or to collect any charge
relating to a transaction effected for the benefit of a shareholder which is
applicable to Fund shares as provided in the Prospectus from time to time.
DESCRIPTION OF THE TRUST
The Trust is an unincorporated business trust organized under Massachusetts law
on October 24, 1990. The Trust's Declaration of Trust authorizes the Board of
Trustees to divide shares into series, each series relating to a separate
portfolio of investments, and to classify and reclassify any unissued shares
into one or more classes of shares of each such series. The Declaration of Trust
currently provides for the shares of six series, as follows: the Quaker Enhanced
Equity Index Fund and the Quaker Fixed Income Fund, both managed by Fiduciary
Asset Management, Inc. of St. Louis, Missouri; the Quaker Core Equity Fund
managed by West Chester Capital Advisors, Inc. of West Chester, Pennsylvania;
the Quaker Aggressive Growth Fund managed by DG Capital Management, Inc. of
Wayland, Massachusetts; the Quaker Small Cap Value Fund managed by Aronson +
Partners of Philadelphia, Pennsylvania; and the Quaker Sector Rotation Equity
Fund managed by Logan Capital Management, Inc. of Philadelphia, Pennsylvania.
The number of shares of each series shall be unlimited. The Trust does not
intend to issue share certificates.
In the event of a liquidation or dissolution of the Trust or an individual
series, such as each Fund, shareholders of a particular series would be entitled
to receive the assets available for distribution belonging to such series.
Shareholders of a series are entitled to participate equally in the net
distributable assets of the particular series involved on liquidation, based
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<PAGE>
on the number of shares of the series that are held by each shareholder. If
there are any assets, income, earnings, proceeds, funds or payments, that are
not readily identifiable as belonging to any particular series, the Trustees
shall allocate them among any one or more of the series as they, in their sole
discretion, deem fair and equitable.
Shareholders of all of the series of the Trust, including the Funds, will vote
together and not separately on a series-by-series or class-by-class basis,
except as otherwise required by law or when the Board of Trustees determines
that the matter to be voted upon affects only the interests of the shareholders
of a particular series or class. Rule 18f-2 under the 1940 Act provides that any
matter required to be submitted to the holders of the outstanding voting
securities of an investment company such as the Trust shall not be deemed to
have been effectively acted upon unless approved by the holders of a majority of
the outstanding shares of each series or class affected by the matter. A series
or class is affected by a matter unless it is clear that the interests of each
series or class in the matter are substantially identical or that the matter
does not affect any interest of the series or class. Under Rule 18f-2, the
approval of an investment advisory agreement, a Rule 12b-1 plan, or any change
in a fundamental investment policy would be effectively acted upon with respect
to a series only if approved by a majority of the outstanding shares of such
series. However, the Rule also provides that the ratification of the appointment
of independent accountants, the approval of principal underwriting contracts and
the election of Trustees may be effectively acted upon by shareholders of the
Trust voting together, without regard to a particular series or class.
When used in the Prospectus or this Additional Statement, a "majority" of
shareholders means the vote of the lesser of (1) 67% of the shares of the Trust
or the applicable series or class present at a meeting if the holders of more
than 50% of the outstanding shares are present in person or by proxy, or (2)
more than 50% of the outstanding shares of the Trust or the applicable series or
class.
When issued for payment as described in the Prospectus and this Additional
Statement, shares of each Fund will be fully paid and non-assessable.
The Declaration of Trust provides that the Trustees of the Trust will not be
liable in any event in connection with the affairs of the Trust, except as such
liability may arise from his or her own bad faith, willful misfeasance, gross
negligence, or reckless disregard of duties. It also provides that all third
parties shall look solely to the Trust property for satisfaction of claims
arising in connection with the affairs of the Trust. With the exceptions stated,
the Declaration of Trust provides that a Trustee or officer is entitled to be
indemnified against all liability in connection with the affairs of the Trust.
ADDITIONAL INFORMATION CONCERNING TAXES
The following summarizes certain additional tax considerations generally
affecting each Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of each Fund or its shareholders, and the discussion here and in the
Prospectus is not intended as a substitute for careful tax planning and is based
on tax laws and regulations that are in effect on the date hereof; such laws and
regulations may be changed by legislative, judicial, or administrative action.
Investors are advised to consult their tax advisors with specific reference to
their own tax situations.
Each series of the Trust, including each Fund, will be treated as a separate
corporate entity under the Code and intends to qualify or remain qualified as a
regulated investment company. In order to so qualify, each series must elect to
be a regulated investment company or have made such an election for a previous
year and must satisfy, in addition to the distribution requirement described in
the Prospectus, certain requirements with respect to the source of its income
for a taxable year. At least 90% of the gross income of each series must be
derived from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stocks, securities or foreign
currencies, and other income derived with respect to the series' business of
investing in such stock, securities or currencies. Any income derived by a
series from a partnership or trust is treated as derived with respect to the
series' business of investing in stock, securities or currencies only to the
extent that such income is attributable to items of income that would have been
qualifying income if realized by the series in the same manner as by the
partnership or trust.
Another requirement for qualification as a regulated investment company under
the Code is that less than 30% of a series' gross income for a taxable year must
be derived from gains realized on the sale or other disposition of the following
investments held for less than three months: (l) stock and securities (as
defined in Section 2(a) (36) of the 1940 Act); (2) options, futures and forward
contracts other than those on foreign currencies; or (3) foreign currencies (or
options, futures
8
<PAGE>
or forward contracts on foreign currencies) that are not directly related to a
series' principal business of investing in stocks or securities (or options and
futures with respect to stocks or securities). Interest (including original
issue discount and, with respect to certain debt securities, accrued market
discount) received by a series upon maturity or disposition of a security held
for less than three months will not be treated as gross income derived from the
sale or other disposition of such security within the meaning of this
requirement. However, any other income which is attributable to realized market
appreciation will be treated as gross income from the sale or other disposition
of securities for this purpose.
An investment company may not qualify as a regulated investment company for any
taxable year unless it satisfies certain requirements with respect to the
diversification of its investments at the close of each quarter of the taxable
year. In general, at least 50% of the value of its total assets must be
represented by cash, cash items, government securities, securities of other
regulated investment companies and other securities which, with respect to any
one issuer, do not represent more than 5% of the total assets of the investment
company nor more than 10% of the outstanding voting securities of such issuer.
In addition, not more than 25% of the value of the investment company's total
assets may be invested in the securities (other than government securities or
the securities of other regulated investment companies) of any one issuer. Each
Fund intends to satisfy all requirements on an ongoing basis for continued
qualification as a regulated investment company.
Each series of the Trust, including each Fund, will designate any distribution
of long term capital gains as a capital gain dividend in a written notice mailed
to shareholders within 60 days after the close of the series' taxable year.
Shareholders should note that, upon the sale or exchange of series shares, if
the shareholder has not held such shares for at least six months, any loss on
the sale or exchange of those shares will be treated as long term capital loss
to the extent of the capital gain dividends received with respect to the shares.
A 4% nondeductible excise tax is imposed on regulated investment companies that
fail to currently distribute an amount equal to specified percentages of their
ordinary taxable income and capital gain net income (excess of capital gains
over capital losses). Each series of the Trust, including each Fund, intends to
make sufficient distributions or deemed distributions of its ordinary taxable
income and any capital gain net income prior to the end of each calendar year to
avoid liability for this excise tax.
If for any taxable year a series does not qualify for the special federal income
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to federal income tax at regular corporate rates (without any
deduction for distributions to its shareholders). In such event, dividend
distributions (whether or not derived from interest on tax-exempt securities)
would be taxable as ordinary income to shareholders to the extent of the series'
current and accumulated earnings and profits, and would be eligible for the
dividends received deduction for corporations.
Each series of the Trust, including each Fund, will be required in certain cases
to withhold and remit to the U.S. Treasury 31% of taxable dividends or 31% of
gross proceeds realized upon sale paid to shareholders who have failed to
provide a correct tax identification number in the manner required, or who are
subject to withholding by the Internal Revenue Service for failure properly to
include on their return payments of taxable interest or dividends, or who have
failed to certify to the Fund that they are not subject to backup withholding
when required to do so or that they are "exempt recipients."
Depending upon the extent of each Fund's activities in states and localities in
which its offices are maintained, in which its agents or independent contractors
are located or in which it is otherwise deemed to be conducting business, each
Fund may be subject to the tax laws of such states or localities. In addition,
in those states and localities that have income tax laws, the treatment of a
Fund and its shareholders under such laws may differ from their treatment under
federal income tax laws.
9
<PAGE>
MANAGEMENT OF THE FUNDS
Trustees and Officers. The Trustees and executive officers of the Trust, their
ages, and their principal occupations for the last five years are as follows:
<TABLE>
<CAPTION>
Name, Age, Position(s) Principal Occupation(s)
and Address During Past 5 Years
<S> <C>
Everett T. Keech, 56 Chairman and CEO
Trustee Pico Products, Inc.
501 Waterloo Road Lakeview Terrace, California
Devon, Pennsylvania Adjunct Professor
Wharton Graduate School of Business
University of Pennsylvania
Philadelphia, Pennsylvania
Laurie Keyes, 46* Chief Operating Officer
Trustee Quaker Securities, Inc.
Suite 75 Valley Forge, Pennsylvania
1288 Valley Forge Road
Valley Forge, Pennsylvania
Jeffry H. King, 53* Chairman and CEO
Trustee and Chairman Quaker Securities, Inc.
Suite 75 Valley Forge, Pennsylvania
1288 Valley Forge Road
Valley Forge, Pennsylvania
Kevin J. Mailey, 44 Senior Vice President
Trustee Penn Square Management Co.
2650 Westview Drive Wyomissing, Pennsylvania
Wyomissing, Pennsylvania
F. Stanton Moyer, 67 Managing Director
Trustee Avonwood Capital Corp.
1436 Lancaster Avenue Berwyn, Pennsylvania since 1995
Berwyn, Pennsylvania previously, Chairman
Global Management Group
Philadelphia, Pennsylvania 1992-95
previously, Chairman
Mercer Capital Management
Philadelphia, Pennsylvania 1991-92
J. Hope Reese, 35 Comptroller, The Nottingham
Treasurer and Assistant Company, Rocky Mount, North
Secretary Carolina (Administrator to the Quaker Funds), since 1995;
105 North Washington Street previously, Cash Manager, Law Companies Group, Atlanta, Georgia,
Rocky Mount, North Carolina 27802 since 1993; previously, Financial Manager, MGR Food Services,
Atlanta, Georgia, since 1992; previously Accounts Receivable Manager,
Coca-Cola Bottling Co., Atlanta, Georgia.
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<PAGE>
C. Frank Watson III, 26 Vice President
Secretary and Assistant Treasurer The Nottingham Company
105 North Washington Street Rocky Mount, North Carolina (Administrator to the Chesapeake
Rocky Mount, North Carolina 27802 Funds), since 1992; previously,
Student
University of North Carolina
Chapel Hill, North Carolina
Peter F. Waitneight, 54* President
Trustee and President Quaker Funds, Inc.
Suite 76 Valley Forge, Pennsylvania 1996;
1288 Valley Forge Road previously, President, Paragon Financial Consulting
Valley Forge, Pennsylvania Malvern, Pennsylvania 1995-96;
previously, Marketing Director
Turner Investment Partners
Berwyn, Pennsylvania 1993-95;
previously, Chief Financial Officer
Radnor Corporation
Radnor, Pennsylvania 1991-93
</TABLE>
- ----------------------------
* Indicates that Trustee is an "interested person" of the Trust for purposes of
the 1940 Act because of his position with one of the Advisors, the Distributor,
or the Sponsor to the Trust.
The officers of the Trust will not receive compensation from the Trust for
performing the duties of their offices. Each Trustee who is not an "interested
person" of the Trust receives a fee of $2,000 each year plus $250 per series of
the Trust per meeting attended in person and $100 per series of the Trust per
meeting attended by telephone. All Trustees are reimbursed for any out-of-pocket
expenses incurred in connection with attendance at meetings. [confirm Trustee
fees]
Principal Holders of Voting Securities. As of November 1996, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) less than 1% of the then outstanding shares of each Fund. On
the same date the following shareholders owned of record more than 5% of the
outstanding shares of beneficial interest of the Funds. Except as provided
below, no person is known by the Trust to be the beneficial owner of more than
5% of the outstanding shares of the Funds as of November 1996.
QUAKER ENHANCED EQUITY INDEX FUND
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership* Percent
[name and Address of _________ shares 100.000%**
Advisor or Affiliate]
QUAKER CORE EQUITY FUND
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership* Percent
[name and Address of _________ shares 100.000%**
Advisor or Affiliate]
11
<PAGE>
QUAKER SECTOR ROTATION EQUITY FUND
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership* Percent
[name and Address of _________ shares 100.000%**
Advisor or Affiliate]
QUAKER SMALL-CAP VALUE FUND
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership* Percent
[name and Address of _________ shares 100.000%**
Advisor or Affiliate]
QUAKER AGGRESSIVE GROWTH FUND
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership* Percent
[name and Address of _________ shares 100.000%**
Advisor or Affiliate]
QUAKER FIXED INCOME FUND
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership* Percent
[name and Address of _________ shares 100.000%**
Advisor or Affiliate]
* The shares indicated are believed by the Trust to be owned both of record and
beneficially.
** Pursuant to applicable SEC regulations, this shareholder is deemed to control
the indicated Fund.
Investment Advisor. Information about the investment advisor to each Fund (each
the "Advisor") and its duties and compensation as Advisor is contained in the
Prospectus.
Compensation of the Advisor with regards to the Quaker Core Equity Fund, the
Quaker Aggressive Growth Fund, the Quaker Small Cap Value Fund, and the Quaker
Sector Rotation Equity Fund, based upon each Fund's average daily net assets, is
at the annual rate of 0.75%. Compensation of the Advisor with regards to the
Quaker Enhanced Equity Index Fund, based upon the Fund's average daily net
assets, is at the annual rate of 0.50%. Compensation of the Advisor with regards
to the Quaker Fixed Income Fund, based upon the Fund's average daily net assets,
is at the annual rate of 0.45%. Restrictive limitations may be imposed on each
Fund as a result of changes in current state laws and regulations in those
states where the Fund has qualified its shares, or by a decision of the Trustees
to qualify the shares in other states having restrictive expense limitations.
12
<PAGE>
Under each Advisory Agreement, the Advisor to each Fund is not liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the performance of such Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Advisor in the performance of its duties or from
its reckless disregard of its duties and obligations under the Agreement.
The Administrator and Transfer Agent. The Trust has entered into a Fund
Accounting, Dividend Disbursing & Transfer Agent and Administration Agreement
with The Nottingham Company (the "Administrator"), 105 North Washington Street,
Post Office Drawer 69, Rocky Mount, North Carolina 27802-0069, pursuant to which
the Administrator receives a fee at the annual rate of 0.175% of the average
daily net assets of each Fund on the first $50 million; 0.150% of the next $50
million; and 0.125% of its average daily net assets in excess of $100 million.
In addition, the Administrator currently receives a base monthly fee of $2,000
for accounting and recordkeeping services for each Fund. The Administrator also
charges each Fund for certain costs involved with the daily valuation of
investment securities and is reimbursed for out-of-pocket expenses. The
Administrator charges a minimum fee of $3,000 per month per Fund for all of its
fees taken in the aggregate, analyzed monthly.
The Administrator will perform the following services for each Fund: (1)
coordinate with the Custodian and monitor the services it provides to the Fund;
(2) coordinate with and monitor any other third parties furnishing services to
the Fund; (3) provide the Fund with necessary office space, telephones and other
communications facilities and personnel competent to perform administrative and
clerical functions for the Fund; (4) supervise the maintenance by third parties
of such books and records of the Fund as may be required by applicable federal
or state law; (5) prepare or supervise the preparation by third parties of all
federal, state and local tax returns and reports of the Fund required by
applicable law; (6) prepare and, after approval by the Trust, file and arrange
for the distribution of proxy materials and periodic reports to shareholders of
the Fund as required by applicable law; (7) prepare and, after approval by the
Trust, arrange for the filing of such registration statements and other
documents with the Securities and Exchange Commission and other federal and
state regulatory authorities as may be required by applicable law; (8) review
and submit to the officers of the Trust for their approval invoices or other
requests for payment of Fund expenses and instruct the Custodian to issue checks
in payment thereof; and (9) take such other action with respect to the Fund as
may be necessary in the opinion of the Administrator to perform its duties under
the agreement.
The Administrator also serves as each Fund's transfer agent and dividend
disbursing agent and will provide certain accounting and pricing services for
each Fund. As transfer agent, the Administrator will receive a monthly fee based
on the number of shareholders in each Fund, subject to a monthly minimum of
$500.
Distributor. Quaker Securities, Inc. (the "Distributor"), 1288 Valley Forge
Road, Post Office Box 987, Valley Forge, Pennsylvania 19482, acts as an
underwriter and distributor of each Fund's shares for the purpose of
facilitating the registration of shares of the Fund under state securities laws
and to assist in sales of Fund shares pursuant to a Distribution Agreement (the
"Distribution Agreement") approved by the Board of Trustees of the Trust.
In this regard, the Distributor has agreed at its own expense to qualify as a
broker-dealer under all applicable federal or state laws in those states which
each Fund shall from time to time identify to the Distributor as states in which
it wishes to offer its shares for sale, in order that state registrations may be
maintained for the Fund.
The Distributor is a broker-dealer registered with the Securities and Exchange
Commission and a member in good standing of the National Association of
Securities Dealers, Inc.
The Distribution Agreement may be terminated by either party upon 60 days prior
written notice to the other party.
Custodian. Wachovia Bank of North Carolina, N.A. (the "Custodian"), 301 North
Main Street, Winston-Salem, North Carolina 27102 serves as custodian for each
Fund's assets. The Custodian acts as the depository for each Fund, holds in
safekeeping its portfolio securities, collects all income and other payments
with respect to portfolio securities, disburses monies at the Fund's request and
maintains records in connection with its duties as Custodian. For its services
as Custodian, the Custodian is entitled to receive from each Fund an annual fee
based on the average net assets of the Fund held by the Custodian.
13
<PAGE>
Independent Accountants. The firm of Deloitte & Touche, 2500 One PPG Place,
Pittsburgh, Pennsylvania 15222, serves as independent accountants for the Funds,
and will audit the annual financial statements of the Funds, prepare each Fund's
federal and state tax returns, and consult with the Funds on matters of
accounting and federal and state income taxation.
SPECIAL SHAREHOLDER SERVICES
Each Fund offers the following shareholder services:
Regular Account. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Fund, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a confirmation statement showing the current transaction and all
prior transactions in the shareholder account during the calendar year to date,
along with a summary of the status of the account as of the transaction date. As
stated in the Prospectus, share certificates are not issued.
Automatic Investment Plan. The automatic investment plan enables shareholders to
make regular monthly or quarterly investment in shares through automatic charges
to their checking account. With shareholder authorization and bank approval, the
Administrator will automatically charge the checking account for the amount
specified ($100 minimum) which will be automatically invested in shares at the
net asset value on or about the 21st day of the month. The shareholder may
change the amount of the investment or discontinue the plan at any time by
writing to the Administrator.
Systematic Withdrawal Plan. Shareholders owning shares with a value of $10,000
or more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $100 per payment, by
authorizing the Fund to redeem the necessary number of shares periodically (each
month, or quarterly in the months of March, June, September and December) in
order to make the payments requested. Each Fund has the capacity of
electronically depositing the proceeds of the systematic withdrawal directly to
the shareholder's personal bank account ($5,000 minimum per bank wire).
Instructions for establishing this service are included in the Fund Shares
Application, enclosed in the Prospectus, or available by calling the Funds. If
the shareholder prefers to receive his systematic withdrawal proceeds in cash,
or if such proceeds are less than the $5,000 minimum for a bank wire, checks
will be made payable to the designated recipient and mailed within 7 days of the
valuation date. If the designated recipient is other than the registered
shareholder, the signature of each shareholder must be guaranteed on the
application (see "Signature Guarantees" in the Prospectus). A corporation (or
partnership) must also submit a "Corporate Resolution" (or "Certification of
Partnership") indicating the names, titles and required number of signatures
authorized to act on its behalf. The application must be signed by a duly
authorized officer(s) and the corporate seal affixed. No redemption fees are
charged to shareholders under this plan. Costs in conjunction with the
administration of the plan are borne by the Funds. Shareholders should be aware
that such systematic withdrawals may deplete or use up entirely their initial
investment and may result in realized long-term or short-term capital gains or
losses. The Systematic Withdrawal Plan may be terminated at any time by the
Funds upon sixty days written notice or by a shareholder upon written notice to
the Funds. Applications and further details may be obtained by calling the Funds
at 800-220-8888, or by writing to:
The Quaker Funds
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
Purchases in Kind. Each Fund may accept securities in lieu of cash in payment
for the purchase of shares in the Fund. The acceptance of such securities is at
the sole discretion of the Advisor to each Fund based upon the suitability of
the securities accepted for inclusion as a long term investment of the Fund, the
marketability of such securities, and other factors which the Advisor may deem
appropriate. If accepted, the securities will be valued using the same criteria
and methods as described in "How Shares are Valued" in the Prospectus.
Transactions involving the issuance of shares in a Fund for securities in lieu
of cash will be limited to acquisitions of securities (except for municipal debt
securities issued by state political subdivisions or their agencies or
instrumentalities) which: (a) meet the investment objectives and policies of the
14
<PAGE>
Fund; (b) are acquired for investment and not for resale; (c) are liquid
securities which are not restricted as to transfer either by law or liquidity of
market; and (d) have a value which is readily ascertainable (and not established
only by evaluation procedures) as evidenced by a listing on the American Stock
Exchange, the New York Stock Exchange, or NASDAQ.
Redemptions in Kind. The Funds do not intend, under normal circumstances, to
redeem their securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Funds to pay for all redemptions in cash. In such
case, the Board of Trustees may authorize payment to be made in readily
marketable portfolio securities of the Fund. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving them would incur brokerage
costs when these securities are sold. An irrevocable election has been filed
under Rule 18f-1 of the 1940 Act, wherein each Fund committed itself to pay
redemptions in cash, rather than in kind, to any shareholder of record of the
Fund who redeems during any ninety-day period, the lesser of (a) $250,000 or (b)
one percent (1%) of the Fund's net asset value at the beginning of such period.
Transfer of Registration. To transfer shares to another owner, send a written
request to the applicable Fund at the address shown herein. Your request should
include the following: (1) the Fund name and existing account registration; (2)
signature(s) of the registered owner(s) exactly as the signature(s) appear(s) on
the account registration; (3) the new account registration, address, social
security or taxpayer identification number and how dividends and capital gains
are to be distributed; (4) signature guarantees (See the Prospectus under the
heading "Signature Guarantees"); and (5) any additional documents which are
required for transfer by corporations, administrators, executors, trustees,
guardians, etc. If you have any questions about transferring shares, call or
write the Fund.
ADDITIONAL INFORMATION ON PERFORMANCE
From time to time, the total return of each Fund and the yield of the Fixed
Income Fund may be quoted in advertisements, sales literature, shareholder
reports or other communications to shareholders. Each Fund computes the "average
annual total return" of each Fund by determining the average annual compounded
rates of return during specified periods that equate the initial amount invested
to the ending redeemable value of such investment. This is done by determining
the ending redeemable value of a hypothetical $1,000 initial payment. This
calculation is as follows:
P(1+T)/n/ = ERV
Where: T = average annual total return.
ERV = ending redeemable value at the end of the period covered
by the computation of a hypothetical $1,000 payment made
at the beginning of the period.
P = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in terms of
years.
Each Fund may also compute the aggregate total return of each Fund, which is
calculated in a similar manner, except that the results are not annualized. The
calculation of average annual total return and aggregate total return assume
that there is a reinvestment of all dividends and capital gain distributions on
the reinvestment dates during the period. The ending redeemable value is
determined by assuming complete redemption of the hypothetical investment and
the deduction of all nonrecurring charges at the end of the period covered by
the computations. These performance quotations should not be considered as
representative of the performance of the Funds for any specified period in the
future.
The yield of the Fixed Income Fund is computed by dividing the net investment
income per share earned during the period stated in the advertisement by the
maximum offering price per share on the last day of the period. For the purpose
of determining net investment income, the calculation includes, among expenses
of the Fund, all recurring fees that are charged to all shareholder accounts and
any nonrecurring charges for the period stated. In particular, yield is
determinied according to the following formula:
Yield =2[(A - B + 1)/6/-1]
CD
15
<PAGE>
Where: A equals dividends and interest earned during the period; B equals
expenses accrued for the period (net of reimbursements); C equals average daily
number of shares outstanding during the period that were entitled to receive
dividends; D equals the maximum offering price per share on the last day of the
period.
Each Fund's performance may be compared in advertisements, sales literature,
shareholder reports, and other communications to the performance of other mutual
funds having similar objectives or to standardized indices or other measures of
investment performance. In particular, each Fund may compare its performance to
the S&P 500 Index. The Fixed Income Fund may also compare its performance with
the Salomon Brothers Broad Investment Grade Index. The SmallCap Value Fund may
also compare its performance with the Russell 2500 Index. Comparative
performance may also be expressed by reference to a ranking prepared by a mutual
fund monitoring service or by one or more newspapers, newsletters or financial
periodicals. Each Fund may also occasionally cite statistics to reflect its
volatility and risk. Each Fund may also compare its performance to other
published reports of the performance of unmanaged portfolios of companies. The
performance of such unmanaged portfolios generally does not reflect the effects
of dividends or dividend reinvestment. Of course, there can be no assurance that
any Fund will experience the same results. Performance comparisons may be useful
to investors who wish to compare a Fund's past performance to that of other
mutual funds and investment products. Of course, past performance is not a
guarantee of future results.
Each Fund's performance fluctuates on a daily basis largely because net earnings
and net asset value per share fluctuate daily. Both net earnings and net asset
value per share are factors in the computation of total return as described
above.
As indicated, from time to time, each Fund may advertise its performance
compared to similar funds or portfolios using certain indices, reporting
services, and financial publications. These may include the following:
o Lipper Analytical Services, Inc. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific
period of time.
o Morningstar, Inc., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Investors may use such indices in addition to the Funds' Prospectus to obtain a
more complete view of each Fund's performance before investing. Of course, when
comparing a Fund's performance to any index, factors such as composition of the
index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for each Fund may quote total returns that are calculated
on non-standardized base periods. The total returns represent the historic
change in the value of an investment in the Fund based on monthly reinvestment
of dividends over a specified period of time.
From time to time each Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the reflects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. Each Fund may also disclose from time to
time information about its portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). Each Fund may also depict the historical performance
of the securities in which the Fund may invest over periods reflecting a variety
of market or economic conditions either alone or in comparison with alternative
investments, performance indices of those investments, or economic indicators.
Each Fund may also include in advertisements and in materials furnished to
present and prospective shareholders statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
to meet specific financial goals, such as saving for retirement, children's
education, or other future needs.
Comparative information about the yield of the Fixed Income Fund and about
average rates of return on certificates of deposits, bank money market deposit
accounts, money market mutual funds, and other similar types of investments may
be included in Fixed Income Fund communications. A bank certificate of deposit,
unlike the Fixed Income Fund's shares, paysa fixed rate of interest and entitles
the depositor to receive the face amount of the certificate at maturity. A bank
money market deposit account is a form of savings account which pays a variable
rate of interest. Unlike the Fixed Income Fund's shares, bank certificates of
deposit and bank money market deposit accounts are insured by the Federal
Deposit Insurance Corporation. A money market mutual fund is designed to
maintain a constant value of $1.00 per share and, thus, a money market fund's
shares are subject to less price fluctuation than the Fixed Income Fund's
shares.
17
<PAGE>
APPENDIX A
DESCRIPTION OF RATINGS
The Funds may acquire from time to time fixed income securities that meet the
following minimum rating criteria ("Investment Grade Debt Securities") or, if
unrated, are in the Advisor's opinion comparable in quality to Investment Grade
Debt Securities. The Fixed Income Fund, however, intends to limit its portfolio
to a more restrictive quality criteria, limiting portfolio investment to those
securiites in the three highest ratings, as described below, or if not rated, of
equivalent quality as determined by the Advisor to the Fixed Income Fund. The
various ratings used by the nationally recognized securities rating services are
described below.
A rating by a rating service represents the service's opinion as to the credit
quality of the security being rated. However, the ratings are general and are
not absolute standards of quality or guarantees as to the creditworthiness of an
issuer. Consequently, the Advisor believes that the quality of fixed income
securities in which the Funds may invest should be continuously reviewed and
that individual analysts give different weightings to the various factors
involved in credit analysis. A rating is not a recommendation to purchase, sell
or hold a security, because it does not take into account market value or
suitability for a particular investor. When a security has received a rating
from more than one service, each rating is evaluated independently. Ratings are
based on current information furnished by the issuer or obtained by the rating
services from other sources that they consider reliable. Ratings may be changed,
suspended or withdrawn as a result of changes in or unavailability of such
information, or for other reasons.
Standard & Poor's Ratings Group. The following summarizes the highest four
ratings used by Standard & Poor's Ratings Group ("S&P") for bonds which are
deemed to be "Investment-Grade Debt Securities" by the Advisor:
AAA - This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay interest and repay
principal.
AA - Debt rated AA is considered to have a very strong capacity to pay
interest and repay principal and differs from AAA issues only in a small
degree.
A - Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for debt in
higher rated categories.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
Bonds rated BB, B, CCC, CC and C are not considered by the Advisor to be
"Investment-Grade Debt Securities" and are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
bonds may have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions.
Commercial paper rated A-1 by S&P indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted A-1+. Capacity for timely payment on
commercial paper rated A-2 is satisfactory, but the relative degree of safety is
not as high as for issues designated A-1.
The rating SP-1 is the highest rating assigned by S&P to municipal notes and
indicates very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics are given a
plus (+) designation.
18
<PAGE>
Moody's Investors Service, Inc. The following summarizes the highest four
ratings used by Moody's Investors Service, Inc. ("Moody's") for bonds which are
deemed to be "Investment-Grade Debt Securities" by the Advisor:
Aaa - Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
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 in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A - Debt which is rated A possesses many favorable investment attributes
and is to be considered as an upper medium grade obligation. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa - Debt which is rated Baa is considered as a medium grade obligation,
i.e., it is neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such debt lacks outstanding investment
characteristics and in fact has speculative characteristics as well.
Moody's applies numerical modifiers (l, 2 and 3) with respect to bonds rated Aa,
A and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the bond ranks in the lower end of
its generic rating category.
Bonds which are rated Ba, B, Caa, Ca or C by Moody's are not considered
"Investment-Grade Debt Securities" by the Advisor. Bonds rated Ba are judged to
have speculative elements because their future cannot be considered as well
assured. Uncertainty of position characterizes bonds in this class, because the
protection of interest and principal payments often may be very moderate and not
well safeguarded.
Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the security over any long period for time may be small. Bonds
which are rated Caa are of poor standing. Such securities may be in default or
there may be present elements of danger with respect to principal or interest.
Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers rated Prime-1 (or related supporting institutions) are considered to
have a superior capacity for repayment of short-term promissory obligations.
Issuers rated Prime-2 (or related supporting institutions) are considered to
have a strong capacity for repayment of short-term promissory obligations. This
will normally be evidenced by many of the characteristics of issuers rated
Prime-1 but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriated may be more affected by external conditions. Ample alternate
liquidity is maintained.
The following summarizes the highest rating used by Moody's for short-term notes
and variable rate demand obligations:
MIG-l; VMIG-l - Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
19
<PAGE>
Duff & Phelps Credit Rating Co. The following summarizes the highest four
ratings used by Duff & Phelps Credit Rating Co. ("D&P") for bonds which are
deemed to be "Investment-Grade Debt Securities" by the Advisor:
AAA - Bonds that are rated AAA are of the highest credit quality. The risk
factors are considered to be negligible, being only slightly more than for
risk-free U.S. Treasury debt.
AA - Bonds that are rated AA are of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
A - Bonds rated A have average but adequate protection factors. The risk
factors are more variable and greater in periods of economic stress.
BBB - Bonds rated BBB have below average protection factors but are still
considered sufficient for prudent investment. There is considerable
variability in risk during economic cycles.
Bonds rated BB, B and CCC by D&P are not considered "Investment-Grade Debt
Securities" and are regarded, on balance, as predominantly speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree of
speculation and CCC the highest degree of speculation.
The rating Duff l is the highest rating assigned by D&P for short-term debt,
including commercial paper. D&P employs three designations, Duff l+, Duff 1 and
Duff 1- within the highest rating category. Duff l+ indicates highest certainty
of timely payment. Short-term liquidity, including internal operating factors
and/or access to alternative sources of funds, is judged to be "outstanding, and
safety is just below risk-free U.S. Treasury short-term obligations." Duff 1
indicates very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
considered to be minor. Duff 1- indicates high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.
Fitch Investors Service, Inc. The following summarizes the highest four ratings
used by Fitch Investors Service, Inc. ("Fitch") for bonds which are deemed to be
"Investment-Grade Debt Securities" by the Advisor:
AAA - Bonds are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA - Bonds are considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A - Bonds that are rated A are considered to be investment grade and of
high credit quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than bonds with
higher ratings.
BBB - Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have adverse
impact on these bonds, and therefore impair timely payment. The likelihood
that the ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within a rating category.
20
<PAGE>
Bonds rated BB, B and CCC by Fitch are not considered "Investment-Grade Debt
Securities" and are regarded, on balance, as predominantly speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree of
speculation and CCC the highest degree of speculation.
The following summarizes the three highest ratings used by Fitch for short-term
notes, municipal notes, variable rate demand instruments and commercial paper:
F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.
F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+
F-2 - Instruments assigned this rating have satisfactory degree of
assurance for timely payment, but the margin of safety is not as great as
for issues assigned F-1+ and F-1 ratings.
21
<PAGE>
PART C
QUAKER INVESTMENT TRUST
FORM N1-A
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
a) Financial Statements:
To be filed by Post-Effective Amendment
b) Exhibits
<TABLE>
<S> <C>
(1) Declaration of Trust - Amended and Restated Declaration of Trust-Enclosed
Exhibit 1
(2) By-Laws - Amended and Restated By-Laws-Enclosed Exhibit 2
(3) Not Applicable
(4) Not Applicable - the series of the Registrant do not issue
certificates
(5) (a) Investment Advisory Agreement for Quaker Enhanced Equity Index
Fund-Enclosed Exhibit 5(a)
(b) Investment Advisory Agreement for Quaker Core Equity Trust-Enclosed
Exhibit 5(b)
(c) Investment Advisory Agreement for Quaker Aggressive Growth
Fund-Enclosed Exhibit 5(c)
(d) Investment Advisory Agreement for Quaker Small Cap Value Fund-Enclosed
Exhibit 5(d)
(e) Investment Advisory Agreement for Quaker Sector Rotation Equity
Fund-Enclosed Exhibit 5(e)
(f) Investment Advisory Agreement for Quaker Fixed Income Fund-Enclosed
Exhibit 5(f)
(6) (a) Distribution Agreement for Quaker Enhanced Equity Index Fund-Enclosed Exhibit 6(a)
(b) Distribution Agreement for Quaker Core Equity Trust-Enclosed Exhibit 6(b)
(c) Distribution Agreement for Quaker Aggressive Growth Fund-Enclosed Exhibit 6(c)
(d) Distribution Agreement for Quaker Small Cap Value Fund-Enclosed Exhibit 6(d)
(e) Distribution Agreement for Quaker Sector Rotation Equity Fund-Enclosed Exhibit 6(e)
(f) Distribution Agreement for Quaker Fixed Income Fund-Enclosed Exhibit 6(f)
(7) Not Applicable
(8) Custodian Agreement - Incorporated by reference; filed on 7/20/93
(9) (a) Fund Accounting, Dividend Disbursing & Transfer Agent and Administration
Agreement-Enclosed Exhibit 9
(10) Opinion and Consent of Counsel-to be filed by Post-Effective Amendment
(11) Consent of Auditors-Not Applicable
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) (a) Plan of Distribution under Rule 12b-1 for Quaker Enhanced Equity
Index Fund-Enclosed Exhibit 15(a)
(b) Plan of Distribution under Rule 12b-1 for Quaker Core Equity Trust-Enclosed Exhibit 15(b)
(c) Plan of Distribution under Rule 12b-1 for Quaker Aggressive Growth Fund-Enclosed Exhibit
15(c)
(d) Plan of Distribution under Rule 12b-1 for Quaker Small Cap Value Fund-Enclosed Exhibit 15(d)
(e) Plan of Distribution under Rule 12b-1 for Quaker Sector Rotation Equity Fund-Enclosed Exhibit
15(e)
(f) Plan of Distribution under Rule 12b-1 for Quaker Fixed Income Fund-Enclosed Exhibit 15(f)
(16) Computation of Performance-to be filed by Post-Effective Amendment
(17) (a) Copies of Powers of Attorney-Not applicable
(b) Financial Data Schedules-to be filed by Post-Effective Amendment
(18) Not applicable
</TABLE>
ITEM 25. Persons Controlled by or Under Common Control with Registrant
No person is controlled by or under common control with Registrant.
<PAGE>
ITEM 26. Number of Record Holders of Securities
As of August 14, 1996, the number of record holders of each class of
securities of Registrant was as follows:
Number of
Title of Class Record Holders
Quaker Enhanced Equity Index Fund 0
Quaker Core Equity Trust 0
Quaker Aggressive Growth Fund 0
Quaker Small Cap Value Fund 0
Quaker Sector Rotation Equity Fund 0
Quaker Fixed Income Fund 0
ITEM 27. Indemnification
Reference is hereby made to the following sections of the
following documents filed or included by reference as exhibits
hereto:
Article VII, Sections 5.4 of the Registrant's Declaration of
Trust, Article XIV Section 8(b) of the Registrant's Investment
Advisory Agreements, Section 8(b) of the Registrant's
Administration Agreement, and Section (6) of the Registrant's
Distribution Agreements.
The Trustees and officers of the Registrant and the personnel of
the Registrant's administrator are insured under an errors and
omissions liability insurance policy. The Registrant and its
officers are also insured under the fidelity bond required by
Rule 17g-1 under the Investment Company Act of 1940.
ITEM 28. Business and other Connections of Investment Advisor
See the Statement of Additional Information section entitled
"Trustees and Officers" for the activities and affiliations of
the officers and directors of the Investment Advisors of the
Registrant. Except as so provided, to the knowledge of
Registrant, none of the directors or executive officers of the
Investment Advisors is or has been at any time during the past
two fiscal years engaged in any other business, profession,
vocation or employment of a substantial nature. The Investment
Advisors currently serve as investment advisors to numerous
institutional and individual clients.
ITEM 29. Principal Underwriter
(a) Quaker Securities, Inc. is underwriter and distributor for The
Quaker Family of Mutual Funds and does not serve as underwriter
or distributor for any other investment companies.
(b)
Name and Principal Position(s) and Offices Position(s) and Offices
Business Address with Underwriter with Registrant
Jeffry H. King Chairman & CEO Trustee and Chairman
1288 Valley Forge Rd
Valley Forge, PA
Laurie Keyes Chief Operating Officer Trustee
1288 Valley Forge Rd
Valley Forge, PA
(c) Not applicable
ITEM 30. Location of Accounts and Records
<PAGE>
All account books and records not normally held by the Custodian and
the Investment Advisors are held by the Registrant, in the offices of
The Nottingham Company, Administrator to the Registrant.
The address of The Nottingham Company is 105 North Washington Street,
P.O. Drawer 69, Rocky Mount, North Carolina 27802-0069.
ITEM 31. Management Services
The substantive provisions of the Fund Accounting, Dividend
Disbursing & Transfer Agent and Administration Agreement, as amended,
between the Registrant and The Nottingham Company are discussed in
Part B hereof.
ITEM 32. Undertakings
Registrant undertakes to file a post-effective amendment, using
financial statements which need not be certified, within four to six
months from the effetive date on this Post-Effective Amendment to
Registrant's 1933 Act registration statement.
Registrant undertakes to furnish each person to whom a Prospectus is
delivered with a copy of the latest annual report of each series of
Registrant to shareholders upon request and without charge.
<PAGE>
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, thereto
duly authorized, in the City of Rocky Mount, State of North Carolina on the 23rd
day of August 1996.
QUAKER INVESTMENT TRUST
By: /s/ FRANK P. MEADOWS III
Frank P. Meadows III
Chairman, Board of Trustees
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
/s/ FRANK P. MEADOWS III Trustee
Frank P. Meadows III Officer
<PAGE>
QUAKER INVESTMENT TRUST
EXHIBIT INDEX
SEQUENTIAL PAGE
EXHIBIT NUMBER DESCRIPTION NUMBER
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
QUAKER INVESTMENT TRUST
(FORMERLY NAMED BRANCH-CABELL INVESTMENT TRUST)
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
QUAKER INVESTMENT TRUST
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
The Trust............................................................ 1
1.1 Name................................................................. 1
1.2 Definitions.......................................................... 2
1.3 Purpose.............................................................. 3
ARTICLE II
Trustees............................................................. 3
2.1 Management of the Trust.............................................. 3
2.2 Election of Trustees................................................. 3
2.3 Term of Office of Trustees........................................... 4
2.4 Termination of Service and Appointment of
Trustees............................................................. 4
2.5 Temporary Absence of Trustee......................................... 5
2.6 Number of Trustees................................................... 5
2.7 Vacancy in Board of Trustees......................................... 5
2.8 Effect of Death, Resignation etc. of a Trustee....................... 5
2.9 Ownership of the Trust............................................... 5
2.10 Meetings............................................................. 5
2.11 Officers............................................................. 6
2.12 By-Laws.............................................................. 6
2.13 Other Activities of Trustees......................................... 6
ARTICLE III
Powers of Trustees................................................... 7
3.1 General.............................................................. 7
3.2 Investments.......................................................... 7
3.3 Legal Title.......................................................... 8
3.4 Issuance and Repurchase of Securities................................ 8
3.5 Borrow Money......................................................... 9
3.6 Delegation; Committees............................................... 9
3.7 Collection and Payment............................................... 9
3.8 Expenses............................................................. 9
3.9 Miscellaneous Powers................................................. 9
3.10 Further Powers....................................................... 10
3.11 Ownership of Shares by Trustees, Officers, and
Agents............................................................... 11
ARTICLE IV
Advisory, Service, Management and
Distribution Arrangements............................................ 11
4.1 Advisory, Service, and Management Arrangements....................... 11
i
<PAGE>
4.2 Distribution Arrangements............................................ 11
4.3 Parties to Contract.................................................. 12
4.4 Provisions and Amendments............................................ 12
ARTICLE V
Limitations of Liability of
Shareholders, Trustees and Others.................................... 12
5.1 Limitation of Personal Liability and
Indemnification of Shareholders...................................... 12
5.2 Limitation of Personal Liability of Trustees,
Officers, Employees or Agents of the Trust........................... 13
5.3 Express Exculpatory Clauses and Instruments.......................... 13
5.4 Mandatory Indemnification............................................ 14
5.5 No Bond Required of Trustees......................................... 15
5.6 No Duty of Investigation; Notice in Trust
Instruments, etc..................................................... 15
5.7 Reliance on Experts, etc............................................. 16
ARTICLE VI
Shares of Beneficial Interest........................................ 16
6.1 Beneficial Interest.................................................. 16
6.2 Series Designation................................................... 16
6.3 Rights of Shareholders............................................... 19
6.4 Trust Only........................................................... 19
6.5 Issuance of Shares................................................... 19
6.6 Register of Shares................................................... 20
6.7 Transfer Agent and Registrar......................................... 20
6.8 Transfer of Shares................................................... 20
6.9 Notices.............................................................. 21
ARTICLE VII
Custodians........................................................... 21
7.1 Appointment and Duties............................................... 21
7.2 Action Upon Termination of Custodian Agreement....................... 22
7.3 Central Certificate System........................................... 22
7.4 Acceptance of Receipts in Lieu of Certificates....................... 22
ARTICLE VIII
Redemption........................................................... 23
8.1 Redemptions.......................................................... 23
8.2 Redemption of Shares; Disclosure of Holding.......................... 23
8.3 Redemptions of Accounts of Less than an Amount
Specified by the Trustees............................................ 24
8.4 Redemptions Pursuant to Constant Net Asset Value..................... 24
8.5 Redemption in Kind................................................... 24
ARTICLE IX
Determination of Net Asset Value,
Net Income and Distributions......................................... 24
9.1 Net Asset Value...................................................... 24
9.2 Distributions to Shareholders........................................ 25
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9.3 Constant Net Asset Value; Reduction on Outstanding
Shares............................................................... 25
9.4 Power to Modify Foregoing Procedures................................. 26
ARTICLE X
Shareholders......................................................... 26
10.1 Voting Powers........................................................ 26
10.2 Meetings............................................................. 27
10.3 Quorum and Required Vote............................................. 28
10.4 Record Date for Meetings............................................. 28
10.5 Proxies.............................................................. 29
10.6 Additional Provisions................................................ 29
10.7 Reports.............................................................. 29
10.8 Shareholder Action by Written Consent................................ 29
10.9 Inspection of Records................................................ 29
ARTICLE XI
Duration; Termination of Trust;
Amendment; Mergers; Etc.............................................. 30
11.1 Duration............................................................. 30
11.2 Termination.......................................................... 30
11.3 Merger, Consolidation and Sale of Assets............................. 31
11.4 Amendment Procedure.................................................. 31
11.5 Incorporation........................................................ 32
ARTICLE XII
Miscellaneous........................................................ 33
12.1 Filing............................................................... 33
12.2 Resident Agent....................................................... 33
12.3 Governing Law........................................................ 34
12.4 Counterparts......................................................... 34
12.5 Reliance by Third Parties............................................ 34
12.6 Provisions in Conflict With Law or Regulations....................... 34
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AMENDED AND RESTATED
DECLARATION OF TRUST
OF
QUAKER INVESTMENT TRUST
THIS DECLARATION OF TRUST of QUAKER INVESTMENT TRUST, originally made as
of the 24th day of October, 1990 under the name "Branch-Cabell Investment
Trust", and amended and restated as of the 1st day of August, 1996, by the
parties signatory hereto, as trustees (such persons, so long as they shall
continue in office in accordance with the terms of this Declaration of Trust,
and all other persons who at the time in question have been duly elected or
appointed as trustees in accordance with the provisions of this Declaration of
Trust and are then in office, being hereinafter called the "Trustees").
WHEREAS, the Trustees hereby established a trust fund under the laws of
Massachusetts for the investment and reinvestment of funds contributed thereto
under this Declaration of Trust;
WHEREAS, this Declaration of Trust has been amended from time to time,
and at least a majority of the Trustees desire to further amend this Declaration
of Trust and restate into a single instrument all of the provisions of this
Declaration of Trust that are now in effect and operative as provided herein in
accordance with Section 11.4 hereof, all without adversely affecting the rights
of any Shareholder or the limitations on personal liability of any Shareholder
or Trustee and without contravening any applicable law, including the 1940 Act
(as defined herein);
NOW, THEREFORE, the Trustees hereby declare that all money and property
contributed to the trust fund under said Declaration of Trust shall be held and
managed under this Declaration of Trust as herein set forth below.
ARTICLE I
The Trust
1.1 Name. The name of the trust created hereby (the "Trust", which term
shall be deemed to include any Series of the Trust when the context requires)
shall be amended and as amended shall be "Quaker Investment Trust", and so far
as may be practicable the Trustees shall conduct the activities of the Trust,
execute all documents and sue or be sued under that name, which name (and the
word "Trust" wherever hereinafter used) shall refer to the Trustees as Trustees,
and not individually, and shall not refer to the officers, agents, employees or
Shareholders of the Trust or any Series thereof. Each Series of the Trust that
shall be established and designated by the Trustees pursuant to Section 6.2
shall conduct its activities under such name as the Trustees shall determine and
set forth in the instrument establishing such Series. Should the Trustees
determine that the use of the name of the Trust or any Series is not advisable,
they may select such other name for the Trust or such Series as they deem
proper, and the Trust or Series may conduct its activities under such other
name. Any name change shall be effective upon the execution by a majority of the
then Trustees (or by an officer of the Trust pursuant to the vote of a majority
of the then Trustees) of an instrument setting forth the new name. Any such
instrument shall have the status of an amendment to this Declaration.
1.2 Definitions. As used in this Declaration, the following
terms have the following meanings:
The terms "Affiliated Person", "Assignment", "Commission", "Interested
Person", "Investment Adviser", "Majority Shareholder" (the 67% or 50%
requirement of the third sentence of Section 2(a) (42) of the 1940 Act,
whichever may be applicable) and "Principal Underwriter" shall have the meanings
given them in the 1940 Act.
"By-Laws" shall mean the By-Laws of the Trust as amended from
time to time.
"Class" shall mean the separate classes into which the Shares of any
Series may be divided as provided in Section 6.2.
"Commission" shall mean the United States Securities and
Exchange Commission.
"Declaration" shall mean this Declaration of Trust as amended from time
to time. References in this Declaration to "Declaration", "hereof", "herein" and
"hereunder" shall be deemed to refer to the Declaration rather than the article
or section in which such words appear.
"Net Asset Value" shall mean the net asset value of each Series or Class
of the Trust determined in the manner provided in Article IX, Section 9.1
hereof.
"Person" shall mean and include individuals, corporations, partnerships,
trusts, associations, limited liability companies, joint ventures and other
entities, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"Prospectus" shall mean the currently effective Prospectus of any Series
or Class of the Trust under the Securities Act of 1933, as amended.
"Series" shall mean the separate series that may be established and
designated pursuant to Section 6.2.
"Shareholders" shall mean as of any particular time all holders of
record of outstanding Shares at such time.
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"Shares" shall mean the transferable units of interest into which the
beneficial interest in any Series or Class of the Trust shall be divided from
time to time and includes fractions of Shares as well as whole Shares. All
reference to Shares shall be deemed to be Shares of any or all Series or Classes
as the context may require.
"Trust" shall have the meaning set forth in Article I, Section 1.1
hereof.
"Trustees" shall mean the signatories to this Declaration of Trust, so
long as they shall continue in office in accordance with the terms hereof, and
all other persons who at the time in question have been duly elected or
appointed and have qualified as Trustees in accordance with the provisions
hereof and are then in office, and reference in this Declaration to a Trustee or
Trustees shall refer to such person or persons in their capacity as Trustees
hereunder.
"Trust Property" shall mean as of any particular time any and all
property, real or personal, tangible or intangible, which at such time is owned
or held by or for the account of the Trust, any Series thereof or the Trustees.
The "1940 Act" shall mean the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder, as amended from time to time
including exemptions granted therefrom.
1.3 Purpose. The Trust is a Massachusetts business trust of the type
described in Section 1 of Chapter 102 of the General Law of the Commonwealth of
Massachusetts formed for the purpose of acting as a management investment
company under the 1940 Act; provided, however, that the Trust may exercise all
powers that are ordinarily exercised by or permissible for Massachusetts
business trusts.
ARTICLE II
Trustees
2.1 Management of the Trust. The business and affairs of the Trust shall
be managed by the Trustees, and they shall have all powers necessary and
desirable to carry out that responsibility. Each Trustee named herein (or his
successor appointed hereunder) shall serve until his successor is elected and
qualified, or until he sooner dies, resigns or is removed.
2.2 Election of Trustees. Shareholders of the Trust shall elect Trustees
at Shareholder meetings called for that purpose. The Trustees need not be
elected annually or at regular intervals. Except as provided in Section 10.2,
the Trustees shall not be required to call a meeting of Shareholders for the
purpose of electing Trustees; provided, however, that if at any time, less
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than a majority of the Trustees holding office at that time were elected by the
Shareholders, a meeting of the Shareholders for the purpose of electing Trustees
shall be held promptly and in any event within 60 days (unless the Commission
shall by order extend such period). No election of a Trustee shall become
effective, however, until the person elected shall have accepted such election
and agreed in writing to be bound by the terms of this Declaration. If
re-elected, a Trustee may succeed himself. Trustees need not own Shares. During
any period in which the Trust may act as distributor of the securities of which
it is the issuer, the selection and nomination of Trustees who are not
interested persons shall be made by disinterested Trustees in accordance with
the 1940 Act.
2.3 Term of Office of Trustees. Each Trustee shall hold office during
the lifetime of this Trust and until its termination as hereinafter provided or,
if sooner, until the next meeting of Shareholders called for the purpose of
electing Trustees and the election and qualification of his successor; except
(a) that any Trustee may resign his trust by written instrument signed by him
and delivered to the other Trustees, which shall take effect upon such delivery
or upon such later date as is specified therein; (b) that any Trustee may be
removed at any time by written instrument signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date when such removal
shall become effective; (c) that any Trustee who requests in writing to be
retired or who has become mentally or physically incapacitated may be retired by
written instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) a Trustee may be removed at any meeting of
Shareholders of the Trust by a vote of two-thirds of the outstanding Shares or
by a written designation signed by shareholders of the Trust holding at least
two thirds of the outstanding Shares.
2.4 Termination of Service and Appointment of Trustees. In case of
death, resignation, retirement, removal or mental or physical incapacity of any
of the Trustees, or in case a vacancy shall, by reason of an increase in number,
or for any other reason, exist, the remaining Trustees shall fill such vacancy
by appointing for the remaining term of the predecessor Trustee such other
person as they in their discretion shall see fit. Such appointment shall be
effective upon the signing of a written instrument by a majority of the Trustees
in office and the written acceptance to this Declaration by the appointee. An
appointment of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees and the written
acceptance of this Declaration by the appointee. As soon as any Trustee so
appointed shall have accepted this Trust, the trust estate shall vest in the new
Trustee or Trustees, together
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with the continuing Trustees, without any further act or conveyance, and he
shall be deemed a Trustee hereunder. Any appointment authorized by this Section
2.4 is subject to the provisions of Section 16(a) of the 1940 Act.
2.5 Temporary Absence of Trustee. Any Trustee may, by power of attorney,
delegate his power for a period not exceeding six months at any one time to any
other Trustee or Trustees, provided that in no case shall less than two of the
Trustees personally exercise the power hereunder except as herein otherwise
expressly provided.
2.6 Number of Trustees. The number of Trustees serving hereunder at
any time shall be determined by the Trustees themselves.
2.7 Vacancy in Board of Trustees. Whenever a vacancy on the Board of
Trustees shall occur and until such vacancy is filled, or while any Trustee is
physically or mentally incapacitated by reason of disease or otherwise, the
other Trustees, regardless of their number, shall have all the powers granted to
the Trustees and shall discharge all the duties imposed upon them by this
Declaration. The certificate of the other Trustees of such vacancy or incapacity
shall be conclusive.
2.8 Effect of Death, Resignation etc. of a Trustee. The death,
resignation, retirement, removal, or mental or physical 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.
2.9 Ownership of the Trust. The assets of the Trust shall be held
separate and apart from any assets now or hereafter held in any capacity other
than as Trustee hereunder by the Trustees or by any successor Trustees. All of
the assets of the Trust shall at all times be considered as vested in the
Trustees. No Shareholder shall be deemed to have a severable ownership in any
individual asset of the Trust or any right of partition or possession thereof,
but each Shareholder shall have a proportionate undivided beneficial interest in
the Trust.
2.10 Meetings. Meetings of the Trustees shall be held from time to time
upon the call of the Chairman, the Secretary, such other officers as may be
thereunto authorized by the By-Laws or vote of the Trustees, or any two
Trustees, or pursuant to a vote of the Trustees adopted at a duly constituted
meeting of the Trustees. Regular meetings of the Trustees may be held without
call or notice at a time and place fixed by the By-Laws or by resolution of the
Trustees. Notice of any other meeting shall be mailed or otherwise given not
less than 48 hours before the meeting but may be waived in person or in writing
by any Trustee either before or after such meeting. The attendance of a Trustee
at a meeting shall constitute
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a waiver of notice of such meeting except where a Trustee attends a meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting has not been lawfully called or convened. The Trustees
may act with or without a meeting. A quorum for all meetings of the Trustees
shall be a majority of the Trustees. Unless provided otherwise in this
Declaration, any action of the Trustees may be taken at a meeting by vote of a
majority of the Trustees present (a quorum being present) or without a meeting
by written consents of a majority of the Trustees.
Any committee of the Trustees, including an executive committee, if any,
may act with or without a meeting. A quorum for all meetings of any such
committee shall be a majority of the members thereof. Unless provided otherwise
in this Declaration, any action of any such committee may be taken at a meeting
by vote of a majority of the members present (a quorum being present) or without
a meeting by written consent of a majority of the members.
With respect to actions of the Trustees and any committee of the
Trustees, Trustees who are Interested Persons of the Trust within the meaning of
Section 1.2 hereof or otherwise interested in any action to be taken may be
counted for quorum purposes under this Section and shall be entitled to vote to
the extent permitted by the 1940 Act.
All or any one or more Trustees may participate in a meeting of the
Trustees or any committee thereof by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to such
communications systems shall constitute presence in person at such meeting.
2.11 Officers. The Trustees shall elect such officers or agents, who
shall have such powers, duties, and responsibilities as the Trustees may deem to
be advisable, and as they shall specify by resolution or in the By-Laws. Except
as may be provided in the ByLaws, any officer or agent elected by the Trustees
may be removed at any time with or without cause. Any two or more offices may be
held by the same individual.
2.12 By-Laws. The Trustees may adopt, and from time to time amend or
repeal, By-Laws for the conduct of the business of the Trust.
2.13 Other Activities of Trustees. Trustees may also serve as officers,
employees, and agents of the Trust, and may hold multiple offices within the
Trust; and may hold any office or be employed by any other business entity, and
engage in any other business activity.
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ARTICLE III
Powers of Trustees
3.1 General. The Trustees in all instances shall act as principals, and
are and shall be free from the control of the Shareholders. The Trustees shall
have full power and authority to do any and all acts and to make and execute any
and all contracts and instruments that they may consider necessary or
appropriate in connection with the management of the Trust. The Trustees shall
not be bound or limited by present or future laws or customs with regard to
investment by trustees or fiduciaries. The enumeration of any specific power
herein shall not be construed as limiting the aforesaid powers.
3.2 Investments. The Trustees shall have power to:
(a) conduct, operate and carry on the business of an investment
company, including any activity incidental to the business of an investment
company or conducive to or expedient for the benefit or protection of the Trust
or its Shareholders;
(b) subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, lend, mortgage,
hypothecate, purchase or sell options on, lease, distribute or otherwise deal in
or dispose of any or all of the assets of the Trust, including, but not limited
to, cash, negotiable or non-negotiable instruments, obligations, evidences of
indebtedness, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, reverse repurchase agreements, equity securities, option
contracts, futures contracts, indices of securities and other securities,
including, without limitation, those issued, guaranteed or sponsored by any
state, territory or possession of the United States and the District of Columbia
and their political subdivisions, agencies and instrumentalities, or by the
United States Government or its agencies or instrumentalities, or international
instrumentalities, or by any bank, savings institution, corporation or other
business entity organized under the laws of the United States or organized under
foreign laws; and to exercise any and all rights, powers and privileges of
ownership or interest in respect of any and all such investments of every kind
and description, including, without limitation, the right to vote, execute and
deliver proxies or powers of attorney, consent and otherwise act with respect
thereto, with power to designate one or more persons, firms, associations or
corporations to exercise any of said rights, powers and privileges in respect of
any of said instruments;
(c) 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, sub-custodian or
other depositary or a nominee or nominees or otherwise;
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(d) consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security or property
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;
(e) 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;
(f) act as distributor of Shares, and as underwriter of,
or broker or dealer in, securities or other property.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust or any Series or Class, nor shall
the Trustees be limited by any law limiting the investments that may be made by
fiduciaries.
3.3 Legal Title. Legal title to all the Trust Property shall be vested
in the Trustees as joint tenants except that the Trustees shall have power to
cause legal title to any Trust Property to be held by or in the name of one or
more of the Trustees, or in the name of the Trust or any Series thereof, or in
the name of any other Person as nominee, on such terms as the Trustees may
determine, provided that the interest therein of the Trust or any Series thereof
is appropriately protected.
The right, title and interest of the Trustees in the Trust Property
shall vest automatically in each person who may hereafter become a Trustee upon
his due election and qualification. Upon the resignation, removal or death of a
Trustee he shall automatically cease to have any right, title or interest in any
of the Trust Property, and the right, title and interest of such Trustee in the
Trust Property shall vest automatically in the remaining Trustees. Such vesting
and cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered.
3.4 Issuance and Repurchase of Securities. The Trustees shall have the
power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell,
dispose of, transfer, and otherwise deal in, Shares, including shares in
fractional denominations, and, subject to the more detailed provisions set forth
in Articles VIII and IX, to apply to any such repurchase, redemption,
retirement, cancellation or acquisition of Shares any funds or property of the
applicable Series of the Trust.
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3.5 Borrow Money. The Trustees shall have power to borrow money or
otherwise obtain credit and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the Trust or any Series thereof,
including the lending of portfolio securities, and to endorse, guarantee, or
undertake the performance of any obligation, contract or engagement of any other
person, firm, association or corporation.
3.6 Delegation; Committees. The Trustees shall have power, consistent
with their continuing exclusive authority over the management of the Trust and
the Trust Property, to delegate from time to time to such of their number or to
officers, employees or agents of the Trust the doing of such things and the
execution of such instruments either in the name of the Trust or the names of
the Trustees or otherwise as the Trustees may deem expedient. The Trustees may
appoint committees consisting in each case of such number of Trustees (but not
less than the minimum required by any applicable law) and having and exercising,
to the extent permitted by law, such powers as the Trustees may determine in the
resolution appointing any such committees. The Trustees shall have power to
appoint members and alternate members of any such committee, and, to the extent
permitted by law, at any time to change the members, alternate members, and
powers of any such committee.
3.7 Collection and Payment. The Trustees shall have power to collect all
property due to the Trust or any Series thereof; to pay all claims, including
taxes, against the Trust Property; to prosecute, defend, compromise or abandon
any claims relating to the Trust Property; to foreclose any security interest
securing any obligations, by virtue of which any property is owed to the Trust
or any Series thereof; and to enter into releases, agreements and other
instruments.
3.8 Expenses. The Trustees shall have power to incur and pay any
expenses which in the opinion of the Trustees are necessary or incidental to
carry out any of the purposes of this Declaration, and to pay reasonable
compensation from the funds of the Trust to themselves as Trustees. The Trustees
shall fix the compensation of all officers, agents, employees and Trustees. The
Trustees may pay themselves such compensation for special services, including
legal, underwriting, syndicating and brokerage services, as they in good faith
may deem reasonable and reimbursement for expenses reasonably incurred by
themselves on behalf of the Trust.
3.9 Miscellaneous Powers. The Trustees shall have the power to: (a)
employ or contract with such Persons as the Trustees may deem desirable for the
transaction of the business of the Trust or any Series or Class thereof; (b)
enter into joint ventures, partnerships and any other combinations or
associations; (c) purchase, and pay for out of Trust Property, insurance
policies insuring the Shareholders, Trustees, officers, employees, agents,
investment advisors, distributors, selected dealers or independent
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contractors of the Trust or any Series or Class thereof against all claims
arising by reason of holding any such position or by reason of any action taken
or omitted by any such Person in such capacity, whether or not constituting
negligence, or whether or not the Trust would have the power to indemnify such
Person against such liability; (d) establish pension, profit-sharing, share
purchase, and other retirement, incentive and benefit plans for any Trustees,
officers, employees and agents of the Trust; (e) make donations, irrespective of
benefit to the Trust, for charitable, religious, educational, scientific, civic
or similar purposes; (f) guarantee indebtedness or contractual obligations of
others; (g) determine and change the fiscal year of the Trust and the method in
which its accounts shall be kept; (h) act as distributor of Shares and as
underwriter of, or broker or dealer in, securities or other property; (i)
determine in accordance with generally accepted accounting principles and
practices what constitutes net profits or net earnings and to determine what
accounting periods shall be used by the Trust for any purpose, whether annual or
any other period, including daily; (j) remove officers and terminate agents as
the Trustees deem appropriate; (k) adopt a seal for the Trust but the absence of
such seal shall not impair the validity of any instrument executed on behalf of
the Trust; and (l) engage in any other lawful activity in which trusts organized
under Massachusetts General Laws, Chapter 182, or any successor statute thereto,
may engage.
3.10 Further Powers. The Trustees shall have power to conduct the
business of the Trust or any Series thereof and carry on its operations in any
and all of its branches and maintain offices both within and without the
Commonwealth of Massachusetts, in any and all states of the United States of
America, in the District of Columbia, and in any and all commonwealths,
territories, dependencies, colonies, possessions, agencies or instrumentalities
of the United States of America and of foreign governments, and to do all such
other things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust or any Series or Class
thereof although such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust or any Series or Class
thereof made by the Trustees in good faith shall be conclusive. In construing
the provisions of this Declaration, the presumption shall be in favor of a grant
of power to the Trustees. The Trustees will not be required to obtain any court
order to deal with the Trust Property. No Trustee shall be required to give any
bond or other security for the performance of any of his duties hereunder.
3.11 Ownership of Shares by Trustees, Officers, and Agents. Any Trustee,
officer or other agent of the Trust may acquire, own and dispose of Shares to
the same extent as if he were not a Trustee, officer or agent; and the Trustees
may issue and sell or cause to be issued and sold Shares to and buy such Shares
from any
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such person or any firm or company in which he is interested, subject only to
the general limitations herein contained as to the sale and purchase of such
Shares; and all subject to any restrictions which may be contained in the
By-Laws.
ARTICLE IV
Advisory, Service, Management and
Distribution Arrangements
4.1 Advisory, Service, and Management Arrangements. The Trustees may in
their discretion from time to time enter into advisory, service, administration
or management contracts whereby the other party to such contract shall undertake
to furnish the Trustees such advisory, administrative, management or other
services, with respect to one or more Series or Classes as the Trustees shall
from time to time consider desirable and all upon such terms and conditions as
the Trustees may in their discretion determine, subject to Majority Shareholder
Vote to the extent required by the 1940 Act. The investment advisor may enter
into a sub-investment advisory contract to receive investment advice from a
sub-investment advisor upon such terms and conditions and for such compensation
as the Trustees may in their discretion approve, subject to Majority Shareholder
Vote to the extent required by the 1940 Act. Notwithstanding any provisions of
this Declaration, the Trustees may authorize any advisor, sub-investment
advisor, administrator or manager (subject to such general or specific
instructions as the Trustees may from time to time adopt) to effect purchases,
sales, loans or exchanges of portfolio securities of any Series of the Trust on
behalf of the Trustees or may authorize any officer, employee or Trustee to
effect such purchases, sales, loans or exchanges pursuant to recommendations of
any such advisor, sub-investment advisor, administrator or manager (and all
without further action by the Trustees). Any such purchases, sales, loans and
exchanges shall be deemed to have been authorized by all of the Trustees.
4.2 Distribution Arrangements. The Trustees may in their discretion from
time to time enter into a contract providing for the sale of the Shares of the
Trust or any Series or Class of the Trust to net the Trust not less than the par
value per share, whereby the Trust may either agree to sell the Shares to the
other party to the contract or appoint such other party its sales agent for such
Shares. In either case, the contract shall be on such terms and conditions as
the Trustees may in their discretion determine not inconsistent with the
provisions of this Article IV or the By-Laws; and such contract may also provide
for the repurchase or sale of Shares by such other party as principal or as
agent of the Trust and may provide that such other party may enter into selected
dealer agreements with registered securities dealers to further the purpose of
the distribution or repurchase of the Shares.
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4.3 Parties to Contract. Any contract of the character described in
Sections 4.1 and 4.2 of this Article IV or in Article VII hereof may be entered
into with any corporation, firm, company, trust or association, although one or
more of the Trustees or officers of the Trust may be an officer, director,
trustee, shareholder, manager, or member of such other party to the contract,
and no such contract shall be invalidated or rendered voidable by reason of the
existence of any such relationship, nor shall any person holding such
relationship be liable merely by reason of such relationship for any loss or
expense to the Trust under or by reason of said contract or accountable for any
profit realized directly or indirectly therefrom, provided that the contract
when entered into was reasonable and fair and not inconsistent with the
provisions of this Article IV or the By-Laws. The same person (including a firm,
corporation, trust, company, or association) may be the other party to contracts
entered into pursuant to Sections 4.1 and 4.2 above or Article VII, and any
individual may be financially interested or otherwise affiliated with persons
who are parties to any or all of the contracts mentioned in this Section 4.3.
4.4 Provisions and Amendments. Any contract entered into pursuant to
Sections 4.1 and 4.2 of this Article IV shall be consistent with and subject to
the requirements of the 1940 Act with respect to its continuance in effect, its
termination, and the method of authorization and approval of such contract or
renewal thereof, and any amendment to any contract entered into pursuant to
Section 4.1 shall be assented to by a Majority Shareholder Vote of the
applicable Series or Class to the extent required by the 1940 Act.
ARTICLE V
Limitations of Liability of
Shareholders, Trustees and Others
5.1 Limitation of Personal Liability and Indemnification of
Shareholders. The Trustees, officers, employees or agents of the Trust shall
have no power to bind any Shareholder personally or 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 agree to pay by way of subscription to any
Shares or otherwise.
No Shareholder or former Shareholder of the Trust shall be liable solely
by reason of his being or having been a Shareholder for any debt, claim, action,
demand, suit, proceeding, judgment, decree, liability or obligation of any kind,
against, or with respect to, the Trust arising out of any action taken or
omitted for or on behalf of the Trust, and the Trust shall be solely liable
therefor and resort shall be had solely to the Trust Property for the payment or
performance thereof.
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Each Shareholder or former Shareholder of the Trust (or their heirs,
executors, administrators or other legal representatives or, in case of a
corporate entity, its corporate or general successor) shall be entitled to
indemnity and reimbursement out of the Trust Property to the full extent of such
liability and the costs of any litigation or other proceedings in which such
liability shall have been determined, including, without limitation, the fees
and disbursements of counsel if, contrary to the provisions hereof, such
Shareholder or former Shareholder of the Trust shall be held to personal
liability.
5.2 Limitation of Personal Liability of Trustees, Officers, Employees or
Agents of the Trust. No Trustee, officer, employee or agent of the Trust shall
have the power to bind any other Trustee, officer, employee or agent of the
Trust personally. The Trustees, officers, employees or agents of the Trust in
incurring any debts, liabilities or obligations, or in taking or omitting any
other actions for or in connection with the Trust, are, and each shall be deemed
to be, acting as Trustee, officer, employee or agent of the Trust and not in his
own individual capacity.
Provided they have acted under the belief that their actions are in the
best interest of the Trust, the Trustees and officers shall not be responsible
for or liable in any event for neglect or wrongdoing by them or any officer,
agent, employee, investment advisor or principal underwriter of the Trust or of
any entity providing administrative services for the Trust, but nothing herein
contained shall protect any Trustee or officer against any liability to which he
would otherwise be subject by reason of willful malfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
5.3 Express Exculpatory Clauses and Instruments. The Trustees shall use
every reasonable means to assure that all persons having dealings with the Trust
shall be informed that the property of the Shareholders and the Trustees,
officers, employees and agents of the Trust shall not be subject to claims
against or obligations of the Trust to any extent whatsoever. The Trustees shall
cause to be inserted in any written agreement, undertaking or obligation made or
issued on behalf of the Trust (including certificates, if any, for Shares of the
Trust) an appropriate reference to this Declaration, providing that neither the
Shareholders, the Trustees, the officers, the employees nor any agent of the
Trust shall be liable thereunder, and that the other parties to such instrument
shall look solely to the Trust Property for the payment of any claim thereunder
or for the performance thereof; but the omission of such provisions from any
such instrument shall not render any Shareholder, Trustee, officer, employee or
agent liable, nor shall the Trustees, or any officer, agent or employee of the
Trust be liable, to anyone for such omission. If, notwithstanding this
provision, any Shareholder, Trustee, officer, employee or agent shall be held
liable to any
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other person by reason of the omission of such provision from any such
agreement, undertaking or obligation, the Shareholder, Trustee, officer,
employee or agent shall be entitled to indemnity and reimbursement out of the
Trust Property, as provided in this Article V.
5.4 Mandatory Indemnification.
(a) Subject only to the provisions hereof, every person who is or
has been a Trustee, officer, employee or agent of the Trust and every person who
serves at the Trustees request as director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise shall
be indemnified by the Trust to the fullest extent permitted by law against all
liabilities and against all expenses reasonably incurred or paid by him in
connection with any debt, claim, action, demand, suit, proceeding, judgment,
decree, liability or obligation of any kind in which he becomes involved as a
party or otherwise or is threatened by virtue of his being or having been a
Trustee, officer, employee or agent of the Trust or of another corporation,
partnership, joint venture, trust or other enterprise at the request of the
Trust and against amounts paid or incurred by him in the compromise or
settlement thereof.
(b) The words "claim", "action", "suit", or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal,
administrative, legislative, investigative or other, including appeals), actual
or threatened, and the words "liabilities" and "expenses" shall include, without
limitation, attorneys' fees, costs, judgments, amounts paid in settlement,
fines, penalties and other liabilities.
(c) No indemnification shall be provided hereunder to a
Trustee or officer:
(i) against any liability to the Trust or the Shareholders
by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office
("disabling conduct");
(ii) with respect to any matter as to which he shall, by the
court or other body by or before which the proceeding was brought or
engaged, have been finally adjudicated to be liable by reason of
disabling conduct;
(iii) in the absence of a final adjudication on the merits
that such Trustee or officer did not engage in disabling conduct, unless
a reasonable determination, based upon a review of the facts that the
person to be indemnified is not liable by reason of such conduct, is
made:
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(A) by vote of a majority of a quorum of the
Trustees who are neither Interested Persons nor parties
to the proceedings; or
(B) by independent legal counsel, in a written
opinion.
(d) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
affect any other rights to which any Trustee, officer, employee or agent may now
or hereafter be entitled, shall continue as to a person who has ceased to be
such Trustee, officer, employee, or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person; provided, however, that no
person may satisfy any right of indemnity or reimbursement granted herein except
out of the property of the Trust, and no other person shall be personally liable
to provide indemnity or reimbursement hereunder (except an insurer or surety or
person otherwise bound by contract).
(e) Expenses in connection with the preparation and presentation
of a defense to any claim, action, suit or proceeding of the character described
in paragraph (a) of this Section 5.4 may be paid by the Trust prior to final
disposition thereof upon receipt of a written undertaking by or on behalf of the
Trustee, officer, employee or agent to reimburse the Trust if it is ultimately
determined under this Section 5.4 that he is not entitled to indemnification.
Such undertaking shall be secured by a surety bond or other suitable insurance
or such security as the Trustees shall require unless a majority of a quorum of
the Trustees who are neither Interested Persons nor parties to the proceeding,
or independent legal counsel in a written opinion, shall have determined, based
on readily available facts, that there is reason to believe that the indemnitee
ultimately will be found to be entitled to indemnification.
5.5 No Bond Required of Trustees. No Trustee shall, as such, be
obligated to give any bond or surety or other security for the performance of
any of his duties hereunder.
5.6 No Duty of Investigation; Notice in Trust Instruments, etc. No
purchaser, lender, transfer agent or other person dealing with the Trustees or
any officer, employee or agent of the Trust shall be bound to make any inquiry
concerning the validity of any transaction purporting to be made by the Trustees
or by said officer, employee or agent or be liable for the application of money
or property paid, loaned, or delivered to or on the order of the Trustees or of
said officer, employee or agent. Every obligation, contract, undertaking,
instrument, certificate, Share, other security of the Trust or any Series or
Class, and every other act or thing whatsoever executed in connection with the
Trust or any Series or Class shall be conclusively taken to have been
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executed or done by the executors thereof only in their capacity as Trustees
under this Declaration or in their capacity as officers, employees or agents of
the Trust. Every written obligation, contract, undertaking, instrument,
certificate, Share, other security of the Trust or any Series or Class made or
issued by the Trustees or by any officers, employees or agents of the Trust, in
their capacity as such, shall contain an appropriate recital to the effect that
the Shareholders, Trustees, officers, employees and agents of the Trust shall
not personally be bound by or liable thereunder, nor shall resort be had to
their private property for the satisfaction of any obligation or claim
thereunder, and appropriate references shall be made therein to this
Declaration, and may contain any further recital which they may deem
appropriate, but the omission of such recital shall not operate to impose
personal liability on any of the Trustees, Shareholders, officers, employees or
agents of the Trust. The Trustees may maintain insurance for the protection of
the Trust Property, its Shareholders, Trustees, officers, employees and agents
in such amount as the Trustees shall deem adequate to cover possible tort
liability, and such other insurance as the Trustees in their sole judgment shall
deem advisable.
5.7 Reliance on Experts, etc. Each Trustee and officer or employee of
the Trust shall, in the performance of his duties, be fully and completely
justified and protected with regard to any act or any failure to act resulting
from reliance in good faith upon the books of account or other records of the
Trust, upon an opinion of counsel, or upon reports made to the Trust by any of
its officers or employees or by any advisor, administrator, manager,
distributor, selected dealer, accountant, appraiser or other expert or
consultant selected with reasonable care by the Trustees, officers or employees
of the Trust, regardless of whether such counsel or expert may also be a
Trustee.
ARTICLE VI
Shares of Beneficial Interest
6.1 Beneficial Interest. The interest of the beneficiaries hereunder
shall be divided into transferable shares of beneficial interest with par value
$.01 per share. The number of such shares of beneficial interest authorized
hereunder is unlimited. All Shares issued hereunder including, without
limitation, Shares issued in connection with a dividend in Shares or a split of
Shares, shall be fully paid and nonassessable.
6.2 Series Designation. The Trustees, in their discretion from time to
time and without Shareholder approval, may authorize the division of Shares into
two or more Series, each Series relating to a separate portfolio of investments;
and may further authorize the division of the Shares of any Series into two or
more Classes. The different Series and Classes shall be established and
designated, and the variations in the relative rights and
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preferences as between the different Series and Classes shall be fixed and
determined, by the Trustees; provided, that all Shares shall be identical except
that there may be variations between different Series and Classes as to purchase
price, determination of net asset values, the price terms and manner of
redemption, special and relative rights as to dividends and on liquidation,
conversion rights, and conditions under which the several Series and Classes
shall have separate voting rights. All references to Shares in this Declaration
shall be deemed to be shares of any or all Series or Classes as the context may
require.
If the Trustees shall divide the Shares into two or more Series, or
divide the Shares of any Series into two or more Classes, the following
provisions shall be applicable:
(a) The number of Shares of each Series and Class that may be
issued shall be unlimited.
(b) The power of the Trustees to invest and reinvest the Trust
Property of each Series that may be established shall be governed by
Section 3.2 of this Declaration.
(c) All consideration received by the Trust for the issue or sale
of Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits,
and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same
may be, shall irrevocably belong to that Series for all purposes,
subject only to the rights of creditors, and shall be so recorded upon
the books of account of the Trust. If there are any assets, income,
earnings, profits, and proceeds thereof, funds, or payments that are not
readily identifiable as belonging to any particular Series, the Trustees
shall allocate them among any one or more of the Series established and
designated from time to time in such manner and on such basis as they,
in their sole discretion, deem fair and equitable. Each such allocation
by the Trustees shall be conclusive and binding upon the Shareholders of
all Series for all purposes.
(d) The assets belonging to each particular Series shall
be charged with the liabilities of the Trust in respect of
that Series and all expenses, costs, charges and reserves
attributable to that Series, and any general liabilities,
expenses, costs, charges or reserves of the Trust that are not
readily identifiable as belonging to any particular Series
shall be allocated and charged by the Trustees to and among
any one or more of the Series established and designated from
time to time in such manner and on such basis as the Trustees
in their sole discretion deem fair and equitable. Each
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allocation of liabilities, expenses, costs, charges and reserves by the
Trustees shall be conclusive and binding upon the holders of all Series
for all purposes. The Trustees shall have full discretion, to the extent
not inconsistent with the 1940 Act, to determine which items shall be
treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon the
Shareholders.
(e) To the extent necessary or appropriate to give effect to the
relative rights and preferences of the Classes of Shares into which any
Series may be divided, the income, earnings, profits, and proceeds
thereof, or the liabilities, expenses, costs, charges and reserves,
belonging to any Series may be allocated to a particular Class of
Shares, or apportioned among two or more Classes of Shares, of that
Series. Each such allocation or apportionment by the Trustees shall be
conclusive and binding upon the Shareholders of all Classes for all
purposes.
(f) The power of the Trustees to pay dividends and make
distributions with respect to any one or more Series or Classes shall be
governed by Section 9.2 of this Declaration. Dividends and distributions
on Shares of a particular Series or Class may be paid with such
frequency as the Trustees may determine, which may be daily or
otherwise, pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Trustees may determine, to the
holders of Shares of that Series or Class, from such of the income and
capital gains, accrued or realized, from the assets belonging to that
Series (or attributable to that Class, as the case may be), as the
Trustees may determine, after providing for actual and accrued
liabilities belonging to that Series (or attributable to that Class).
All dividends and distributions on Shares of a particular Series shall
be distributed pro rata to the holders of that Series in proportion to
the number of Shares of that Series held by such holders at the date and
time of record established for the payment of such dividends or
distributions, except to the extent otherwise required or permitted by
the relative rights and preferences of any Classes of that Series, and
any dividends and distributions on shares of a particular Class shall be
distributed pro rata to the holders of that Class in proportion to the
number of Shares of that Class held by such holders at the date and time
of record established for the payment of such dividends or
distributions.
Without limiting the authority of the Trustees to establish and
designate further Series, there is hereby established the following Series: the
Quaker Enhanced Equity Index Fund, the Quaker Core Equity Fund, the Quaker
Aggressive Growth Fund, the Quaker Small Cap Value Fund, the Quaker Sector
Rotation Equity Fund, and
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The Quaker Fixed Income Fund. The establishment and designation of any further
Series or Class of Shares shall be effective upon the execution by a majority of
the then Trustees (or by an officer of the Trust pursuant to the vote of a
majority of the then Trustees) of an instrument setting forth the establishment
and designation of such Series or Class. Such instrument shall also set forth
any rights and preferences of such Series or Class that are in addition to the
rights and preferences of Shares set forth in this Declaration. At any time that
there are no Shares outstanding of any particular Series or Class previously
established and designated, the Trustees may by an instrument executed by a
majority of their number (or by an officer of the Trust pursuant to the vote of
a majority of the then Trustees) abolish that Series or Class and the
establishment and designation thereof.
6.3 Rights of Shareholders. The ownership of the Trust Property of every
description and the right to conduct any business hereinbefore described are
vested exclusively in the Trustees, and the Shareholders shall have no interest
therein other than the beneficial interest conferred by their Shares with
respect to a particular Series or Class, and they shall have no right to call
for any partition or division of any property, profits, rights or interests of
the Trust nor can they be called upon to share or assume any losses of the Trust
or suffer an assessment of any kind by virtue of their ownership of Shares. The
Shares shall be personal property giving only the rights in this Declaration
specifically set forth. The Shares shall not entitle the holder to preference,
preemptive, appraisal, conversion or exchange rights.
6.4 Trust Only. It is the intention of the Trustees to create only the
relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, limited liability company, bailment or any form of legal
relationship other than a business trust. Nothing in this Declaration shall be
construed to make the Shareholders, either by themselves or with the Trustees,
partners or members of a joint stock association.
6.5 Issuance of Shares. The Trustees, in their discretion, may from time
to time without vote of the Shareholders issue Shares with respect to any Series
or Class that may have been established pursuant to Section 6.2, in addition to
the then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount not less than par value and type of
consideration, including cash or property, at such time or times (including,
without limitation, each business day in accordance with the maintenance of a
constant net asset value per share as set forth in Section 9.3 hereof), and on
such terms as the Trustees may deem best, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection with
the assumption of, liabilities) and businesses. In connection with any
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issuance of Shares, the Trustees may issue fractional Shares. The Trustees may
from time to time divide or combine the Shares of any Series or Class into a
greater or lesser number without thereby changing the proportionate beneficial
interests in such Series or Class of the Trust. Reductions in the number of
outstanding Shares may be made pursuant to the constant net asset value per
share formula set forth in Section 9.3. Contributions to the Trust may be
accepted for, and Shares shall be redeemed as, whole Shares and/or 1/1,000ths of
a Share or multiples thereof.
6.6 Register of Shares. A register shall be kept at the Trust or any
transfer agent duly appointed by the Trustees under the direction of the
Trustees that shall contain the names and addresses of the Shareholders and the
number of Shares (with respect to each Series and Class that may have been
established) held by them respectively and a record of all transfers thereof.
Separate registers shall be established and maintained for each Series and Class
of the Trust. Each such register shall be conclusive as to who are the holders
of the Shares of the applicable Series or Class and who shall be entitled to
receive dividends or distributions or otherwise to exercise or enjoy the rights
of Shareholders. No Shareholder shall be entitled to receive payment of any
dividend or distribution, nor to have notice given to him as herein provided,
until he has given his address to a transfer agent or such other officer or
agent of the Trustees as shall keep the register for entry thereon. It is not
contemplated that certificates will be issued for the Shares; however, the
Trustees, in their discretion, may authorize the issuance of share certificates
and promulgate appropriate rules and regulations as to their use.
6.7 Transfer Agent and Registrar. The Trustees shall have power to
employ a transfer agent or transfer agents, and a registrar or registrars, with
respect to the Shares of the various Series and Classes. The transfer agent or
transfer agents may keep the applicable register and record therein the original
issues and transfers, if any, of the said Shares of the applicable Series or
Class. Any such transfer agent and registrars shall perform the duties usually
performed by transfer agents and registrars of certificates of stock in a
corporation, except as modified by the Trustees.
6.8 Transfer of Shares. Shares shall be transferable on the records of
the Trust only by the record holder thereof or by his agent thereto duly
authorized in writing, upon delivery to the Trustees or a transfer agent of the
Trust of a duly executed instrument of transfer, together with such evidence of
the genuineness of each such execution and authorization and of other matters as
may reasonably be required. Upon such delivery the transfer shall be recorded on
the applicable register of the Trust. Until such record is made, the Shareholder
of record shall be deemed to be the holder of such Shares for all purposes
hereof, and
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neither the Trustees nor any transfer agent or registrar nor any officer,
employee or agent of the Trust shall be affected by any notice of the proposed
transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the applicable register of Shares as the holder of
such Shares upon production of the proper evidence thereof to the Trustees or a
transfer agent of the Trust, but until such record is made, the Shareholder of
record shall be deemed to be the holder of such Shares for all purposes hereof,
and neither the Trustees nor any transfer agent or registrar nor any officer or
agent of the Trust shall be affected by any notice of such death, bankruptcy or
incompetence, or other operation of law.
6.9 Notices. Any and all notices to which any Shareholder hereunder amy
be entitled and any and all communications shall be deemed duly served or given
if mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the applicable register of the Trust.
ARTICLE VII
Custodians
7.1 Appointment and Duties. The Trustees shall at all times employ a
custodian or custodians, meeting the qualifications for custodians for portfolio
securities of investment companies contained in the 1940 Act, as custodian or
custodians with respect to each Series of the Trust. Separate custodians may but
need not be employed for the different Series of the Trust. Each Series may, but
need not, employ more than one custodian. Any custodian, acting with respect to
one or more Series, or portions thereof, shall have authority as agent of the
Trust or the Series with respect to which it is acting, but subject to such
restrictions, limitations and other requirements, if any, as may be contained in
the By-Laws and the 1940 Act:
(1) to hold the securities owned by the Trust or the
Series and deliver the same upon written order;
(2) to receive and receipt for any moneys due to the Trust or the
Series and deposit the same in its own banking department (if a bank) or
elsewhere as the Trustees may direct;
(3) to disburse such funds upon orders or vouchers;
(4) if authorized by the Trustees, to keep the books and
accounts of the Trust or the Series or any Class and furnish
clerical and accounting services; and
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(5) if authorized to do so by the Trustees, to compute
the net income of the Trust or the Series or any Class;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian. If so directed by a Majority Shareholder Vote of any Series
with respect to which the custodian is acting, the custodian shall deliver and
pay over all property of the Trust held by it as specified in such vote.
The Trustees may also authorize each custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall meet the qualifications for custodians
contained in the 1940 Act.
7.2 Action Upon Termination of Custodian Agreement. Upon termination of
any custodian agreement with respect to any Series or inability of any custodian
to continue to serve, the Trustees shall promptly appoint a successor custodian,
but if no successor custodian can be found who has the required qualifications
and is willing to serve, the Trustees shall call as promptly as possible a
special Shareholders' meeting to determine whether said Series shall function
without a custodian or shall be liquidated.
7.3 Central Certificate System. Subject to such rules, regulations and
orders as the Commission may adopt, the Trustees may direct the custodian to
deposit all or any part of the securities owned by the Trust or any Series in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other person as
may be permitted by the Commission, or otherwise in accordance with the 1940
Act, pursuant to which system all securities of any particular class or series
of any issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its duly authorized agents (which may include an
investment adviser).
7.4 Acceptance of Receipts in Lieu of Certificates. Subject to such
rules, regulations and orders as the Commission may adopt, the Trustees may
direct the custodian to accept written receipts or other written evidences
indicating purchases of securities held in book-entry form in the Federal
Reserve System in accordance with regulations promulgated by the Board of
Governors of the Federal Reserve System, and the local Federal Reserve Banks in
lieu of receipt of certificates representing such securities.
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ARTICLE VIII
Redemption
8.1 Redemptions. All outstanding Shares of any Series of the Trust may
be redeemed at the option of the holders thereof, upon and subject to the terms
and conditions provided in this Article VIII. The Trust shall, upon application
of any Shareholder or pursuant to authorization from any Shareholder of a
particular Series, redeem or repurchase from such Shareholder outstanding Shares
of such Series or Class for an amount per share determined by the application of
a formula adopted for such purpose by the Trustees with respect to such Series
or Class (which formula shall be consistent with the 1940 Act); provided that
(a) such amount per Share shall not exceed the cash equivalent of the
proportionate interest of each Share in the assets of the Series or of the
assets of that Series attributable to the Shares of the particular Class) of the
Trust at the time of the purchase or redemption and (b) if so authorized by the
Trustees, the Trust may, at any time and from time to time, charge fees for
effecting such redemption, at such rates as the Trustees may establish, as and
to the extent permitted under the 1940 Act, and may, at any time and from time
to time, pursuant to such Act, suspend such right of redemption. The procedures
for effecting redemption shall be as set forth in the Prospectus with respect to
the applicable Series or Class from time to time.
8.2 Redemption of Shares; Disclosure of Holding. If the Trustees shall,
at any time and in good faith, be of the opinion that direct or indirect
ownership of Shares or other securities of the Trust has or may become
concentrated in any person to an extent that would disqualify the Trust as a
regulated investment company under the Internal Revenue Code, then the Trustees
shall have the power by lot or other means deemed equitable by them (i) to call
for redemption a number, or principal amount, of Shares or other securities of
the Trust sufficient, in the opinion of the Trustees, to maintain or bring the
direct or indirect ownership of Shares or other securities of the Trust into
conformity with the requirements for such qualification and (ii) to refuse to
transfer or issue Shares or other securities of the Trust to any Person whose
acquisition of the Shares or other securities of the Trust in question would in
the opinion of the Trustees result in such disqualification. The redemption
shall be effected at a redemption price determined in accordance with Section
8.1.
The holders of Shares or other securities of the Trust shall upon demand
disclose to the Trustees in writing such information with respect to direct and
indirect ownership of Shares or other securities of the Trust as the Trustees
deem necessary to comply with the provisions of the Internal Revenue Code, or to
comply with the requirements of any other taxing authority.
8.3 Redemptions of Accounts of Less than an Amount Specified
by the Trustees. Due to the relatively high cost of maintaining
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small investment accounts, the Trustees shall have the power to redeem shares at
a redemption price determined in accordance with Section 8.1 if at any time the
total investment in such account does not have a value in excess of any minimum
account size that the Trustees may from time to time establish; provided,
however, that the Trustees may not exercise such power with respect to Shares of
any Series or Class if the Prospectus of such Series or Class does not describe
such power. If the Trustees determine to exercise their power to redeem Shares
provided in this Section 8.3, Shareholders shall be notified that the value of
their account is less than the minimum account size then in effect and allowed
at least 14 days to make an additional investment before redemption is
processed.
8.4 Redemptions Pursuant to Constant Net Asset Value. The
Trust may also reduce the number of outstanding Shares of any
Series or Class pursuant to the provisions of Section 9.3.
8.5 Redemption in Kind. Subject to any generally applicable limitation
imposed by the Trustees, any payment on redemption, purchase or repurchase by
the Trust of Shares may, if authorized by the Trustees, be made wholly or partly
in kind, instead of in cash. Such payment in kind shall be made by distributing
securities or other property, constituting, in the opinion of the Trustees, a
fair representation of the various types of securities and other property then
held by the Series of Shares being redeemed, purchased or repurchased (but not
necessarily involving a portion of each of the Series' holdings) and taken at
their value used in determining the net asset value of the Shares in respect of
which payment is made.
ARTICLE IX
Determination of Net Asset Value,
Net Income and Distributions
9.1 Net Asset Value. The net asset value of each outstanding Share of
each Series and Class of the Trust shall be determined at such time or times on
such days as the Trustees may determine, in accordance with the 1940 Act, with
respect to each Series and Class. The method of determination of net asset value
shall be determined by the Trustees and shall be as set forth in the Prospectus
with respect to the applicable Series or Class. The power and duty to make the
daily calculations for any Series or Class may be delegated by the Trustees to
the advisor, administrator, manager, custodian, transfer agent or such other
person as the Trustees may determine. The Trustees may suspend the daily
determination of net asset value to the extent permitted by the 1940 Act.
9.2 Distributions to Shareholders. The Trustees may from
time to time distribute among the Shareholders of any Series or
Class such proportion of the assets belonging to such Series (or
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attributable to the particular Class) held by the Trustees as they may deem
proper. Such distribution may be made in cash or property (including without
limitation any type of obligations of the Trust or any assets thereof), and the
Trustees may distribute among the Shareholders of any Series or Class additional
Shares of such Series or Class in such manner, at such times, and on such terms
as the Trustees may deem proper. Such distributions may be among the
Shareholders of record at the time of declaring a distribution or among the
Shareholders of record at such later date as the Trustees shall determine.
Except as necessary or appropriate to give effect to the relative rights and
preferences of the Classes of Shares into which any Series may be divided, all
distributions shall be made ratably among the Shareholders of the relative
Series or Class based on the number of Shares of the relative Series or Class
held by such Shareholder. The Trustees may always retain such amount as they may
deem necessary to pay the debts or expenses of the Trust or to meet obligations
of the Trust, or as they may deem desirable to use in the conduct its affairs or
to retain for future requirements or extensions of the business. The Trustees
may adopt and offer to Shareholders of any Series or Class such dividend
reinvestment plans, cash dividend payout plans or related plans at the Trustees
shall deem appropriate for such Series or Class.
Inasmuch as the computation of net income and gains for Federal income
tax purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes.
The Trustees shall be authorized to withhold from the payment of any
dividend an amount necessary to pay the expenses of the Trust that are not
deductible for Federal income tax purposes or otherwise to afford the Trust the
full tax benefits of a regulated investment company as defined in the Internal
Revenue Code of 1986.
9.3 Constant Net Asset Value; Reduction on Outstanding Shares. The
Trustees shall have the power, but shall not be required, to determine the net
income of any Series or Class of the Trust on each day the net asset value of
such Series or Class is determined as provided in Section 9.1 and at each such
determination declare such net income for such Series or Class as dividends with
the result that the net asset value per share of the Series or Class of the
Trust, taking into account withholdings authorized by Section 9.2 hereof, shall
remain at a constant dollar value. The determination of net income and the
resultant declaration of dividends shall be as set forth in the Prospectus. In
such event fluctuations in value may be effected in the number of outstanding
Shares in each Shareholder's account. It is expected that each Series or Class
of the Trust will have a positive net income at the time of each determination.
If for any
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<PAGE>
reason such net income is a negative amount, the Trust may offset such amount
against dividends accrued in the account of the Shareholder of the applicable
Series or Class. If and to the extent such negative amount exceeds such accrued
dividends, the Trust shall have authority to reduce the number of outstanding
Shares of the Series or Class. Such reduction will be effected by having each
Shareholder proportionately contribute to the Series or Class capital the
necessary Shares that represent the amount of the excess upon such
determination. Each Shareholder will be deemed to have agreed to such
contribution in these circumstances by his investment in the Series or Class of
the Trust. This procedure will permit the net asset value per share of the
Series or Class of the Trust to be maintained at a constant dollar value per
share.
The Trustees, by resolution, may discontinue or amend the practice of
maintaining the net asset value per share at a constant dollar amount with
respect to any Series or Class at any time, and such modification shall be
evidenced by appropriate changes in the Prospectus.
9.4 Power to Modify Foregoing Procedures. Notwithstanding any of the
foregoing provisions of this Article IX, the Trustees may prescribe, in their
absolute discretion, such other bases and times for determining the per share
net asset value of the Trust's Shares or net income, or the declaration and
payment of dividends and distributions as they may deem necessary or desirable
to enable the Trust to comply with any provision or rule of the 1940 Act, or any
securities association registered under the Securities Exchange Act of 1934, or
any order of exemption issued by the Commission, all as in effect now or
hereafter amended or modified.
ARTICLE X
Shareholders
10.1 Voting Powers. The Shareholders shall have the power to vote (i)
for the election of Trustees as provided in Article II, Section 2.2; (ii) for
the removal of Trustees as provided in Article II, Section 2.3(d); (iii) with
respect to any contract as provided in Article IV, Section 4.1; (iv) with
respect to the amendment of this Declaration as provided in Article XI, Section
11.4; (v) to the same extent as the shareholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim should be
brought or maintained derivatively or as a class action on behalf of the Trust
or the Shareholders (except that a Shareholder of a particular Series shall not
in any event be entitled to maintain a derivative or class action on behalf of
any other Series or the Shareholders thereof); and (vi) with respect to such
additional matters relating to the Trust as may be required by law, by this
Declaration, or the By-Laws of the Trust or any regulation of the Trust by the
Commission or any State, or as the Trustees may consider desirable. Any matter
affecting a particular Series, including, without limitation,
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matters affecting the investment advisory arrangements or investment policies or
restrictions of a Series, shall not be deemed to have been effectively acted
upon unless approved by the required vote of the Shareholders of such Series. To
the extent required by the 1940 Act or necessary or appropriate to give effect
to the relative rights and preferences of the Classes of Shares into which any
Series may be divided, any matter affecting a particular Class (unless the
interests of each Class of such Series in the matter are substantially
identical), including, without limitation, matters affecting the distribution
plan of that Class shall not be deemed to have been effectively acted upon
unless approved by the required vote of the Shareholders of such Class.
Notwithstanding the foregoing, to the extent permitted by the 1940 Act, each
Series and Class shall not be required to vote separately on the selection of
independent public accountants, the election of Trustees and any submission with
respect to a contract with a principal underwriter or distributor. 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. There shall be no cumulative voting in the election of Trustees. Until
Shares are issued, the Trustees may exercise all rights of Shareholders and may
take any action to be taken by Shareholders which is required or permitted by
law, this Declaration or any By-Laws of the Trust.
10.2 Meetings. Shareholder meetings shall be held as specified in the
By-Laws and in Section 2.2 hereof at the principal office of the Trust or at
such other place as the Trustees may designate. Meetings of the Shareholders may
be called by the Trustees or by officers of the Trust given such authority in
the By-Laws and shall be called by the Trustees at a place designated by them
upon written request specifying the purpose of such meeting and submitted by
Shareholders of any Series or Class holding in the aggregate not less than 10%
of the outstanding Shares of such Series or Class having voting rights.
Whenever ten or more Shareholders of record of any Series or Class who
have been such for at least six months preceding the date of application, and
who hold in the aggregate either shares having a net asset value of at least
$25,000 or at least one percent (1%) of the outstanding shares, whichever is
less, shall apply to the Trustees in writing, stating that they wish to
communicate with other Shareholders with a view to obtaining signatures to a
request for a meeting pursuant to this Section 10.2 and accompanied by a form of
communication and request which they wish to transmit, the Trustees shall,
within five days after receipt of such application either (i) afford to such
applicants access to a list of the names and addresses of all Shareholders of
such Series or Class as recorded on the books of the Trust or (ii) inform such
applicants as to the approximate number of Shareholders of record of such Series
or Class and the approximate cost of mailing to them the proposed communication
and form of request. If the Trustees elect
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to follow the course of (ii), above, the Trustees, upon the written request of
such applicants, accompanied by a tender of the material to be mailed and the
reasonable expenses of mailing, shall, with reasonable promptness, mail such
material to all Shareholders of record of such Series or Class at their
addresses as recorded on the books. If in the opinion of the Trustees, the
material to be mailed contains untrue statements of fact or omits to state facts
necessary to make the statements contained therein not misleading, or would be
in violation of applicable law, the Trustees may, within five business days and
in lieu of mailing the tendered material to Shareholders, request a hearing by
the Commission in accordance with Section 16(c) of the 1940 Act, to decide the
matter.
10.3 Quorum and Required Vote. Except as otherwise provided by law, the
holders of a majority of the outstanding Shares of the Trust, or, as to any
matter to be voted on by a Series or Class, a majority of the outstanding Shares
of such Series or Class, present in person or by proxy shall constitute a quorum
for the transaction of any business at any meeting of Shareholders. If a quorum,
as above defined, shall not be present for the purpose of any vote that may
properly come before the meeting, the Shareholders present in person or by proxy
and entitled to vote at such meeting on such matter holding a majority of the
Shares present entitled to vote on such matter may vote to adjourn the meeting
from time to time to be held at the same place without further notice than by
announcement to be given at the meeting until a quorum, as above defined,
entitled to vote on such matter shall be present, whereupon any such matter may
be voted upon at the meeting as though held when originally convened. Subject to
any applicable requirement of law, this Declaration or the By-Laws, a plurality
of the votes cast shall elect a Trustee and all other matters shall be decided
by a majority of the votes cast entitled to vote thereon.
10.4 Record Date for Meetings. For the purpose of determining the
Shareholders who are entitled to notice of and to vote at any meeting, or to
participate in any distribution, or for the purpose of any other action, the
Trustees may from time to time close the transfer books for such period, not
exceeding 30 days, as the Trustees may determine; or without closing the
transfer books the Trustees may fix a date not more than 90 days prior to the
date of any meeting of Shareholders or declaration of daily dividends or other
action as a record date for the determination of the persons to be treated as
Shareholders of record for such purposes, except for dividend payments, which
shall be governed by Section 9.2 hereof.
10.5 Proxies. Any vote by a Shareholder of the Trust may be made in
person or by proxy, provided that no proxy shall be voted at any meeting unless
it shall have been placed on file with the Trustees or their designee prior to
the time the vote is taken. Pursuant to a resolution of a majority of the
Trustees, proxies may
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be solicited in the name of one or more Trustees or one or more officers of the
Trust. Only Shareholders of record shall be entitled to vote. 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.
10.6 Additional Provisions. The By-Laws may include further
provisions for Shareholders, votes, meetings and related matters.
10.7 Reports. The Trustees shall cause to be prepared with respect to
each Series and Class at least annually a report of operations containing a
balance sheet and statement of income and undistributed income of the applicable
Series or Class of the Trust prepared in conformity with generally accepted
accounting principles and an opinion of an independent public accountant on such
financial statements. It is contemplated that separate reports may be prepared
for the various Series and Classes. Copies of such reports shall be mailed to
all Shareholders of record of the applicable Series or Class within the time
required by the 1940 Act. The Trustees shall, in addition, furnish to the
Shareholders at least semiannually, interim reports containing an unaudited
balance sheet of the Series or Class as of the end of such period and an
unaudited statement of income and surplus for the period from the beginning of
the current fiscal year to the end of such period.
10.8 Shareholder Action by Written Consent. Any action that may be taken
by Shareholders may be taken without a meeting if a majority of Shareholders of
each Series or Class entitled to vote on the matter (or such larger proportion
thereof as shall be required by any express provision of this Declaration)
consent to the action in writing and the 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.
10.9 Inspection of Records. The Trustees shall from time to time
determine whether and to what extent, and at what times and places, and under
what conditions and regulations, the accounts and books of the Trust or any of
them shall be open to the inspection of the Shareholders, and no Shareholder
shall have any right to inspect any account or book or document of the Trust
except as conferred by law or otherwise by the Trustees. Notwithstanding the
foregoing, at a minimum the records of the Trust shall be open for inspection by
Shareholders to the same extent as is permitted stockholders of a Massachusetts
business corporation under the Massachusetts Business Corporation Law.
ARTICLE XI
Duration; Termination of Trust;
Amendment; Mergers; Etc.
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11.1 Duration. Subject to the provisions of Sections 11.2 and 11.3
hereof, the Trust created hereby shall continue without limitation of time.
11.2 Termination.
(a) The Trust may be terminated by the affirmative vote of the
holders of not less than a majority of the Shares of each Series of the
Trust at any meeting of Shareholders or by an instrument in writing,
without a meeting, signed by a majority of the Trustees (or by an
officer of the Trust pursuant to a vote of a majority of the Trustees)
and consented to by the holders of not less than a majority of such
Shares. Any Series or Class may be so terminated by vote or written
consent of not less than a majority of the Shares of such Series or
Class. Upon the termination of the Trust or any Series or Class:
(i) The Trust or such Series or Class shall carry on no
business except for the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the
Trust or such Series or Class and all of the powers of the
Trustees under this Declaration shall continue until the affairs
of the Trust or such Series or Class shall have been wound up,
including the power to fulfill or discharge the contracts of the
Trust or such Series or Class, collect its assets, sell, convey,
assign, exchange, transfer or otherwise dispose of all or any
part of the remaining Trust Property to one or more persons at
public or private sale for consideration that may consist in
whole or in part of cash, securities or other property of any
kind, discharge or pay its liabilities, and do all other acts
appropriate to liquidate its business; provided that any sale,
conveyance, assignment, exchange, transfer or other disposition
of all or substantially all the Trust Property shall require
approval of the consideration by vote or consent of the holders
of a majority of the Shares entitled to vote; and
(iii) After paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases, indemnities
and refunding agreements, as they deem necessary for their
protection, the Trustees may distribute remaining Trust Property
of any Series (or attributable to the Shares of any Class), in
cash or in kind or partly each, among the Shareholders of such
Series or Class according to their respective rights.
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(b) After termination of the Trust or any Series or Class and
distribution to the Shareholders as herein provided, a majority of the
Trustees (or an officer of the Trust pursuant to a vote of a majority of
the Trustees) shall execute and lodge among the records of the Trust an
instrument in writing setting forth the fact of such termination. Upon
termination of the Trust, the Trustees shall thereupon be discharged
from all further liabilities and duties hereunder, and the rights and
interests of all Shareholders shall thereupon cease. Upon termination of
any Series or Class, the Trustees shall thereupon be discharged from all
further liabilities and duties with respect to such Series or Class, and
the rights and interests of all Shareholders of such Series or Class
shall thereupon cease.
11.3 Merger, Consolidation and Sale of Assets. The Trust may merge or
consolidate with any other corporation, association, trust or other organization
or may sell, lease or exchange all or substantially all of the Trust Property,
including its good will, upon such terms and conditions and for such
consideration when and as authorized at any meeting of Shareholders called for
that purpose by the affirmative vote of the holders of not less than a majority
of the Shares of each Series, or by an instrument or instruments in writing
without a meeting, consented to by the holders of not less than a majority of
such Shares of each Series. Any Series may so merge, consolidate or effect a
sale or exchange of assets by the vote or written consent of not less than a
majority of the Shares of such Series.
11.4 Amendment Procedure.
(a) This Declaration may be amended by the affirmative vote of
the holders of not less than a majority of the Shares at any meeting of
Shareholders or by an instrument in writing, without a meeting, signed
by a majority of the Trustees (or by an officer of the Trust pursuant to
the vote of a majority of the Trustees) and consented to by the holders
of not less than a majority of such Shares. The Shareholders of each
Series and Class shall have the right to vote separately on amendments
to this Declaration to the extent provided by Section 10.1. The Trustees
may also amend this Declaration at any time (whether or not related to
the rights of Shareholders) without the vote or consent of Shareholders
if they deem it necessary to conform this Declaration to the
requirements of applicable federal laws or regulations or the
requirements of the regulated investment company provisions of the
Internal Revenue Code (but the Trustees shall not be liable for failing
so to do), or for any other reason determined by the Trustees so long as
such amendment does not adversely affect the rights of any Shareholder
with respect to matters to which such amendment is or purports to be
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<PAGE>
applicable and so long as such amendment is not in contravention of
applicable law, including the 1940 Act.
(b) All rights granted to the Shareholders under this Declaration
are granted subject to the reservation of the right to amend this
Declaration as hereinabove provided, subject to the following
limitations. No amendment may be made, under Section 11.4(a) above,
which would change any rights with respect to all Shares of the Trust by
reducing the amount payable thereon upon liquidation of the Trust, by
diminishing or eliminating any voting rights pertaining thereto, or by
otherwise adversely affecting the rights of Shareholders, except with
the vote or consent of the holders of a majority of all the Shares of
the Trust without regard to Series, or if said amendment adversely
affects the rights of the Shareholders of less than all of the Series,
except with the vote or consent of the holders of a majority of all the
Shares of each Series or Class so affected. An instrument establishing
and designating any Series or Class of Shares and authorizing the Shares
thereof shall not constitute an amendment to this Declaration that
adversely affects the rights of any Shareholder. Nothing contained in
this Declaration shall permit the amendment of this Declaration to
impair the exemption from personal liability of the Shareholders,
Trustees, officers, employees and agents of the Trust or to permit
assessments upon Shareholders (otherwise than as permitted under Section
9.3).
(c) A certification in recordable form signed by a majority of
the Trustees (or by an officer of the Trust pursuant to the vote of a
majority of the Trustees) setting forth an amendment and reciting that
it was duly adopted by the Shareholders or by the Trustees as aforesaid
or a copy of the Declaration, as amended, in recordable form, and
executed by a majority of the Trustees, shall be conclusive evidence of
such amendment when lodged among the records of the Trust.
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of Shares of the Trust shall have become effective,
this Declaration may be terminated or amended in any respect by the affirmative
vote of a majority of the Trustees or by an instrument signed by an officer of
the Trust pursuant to the vote of a majority of the Trustees.
11.5 Incorporation. With the approval of the holders of a majority of
the Shares, the Trustees may cause to be organized or assist in organizing a
corporation or corporations under the laws of any jurisdiction or any other
trust, partnership, association or other organization to take over all of the
Trust Property or to carry on any business in which the Trust shall directly or
indirectly have any interest, and to sell, convey and transfer the
32
<PAGE>
Trust Property to any such corporation, trust, association or organization in
exchange for the shares or securities thereof or otherwise and to lend money to,
subscribe for the shares or securities thereof or otherwise, and to lend money
to, subscribe for the shares or securities of, and enter into any contracts with
any such corporation, trust, partnership, association or organization, or any
corporation, partnership, trust, association or organization in which the Trust
holds or is about to acquire shares or any other interest. The Trustees may also
cause a merger or consolidation between the Trust or any successor thereto and
any such corporation, trust, partnership, association or other organization if
and to the extent permitted by law, as provided under the law then in effect.
Nothing contained herein shall be construed as requiring approval of
Shareholders for the Trustees to organize or assist in organizing one or more
corporations, trusts, partnerships, associations or other organizations and
selling, conveying or transferring a portion of the Trust Property to such
organizations or entities.
ARTICLE XII
Miscellaneous
12.1 Filing. This Declaration and any amendment hereto shall be filed in
the office of the Secretary of the Commonwealth of Massachusetts and in such
other places as may be required under the laws of Massachusetts and may also be
filed or recorded in such other places as the Trustees deem appropriate. Each
amendment so filed shall be accompanied by a certificate signed and acknowledged
by a Trustee or officer of the Trust stating that such action was duly taken in
a manner provided herein, and unless such amendment or such certificate sets
forth some later time for the effectiveness of such amendment, such amendment
shall be effective upon its filing. A restated Declaration, containing the
original Declaration and all amendments theretofore made, may be executed from
time to time by a majority of the Trustees and shall, upon filing with the
Secretary of the Commonwealth of Massachusetts, be conclusive evidence of all
amendments contained therein and may thereafter be referred to in lieu of the
original Declaration and the various amendments thereto.
12.2 Resident Agent. The Trust shall maintain a resident agent in the
Commonwealth of Massachusetts, which agent shall initially be CT Corporation
System, Two Oliver Street, Boston, Massachusetts 02109. The Trustees may
designate a successor resident agent; provided, however, that such appointment
shall not become effective until written notice thereof is delivered to the
office of Secretary of the Commonwealth of Massachusetts.
12.3 Governing Law. This Declaration is executed by the
Trustees and delivered in the Commonwealth of Massachusetts and
with reference to the laws thereof, and the rights of all parties
and the validity and construction of every provision hereof shall
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be subject to and construed according to the laws of said Commonwealth, and
reference shall be specifically made to the business corporation law of the
Commonwealth of Massachusetts as to the construction of matters not specifically
covered herein or as to which an ambiguity exists.
12.4 Counterparts. This Declaration may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original, and such
counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
12.5 Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust, or of any recording
office in which this Declaration may be recorded, appears to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the name of the Trust or any Series or Class thereof, (c) the
establishment of any Series or Class, (d) the due authorization of the execution
of any instrument or writing, (e) the form of any vote passed at a meeting of
Trustees or Shareholders, (f) the fact that the number of Trustees or
Shareholders present at any meeting or executing any written instrument
satisfies the requirements of this Declaration, (g) the form of any By-Laws
adopted by or the identity of any officers elected by the Trustees, or (h) the
existence of any fact or facts that in any manner relate to the affairs of the
Trust or any Series or Class, shall be conclusive evidence as to the matters so
certified in favor of any person dealing with the Trustees and their successors.
12.6 Provisions in Conflict With Law or Regulations.
(a) The provisions of this Declaration are severable, and if the
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with 1940 Act, the regulated investment
company provisions of the Internal Revenue Code or with other applicable
laws and regulations, the conflicting provision shall be deemed never to
have constituted a part of this Declaration; provided however, that such
determination shall not affect any of the remaining provisions of this
Declaration or render invalid or improper any action taken or omitted
prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability
shall attach only to such provision in such jurisdiction and shall not
in any manner affect such provision in any other jurisdiction or any
other provision of this Declaration in any jurisdiction.
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This Declaration of Trust establishing Quaker Investment Trust provides
that the name Quaker Investment Trust refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or personally; and
no Trustee, shareholder, officer, employee or agent of Quaker Investment Trust,
shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of Quaker Investment Trust, but the Trust Property
only shall be liable.
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
-----------------------------------
Frank P. Meadows III
105 North Washington Street
Rocky Mount, North Carolina 27802
The address of the principal place of business of the Trust is:
105 North Washington Street
Rocky Mount, North Carolina 27802
35
</TABLE>
AMENDED AND RESTATED
BYLAWS
OF
QUAKER INVESTMENT TRUST
Effective August 1, 1996
<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
QUAKER INVESTMENT TRUST
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I TRANSACTION CONFIRMATIONS, ACCOUNT STATEMENTS,
CERTIFICATES AND DIVIDEND DISTRIBUTIONS................................1
ARTICLE II FISCAL YEAR................................................... 2
ARTICLE III SEAL.......................................................... 2
ARTICLE IV SHAREHOLDER MEETINGS.......................................... 2
ARTICLE V TRUSTEES...................................................... 5
ARTICLE VI COMMITTEES.................................................... 8
ARTICLE VII NOTICES....................................................... 8
ARTICLE VIII OFFICERS...................................................... 9
ARTICLE IX INVESTMENT AND OTHER RESTRICTIONS............................. 12
ARTICLE X CUSTODIAN..................................................... 12
ARTICLE XI INVESTMENT ADVISER............................................ 15
ARTICLE XII DISTRIBUTOR................................................... 16
ARTICLE XIII TRANSACTIONS OF TRUSTEES, OFFICERS AND
OTHERS.................................................... 17
ARTICLE XIV INDEMNIFICATION............................................... 18
ARTICLE XV AUDITOR....................................................... 20
ARTICLE XVI AMENDMENTS.................................................... 20
ARTICLE XVII MISCELLANEOUS................................................. 20
</TABLE>
i
<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
QUAKER INVESTMENT TRUST
ARTICLE I
TRANSACTION CONFIRMATIONS, ACCOUNT STATEMENTS,
CERTIFICATES AND DIVIDEND DISTRIBUTIONS
1. Every shareholder of record will receive a confirmation of each new
transaction in their account with the Trust, and an account statement at least
quarterly, which will show the total number of shares of the Trust owned by the
shareholder and being held by the transfer agent for the account of the
shareholder. Shareholders may rely on these confirmations and statements in lieu
of certificates, which will not be issued, except as may be authorized from time
to time as determined by the Board of Trustees of the Trust for any particular
series of the Trust.
2. Certificates evidencing shares of a particular series of the Trust
shall be in the form prescribed by the Board of Trustees and shall be signed by
the Chairman and the Secretary or Treasurer or such officers as the Board of
Trustees may designate in authorizing such certificates. The signature of any
officer of the Trust and the seal of the Trust thereon may be facsimiles.
3. In the event any officer authorized to sign certificates of shares
shall die, resign or be removed from office, otherwise valid certificates
bearing the signature, or facsimile thereof, of such officer shall remain valid
and may be issued.
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ARTICLE II
FISCAL YEAR
The fiscal year of the Trust or any particular series of the Trust shall
be as provided by the Board of Trustees.
ARTICLE III
SEAL
The Trust seal shall, subject to alteration by the Board of Trustees,
consist of a flat-faced circular die upon which shall be engraved or cut the
word, "Massachusetts," together with the name of the particular series of the
Trust and the year of its Declaration.
ARTICLE IV
SHAREHOLDER MEETINGS
1. Meetings of shareholders will only be held as necessary to approve
fundamental policy changes, elect trustees and other matters requiring approval
of the shareholders in accordance with the Investment Company Act of 1940, as
amended.
2. Meetings of shareholders of the Trust shall be held at such time and
on such day as shall be designated in the notice of said meeting. At such
meetings, shareholders may elect a Board of Trustees or transact such other
business as may properly be brought before the meeting and which is stated in
the notice of the meeting.
3. Special meetings of shareholders of the Trust, or of any
particular series of the Trust, unless otherwise prescribed by
statute, rule or regulation, may be called for any purpose or
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purposes by the Chairman of the Board, any Vice Chairman, or the President of
the particular series of the Trust in question at any time and shall be called
by the Chairman of the Board, any Vice Chairman, or the President of the
particular series of the Trust in question at the request of a majority of the
Board of Trustees, or at the request in writing of one or more shareholders who
collectively hold at least ten percent (10%) of the shares of a particular
series of the Trust issued and outstanding and entitled to vote. Such request
shall state the purpose or purposes of the meeting. Business transacted at all
special meetings shall be confined to the objects stated in the notice of such
meeting.
4. Written notice of every meeting of the shareholders, stating the
time, place and purpose or purposes for which the meeting is called, shall be
given by the Secretary to each shareholder entitled to vote thereat and to any
shareholder entitled by law to such notice. Such notice shall be given to each
shareholder by mailing the same, postage prepaid, to the address of the
shareholder as it appears on the books of the Trust not less than ten (10) days
nor more than forty-five (45) days before the time fixed for such meeting.
5. The holders of a majority of the shares issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall be
requisite and shall constitute a quorum at all meetings of the shareholders for
the transaction of business, except as otherwise provided by statute. If such
quorum shall not be present or represented at any meeting of the
3
<PAGE>
shareholders, the shareholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to time
(provided no adjournment shall be for more than three (3) months) without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall the present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified.
6. When a quorum is present at any meeting, the vote of the holders of a
majority of the shares having the right to vote thereat, present in person or
represented by proxy, shall determine any question brought before such meeting,
unless the question is one upon which, by express provision of the applicable
statutes, rules and regulations, Declaration of Trust or these Bylaws, a
different vote is required, in which case such express provision shall control.
7. At any meeting of the shareholders, every shareholder having the
right to vote shall be entitled to vote in person or by proxy appointed by an
instrument in writing subscribed by such shareholder and bearing a date not more
than eleven (11) months prior to said meeting, which instrument shall be filed
with the secretary of the meeting before being voted. Each shareholder shall
have one vote or fraction thereof for each share or fraction thereof held.
8. The Board of Trustees may fix a record date, not more
than ninety (90) nor less than ten (10) days prior to the date for
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which a meeting is called, as of which the shareholders entitled to vote at such
meeting or any adjournment thereof, shall be determined, notwithstanding any
transfer or the issue of any share occurring after such record date.
ARTICLE V
TRUSTEES
1. The number of trustees which shall constitute the entire Board of
Trustees of the Trust shall be such number as shall be fixed from time to time
by a vote adopted by a majority of the then Trustees. Any trustee may be removed
by a two-thirds (2/3) majority of all trustees, at a regular or special meeting
called for that purpose, for cause by them deemed sufficient. Subject to death,
resignation or removal, each trustee shall hold office indefinitely and until
his successor is elected and qualified.
Trustees need not be shareholders of the Trust.
2. If the office of any trustee or trustees becomes vacant for any
reason, a majority of the remaining trustees, though less than a quorum, may
choose a successor or successors, who shall hold office for the unexpired term
in respect to which such vacancy occurred or until the next election of
trustees, provided that, immediately after filling any such vacancy, at least
two-thirds (2/3) of the trustees then holding office shall have been elected to
such office by the shareholders of the Trust entitled to vote; otherwise such
vacancy shall be filled by vote of the shareholders at a special meeting called
for such purpose.
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3. The property and business of the Trust shall be managed by its Board
of Trustees which may exercise all powers of the Trust and do all lawful acts
and things as are not by applicable statute, rule or regulation, the Declaration
of Trust or these Bylaws prohibited, or directed or required to be exercised or
done by the shareholders.
4. The Board of Trustees may hold their meetings and keep the books of
the Trust at the office of the Trust in the City of Rocky Mount, State of North
Carolina, or at such other places as they may from time to time determine, and
telephone meetings may be held except that the Board of Trustees may not hold
telephone meetings to approve or renew an investment advisory agreement or any
rule 12b-1 plan or any agreements relating to such plan. The original or
duplicate stock ledger shall be kept at the office of the Trust in the City of
Rocky Mount, State of North Carolina or at the office of any transfer agent
which may be employed by the Trust.
5. The first meeting of the newly elected Board of Trustees shall be
held at the place of, and immediately following the meeting of the shareholders
at which such Board of Trustees was elected, either within or without the State
of North Carolina; provided the trustees may hold their meeting at such other
place and time as they may determine. No notice of such meeting shall be
necessary to the newly elected trustees in order to legally constitute the
meeting, provided a quorum shall be present. Regular meetings of the Board of
Trustees shall be held without
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notice at such time and place, either within or without the State of North
Carolina as shall from time to time be determined by the board.
6. Special meetings of the Board of Trustees may be held at any time
when called by the Chairman, any Vice Chairman, any President, the Secretary or
any two (2) trustees (or if there shall be fewer than three (3) trustees, by any
trustee). Not less than twenty-four (24) hours' notice of any special meeting
shall be given by the Secretary or other officer calling such meeting to each
trustee either in person, by telephone, by mail or by telegram. Such notice may
be waived by any trustee either in person or in writing or by telegram. Such
special meetings shall be held at such time and place, within or without the
State of North Carolina, as the notice thereof or waiver shall specify. Unless
otherwise specified in the notice thereof, any and all business may be
transacted at any meeting of the Board of Trustees.
7. At all meetings of the Board of Trustees, a majority of the trustees
shall be necessary and sufficient to constitute a quorum for the transaction of
business, and the act of the majority of trustees present at any meeting at
which there is a quorum shall be the act of the Board of Trustees, except as may
be otherwise specifically provided by an applicable statute, rule, or
regulation, by the Declaration of Trust or by these Bylaws. If a quorum shall
not be present at any meeting of the Board of Trustees, the trustees present
thereat may adjourn the meeting from
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time to time, without notice other than announcement at the meeting, until a
quorum shall be present.
ARTICLE VI
COMMITTEES
The Board of Trustees may elect from their own number, by resolution or
resolutions passed by a majority of the board, an executive committee to consist
of two (2) or more trustees, which shall have the power to conduct the current
and ordinary business of the Trust while the Board of Trustees is not in
session. The Board of Trustees may also in the same manner elect from their own
number from time to time other committees, the number composing such committees
and the powers conferred thereon to be determined from the resolution creating
the same.
ARTICLE VII
NOTICES
1. Whenever, under the provisions of an applicable statute, rule, or
regulation, the Declaration of Trust or these Bylaws, notice is required to be
given to any shareholder or trustee, it shall not be construed to mean personal
notice unless the context otherwise provides such notice may be given in
writing, by mail, by depositing the same in a post office or letter box, in a
postage prepaid envelope, addressed to such shareholder or trustee at such
address as appears on the books of the Trust, and such notice shall be deemed to
be given at the time when the same shall be thus mailed.
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2. Whenever any notice is required to be given under the provisions of
an applicable statute, rule or regulation, the Declaration of Trust or by these
Bylaws, a waiver thereof in writing signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be
equivalent thereto.
ARTICLE VIII
OFFICERS
1. The Board of Trustees shall elect officers of the Trust for such term
in office, which may be indefinite, as determined by the board. The Board of
Trustees shall elect one of its own members as Chairman of the Board and shall
elect a Secretary and Treasurer of the Trust and a President for each series of
the Trust. The Treasurer shall be the Chief Accounting Officer of the Trust. The
Board of Trustees may also elect or appoint or authorize the Chairman, the Vice
Chairman, if any, or any President to appoint such other officers, including a
Vice Chairman, Vice Presidents and one or more Assistant Secretaries and
Assistant Treasurers, as the Board of Trustees deems advisable. Two or more
offices may be held by the same person. The Chairman of the Trust and any Vice
Chairman shall be a trustee. All other officers may be, but need not be,
trustees.
2. The Board of Trustees may appoint such other officers, agents and
representatives of the Trust as shall be deemed necessary, with such powers for
such term and to perform such acts and duties on behalf of the Trust as the
Board of Trustees may see
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fit to the extent authorized or permitted by statute, rule, or regulation, the
Declaration of Trust and these Bylaws.
3. The Chairman of the Board shall preside at all meetings of the
shareholders and Board of Trustees. In addition, the Chairman shall be the chief
executive officer of the Trust and shall have general charge and supervision of
the business, property, and affairs of the Trust and such other powers and
duties as the Board of Trustees may from time to time prescribe.
4. If the trustees shall elect one or more Vice Chairmen, the Vice
Chairman or if there shall be more than one, such Vice Chairmen in the order of
their seniority or as designated by the Board of Trustees, in the absence of the
Chairman, shall preside at meetings of the shareholders and Board of Trustees
and shall exercise such other powers and duties as the Chairman shall determine.
5. The President of each series of the Trust shall be the chief
executive officer of the Trust for matters pertaining to that particular series
and shall have general charge and supervision of the business, property and
affairs of the series and such other powers and duties as the Board of Trustees
shall from time to time prescribe.
6. The Vice Presidents of each series of the Trust, in the
order of their seniority or as designated by the Board of Trustees,
shall in the absence or disability of the President perform the
duties and exercise the powers of the President and shall perform
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such other duties as the Board of Trustees or the President of such series may
from time to time prescribe.
7. The Secretary shall record all votes and proceedings of meetings of
the shareholders and of the Board of Trustees in the Trust records. The
Secretary shall give, or cause to be given, notice of all meetings of the
shareholders and meetings of the Board of Trustees when notice thereof is
required. The Secretary shall have custody of the seal of the Trust and may
affix the same to any instrument requiring the seal and attest to the same with
his or her signature. The Secretary shall perform such other duties as the Board
of Trustees may from time to time prescribe.
8. The Assistant Secretaries, in order of their seniority or as directed
by the Board of Trustees, shall in the absence or disability of the Secretary
perform the duties and exercise the powers of the Secretary and shall perform
such other duties as the Board of Trustees may prescribe.
9. The Treasurer shall deliver all Trusts and securities of the Trust
which may come into the Treasurer's hands to such bank or trust company as the
Board of Trustees may designate as Custodian. The Treasurer shall keep such
records of the financial transactions of the Trust as the Board of Trustees
shall prescribe. The Treasurer shall perform such other duties as the Board of
Trustees may from time to time prescribe.
10. The Assistant Treasurers, in order of their seniority or
as directed by the Board of Trustees, shall in the absence or
disability of the Treasurer perform the duties and exercise the
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powers of the Treasurer and shall perform such other duties as the Board of
Trustees may prescribe.
11. The officers of the Trust shall hold office until their successors
are chosen and qualified. Any officer elected or appointed by the Board of
Trustees may be removed at any time with or without cause by the affirmative
vote of a majority of the entire Board of Trustees. If the office of any officer
shall become vacant for any reason, the vacancy shall be filled by the Board of
Trustees.
ARTICLE IX
INVESTMENT AND OTHER RESTRICTIONS
The investment limitations for each particular series of the Trust are
set forth in each of the Trust's current Prospectuses or Statements of
Additional Information for the particular series as approved by the Trustees.
ARTICLE X
CUSTODIAN
1. The Trust shall employ a Custodian pursuant to a written
contract that shall contain in substance the following provisions:
(a) The Trust will cause all securities and Trusts owned by the
Trust to be delivered or paid to the Custodian.
(b) The Custodian will receive any monies due to the Trust and
deposit the same in an account in its own banking department or in such
other banking institution, if any, as the Board of Trustees may direct.
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(c) The Custodian shall release and deliver securities owned by
the Trust in the following cases only:
(1) Upon the sale of such securities for the
account of the company and the receipt of payment
therefor;
(2) To the issuer thereof or its agent when such
securities are called, redeemed, retired or otherwise become
payable, provided that in any such case the cash proceeds thereof
shall be delivered to the Custodian;
(3) To the issuer thereof or its agent for transfer into
the name of the Trust or the Custodian, or a nominee of either,
or in exchange for a different number of certificates
representing the same number of shares or aggregate face amount,
provided that in any such case the new securities replacing such
securities are delivered to the Custodian and approval of the
Trust is received;
(4) To any broker selling the same for examination
in accord with the "street delivery" custom;
(5) For exchange or conversion pursuant to any plan of
merger, consolidation, reorganization, recapitalization or
readjustment of the securities of the issuer of such securities,
or pursuant to provisions for conversion contained in such
securities, provided that in any such case the new securities and
cash, if any, are delivered to the Custodian;
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(6) In the case of warrants, rights or similar options,
the surrender thereof shall be only for the exercise of such
warrants, rights or other options on behalf of the Trust upon
interim receipts or temporary securities for definitive
securities;
(7) For any other proper purpose approved by the
Trust.
(d) The Custodian shall pay out monies of the Trust only
upon the purchase of securities for the account of the Trust and the
delivery in due course of such securities to the Custodian, or in
connection with the conversion, exchange or surrender of securities
owned by the Trust as set forth herein, or for the repurchase of shares
issued by the Trust, or for the making of any disbursements authorized
by the Board of Trustees for expenses or liabilities incurred by the
Trust pursuant to all applicable statutes, rules and regulations.
(e) The Custodian shall make deliveries of securities and
payments of cash only upon proper written instructions signed by such
officer or officers or other agent or agents of the Trust, including the
investment adviser, as may be authorized to sign such instructions by
resolution of the Board of Trustees. The Trustees may, from time to
time, authorize different persons to sign proper instructions for
different purposes. 2. The contract between the Trust and the Custodian
may contain any other provisions not inconsistent with all applicable
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statutes, rules, and regulations, the Declaration of Trust or with these Bylaws
which the Board of Trustees may approve.
3. Such contract shall be terminable by either party upon written notice
to the other; provided, however, that upon termination of the contract or
inability of the Custodian to continue to serve, the Custodian shall deliver and
pay over to such successor Custodian all securities and monies held by it for
the account of the Trust. In the event that the Custodian terminates its
contract with the Trust: (a) the Board of Trustees shall promptly appoint a
successor Custodian; (b) in the event that the Trust cannot find a successor
Custodian having the required qualifications and willing to serve, the Board of
Trustees shall promptly call a special meeting of the shareholders to determine
whether the Trust shall function without a Custodian or shall be liquidated; (c)
in the event that such vote of shareholders shall be held the Custodian shall
deliver and pay over all property of the Trust held by it as directed by, and in
accordance with, the vote of a majority of the outstanding shares of the Trust.
ARTICLE XI
INVESTMENT ADVISER
The Board of Trustees, with the approval of the shareholders, as
provided by applicable statutes, rules and regulations, and consistent with the
Declaration of Trust, may enter into a contract or contracts with one or more
persons, firms or corporations to act as Investment Adviser or Investment
Advisers for each particular series of the Trust and to perform such duties and
render such
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services as shall be deemed necessary. Any such contract shall provide that it
may be terminated at any time by the Trust without penalty and upon not more
than sixty (60) days' written notice, and shall be automatically terminated in
the event of its assignment. Any such contract shall continue in effect only if
approved in accordance with the provisions of all applicable statutes, rules,
and regulations, the Declaration of Trust and these Bylaws.
ARTICLE XII
DISTRIBUTOR
The Board of Trustees, as consistent with all applicable statutes,
rules, and regulations, and the Declaration of Trust, may enter into a contract
or contracts with any one or more persons, firms or corporations to act as
Distributor or Distributors for the Trust, or any particular series of the
Trust, and to perform such other duties and render such other services as shall
be deemed necessary. Any such contract shall provide that it shall be
automatically terminated in the event of its assignment by such person, firm or
corporation, and that, if it shall continue in effect for a period of more than
two (2) years from the date of its execution, it shall be specifically approved
at least annually by vote of the outstanding voting securities of the Trust or
the particular series of the Trust in question or by the Board of Trustees in
accordance with all applicable statutes, rules and regulations. Such contract
may be exclusive, and may be, with the same person, firm or corporation that is
a party to an investment adviser's contract with the Trust. Such contract may
also contain
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any other provisions not inconsistent with all applicable statutes, rules and
regulations, the Declaration of Trust and these Bylaws.
ARTICLE XIII
TRANSACTIONS OF TRUSTEES, OFFICERS AND OTHERS
1. No trustee or officer of the Trust, nor the Investment
Adviser(s), nor any member, officer, director, or shareholder of such Investment
Adviser(s) shall take a long or short position in the securities issued by any
series of the Trust, except that any trustee or officer of this Trust, or
member, officer, director or shareholder of the Investment Adviser(s) may
purchase from the Trust at any time, shares issued by any series of the Trust:
(a) at the price available to the public at the moment of such purchase; or (b)
to the extent that such person is a shareholder, at the price available to
shareholders generally at the moment of such purchase; or (c) at a price
determined as set forth in the Trust's current Prospectus for a particular
series of the Trust. In any event, such purchase shall not be in contravention
of any applicable federal or state statute, rule or regulation.
2. The Trust shall not lend any of its assets to the Distributor(s) or
Investment Adviser(s) or to any officer, director or trustee of the
Distributor(s) or the Investment Adviser(s) or the Trust and shall not permit
any officer or trustee, or any officer or director of the Distributor(s) or the
Investment Adviser(s), to deal for or on behalf of the Trust with himself as
principal or agent, or with any partnership, association or corporation in which
he has a financial interest. The foregoing
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provisions shall not prevent: (a) officers and trustees of the Trust from
buying, holding or selling shares in any series of the Trust, or from being
partners, officers or directors of or otherwise financially interested in the
Distributor(s) or the Investment Adviser(s); (b) employment of legal counsel,
registrar, transfer agent, dividend disbursing agent or custodian who is, or has
a partner, shareholder, officer or director who is, an officer or trustee of the
Trust, if only customary fees are charged for services to the Trust; or (c)
purchases or sales of securities or other property if such transaction is
permitted by or is exempted under any applicable statute, rule or regulation.
3. Any officer, trustee or agent of the Trust may acquire, own and
dispose of shares of any series of the Trust to the same extent as if he or she
were not such officer, trustee or agent. The Board of Trustees may issue,
purchase and sell or cause to be issued, purchased and sold shares of any series
of the Trust and from any person, or to and from any firm or company of which
such person is an officer, director, trustee or shareholder subject only to all
applicable statutes, rules, and regulations, any limitations contained in the
Declaration of Trust and the limitations and restrictions in these Bylaws.
ARTICLE XIV
INDEMNIFICATION
1. The Trust shall indemnify each trustee and officer to the
full extent permitted by applicable federal, state and local
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statutes, rules and regulations and the Declaration of Trust, as
amended from time to time.
2. With respect to a proceeding against a trustee or officer brought by
or on behalf of the Trust to obtain a judgment or decree in its favor, the Trust
shall provide the officer or trustee with the same indemnification, after the
same determination, as it is required to provide with respect to a proceeding
not brought by or on behalf of the Trust.
3. The Board of Trustees, in its discretion, may authorized
or provide the above-described indemnification to an employee or
agent.
4. Any indemnification provided by this Article:
(a) Continues as to a trustee, officer, employee or
agent who has ceased to be such, and inures to the benefit of
his heirs and personal representative; and
(b) Does not exclude any other rights to which a person is or may
be entitled by any applicable statute, rule, regulation, agreement, vote
of shareholders or disinterested trustees, or otherwise, as to:
(1) Actions in his official capacity; and
(2) Actions in any other capacity while holding
such office.
5. The indemnification provided by this Article shall be provided with
respect to an action, suit or proceeding arising from an act or omission or
alleged act or omission, whether occurring before or after the adoption of this
Article.
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6. Nothing in this Article protects, or purports to protect, or may be
interpreted or construed to protect, any trustee or officer against any
liability to the Trust or its shareholders 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.
ARTICLE XV
AUDITOR
The independent auditor of the particular series of the Trust shall be
selected annually in accordance with all applicable statutes, rules and
regulations.
ARTICLE XVI
AMENDMENTS
The Board of Trustees may make, amend, alter or repeal these Bylaws, at
any meeting duly held; provided, that the provisions concerning investment and
other restrictions contained in Article IX of these Bylaws shall only be
amended, altered or repealed by the vote of a majority of the outstanding voting
securities of the particular series of the Trust involved, as defined in the
Investment Company Act of 1940, or as otherwise provided by any applicable
statute, rule or regulations.
ARTICLE XVII
MISCELLANEOUS
1. When used in these Bylaws, the term "applicable statutes,
rules and regulations" shall mean any and all federal and state
statutes, rules and regulations that are applicable to, govern or
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otherwise regulate the conduct of the Trust's business as a regulated,
diversified, open-end investment company of the management type. Such statutes,
rules and regulations shall include, but are not limited to: The Investment
Company Act of 1940, the Investment Advisers Act of 1940, the Securities Act of
1933, the Securities Exchange Act of 1934, all as amended to date and as may be
hereafter amended, and all rules and regulations promulgated by the Securities
and Exchange Commission thereunder; Subchapter M of the Internal Revenue Code,
and all rules and regulations promulgated by the Internal Revenue Service
thereunder; the Annotated Code of Massachusetts, and all rules and regulations
promulgated by any commission, organization, or division of such, which has been
authorized by the State of Massachusetts to formulate or to enforce same; and
any and all other statutes, rules or regulations enacted or promulgated by any
state, commission or division that shall or may be deemed to govern or regulate
the conduct of the Trust.
2. Each Article, section or portion of these Bylaws shall be deemed
severable, and the invalidity of any such Article, section or portion shall not
affect the validity of the remainder of these Bylaws.
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INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, entered into as of the date that the registration
statement of the Quaker Enhanced Equity Index Fund of the Quaker Investment
Trust becomes effective with the Securities and Exchange Commission, by and
between QUAKER INVESTMENT TRUST (the "Trust"), a Massachusetts business trust,
and FIDUCIARY ASSET MANAGEMENT, INC., a Missouri corporation (the "Advisor"),
registered as an investment advisor under the Investment Advisors Act of 1940,
as amended (the "Act").
BACKGROUND
WHEREAS, the Trust is registered as a diversified, open-end management
investment company of the series type under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Advisor to furnish investment
advisory services to the Quaker Enhanced Equity Index Fund series of the Trust
pursuant to the terms and conditions of this Agreement, and the Advisor is
willing to so furnish such services;
NOW, THEREFORE, in consideration of the foregoing and the agreements and
covenants herein contained, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Appointment. The Trust hereby appoints the Advisor to act as
Investment Advisor to the Quaker Enhanced Equity Index Fund (the "Fund") series
of the Trust for the period and on the terms set forth in this Agreement. The
Advisor accepts such appointment and agrees to furnish the services herein set
forth for the compensation herein provided.
2. Delivery of Documents. The Trust has furnished the Investment Advisor
with copies properly certified or authenticated of each of the following:
(a) The Trust's Declaration of Trust, as filed with the
Commonwealth of Massachusetts (such Declaration, as
presently in effect and as it shall from time to time be
amended, is herein called the "Declaration");
(b) The Trust's By-Laws (such By-Laws, as presently in effect
and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) Resolutions of the Trust's Board of Trustees and the
resolution approved by a majority of the outstanding
shares of the Fund authorizing the appointment of the
Advisor and approving this Agreement;
<PAGE>
(d) The Trust's Registration Statement on Form N-1A
promulgated under the 1940 Act and under the Securities
Act of 1933, as amended (the "1933 Act"), relating to
shares of beneficial interest of the Fund (herein called
the "Shares") as filed with the Securities and Exchange
Commission (the "SEC") and all amendments thereto;
(e) The Fund's Prospectus and Statement of Additional
Information (such Prospectus, together with the Statement
of Additional Information, as presently in effect and all
amendments and supplements thereto are herein called the
"Prospectus").
The Trust will furnish the Advisor from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing at the same time as such documents are required to be filed with the
SEC.
3. Management. Subject to the supervision of the Trust's Board of
Trustees, the Advisor will provide a continuous investment program for the Fund,
including investment research and management with respect to all securities,
investments, cash and cash equivalents in the Fund. The Advisor will determine
from time to time what securities and other investments will be purchased,
retained or sold by the Fund. The Advisor will provide the services under this
Agreement in accordance with the Fund's investment objectives, policies and
restrictions as such are set forth in the Prospectus from time to time. The
Advisor further agrees that it:
(a) Will conform its activities to all applicable Rules and
Regulations of the SEC and will, in addition, conduct its
activities under this Agreement in accordance with the
regulations of any other Federal and state agencies which
may now or in the future have jurisdiction over its
activities under this Agreement.
(b) Will place orders pursuant to its investment
determinations for the Fund either directly with the
respective issuers or with any broker or dealer. In
placing orders with brokers or dealers, the Advisor will
attempt to obtain the best net price and the most
favorable execution of its orders. Consistent with this
obligation, when the Advisor believes two or more brokers
of dealers are comparable in price and execution, the
Advisor may prefer: (i) brokers and dealers who provide
the Fund with research advice and other services, or who
recommend or sell Trust shares, and (ii) brokers who are
affiliated with the Fund or the Advisor; provided,
however, that in no instance will portfolio securities be
purchased from or sold to the Advisor in principal
transactions;
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<PAGE>
(c) Will provide, at its own cost, all office space,
facilities and equipment necessary for the conduct of its
advisory activities on behalf of the Fund.
4. Services Not Exclusive. The advisory services to be furnished by the
Advisor hereunder are not to be deemed exclusive, and the Advisor shall be free
to furnish similar services to others so long as its services under this
Agreement are not impaired thereby; provided, however, that without the written
consent of the Trustees of the Trust, the Advisor will not serve as an
investment advisor to any other investment company having an investment
objective similar to that of the Fund.
5. Books and Records. In compliance with the requirements of Rule 31a-3
promulgated under the 1940 Act, the Advisor hereby agrees that all records which
it maintains for the benefit of the Fund are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. The Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 promulgated under the 1940 Act, the records required to
be maintained by it pursuant to Rule 31a-1 promulgated under the 1940 Act that
are not maintained by others on behalf of the Fund.
6. Expenses. During the term of this Agreement, the Advisor will pay all
expenses incurred by it in connection with its investment advisory services
furnished to the Fund other than the cost of securities and other investments
(including brokerage commissions and other transaction charges) purchased or
sold for the Fund. In addition, in accordance with the Plan of Distribution
adopted by the Fund under the provisions of Rule 12b-1 promulgated under the
1940 Act, the Advisor agrees to pay, from the advisory fees paid to it
hereunder, the amounts set forth in Exhibit A attached hereto to qualified
brokers and dealers who are authorized to sell Fund shares and receive
compensation therefor.
7. Compensation. The Trust will pay the Advisor, and the Advisor will
accept as full compensation for its services rendered hereunder, an investment
advisory fee, computed at the end of each month and payable within five (5)
business days thereafter, equal to the annual rate of 0.50% of the average daily
net assets of the Fund. The Advisor hereby acknowledges that the expense ratio
for the Fund will be capped at 1.00% of average daily net assets of the Fund and
hereby agrees to waive its fees to the extent necessary to achieve such expense
ratio, on a basis that is pro rata to the fees charged by other providers of
services to the Fund.
8. Limitation of Liability. The Adviser shall not be liable for any
error of judgment, mistake of law or for any other loss suffered by the Fund in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations or duties under this Agreement.
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<PAGE>
9. Duration and Termination. This Agreement shall become effective upon
the date the registration statement of the Trust containing the Fund's
Prospectus is declared effective by the SEC and, unless sooner terminated as
provided herein, shall continue in effect for two years. Thereafter, this
Agreement shall be renewable for successive periods of one year each, provided
such continuance is specifically approved annually:
(a) By the vote of a majority of those members of the Board of
Trustees who are not parties to this Agreement or
interested persons of any such party (as that term is
defined in the 1940 Act), cast in person at a meeting
called for the purpose of voting on such approval; and
(b) By vote of either the Board of Trustees or a majority (as
that term is defined in the 1940 Act) of the outstanding
voting securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated by the Fund or
by the Advisor at any time upon sixty (60) days' written notice, without the
payment of any penalty, provided that termination by the Fund must be authorized
either by vote of the Board of Trustees or by vote of a majority of the
outstanding voting securities of the Fund. This Agreement will automatically
terminate in the event of its assignment (as that term is defined in the 1940
Act).
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by a written
instrument signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No material amendment of this Agreement
shall be effective until approved by vote of the holders of a majority of the
Fund's outstanding voting securities (as defined in the 1940 Act).
11. Miscellaneous. The captions in this Agreement 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. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of the Agreement shall not be affected
thereby. This Agreement shall be binding on, and shall inure to the benefit of,
the parties hereto and their respective successors.
12. Counterparts. This Agreement may be executed in counterparts by the
parties hereto, each of which shall constitute an original, and all of which,
together, shall constitute one Agreement.
13. Governing Law. This Agreement shall be construed in accordance with,
and governed by, the laws of the Commonwealth of Pennsylvania.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their officers designated below as of the day and year first
above written
Attest: QUAKER INVESTMENT TRUST
By:_____________________________ By:__________________________
Title: Title:
Attest: FIDUCIARY ASSET MANAGEMENT,
INC.
By:_____________________________ By:__________________________
Title: Title:
-5-
<PAGE>
EXHIBIT A
12b-1 Fees
25% of management fee on amount of Fund shares sold for first 12 months
10% of management fee on such amount for succeeding 12 months
5% of management fee on such amount thereafter.
The foregoing shall be in effect with respect to Fund shares until such
shares are redeemed.
-6-
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, entered into as of the date that the registration
statement of the Quaker Core Equity Fund of the Quaker Investment Trust becomes
effective with the Securities and Exchange Commission, by and between QUAKER
INVESTMENT TRUST (the "Trust"), a Massachusetts business trust, and WEST CHESTER
CAPITAL ADVISORS, INC., a Pennsylvania corporation (the "Advisor"), registered
as an investment advisor under the Investment Advisors Act of 1940, as amended
(the "Act").
BACKGROUND
WHEREAS, the Trust is registered as a diversified, open-end management
investment company of the series type under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Advisor to furnish investment
advisory services to the Quaker Core Equity Fund series of the Trust pursuant to
the terms and conditions of this Agreement, and the Advisor is willing to so
furnish such services;
NOW, THEREFORE, in consideration of the foregoing and the agreements and
covenants herein contained, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Appointment. The Trust hereby appoints the Advisor to act as
Investment Advisor to the Quaker Core Equity Fund (the "Fund") series of the
Trust for the period and on the terms set forth in this Agreement. The Advisor
accepts such appointment and agrees to furnish the services herein set forth for
the compensation herein provided.
2. Delivery of Documents. The Trust has furnished the Investment Advisor
with copies properly certified or authenticated of each of the following:
(a) The Trust's Declaration of Trust, as filed with the
Commonwealth of Massachusetts (such Declaration, as
presently in effect and as it shall from time to time be
amended, is herein called the "Declaration");
(b) The Trust's By-Laws (such By-Laws, as presently in effect
and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) Resolutions of the Trust's Board of Trustees and the
resolution approved by a majority of the outstanding
shares of the Fund authorizing the appointment of the
Advisor and approving this Agreement;
<PAGE>
(d) The Trust's Registration Statement on Form N-1A
promulgated under the 1940 Act and under the Securities
Act of 1933, as amended (the "1933 Act"), relating to
shares of beneficial interest of the Fund (herein called
the "Shares") as filed with the Securities and Exchange
Commission (the "SEC") and all amendments thereto;
(e) The Fund's Prospectus and Statement of Additional
Information (such Prospectus, together with the Statement
of Additional Information, as presently in effect and all
amendments and supplements thereto are herein called the
"Prospectus").
The Trust will furnish the Advisor from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing at the same time as such documents are required to be filed with the
SEC.
3. Management. Subject to the supervision of the Trust's Board of
Trustees, the Advisor will provide a continuous investment program for the Fund,
including investment research and management with respect to all securities,
investments, cash and cash equivalents in the Fund. The Advisor will determine
from time to time what securities and other investments will be purchased,
retained or sold by the Fund. The Advisor will provide the services under this
Agreement in accordance with the Fund's investment objectives, policies and
restrictions as such are set forth in the Prospectus from time to time. The
Advisor further agrees that it:
(a) Will conform its activities to all applicable Rules and
Regulations of the SEC and will, in addition, conduct its
activities under this Agreement in accordance with the
regulations of any other Federal and state agencies which
may now or in the future have jurisdiction over its
activities under this Agreement.
(b) Will place orders pursuant to its investment
determinations for the Fund either directly with the
respective issuers or with any broker or dealer. In
placing orders with brokers or dealers, the Advisor will
attempt to obtain the best net price and the most
favorable execution of its orders. Consistent with this
obligation, when the Advisor believes two or more brokers
of dealers are comparable in price and execution, the
Advisor may prefer: (i) brokers and dealers who provide
the Fund with research advice and other services, or who
recommend or sell Trust shares, and (ii) brokers who are
affiliated with the Fund or the Advisor; provided,
however, that in no instance will portfolio securities be
purchased from or sold to the Advisor in principal
transactions;
-2-
<PAGE>
(c) Will provide, at its own cost, all office space,
facilities and equipment necessary for the conduct of its
advisory activities on behalf of the Fund.
4. Services Not Exclusive. The advisory services to be furnished by the
Advisor hereunder are not to be deemed exclusive, and the Advisor shall be free
to furnish similar services to others so long as its services under this
Agreement are not impaired thereby; provided, however, that without the written
consent of the Trustees of the Trust, the Advisor will not serve as an
investment advisor to any other investment company having an investment
objective similar to that of the Fund.
5. Books and Records. In compliance with the requirements of Rule 31a-3
promulgated under the 1940 Act, the Advisor hereby agrees that all records which
it maintains for the benefit of the Fund are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. The Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 promulgated under the 1940 Act, the records required to
be maintained by it pursuant to Rule 31a-1 promulgated under the 1940 Act that
are not maintained by others on behalf of the Fund.
6. Expenses. During the term of this Agreement, the Advisor will pay all
expenses incurred by it in connection with its investment advisory services
furnished to the Fund other than the cost of securities and other investments
(including brokerage commissions and other transaction charges) purchased or
sold for the Fund. In addition, in accordance with the Plan of Distribution
adopted by the Fund under the provisions of Rule 12b-1 promulgated under the
1940 Act, the Advisor agrees to pay, from the advisory fees paid to it
hereunder, the amounts set forth in Exhibit A attached hereto to qualified
brokers and dealers who are authorized to sell Fund shares and receive
compensation therefor.
7. Compensation. The Trust will pay the Advisor, and the Advisor will
accept as full compensation for its services rendered hereunder, an investment
advisory fee, computed at the end of each month and payable within five (5)
business days thereafter, equal to the annual rate of 0.75% of the average daily
net assets of the Fund. The Advisor hereby acknowledges that the expense ratio
for the Fund will be capped at 1.35% of average daily net assets of the Fund and
hereby agrees to waive its fees to the extent necessary to achieve such expense
ratio, on a basis that is pro rata to the fees charged by other providers of
services to the Fund.
8. Limitation of Liability. The Adviser shall not be liable for any
error of judgment, mistake of law or for any other loss suffered by the Fund in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations or duties under this Agreement.
-3-
<PAGE>
9. Duration and Termination. This Agreement shall become effective upon
the date the registration statement of the Trust containing the Fund's
Prospectus is declared effective by the SEC and, unless sooner terminated as
provided herein, shall continue in effect for two years. Thereafter, this
Agreement shall be renewable for successive periods of one year each, provided
such continuance is specifically approved annually:
(a) By the vote of a majority of those members of the Board of
Trustees who are not parties to this Agreement or
interested persons of any such party (as that term is
defined in the 1940 Act), cast in person at a meeting
called for the purpose of voting on such approval; and
(b) By vote of either the Board of Trustees or a majority (as
that term is defined in the 1940 Act) of the outstanding
voting securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated by the Fund or
by the Advisor at any time upon sixty (60) days' written notice, without the
payment of any penalty, provided that termination by the Fund must be authorized
either by vote of the Board of Trustees or by vote of a majority of the
outstanding voting securities of the Fund. This Agreement will automatically
terminate in the event of its assignment (as that term is defined in the 1940
Act).
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by a written
instrument signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No material amendment of this Agreement
shall be effective until approved by vote of the holders of a majority of the
Fund's outstanding voting securities (as defined in the 1940 Act).
11. Miscellaneous. The captions in this Agreement 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. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of the Agreement shall not be affected
thereby. This Agreement shall be binding on, and shall inure to the benefit of,
the parties hereto and their respective successors.
12. Counterparts. This Agreement may be executed in counterparts by the
parties hereto, each of which shall constitute an original, and all of which,
together, shall constitute one Agreement.
13. Governing Law. This Agreement shall be construed in accordance with,
and governed by, the laws of the Commonwealth of Pennsylvania.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their officers designated below as of the day and year first
above written
Attest: QUAKER INVESTMENT TRUST
By:_____________________________ By:__________________________
Title: Title:
Attest: WEST CHESTER CAPITAL ADVISORS,
INC.
By:_____________________________ By:__________________________
Title: Title:
-5-
<PAGE>
EXHIBIT A
12b-1 Fees
25% of management fee on amount of Fund shares sold for first 12 months
10% of management fee on such amount for succeeding 12 months
5% of management fee on such amount thereafter.
The foregoing shall be in effect with respect to Fund shares until such
shares are redeemed.
-6-
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, entered into as of the date that the registration
statement of the Quaker Aggressive Growth Fund of the Quaker Investment Trust
becomes effective with the Securities and Exchange Commission, by and between
QUAKER INVESTMENT TRUST (the "Trust"), a Massachusetts business trust, and DG
CAPITAL MANAGEMENT, INC., a Massachusetts corporation (the "Advisor"),
registered as an investment advisor under the Investment Advisors Act of 1940,
as amended (the "Act").
BACKGROUND
WHEREAS, the Trust is registered as a diversified, open-end management
investment company of the series type under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Advisor to furnish investment
advisory services to the Quaker Aggressive Growth Fund series of the Trust
pursuant to the terms and conditions of this Agreement, and the Advisor is
willing to so furnish such services;
NOW, THEREFORE, in consideration of the foregoing and the agreements and
covenants herein contained, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Appointment. The Trust hereby appoints the Advisor to act as
Investment Advisor to the Quaker Aggressive Growth Fund (the "Fund") series of
the Trust for the period and on the terms set forth in this Agreement. The
Advisor accepts such appointment and agrees to furnish the services herein set
forth for the compensation herein provided.
2. Delivery of Documents. The Trust has furnished the Investment Advisor
with copies properly certified or authenticated of each of the following:
(a) The Trust's Declaration of Trust, as filed with the
Commonwealth of Massachusetts (such Declaration, as
presently in effect and as it shall from time to time be
amended, is herein called the "Declaration");
(b) The Trust's By-Laws (such By-Laws, as presently in effect
and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) Resolutions of the Trust's Board of Trustees and the
resolution approved by a majority of the outstanding
shares of the Fund authorizing the appointment of the
Advisor and approving this Agreement;
<PAGE>
(d) The Trust's Registration Statement on Form N-1A
promulgated under the 1940 Act and under the Securities
Act of 1933, as amended (the "1933 Act"), relating to
shares of beneficial interest of the Fund (herein called
the "Shares") as filed with the Securities and Exchange
Commission (the "SEC") and all amendments thereto;
(e) The Fund's Prospectus and Statement of Additional
Information (such Prospectus, together with the Statement
of Additional Information, as presently in effect and all
amendments and supplements thereto are herein called the
"Prospectus").
The Trust will furnish the Advisor from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing at the same time as such documents are required to be filed with the
SEC.
3. Management. Subject to the supervision of the Trust's Board of
Trustees, the Advisor will provide a continuous investment program for the Fund,
including investment research and management with respect to all securities,
investments, cash and cash equivalents in the Fund. The Advisor will determine
from time to time what securities and other investments will be purchased,
retained or sold by the Fund. The Advisor will provide the services under this
Agreement in accordance with the Fund's investment objectives, policies and
restrictions as such are set forth in the Prospectus from time to time. The
Advisor further agrees that it:
(a) Will conform its activities to all applicable Rules and
Regulations of the SEC and will, in addition, conduct its
activities under this Agreement in accordance with the
regulations of any other Federal and state agencies which
may now or in the future have jurisdiction over its
activities under this Agreement.
(b) Will place orders pursuant to its investment
determinations for the Fund either directly with the
respective issuers or with any broker or dealer. In
placing orders with brokers or dealers, the Advisor will
attempt to obtain the best net price and the most
favorable execution of its orders. Consistent with this
obligation, when the Advisor believes two or more brokers
of dealers are comparable in price and execution, the
Advisor may prefer: (i) brokers and dealers who provide
the Fund with research advice and other services, or who
recommend or sell Trust shares, and (ii) brokers who are
affiliated with the Fund or the Advisor; provided,
however, that in no instance will portfolio securities be
purchased from or sold to the Advisor in principal
transactions;
-2-
<PAGE>
(c) Will provide, at its own cost, all office space,
facilities and equipment necessary for the conduct of its
advisory activities on behalf of the Fund.
4. Services Not Exclusive. The advisory services to be furnished by the
Advisor hereunder are not to be deemed exclusive, and the Advisor shall be free
to furnish similar services to others so long as its services under this
Agreement are not impaired thereby; provided, however, that without the written
consent of the Trustees of the Trust, the Advisor will not serve as an
investment advisor to any other investment company having an investment
objective similar to that of the Fund.
5. Books and Records. In compliance with the requirements of Rule 31a-3
promulgated under the 1940 Act, the Advisor hereby agrees that all records which
it maintains for the benefit of the Fund are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. The Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 promulgated under the 1940 Act, the records required to
be maintained by it pursuant to Rule 31a-1 promulgated under the 1940 Act that
are not maintained by others on behalf of the Fund.
6. Expenses. During the term of this Agreement, the Advisor will pay all
expenses incurred by it in connection with its investment advisory services
furnished to the Fund other than the cost of securities and other investments
(including brokerage commissions and other transaction charges) purchased or
sold for the Fund. In addition, in accordance with the Plan of Distribution
adopted by the Fund under the provisions of Rule 12b-1 promulgated under the
1940 Act, the Advisor agrees to pay, from the advisory fees paid to it
hereunder, the amounts set forth in Exhibit A attached hereto to qualified
brokers and dealers who are authorized to sell Fund shares and receive
compensation therefor.
7. Compensation. The Trust will pay the Advisor, and the Advisor will
accept as full compensation for its services rendered hereunder, an investment
advisory fee, computed at the end of each month and payable within five (5)
business days thereafter, equal to the annual rate of 0.75% of the average daily
net assets of the Fund. The Advisor hereby acknowledges that the expense ratio
for the Fund will be capped at 1.35% of average daily net assets of the Fund and
hereby agrees to waive its fees to the extent necessary to achieve such expense
ratio, on a basis that is pro rata to the fees charged by other providers of
services to the Fund.
8. Limitation of Liability. The Adviser shall not be liable for any
error of judgment, mistake of law or for any other loss suffered by the Fund in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations or duties under this Agreement.
-3-
<PAGE>
9. Duration and Termination. This Agreement shall become effective upon
the date the registration statement of the Trust containing the Fund's
Prospectus is declared effective by the SEC and, unless sooner terminated as
provided herein, shall continue in effect for two years. Thereafter, this
Agreement shall be renewable for successive periods of one year each, provided
such continuance is specifically approved annually:
(a) By the vote of a majority of those members of the Board of
Trustees who are not parties to this Agreement or
interested persons of any such party (as that term is
defined in the 1940 Act), cast in person at a meeting
called for the purpose of voting on such approval; and
(b) By vote of either the Board of Trustees or a majority (as
that term is defined in the 1940 Act) of the outstanding
voting securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated by the Fund or
by the Advisor at any time upon sixty (60) days' written notice, without the
payment of any penalty, provided that termination by the Fund must be authorized
either by vote of the Board of Trustees or by vote of a majority of the
outstanding voting securities of the Fund. This Agreement will automatically
terminate in the event of its assignment (as that term is defined in the 1940
Act).
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by a written
instrument signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No material amendment of this Agreement
shall be effective until approved by vote of the holders of a majority of the
Fund's outstanding voting securities (as defined in the 1940 Act).
11. Miscellaneous. The captions in this Agreement 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. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of the Agreement shall not be affected
thereby. This Agreement shall be binding on, and shall inure to the benefit of,
the parties hereto and their respective successors.
12. Counterparts. This Agreement may be executed in counterparts by the
parties hereto, each of which shall constitute an original, and all of which,
together, shall constitute one Agreement.
13. Governing Law. This Agreement shall be construed in accordance with,
and governed by, the laws of the Commonwealth of Pennsylvania.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their officers designated below as of the day and year first
above written
Attest: QUAKER INVESTMENT TRUST
By:_____________________________ By:__________________________
Title: Title:
Attest: DG CAPITAL MANAGEMENT, INC.
By:_____________________________ By:__________________________
Title: Title:
-5-
<PAGE>
EXHIBIT A
12b-1 Fees
25% of management fee on amount of Fund shares sold for first 12 months
10% of management fee on such amount for succeeding 12 months
5% of management fee on such amount thereafter.
The foregoing shall be in effect with respect to Fund shares until such
shares are redeemed.
-6-
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, entered into as of the date that the registration
statement of the Quaker Small Cap Value Fund of the Quaker Investment Trust
becomes effective with the Securities and Exchange Commission, by and between
QUAKER INVESTMENT TRUST (the "Trust"), a Massachusetts business trust, and
ARONSON & PARTNERS, a Pennsylvania partnership (the "Advisor"), registered as an
investment advisor under the Investment Advisors Act of 1940, as amended (the
"Act").
BACKGROUND
WHEREAS, the Trust is registered as a diversified, open-end management
investment company of the series type under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Advisor to furnish investment
advisory services to the Quaker Small Cap Value Fund series of the Trust
pursuant to the terms and conditions of this Agreement, and the Advisor is
willing to so furnish such services;
NOW, THEREFORE, in consideration of the foregoing and the agreements and
covenants herein contained, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Appointment. The Trust hereby appoints the Advisor to act as
Investment Advisor to the Quaker Small Cap Value Fund (the "Fund") series of the
Trust for the period and on the terms set forth in this Agreement. The Advisor
accepts such appointment and agrees to furnish the services herein set forth for
the compensation herein provided.
2. Delivery of Documents. The Trust has furnished the Investment Advisor
with copies properly certified or authenticated of each of the following:
(a) The Trust's Declaration of Trust, as filed with the
Commonwealth of Massachusetts (such Declaration, as
presently in effect and as it shall from time to time be
amended, is herein called the "Declaration");
(b) The Trust's By-Laws (such By-Laws, as presently in effect
and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) Resolutions of the Trust's Board of Trustees and the
resolution approved by a majority of the outstanding
shares of the Fund authorizing the appointment of the
Advisor and approving this Agreement;
<PAGE>
(d) The Trust's Registration Statement on Form N-1A
promulgated under the 1940 Act and under the Securities
Act of 1933, as amended (the "1933 Act"), relating to
shares of beneficial interest of the Fund (herein called
the "Shares") as filed with the Securities and Exchange
Commission (the "SEC") and all amendments thereto;
(e) The Fund's Prospectus and Statement of Additional
Information (such Prospectus, together with the Statement
of Additional Information, as presently in effect and all
amendments and supplements thereto are herein called the
"Prospectus").
The Trust will furnish the Advisor from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing at the same time as such documents are required to be filed with the
SEC.
3. Management. Subject to the supervision of the Trust's Board of
Trustees, the Advisor will provide a continuous investment program for the Fund,
including investment research and management with respect to all securities,
investments, cash and cash equivalents in the Fund. The Advisor will determine
from time to time what securities and other investments will be purchased,
retained or sold by the Fund. The Advisor will provide the services under this
Agreement in accordance with the Fund's investment objectives, policies and
restrictions as such are set forth in the Prospectus from time to time. The
Advisor further agrees that it:
(a) Will conform its activities to all applicable Rules and
Regulations of the SEC and will, in addition, conduct its
activities under this Agreement in accordance with the
regulations of any other Federal and state agencies which
may now or in the future have jurisdiction over its
activities under this Agreement.
(b) Will place orders pursuant to its investment
determinations for the Fund either directly with the
respective issuers or with any broker or dealer. In
placing orders with brokers or dealers, the Advisor will
attempt to obtain the best net price and the most
favorable execution of its orders. Consistent with this
obligation, when the Advisor believes two or more brokers
of dealers are comparable in price and execution, the
Advisor may prefer: (i) brokers and dealers who provide
the Fund with research advice and other services, or who
recommend or sell Trust shares, and (ii) brokers who are
affiliated with the Fund or the Advisor; provided,
however, that in no instance will portfolio securities be
purchased from or sold to the Advisor in principal
transactions;
-2-
<PAGE>
(c) Will provide, at its own cost, all office space,
facilities and equipment necessary for the conduct of its
advisory activities on behalf of the Fund.
4. Services Not Exclusive. The advisory services to be furnished by the
Advisor hereunder are not to be deemed exclusive, and the Advisor shall be free
to furnish similar services to others so long as its services under this
Agreement are not impaired thereby; provided, however, that without the written
consent of the Trustees of the Trust, the Advisor will not serve as an
investment advisor to any other investment company having an investment
objective similar to that of the Fund.
5. Books and Records. In compliance with the requirements of Rule 31a-3
promulgated under the 1940 Act, the Advisor hereby agrees that all records which
it maintains for the benefit of the Fund are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. The Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 promulgated under the 1940 Act, the records required to
be maintained by it pursuant to Rule 31a-1 promulgated under the 1940 Act that
are not maintained by others on behalf of the Fund.
6. Expenses. During the term of this Agreement, the Advisor will pay all
expenses incurred by it in connection with its investment advisory services
furnished to the Fund other than the cost of securities and other investments
(including brokerage commissions and other transaction charges) purchased or
sold for the Fund. In addition, in accordance with the Plan of Distribution
adopted by the Fund under the provisions of Rule 12b-1 promulgated under the
1940 Act, the Advisor agrees to pay, from the advisory fees paid to it
hereunder, the amounts set forth in Exhibit A attached hereto to qualified
brokers and dealers who are authorized to sell Fund shares and receive
compensation therefor.
7. Compensation. The Trust will pay the Advisor, and the Advisor will
accept as full compensation for its services rendered hereunder, an investment
advisory fee, computed at the end of each month and payable within five (5)
business days thereafter, equal to the annual rate of 0.75% of the average daily
net assets of the Fund. The Advisor hereby acknowledges that the expense ratio
for the Fund will be capped at 1.35% of average daily net assets of the Fund and
hereby agrees to waive its fees to the extent necessary to achieve such expense
ratio, on a basis that is pro rata to the fees charged by other providers of
services to the Fund.
8. Limitation of Liability. The Adviser shall not be liable for any
error of judgment, mistake of law or for any other loss suffered by the Fund in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations or duties under this Agreement.
-3-
<PAGE>
9. Duration and Termination. This Agreement shall become effective upon
the date the registration statement of the Trust containing the Fund's
Prospectus is declared effective by the SEC and, unless sooner terminated as
provided herein, shall continue in effect for two years. Thereafter, this
Agreement shall be renewable for successive periods of one year each, provided
such continuance is specifically approved annually:
(a) By the vote of a majority of those members of the Board of
Trustees who are not parties to this Agreement or
interested persons of any such party (as that term is
defined in the 1940 Act), cast in person at a meeting
called for the purpose of voting on such approval; and
(b) By vote of either the Board of Trustees or a majority (as
that term is defined in the 1940 Act) of the outstanding
voting securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated by the Fund or
by the Advisor at any time upon sixty (60) days' written notice, without the
payment of any penalty, provided that termination by the Fund must be authorized
either by vote of the Board of Trustees or by vote of a majority of the
outstanding voting securities of the Fund. This Agreement will automatically
terminate in the event of its assignment (as that term is defined in the 1940
Act).
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by a written
instrument signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No material amendment of this Agreement
shall be effective until approved by vote of the holders of a majority of the
Fund's outstanding voting securities (as defined in the 1940 Act).
11. Miscellaneous. The captions in this Agreement 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. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of the Agreement shall not be affected
thereby. This Agreement shall be binding on, and shall inure to the benefit of,
the parties hereto and their respective successors.
12. Counterparts. This Agreement may be executed in counterparts by the
parties hereto, each of which shall constitute an original, and all of which,
together, shall constitute one Agreement.
13. Governing Law. This Agreement shall be construed in accordance with,
and governed by, the laws of the Commonwealth of Pennsylvania.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their officers designated below as of the day and year first
above written
Attest: QUAKER INVESTMENT TRUST
By:_____________________________ By:__________________________
Title: Title:
Attest: ARONSON & PARTNERS
By:_____________________________ By:__________________________
Title: General Partner
-5-
<PAGE>
EXHIBIT A
12b-1 Fees
25% of management fee on amount of Fund shares sold for first 12 months
10% of management fee on such amount for succeeding 12 months
5% of management fee on such amount thereafter.
The foregoing shall be in effect with respect to Fund shares until such
shares are redeemed.
-6-
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, entered into as of the date that the registration
statement of the Quaker Sector Rotation Equity Fund of the Quaker Investment
Trust becomes effective with the Securities and Exchange Commission, by and
between QUAKER INVESTMENT TRUST (the "Trust"), a Massachusetts business trust,
and LOGAN CAPITAL MANAGEMENT, INC., a Pennsylvania corporation (the "Advisor"),
registered as an investment advisor under the Investment Advisors Act of 1940,
as amended (the "Act").
BACKGROUND
WHEREAS, the Trust is registered as a diversified, open-end management
investment company of the series type under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Advisor to furnish investment
advisory services to the Quaker Sector Rotation Equity Fund series of the Trust
pursuant to the terms and conditions of this Agreement, and the Advisor is
willing to so furnish such services;
NOW, THEREFORE, in consideration of the foregoing and the agreements and
covenants herein contained, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Appointment. The Trust hereby appoints the Advisor to act as
Investment Advisor to the Quaker Sector Rotation Equity Fund (the "Fund") series
of the Trust for the period and on the terms set forth in this Agreement. The
Advisor accepts such appointment and agrees to furnish the services herein set
forth for the compensation herein provided.
2. Delivery of Documents. The Trust has furnished the Investment Advisor
with copies properly certified or authenticated of each of the following:
(a) The Trust's Declaration of Trust, as filed with the
Commonwealth of Massachusetts (such Declaration, as
presently in effect and as it shall from time to time be
amended, is herein called the "Declaration");
(b) The Trust's By-Laws (such By-Laws, as presently in effect
and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) Resolutions of the Trust's Board of Trustees and the
resolution approved by a majority of the outstanding
shares of the Fund authorizing the appointment of the
Advisor and approving this Agreement;
<PAGE>
(d) The Trust's Registration Statement on Form N-1A
promulgated under the 1940 Act and under the Securities
Act of 1933, as amended (the "1933 Act"), relating to
shares of beneficial interest of the Fund (herein called
the "Shares") as filed with the Securities and Exchange
Commission (the "SEC") and all amendments thereto;
(e) The Fund's Prospectus and Statement of Additional
Information (such Prospectus, together with the Statement
of Additional Information, as presently in effect and all
amendments and supplements thereto are herein called the
"Prospectus").
The Trust will furnish the Advisor from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing at the same time as such documents are required to be filed with the
SEC.
3. Management. Subject to the supervision of the Trust's Board of
Trustees, the Advisor will provide a continuous investment program for the Fund,
including investment research and management with respect to all securities,
investments, cash and cash equivalents in the Fund. The Advisor will determine
from time to time what securities and other investments will be purchased,
retained or sold by the Fund. The Advisor will provide the services under this
Agreement in accordance with the Fund's investment objectives, policies and
restrictions as such are set forth in the Prospectus from time to time. The
Advisor further agrees that it:
(a) Will conform its activities to all applicable Rules and
Regulations of the SEC and will, in addition, conduct its
activities under this Agreement in accordance with the
regulations of any other Federal and state agencies which
may now or in the future have jurisdiction over its
activities under this Agreement.
(b) Will place orders pursuant to its investment
determinations for the Fund either directly with the
respective issuers or with any broker or dealer. In
placing orders with brokers or dealers, the Advisor will
attempt to obtain the best net price and the most
favorable execution of its orders. Consistent with this
obligation, when the Advisor believes two or more brokers
of dealers are comparable in price and execution, the
Advisor may prefer: (i) brokers and dealers who provide
the Fund with research advice and other services, or who
recommend or sell Trust shares, and (ii) brokers who are
affiliated with the Fund or the Advisor; provided,
however, that in no instance will portfolio securities be
purchased from or sold to the Advisor in principal
transactions;
-2-
<PAGE>
(c) Will provide, at its own cost, all office space,
facilities and equipment necessary for the conduct of its
advisory activities on behalf of the Fund.
4. Services Not Exclusive. The advisory services to be furnished by the
Advisor hereunder are not to be deemed exclusive, and the Advisor shall be free
to furnish similar services to others so long as its services under this
Agreement are not impaired thereby; provided, however, that without the written
consent of the Trustees of the Trust, the Advisor will not serve as an
investment advisor to any other investment company having an investment
objective similar to that of the Fund.
5. Books and Records. In compliance with the requirements of Rule 31a-3
promulgated under the 1940 Act, the Advisor hereby agrees that all records which
it maintains for the benefit of the Fund are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. The Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 promulgated under the 1940 Act, the records required to
be maintained by it pursuant to Rule 31a-1 promulgated under the 1940 Act that
are not maintained by others on behalf of the Fund.
6. Expenses. During the term of this Agreement, the Advisor will pay all
expenses incurred by it in connection with its investment advisory services
furnished to the Fund other than the cost of securities and other investments
(including brokerage commissions and other transaction charges) purchased or
sold for the Fund. In addition, in accordance with the Plan of Distribution
adopted by the Fund under the provisions of Rule 12b-1 promulgated under the
1940 Act, the Advisor agrees to pay, from the advisory fees paid to it
hereunder, the amounts set forth in Exhibit A attached hereto to qualified
brokers and dealers who are authorized to sell Fund shares and receive
compensation therefor.
7. Compensation. The Trust will pay the Advisor, and the Advisor will
accept as full compensation for its services rendered hereunder, an investment
advisory fee, computed at the end of each month and payable within five (5)
business days thereafter, equal to the annual rate of 0.75% of the average daily
net assets of the Fund. The Advisor hereby acknowledges that the expense ratio
for the Fund will be capped at 1.35% of average daily net assets of the Fund and
hereby agrees to waive its fees to the extent necessary to achieve such expense
ratio, on a basis that is pro rata to the fees charged by other providers of
services to the Fund.
8. Limitation of Liability. The Adviser shall not be liable for any
error of judgment, mistake of law or for any other loss suffered by the Fund in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations or duties under this Agreement.
-3-
<PAGE>
9. Duration and Termination. This Agreement shall become effective upon
the date the registration statement of the Trust containing the Fund's
Prospectus is declared effective by the SEC and, unless sooner terminated as
provided herein, shall continue in effect for two years. Thereafter, this
Agreement shall be renewable for successive periods of one year each, provided
such continuance is specifically approved annually:
(a) By the vote of a majority of those members of the Board of
Trustees who are not parties to this Agreement or
interested persons of any such party (as that term is
defined in the 1940 Act), cast in person at a meeting
called for the purpose of voting on such approval; and
(b) By vote of either the Board of Trustees or a majority (as
that term is defined in the 1940 Act) of the outstanding
voting securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated by the Fund or
by the Advisor at any time upon sixty (60) days' written notice, without the
payment of any penalty, provided that termination by the Fund must be authorized
either by vote of the Board of Trustees or by vote of a majority of the
outstanding voting securities of the Fund. This Agreement will automatically
terminate in the event of its assignment (as that term is defined in the 1940
Act).
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by a written
instrument signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No material amendment of this Agreement
shall be effective until approved by vote of the holders of a majority of the
Fund's outstanding voting securities (as defined in the 1940 Act).
11. Miscellaneous. The captions in this Agreement 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. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of the Agreement shall not be affected
thereby. This Agreement shall be binding on, and shall inure to the benefit of,
the parties hereto and their respective successors.
12. Counterparts. This Agreement may be executed in counterparts by the
parties hereto, each of which shall constitute an original, and all of which,
together, shall constitute one Agreement.
13. Governing Law. This Agreement shall be construed in accordance with,
and governed by, the laws of the Commonwealth of Pennsylvania.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their officers designated below as of the day and year first
above written
Attest: QUAKER INVESTMENT TRUST
By:_____________________________ By:__________________________
Title: Title:
Attest: LOGAN CAPITAL MANAGEMENT,
INC.
By:_____________________________ By:__________________________
Title: Title:
-5-
<PAGE>
EXHIBIT A
12b-1 Fees
25% of management fee on amount of Fund shares sold for first 12 months
10% of management fee on such amount for succeeding 12 months
5% of management fee on such amount thereafter.
The foregoing shall be in effect with respect to Fund shares until such
shares are redeemed.
-6-
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, entered into as of the date that the registration
statement of the Quaker Fixed Income Fund of the Quaker Investment Trust becomes
effective with the Securities and Exchange Commission, by and between QUAKER
INVESTMENT TRUST (the "Trust"), a Massachusetts business trust, and FIDUCIARY
ASSET MANAGEMENT, INC., a Missouri corporation (the "Advisor"), registered as an
investment advisor under the Investment Advisors Act of 1940, as amended (the
"Act").
BACKGROUND
WHEREAS, the Trust is registered as a diversified, open-end management
investment company of the series type under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Advisor to furnish investment
advisory services to the Quaker Fixed Income Fund series of the Trust pursuant
to the terms and conditions of this Agreement, and the Advisor is willing to so
furnish such services;
NOW, THEREFORE, in consideration of the foregoing and the agreements and
covenants herein contained, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Appointment. The Trust hereby appoints the Advisor to act as
Investment Advisor to the Quaker Fixed Income Fund (the "Fund") series of the
Trust for the period and on the terms set forth in this Agreement. The Advisor
accepts such appointment and agrees to furnish the services herein set forth for
the compensation herein provided.
2. Delivery of Documents. The Trust has furnished the Investment
Advisor with copies properly certified or authenticated of each of the
following:
(a) The Trust's Declaration of Trust, as filed with the
Commonwealth of Massachusetts (such Declaration, as
presently in effect and as it shall from time to time be
amended, is herein called the "Declaration");
(b) The Trust's By-Laws (such By-Laws, as presently in effect
and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) Resolutions of the Trust's Board of Trustees and the
resolution approved by a majority of the outstanding
shares of the Fund authorizing the appointment of the
Advisor and approving this Agreement;
(d) The Trust's Registration Statement on Form N-1A
promulgated under the 1940 Act and under the Securities
Act of 1933, as amended (the "1933 Act"), relating to
shares of beneficial interest of the Fund (herein
<PAGE>
called the "Shares") as filed with the Securities and
Exchange Commission (the "SEC") and all amendments
thereto;
(e) The Fund's Prospectus and Statement of Additional
Information (such Prospectus, together with the Statement
of Additional Information, as presently in effect and all
amendments and supplements thereto are herein called the
"Prospectus").
The Trust will furnish the Advisor from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing at the same time as such documents are required to be filed with the
SEC.
3. Management. Subject to the supervision of the Trust's Board of
Trustees, the Advisor will provide a continuous investment program for the Fund,
including investment research and management with respect to all securities,
investments, cash and cash equivalents in the Fund. The Advisor will determine
from time to time what securities and other investments will be purchased,
retained or sold by the Fund. The Advisor will provide the services under this
Agreement in accordance with the Fund's investment objectives, policies and
restrictions as such are set forth in the Prospectus from time to time. The
Advisor further agrees that it:
(a) Will conform its activities to all applicable Rules and
Regulations of the SEC and will, in addition, conduct its
activities under this Agreement in accordance with the
regulations of any other Federal and state agencies which
may now or in the future have jurisdiction over its
activities under this Agreement.
(b) Will place orders pursuant to its investment
determinations for the Fund either directly with the
respective issuers or with any broker or dealer. In
placing orders with brokers or dealers, the Advisor will
attempt to obtain the best net price and the most
favorable execution of its orders. Consistent with this
obligation, when the Advisor believes two or more brokers
of dealers are comparable in price and execution, the
Advisor may prefer: (i) brokers and dealers who provide
the Fund with research advice and other services, or who
recommend or sell Trust shares, and (ii) brokers who are
affiliated with the Fund or the Advisor; provided,
however, that in no instance will portfolio securities be
purchased from or sold to the Advisor in principal
transactions;
(c) Will provide, at its own cost, all office space,
facilities and equipment necessary for the conduct of its
advisory activities on behalf of the Fund.
-2-
<PAGE>
4. Services Not Exclusive. The advisory services to be furnished by the
Advisor hereunder are not to be deemed exclusive, and the Advisor shall be free
to furnish similar services to others so long as its services under this
Agreement are not impaired thereby; provided, however, that without the written
consent of the Trustees of the Trust, the Advisor will not serve as an
investment advisor to any other investment company having an investment
objective similar to that of the Fund.
5. Books and Records. In compliance with the requirements of Rule 31a-3
promulgated under the 1940 Act, the Advisor hereby agrees that all records which
it maintains for the benefit of the Fund are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. The Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 promulgated under the 1940 Act, the records required to
be maintained by it pursuant to Rule 31a-1 promulgated under the 1940 Act that
are not maintained by others on behalf of the Fund.
6. Expenses. During the term of this Agreement, the Advisor will pay all
expenses incurred by it in connection with its investment advisory services
furnished to the Fund other than the cost of securities and other investments
(including brokerage commissions and other transaction charges) purchased or
sold for the Fund. In addition, in accordance with the Plan of Distribution
adopted by the Fund under the provisions of Rule 12b-1 promulgated under the
1940 Act, the Advisor agrees to pay, from the advisory fees paid to it
hereunder, the amounts set forth in Exhibit A attached hereto to qualified
brokers and dealers who are authorized to sell Fund shares and receive
compensation therefor.
7. Compensation. The Trust will pay the Advisor, and the Advisor will
accept as full compensation for its services rendered hereunder, an investment
advisory fee, computed at the end of each month and payable within five (5)
business days thereafter, equal to the annual rate of 0.45% of the average daily
net assets of the Fund. The Advisor hereby acknowledges that the expense ratio
for the Fund will be capped at 0.90% of average daily net assets of the Fund and
hereby agrees to waive its fees to the extent necessary to achieve such expense
ratio, on a basis that is pro rata to the fees charged by other providers of
services to the Fund.
8. Limitation of Liability. The Adviser shall not be liable for any
error of judgment, mistake of law or for any other loss suffered by the Fund in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations or duties under this Agreement.
9. Duration and Termination. This Agreement shall become effective
upon the date the registration statement of the Trust containing the Fund's
Prospectus is declared effective by the SEC and, unless sooner terminated as
provided herein, shall continue in effect for two
-3-
<PAGE>
years. Thereafter, this Agreement shall be renewable for successive periods of
one year each, provided such continuance is specifically approved annually:
(a) By the vote of a majority of those members of the Board of
Trustees who are not parties to this Agreement or
interested persons of any such party (as that term is
defined in the 1940 Act), cast in person at a meeting
called for the purpose of voting on such approval; and
(b) By vote of either the Board of Trustees or a majority (as
that term is defined in the 1940 Act) of the outstanding
voting securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated by the Fund or
by the Advisor at any time upon sixty (60) days' written notice, without the
payment of any penalty, provided that termination by the Fund must be authorized
either by vote of the Board of Trustees or by vote of a majority of the
outstanding voting securities of the Fund. This Agreement will automatically
terminate in the event of its assignment (as that term is defined in the 1940
Act).
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by a written
instrument signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No material amendment of this Agreement
shall be effective until approved by vote of the holders of a majority of the
Fund's outstanding voting securities (as defined in the 1940 Act).
11. Miscellaneous. The captions in this Agreement 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. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of the Agreement shall not be affected
thereby. This Agreement shall be binding on, and shall inure to the benefit of,
the parties hereto and their respective successors.
12. Counterparts. This Agreement may be executed in counterparts by
the parties hereto, each of which shall constitute an original, and all of
which, together, shall constitute one Agreement.
13. Governing Law. This Agreement shall be construed in accordance
with, and governed by, the laws of the Commonwealth of Pennsylvania.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their officers designated below as of the day and year first
above written
Attest: QUAKER INVESTMENT TRUST
By:_____________________________ By:____________________________
Title: Title:
Attest: FIDUCIARY ASSET MANAGEMENT, INC.
By:_____________________________ By:____________________________
Title: Title:
-5-
<PAGE>
EXHIBIT A
12b-1 Fees
25% of management fee on amount of Fund shares sold for first 12 months
10% of management fee on such amount for succeeding 12 months
5% of management fee on such amount thereafter.
The foregoing shall be in effect with respect to Fund shares until such
shares are redeemed.
-6-
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT made effective as of the 1st day of November 1996, by and between
QUAKER INVESTMENT TRUST, an unincorporated business trust organized under the
laws of The Commonwealth of Massachusetts (the "Trust"), and QUAKER SECURITIES,
INC., a Pennsylvania corporation ("Distributor").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is so registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests in the
QUAKER ENHANCED EQUITY INDEX FUND (the "Fund") of the Trust, which Shares are
divided into two Classes of Investor and Institutional Shares, and has
registered the Shares under the Securities Act of 1933, as amended (the "1933
Act"), pursuant to a registration statement on Form N-1A (the "Registration
Statement"), including a prospectus (the "Prospectus") and a statement of
additional information (the "Statement of Additional Information"); and
WHEREAS, the Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1
under the 1940 Act (the "Distribution Plan") with respect to the Investor Shares
of the Fund, and may enter into related agreements providing for the
distribution of Investor Shares of the Fund; and
WHEREAS, Distributor has agreed to act as distributor of the Shares
of the Fund for the period of this Agreement;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of Distributor.
(a) The Trust hereby appoints Distributor its exclusive agent for the
distribution of the Shares of the Fund in jurisdictions wherein such
Shares may be legally offered for sale; provided, however, that the
Trust in its absolute discretion may issue Shares of the Fund in
connection with (i) the payment or reinvestment of dividends or
distributions; (ii) any merger or consolidation of the Trust or of the
Fund with any other investment company or trust or any personal holding
company, or the acquisition of the assets of any such
<PAGE>
entity or another fund of the Trust; or (iii) any offer of exchange
permitted by Section 11 of the 1940 Act.
(b) Distributor hereby accepts such appointment as exclusive agent for
the distribution of the Shares of the Fund and agrees that it will sell
the Shares as agent for the Trust at prices determined as hereinafter
provided and on the terms hereinafter set forth, all according to
applicable federal and state laws and regulations and to the Agreement
and Declaration of Trust of the Trust.
(c) Distributor may sell Shares of the Fund to or through qualified
securities dealers or others. Distributor will require each dealer or
other such party to conform to the provisions hereof, the Registration
Statement and the Prospectus and Statement of Additional Information,
and applicable law; and neither Distributor nor any such dealers or
others shall withhold the placing of purchase orders for Shares so as to
make a profit thereby.
(d) Distributor shall order Shares of the Fund from the Trust only to
the extent that it shall have received purchase orders therefor.
Distributor will not make, or authorize any dealers or others to make:
(i) any short sales of Shares; or (ii) any sales of Shares to any
Trustee or officer of the Trust or to any officer or director of
Distributor or of any corporation or association furnishing investment
advisory, managerial or supervisory services to the Trust, or to any
such corporation or association, unless such sales are made in
accordance with the then current Prospectus and Statement of Additional
Information.
(e) Distributor is not authorized by the Trust to give any information
or make any representations regarding the Shares of the Fund, except
such information or representations as are contained in the Registration
Statement or in the current Prospectus or Statement of Additional
Information of the Fund, or in advertisements and sales literature
prepared by or on behalf of the Trust for Distributor's use.
(f) Notwithstanding any provision hereof, the Trust may terminate,
suspend or withdraw the offering of Shares of the Fund whenever, in its
sole discretion, it deems such action to be desirable.
2. Offering Price of Shares. All Fund Shares sold under
this Agreement shall be sold at the public offering price per
Share in effect at the time of the sale, as described in the
then current Prospectus of the Fund. The excess, if any, of
the public offering price over the net asset value of the
Shares sold by Distributor as agent shall be retained by
Distributor as a commission for its services hereunder. Out
2
<PAGE>
of such commission Distributor may allow commissions or concessions to
dealers and may allow them to others in its discretion in such amounts
as Distributor shall determine from time to time. Except as may be
otherwise determined by Distributor from time to time, such commissions
or concessions shall be uniform to all dealers. At no time shall the
Trust receive less than the full net asset value of the Shares,
determined in the manner set forth in the then current Prospectus and
Statement of Additional Information. Distributor shall also be entitled
to such commissions and other fees and payments as may be authorized by
the Trustees of the Trust from time to time under the Distribution Plan.
3. Furnishing of Information. The Trust shall furnish to Distributor
copies of any information, financial statements and other documents that
Distributor may reasonably request for use in connection with the sale
of Shares of the Fund under this Agreement. The Trust shall also make
available a sufficient number of copies of the Fund's current Prospectus
and Statement of Additional Information for use by the Distributor.
4. Expenses.
(a) The Trust will pay or cause to be paid the following expenses: (i)
preparation, printing and distribution to shareholders of the Prospectus
and Statement of Additional Information; (ii) preparation, printing and
distribution of reports and other communications to shareholders; (iii)
registration of the Shares under the federal securities laws; (iv)
qualification of the Shares for sale in certain states; (v)
qualification of the Trust as a dealer or broker under state law as well
as qualification of the Trust as an entity authorized to do business in
certain states; (vi) maintaining facilities for the issue and transfer
of Shares; (vii) supplying information, prices and other data to be
furnished by the Trust under this Agreement; and (viii) certain taxes
applicable to the sale or delivery of the Shares or certificates
therefor.
(b) Except to the extent such expenses are borne by the Trust pursuant
to the Distribution Plan, Distributor will pay or cause to be paid the
following expenses: (i) payments to sales representatives of the
Distributor and to securities dealers and others in respect of the sale
of Shares of the Fund; (ii) payment of compensation to and expenses of
employees of the Distributor and any of its affiliates to the extent
they engage in or support distribution of Fund Shares or render
shareholder support services not otherwise provided by the Trust's
transfer agent, administrator, or custodian, including, but not limited
to, answering routine inquiries regarding the Fund, processing
shareholder transactions, and
3
<PAGE>
providing such other shareholder services as the Trust may reasonably
request; (iii) formulation and implementation of marketing and
promotional activities, including, but not limited to, direct mail
promotions and television, radio, newspaper, magazine and other mass
media advertising; (iv) preparation, printing and distribution of sales
literature and of Prospectuses and Statements of Additional Information
and reports of the Trust for recipients other than existing shareholders
of the Fund; and (v) obtaining such information, analyses and reports
with respect to marketing and promotional activities as the Trust may,
from time to time, reasonably request.
(c) Distributor in connection with the Distribution Plan shall prepare
and deliver reports to the Trustees of the Trust on a regular basis, at
least quarterly, showing the expenditures with respect to the Fund
pursuant to the Distribution Plan and the purposes therefor, as well as
any supplemental reports as the Trustees of the Trust, from time to
time, may reasonably request.
5. Repurchase of Shares. Distributor as agent and for the account
of the Trust may repurchase Shares of the Fund offered for resale to it
and redeem such Shares at their net asset value.
6. Indemnification by the Trust. In absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of Distributor, the Trust agrees to indemnify
Distributor and its officers and partners against any and all claims,
demands, liabilities and expenses that Distributor may incur under the
1933 Act, or common law or otherwise, arising out of or based upon any
alleged untrue statement of a material fact contained in the
Registration Statement or any Prospectus or Statement of Additional
Information of the Fund, or in any advertisements or sales literature
prepared by or on behalf of the Trust for Distributor's use, or any
omission to state a material fact therein, the omission of which makes
any statement contained therein misleading, unless such statement or
omission was made in reliance upon and in conformity with information
furnished to the Trust in connection therewith by or on behalf of
Distributor. Nothing herein contained shall require the Trust to take
any action contrary to any provision of its Agreement and Declaration of
Trust or any applicable statute or regulation.
7. Indemnification by Distributor. Distributor agrees to indemnify
the Trust and its officers and Trustees against any and all claims,
demands, liabilities and expenses which the Trust may incur under the
1933 Act, or common law or otherwise, arising out of or based upon (i)
any alleged untrue
4
<PAGE>
statement of a material fact contained in the Registration Statement or
any Prospectus or Statement of Additional Information of the Fund, or in
any advertisements or sales literature prepared by or on behalf of the
Trust for Distributor's use, or any omission to state a material fact
therein, the omission of which makes any statement contained therein
misleading, if such statement or omission was made in reliance upon and
in conformity with information furnished to the Trust in connection
therewith by or on behalf of Distributor; or (ii) any act or deed of
Distributor or its sales representatives, or securities dealers and
others authorized to sell Fund Shares hereunder, or their sales
representatives, that has not been authorized by the Trust in any
Prospectus or Statement of Additional Information of the Fund or by this
Agreement.
8. Term and Termination.
(a) This Agreement shall become effective on the date hereof. Unless
terminated as herein provided, this Agreement shall continue in effect
for one year from the date hereof and shall continue in full force and
effect for successive periods of one year thereafter, but only so long
as each such continuance is approved (i) by either the Trustees of the
Trust or by vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund and, in either event, (ii) by vote
of a majority of the Trustees of the Trust who are not parties to this
Agreement or interested persons (as defined in the 1940 Act) of any such
party and who have no direct or indirect financial interest in this
Agreement or in the operation of the Distribution Plan or in any
agreement related thereto ("Independent Trustees"), cast at a meeting
called for the purpose of voting on such approval.
(b) This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Trust or a majority of the
Independent Trustees or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund or by Distributor,
on sixty days' written notice to the other party.
(c) This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
9. Limitation of Liability. The obligations of the Trust hereunder shall
not be binding upon any of the Trustees, officers or shareholders of the
Trust personally, but shall bind only the assets and property of the
Trust. The term "Quaker Investment Trust" means and refers to the
Trustees from time to time serving under the Agreement and Declaration
of Trust of the Trust, a copy of which is on file with the Secretary of
the Commonwealth of Massachusetts. The execution
5
<PAGE>
and delivery of this Agreement has been authorized by the Trustees, and
this Agreement has been signed on behalf of the Trust by an authorized
officer of the Trust, acting as such and not individually, and neither
such authorization by such Trustees nor such execution and delivery by
such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Trust as provided in the
Agreement and Declaration of Trust.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.
QUAKER INVESTMENT TRUST
Attest:
By:________________________________
QUAKER ENHANCED EQUITY INDEX FUND
Attest:
By:________________________________
QUAKER SECURITIES, INC.
Attest:
By:________________________________
6
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT made effective as of the 1st day of November 1996, by and between
QUAKER INVESTMENT TRUST, an unincorporated business trust organized under the
laws of The Commonwealth of Massachusetts (the "Trust"), and QUAKER SECURITIES,
INC., a Pennsylvania corporation ("Distributor").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is so registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests in the
QUAKER CORE EQUITY FUND (the "Fund") of the Trust, which Shares are divided into
two Classes of Investor and Institutional Shares, and has registered the Shares
under the Securities Act of 1933, as amended (the "1933 Act"), pursuant to a
registration statement on Form N-1A (the "Registration Statement"), including a
prospectus (the "Prospectus") and a statement of additional information (the
"Statement of Additional Information"); and
WHEREAS, the Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1
under the 1940 Act (the "Distribution Plan") with respect to the Investor Shares
of the Fund, and may enter into related agreements providing for the
distribution of Investor Shares of the Fund; and
WHEREAS, Distributor has agreed to act as distributor of the Shares of the Fund
for the period of this Agreement;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of Distributor.
(a) The Trust hereby appoints Distributor its exclusive agent for the
distribution of the Shares of the Fund in jurisdictions wherein such
Shares may be legally offered for sale; provided, however, that the
Trust in its absolute discretion may issue Shares of the Fund in
connection with (i) the payment or reinvestment of dividends or
distributions; (ii) any merger or consolidation of the Trust or of the
Fund with any other investment company or trust or any personal holding
company, or the acquisition of the assets of any such
<PAGE>
entity or another fund of the Trust; or (iii) any offer of exchange
permitted by Section 11 of the 1940 Act.
(b) Distributor hereby accepts such appointment as exclusive agent for
the distribution of the Shares of the Fund and agrees that it will sell
the Shares as agent for the Trust at prices determined as hereinafter
provided and on the terms hereinafter set forth, all according to
applicable federal and state laws and regulations and to the Agreement
and Declaration of Trust of the Trust.
(c) Distributor may sell Shares of the Fund to or through qualified
securities dealers or others. Distributor will require each dealer or
other such party to conform to the provisions hereof, the Registration
Statement and the Prospectus and Statement of Additional Information,
and applicable law; and neither Distributor nor any such dealers or
others shall withhold the placing of purchase orders for Shares so as to
make a profit thereby.
(d) Distributor shall order Shares of the Fund from the Trust only to
the extent that it shall have received purchase orders therefor.
Distributor will not make, or authorize any dealers or others to make:
(i) any short sales of Shares; or (ii) any sales of Shares to any
Trustee or officer of the Trust or to any officer or director of
Distributor or of any corporation or association furnishing investment
advisory, managerial or supervisory services to the Trust, or to any
such corporation or association, unless such sales are made in
accordance with the then current Prospectus and Statement of Additional
Information.
(e) Distributor is not authorized by the Trust to give any information
or make any representations regarding the Shares of the Fund, except
such information or representations as are contained in the Registration
Statement or in the current Prospectus or Statement of Additional
Information of the Fund, or in advertisements and sales literature
prepared by or on behalf of the Trust for Distributor's use.
(f) Notwithstanding any provision hereof, the Trust may terminate,
suspend or withdraw the offering of Shares of the Fund whenever, in its
sole discretion, it deems such action to be desirable.
2. Offering Price of Shares. All Fund Shares sold under
this Agreement shall be sold at the public offering price per
Share in effect at the time of the sale, as described in the
then current Prospectus of the Fund. The excess, if any, of
the public offering price over the net asset value of the
Shares sold by Distributor as agent shall be retained by
Distributor as a commission for its services hereunder. Out
2
<PAGE>
of such commission Distributor may allow commissions or concessions to
dealers and may allow them to others in its discretion in such amounts
as Distributor shall determine from time to time. Except as may be
otherwise determined by Distributor from time to time, such commissions
or concessions shall be uniform to all dealers. At no time shall the
Trust receive less than the full net asset value of the Shares,
determined in the manner set forth in the then current Prospectus and
Statement of Additional Information. Distributor shall also be entitled
to such commissions and other fees and payments as may be authorized by
the Trustees of the Trust from time to time under the Distribution Plan.
3. Furnishing of Information. The Trust shall furnish to Distributor
copies of any information, financial statements and other documents that
Distributor may reasonably request for use in connection with the sale
of Shares of the Fund under this Agreement. The Trust shall also make
available a sufficient number of copies of the Fund's current Prospectus
and Statement of Additional Information for use by the Distributor.
4. Expenses.
(a) The Trust will pay or cause to be paid the following expenses: (i)
preparation, printing and distribution to shareholders of the Prospectus
and Statement of Additional Information; (ii) preparation, printing and
distribution of reports and other communications to shareholders; (iii)
registration of the Shares under the federal securities laws; (iv)
qualification of the Shares for sale in certain states; (v)
qualification of the Trust as a dealer or broker under state law as well
as qualification of the Trust as an entity authorized to do business in
certain states; (vi) maintaining facilities for the issue and transfer
of Shares; (vii) supplying information, prices and other data to be
furnished by the Trust under this Agreement; and (viii) certain taxes
applicable to the sale or delivery of the Shares or certificates
therefor.
(b) Except to the extent such expenses are borne by the Trust pursuant
to the Distribution Plan, Distributor will pay or cause to be paid the
following expenses: (i) payments to sales representatives of the
Distributor and to securities dealers and others in respect of the sale
of Shares of the Fund; (ii) payment of compensation to and expenses of
employees of the Distributor and any of its affiliates to the extent
they engage in or support distribution of Fund Shares or render
shareholder support services not otherwise provided by the Trust's
transfer agent, administrator, or custodian, including, but not limited
to, answering routine inquiries regarding the Fund, processing
shareholder transactions, and
3
<PAGE>
providing such other shareholder services as the Trust may reasonably
request; (iii) formulation and implementation of marketing and
promotional activities, including, but not limited to, direct mail
promotions and television, radio, newspaper, magazine and other mass
media advertising; (iv) preparation, printing and distribution of sales
literature and of Prospectuses and Statements of Additional Information
and reports of the Trust for recipients other than existing shareholders
of the Fund; and (v) obtaining such information, analyses and reports
with respect to marketing and promotional activities as the Trust may,
from time to time, reasonably request.
(c) Distributor in connection with the Distribution Plan shall prepare
and deliver reports to the Trustees of the Trust on a regular basis, at
least quarterly, showing the expenditures with respect to the Fund
pursuant to the Distribution Plan and the purposes therefor, as well as
any supplemental reports as the Trustees of the Trust, from time to
time, may reasonably request.
5. Repurchase of Shares. Distributor as agent and for the account of
the Trust may repurchase Shares of the Fund offered for resale to it and
redeem such Shares at their net asset value.
6. Indemnification by the Trust. In absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of Distributor, the Trust agrees to indemnify
Distributor and its officers and partners against any and all claims,
demands, liabilities and expenses that Distributor may incur under the
1933 Act, or common law or otherwise, arising out of or based upon any
alleged untrue statement of a material fact contained in the
Registration Statement or any Prospectus or Statement of Additional
Information of the Fund, or in any advertisements or sales literature
prepared by or on behalf of the Trust for Distributor's use, or any
omission to state a material fact therein, the omission of which makes
any statement contained therein misleading, unless such statement or
omission was made in reliance upon and in conformity with information
furnished to the Trust in connection therewith by or on behalf of
Distributor. Nothing herein contained shall require the Trust to take
any action contrary to any provision of its Agreement and Declaration of
Trust or any applicable statute or regulation.
7. Indemnification by Distributor. Distributor agrees to indemnify the
Trust and its officers and Trustees against any and all claims, demands,
liabilities and expenses which the Trust may incur under the 1933 Act,
or common law or otherwise, arising out of or based upon (i) any alleged
untrue
4
<PAGE>
statement of a material fact contained in the Registration Statement or
any Prospectus or Statement of Additional Information of the Fund, or in
any advertisements or sales literature prepared by or on behalf of the
Trust for Distributor's use, or any omission to state a material fact
therein, the omission of which makes any statement contained therein
misleading, if such statement or omission was made in reliance upon and
in conformity with information furnished to the Trust in connection
therewith by or on behalf of Distributor; or (ii) any act or deed of
Distributor or its sales representatives, or securities dealers and
others authorized to sell Fund Shares hereunder, or their sales
representatives, that has not been authorized by the Trust in any
Prospectus or Statement of Additional Information of the Fund or by this
Agreement.
8. Term and Termination.
(a) This Agreement shall become effective on the date hereof. Unless
terminated as herein provided, this Agreement shall continue in effect
for one year from the date hereof and shall continue in full force and
effect for successive periods of one year thereafter, but only so long
as each such continuance is approved (i) by either the Trustees of the
Trust or by vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund and, in either event, (ii) by vote
of a majority of the Trustees of the Trust who are not parties to this
Agreement or interested persons (as defined in the 1940 Act) of any such
party and who have no direct or indirect financial interest in this
Agreement or in the operation of the Distribution Plan or in any
agreement related thereto ("Independent Trustees"), cast at a meeting
called for the purpose of voting on such approval.
(b) This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Trust or a majority of the
Independent Trustees or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund or by Distributor,
on sixty days' written notice to the other party.
(c) This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
9. Limitation of Liability. The obligations of the Trust hereunder shall
not be binding upon any of the Trustees, officers or shareholders of the
Trust personally, but shall bind only the assets and property of the
Trust. The term "Quaker Investment Trust" means and refers to the
Trustees from time to time serving under the Agreement and Declaration
of Trust of the Trust, a copy of which is on file with the Secretary of
the Commonwealth of Massachusetts. The execution
5
<PAGE>
and delivery of this Agreement has been authorized by the Trustees, and
this Agreement has been signed on behalf of the Trust by an authorized
officer of the Trust, acting as such and not individually, and neither
such authorization by such Trustees nor such execution and delivery by
such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Trust as provided in the
Agreement and Declaration of Trust.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.
QUAKER INVESTMENT TRUST
Attest:
By:________________________________
QUAKER CORE EQUITY FUND
Attest:
By:________________________________
QUAKER SECURITIES, INC.
Attest:
By:________________________________
6
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT made effective as of the 1st day of November 1996, by and between
QUAKER INVESTMENT TRUST, an unincorporated business trust organized under the
laws of The Commonwealth of Massachusetts (the "Trust"), and QUAKER SECURITIES,
INC., a Pennsylvania corporation ("Distributor").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is so registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests in the
QUAKER AGGRESSIVE GROWTH FUND (the "Fund") of the Trust, which Shares are
divided into two Classes of Investor and Institutional Shares, and has
registered the Shares under the Securities Act of 1933, as amended (the "1933
Act"), pursuant to a registration statement on Form N-1A (the "Registration
Statement"), including a prospectus (the "Prospectus") and a statement of
additional information (the "Statement of Additional Information"); and
WHEREAS, the Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1
under the 1940 Act (the "Distribution Plan") with respect to the Investor Shares
of the Fund, and may enter into related agreements providing for the
distribution of Investor Shares of the Fund; and
WHEREAS, Distributor has agreed to act as distributor of the Shares
of the Fund for the period of this Agreement;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of Distributor.
(a) The Trust hereby appoints Distributor its exclusive agent for the
distribution of the Shares of the Fund in jurisdictions wherein such
Shares may be legally offered for sale; provided, however, that the
Trust in its absolute discretion may issue Shares of the Fund in
connection with (i) the payment or reinvestment of dividends or
distributions; (ii) any merger or consolidation of the Trust or of the
Fund with any other investment company or trust or any personal holding
company, or the acquisition of the assets of any such
<PAGE>
entity or another fund of the Trust; or (iii) any offer of exchange
permitted by Section 11 of the 1940 Act.
(b) Distributor hereby accepts such appointment as exclusive agent for
the distribution of the Shares of the Fund and agrees that it will sell
the Shares as agent for the Trust at prices determined as hereinafter
provided and on the terms hereinafter set forth, all according to
applicable federal and state laws and regulations and to the Agreement
and Declaration of Trust of the Trust.
(c) Distributor may sell Shares of the Fund to or through qualified
securities dealers or others. Distributor will require each dealer or
other such party to conform to the provisions hereof, the Registration
Statement and the Prospectus and Statement of Additional Information,
and applicable law; and neither Distributor nor any such dealers or
others shall withhold the placing of purchase orders for Shares so as to
make a profit thereby.
(d) Distributor shall order Shares of the Fund from the Trust only to
the extent that it shall have received purchase orders therefor.
Distributor will not make, or authorize any dealers or others to make:
(i) any short sales of Shares; or (ii) any sales of Shares to any
Trustee or officer of the Trust or to any officer or director of
Distributor or of any corporation or association furnishing investment
advisory, managerial or supervisory services to the Trust, or to any
such corporation or association, unless such sales are made in
accordance with the then current Prospectus and Statement of Additional
Information.
(e) Distributor is not authorized by the Trust to give any information
or make any representations regarding the Shares of the Fund, except
such information or representations as are contained in the Registration
Statement or in the current Prospectus or Statement of Additional
Information of the Fund, or in advertisements and sales literature
prepared by or on behalf of the Trust for Distributor's use.
(f) Notwithstanding any provision hereof, the Trust may terminate,
suspend or withdraw the offering of Shares of the Fund whenever, in its
sole discretion, it deems such action to be desirable.
2. Offering Price of Shares. All Fund Shares sold under
this Agreement shall be sold at the public offering price per
Share in effect at the time of the sale, as described in the
then current Prospectus of the Fund. The excess, if any, of
the public offering price over the net asset value of the
Shares sold by Distributor as agent shall be retained by
Distributor as a commission for its services hereunder. Out
2
<PAGE>
of such commission Distributor may allow commissions or concessions to
dealers and may allow them to others in its discretion in such amounts
as Distributor shall determine from time to time. Except as may be
otherwise determined by Distributor from time to time, such commissions
or concessions shall be uniform to all dealers. At no time shall the
Trust receive less than the full net asset value of the Shares,
determined in the manner set forth in the then current Prospectus and
Statement of Additional Information. Distributor shall also be entitled
to such commissions and other fees and payments as may be authorized by
the Trustees of the Trust from time to time under the Distribution Plan.
3. Furnishing of Information. The Trust shall furnish to Distributor
copies of any information, financial statements and other documents that
Distributor may reasonably request for use in connection with the sale
of Shares of the Fund under this Agreement. The Trust shall also make
available a sufficient number of copies of the Fund's current Prospectus
and Statement of Additional Information for use by the Distributor.
4. Expenses.
(a) The Trust will pay or cause to be paid the following expenses: (i)
preparation, printing and distribution to shareholders of the Prospectus
and Statement of Additional Information; (ii) preparation, printing and
distribution of reports and other communications to shareholders; (iii)
registration of the Shares under the federal securities laws; (iv)
qualification of the Shares for sale in certain states; (v)
qualification of the Trust as a dealer or broker under state law as well
as qualification of the Trust as an entity authorized to do business in
certain states; (vi) maintaining facilities for the issue and transfer
of Shares; (vii) supplying information, prices and other data to be
furnished by the Trust under this Agreement; and (viii) certain taxes
applicable to the sale or delivery of the Shares or certificates
therefor.
(b) Except to the extent such expenses are borne by the Trust pursuant
to the Distribution Plan, Distributor will pay or cause to be paid the
following expenses: (i) payments to sales representatives of the
Distributor and to securities dealers and others in respect of the sale
of Shares of the Fund; (ii) payment of compensation to and expenses of
employees of the Distributor and any of its affiliates to the extent
they engage in or support distribution of Fund Shares or render
shareholder support services not otherwise provided by the Trust's
transfer agent, administrator, or custodian, including, but not limited
to, answering routine inquiries regarding the Fund, processing
shareholder transactions, and
3
<PAGE>
providing such other shareholder services as the Trust may reasonably
request; (iii) formulation and implementation of marketing and
promotional activities, including, but not limited to, direct mail
promotions and television, radio, newspaper, magazine and other mass
media advertising; (iv) preparation, printing and distribution of sales
literature and of Prospectuses and Statements of Additional Information
and reports of the Trust for recipients other than existing shareholders
of the Fund; and (v) obtaining such information, analyses and reports
with respect to marketing and promotional activities as the Trust may,
from time to time, reasonably request.
(c) Distributor in connection with the Distribution Plan shall prepare
and deliver reports to the Trustees of the Trust on a regular basis, at
least quarterly, showing the expenditures with respect to the Fund
pursuant to the Distribution Plan and the purposes therefor, as well as
any supplemental reports as the Trustees of the Trust, from time to
time, may reasonably request.
5. Repurchase of Shares. Distributor as agent and for the account
of the Trust may repurchase Shares of the Fund offered for resale to it
and redeem such Shares at their net asset value.
6. Indemnification by the Trust. In absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of Distributor, the Trust agrees to indemnify
Distributor and its officers and partners against any and all claims,
demands, liabilities and expenses that Distributor may incur under the
1933 Act, or common law or otherwise, arising out of or based upon any
alleged untrue statement of a material fact contained in the
Registration Statement or any Prospectus or Statement of Additional
Information of the Fund, or in any advertisements or sales literature
prepared by or on behalf of the Trust for Distributor's use, or any
omission to state a material fact therein, the omission of which makes
any statement contained therein misleading, unless such statement or
omission was made in reliance upon and in conformity with information
furnished to the Trust in connection therewith by or on behalf of
Distributor. Nothing herein contained shall require the Trust to take
any action contrary to any provision of its Agreement and Declaration of
Trust or any applicable statute or regulation.
7. Indemnification by Distributor. Distributor agrees to
indemnify the Trust and its officers and Trustees against any
and all claims, demands, liabilities and expenses which the
Trust may incur under the 1933 Act, or common law or
otherwise, arising out of or based upon (i) any alleged untrue
4
<PAGE>
statement of a material fact contained in the Registration Statement or
any Prospectus or Statement of Additional Information of the Fund, or in
any advertisements or sales literature prepared by or on behalf of the
Trust for Distributor's use, or any omission to state a material fact
therein, the omission of which makes any statement contained therein
misleading, if such statement or omission was made in reliance upon and
in conformity with information furnished to the Trust in connection
therewith by or on behalf of Distributor; or (ii) any act or deed of
Distributor or its sales representatives, or securities dealers and
others authorized to sell Fund Shares hereunder, or their sales
representatives, that has not been authorized by the Trust in any
Prospectus or Statement of Additional Information of the Fund or by this
Agreement.
8. Term and Termination.
(a) This Agreement shall become effective on the date hereof. Unless
terminated as herein provided, this Agreement shall continue in effect
for one year from the date hereof and shall continue in full force and
effect for successive periods of one year thereafter, but only so long
as each such continuance is approved (i) by either the Trustees of the
Trust or by vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund and, in either event, (ii) by vote
of a majority of the Trustees of the Trust who are not parties to this
Agreement or interested persons (as defined in the 1940 Act) of any such
party and who have no direct or indirect financial interest in this
Agreement or in the operation of the Distribution Plan or in any
agreement related thereto ("Independent Trustees"), cast at a meeting
called for the purpose of voting on such approval.
(b) This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Trust or a majority of the
Independent Trustees or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund or by Distributor,
on sixty days' written notice to the other party.
(c) This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
9. Limitation of Liability. The obligations of the Trust hereunder shall
not be binding upon any of the Trustees, officers or shareholders of the
Trust personally, but shall bind only the assets and property of the
Trust. The term "Quaker Investment Trust" means and refers to the
Trustees from time to time serving under the Agreement and Declaration
of Trust of the Trust, a copy of which is on file with the Secretary of
the Commonwealth of Massachusetts. The execution
5
<PAGE>
and delivery of this Agreement has been authorized by the Trustees, and
this Agreement has been signed on behalf of the Trust by an authorized
officer of the Trust, acting as such and not individually, and neither
such authorization by such Trustees nor such execution and delivery by
such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Trust as provided in the
Agreement and Declaration of Trust.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.
QUAKER INVESTMENT TRUST
Attest:
By:________________________________
QUAKER AGGRESSIVE GROWTH FUND
Attest:
By:________________________________
QUAKER SECURITIES, INC.
Attest:
By:________________________________
6
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT made effective as of the 1st day of November 1996, by and between
QUAKER INVESTMENT TRUST, an unincorporated business trust organized under the
laws of The Commonwealth of Massachusetts (the "Trust"), and QUAKER SECURITIES,
INC., a Pennsylvania corporation ("Distributor").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is so registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests in the
QUAKER AGGRESSIVE GROWTH FUND (the "Fund") of the Trust, which Shares are
divided into two Classes of Investor and Institutional Shares, and has
registered the Shares under the Securities Act of 1933, as amended (the "1933
Act"), pursuant to a registration statement on Form N-1A (the "Registration
Statement"), including a prospectus (the "Prospectus") and a statement of
additional information (the "Statement of Additional Information"); and
WHEREAS, the Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1
under the 1940 Act (the "Distribution Plan") with respect to the Investor Shares
of the Fund, and may enter into related agreements providing for the
distribution of Investor Shares of the Fund; and
WHEREAS, Distributor has agreed to act as distributor of the Shares
of the Fund for the period of this Agreement;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of Distributor.
(a) The Trust hereby appoints Distributor its exclusive agent for the
distribution of the Shares of the Fund in jurisdictions wherein such
Shares may be legally offered for sale; provided, however, that the
Trust in its absolute discretion may issue Shares of the Fund in
connection with (i) the payment or reinvestment of dividends or
distributions; (ii) any merger or consolidation of the Trust or of the
Fund with any other investment company or trust or any personal holding
company, or the acquisition of the assets of any such
<PAGE>
entity or another fund of the Trust; or (iii) any offer of exchange
permitted by Section 11 of the 1940 Act.
(b) Distributor hereby accepts such appointment as exclusive agent for
the distribution of the Shares of the Fund and agrees that it will sell
the Shares as agent for the Trust at prices determined as hereinafter
provided and on the terms hereinafter set forth, all according to
applicable federal and state laws and regulations and to the Agreement
and Declaration of Trust of the Trust.
(c) Distributor may sell Shares of the Fund to or through qualified
securities dealers or others. Distributor will require each dealer or
other such party to conform to the provisions hereof, the Registration
Statement and the Prospectus and Statement of Additional Information,
and applicable law; and neither Distributor nor any such dealers or
others shall withhold the placing of purchase orders for Shares so as to
make a profit thereby.
(d) Distributor shall order Shares of the Fund from the Trust only to
the extent that it shall have received purchase orders therefor.
Distributor will not make, or authorize any dealers or others to make:
(i) any short sales of Shares; or (ii) any sales of Shares to any
Trustee or officer of the Trust or to any officer or director of
Distributor or of any corporation or association furnishing investment
advisory, managerial or supervisory services to the Trust, or to any
such corporation or association, unless such sales are made in
accordance with the then current Prospectus and Statement of Additional
Information.
(e) Distributor is not authorized by the Trust to give any information
or make any representations regarding the Shares of the Fund, except
such information or representations as are contained in the Registration
Statement or in the current Prospectus or Statement of Additional
Information of the Fund, or in advertisements and sales literature
prepared by or on behalf of the Trust for Distributor's use.
(f) Notwithstanding any provision hereof, the Trust may terminate,
suspend or withdraw the offering of Shares of the Fund whenever, in its
sole discretion, it deems such action to be desirable.
2. Offering Price of Shares. All Fund Shares sold under
this Agreement shall be sold at the public offering price per
Share in effect at the time of the sale, as described in the
then current Prospectus of the Fund. The excess, if any, of
the public offering price over the net asset value of the
Shares sold by Distributor as agent shall be retained by
Distributor as a commission for its services hereunder. Out
2
<PAGE>
of such commission Distributor may allow commissions or concessions to
dealers and may allow them to others in its discretion in such amounts
as Distributor shall determine from time to time. Except as may be
otherwise determined by Distributor from time to time, such commissions
or concessions shall be uniform to all dealers. At no time shall the
Trust receive less than the full net asset value of the Shares,
determined in the manner set forth in the then current Prospectus and
Statement of Additional Information. Distributor shall also be entitled
to such commissions and other fees and payments as may be authorized by
the Trustees of the Trust from time to time under the Distribution Plan.
3. Furnishing of Information. The Trust shall furnish to Distributor
copies of any information, financial statements and other documents that
Distributor may reasonably request for use in connection with the sale
of Shares of the Fund under this Agreement. The Trust shall also make
available a sufficient number of copies of the Fund's current Prospectus
and Statement of Additional Information for use by the Distributor.
4. Expenses.
(a) The Trust will pay or cause to be paid the following expenses: (i)
preparation, printing and distribution to shareholders of the Prospectus
and Statement of Additional Information; (ii) preparation, printing and
distribution of reports and other communications to shareholders; (iii)
registration of the Shares under the federal securities laws; (iv)
qualification of the Shares for sale in certain states; (v)
qualification of the Trust as a dealer or broker under state law as well
as qualification of the Trust as an entity authorized to do business in
certain states; (vi) maintaining facilities for the issue and transfer
of Shares; (vii) supplying information, prices and other data to be
furnished by the Trust under this Agreement; and (viii) certain taxes
applicable to the sale or delivery of the Shares or certificates
therefor.
(b) Except to the extent such expenses are borne by the Trust pursuant
to the Distribution Plan, Distributor will pay or cause to be paid the
following expenses: (i) payments to sales representatives of the
Distributor and to securities dealers and others in respect of the sale
of Shares of the Fund; (ii) payment of compensation to and expenses of
employees of the Distributor and any of its affiliates to the extent
they engage in or support distribution of Fund Shares or render
shareholder support services not otherwise provided by the Trust's
transfer agent, administrator, or custodian, including, but not limited
to, answering routine inquiries regarding the Fund, processing
shareholder transactions, and
3
<PAGE>
providing such other shareholder services as the Trust may reasonably
request; (iii) formulation and implementation of marketing and
promotional activities, including, but not limited to, direct mail
promotions and television, radio, newspaper, magazine and other mass
media advertising; (iv) preparation, printing and distribution of sales
literature and of Prospectuses and Statements of Additional Information
and reports of the Trust for recipients other than existing shareholders
of the Fund; and (v) obtaining such information, analyses and reports
with respect to marketing and promotional activities as the Trust may,
from time to time, reasonably request.
(c) Distributor in connection with the Distribution Plan shall prepare
and deliver reports to the Trustees of the Trust on a regular basis, at
least quarterly, showing the expenditures with respect to the Fund
pursuant to the Distribution Plan and the purposes therefor, as well as
any supplemental reports as the Trustees of the Trust, from time to
time, may reasonably request.
5. Repurchase of Shares. Distributor as agent and for the account
of the Trust may repurchase Shares of the Fund offered for resale to it
and redeem such Shares at their net asset value.
6. Indemnification by the Trust. In absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of Distributor, the Trust agrees to indemnify
Distributor and its officers and partners against any and all claims,
demands, liabilities and expenses that Distributor may incur under the
1933 Act, or common law or otherwise, arising out of or based upon any
alleged untrue statement of a material fact contained in the
Registration Statement or any Prospectus or Statement of Additional
Information of the Fund, or in any advertisements or sales literature
prepared by or on behalf of the Trust for Distributor's use, or any
omission to state a material fact therein, the omission of which makes
any statement contained therein misleading, unless such statement or
omission was made in reliance upon and in conformity with information
furnished to the Trust in connection therewith by or on behalf of
Distributor. Nothing herein contained shall require the Trust to take
any action contrary to any provision of its Agreement and Declaration of
Trust or any applicable statute or regulation.
7. Indemnification by Distributor. Distributor agrees to
indemnify the Trust and its officers and Trustees against any
and all claims, demands, liabilities and expenses which the
Trust may incur under the 1933 Act, or common law or
otherwise, arising out of or based upon (i) any alleged untrue
4
<PAGE>
statement of a material fact contained in the Registration Statement or
any Prospectus or Statement of Additional Information of the Fund, or in
any advertisements or sales literature prepared by or on behalf of the
Trust for Distributor's use, or any omission to state a material fact
therein, the omission of which makes any statement contained therein
misleading, if such statement or omission was made in reliance upon and
in conformity with information furnished to the Trust in connection
therewith by or on behalf of Distributor; or (ii) any act or deed of
Distributor or its sales representatives, or securities dealers and
others authorized to sell Fund Shares hereunder, or their sales
representatives, that has not been authorized by the Trust in any
Prospectus or Statement of Additional Information of the Fund or by this
Agreement.
8. Term and Termination.
(a) This Agreement shall become effective on the date hereof. Unless
terminated as herein provided, this Agreement shall continue in effect
for one year from the date hereof and shall continue in full force and
effect for successive periods of one year thereafter, but only so long
as each such continuance is approved (i) by either the Trustees of the
Trust or by vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund and, in either event, (ii) by vote
of a majority of the Trustees of the Trust who are not parties to this
Agreement or interested persons (as defined in the 1940 Act) of any such
party and who have no direct or indirect financial interest in this
Agreement or in the operation of the Distribution Plan or in any
agreement related thereto ("Independent Trustees"), cast at a meeting
called for the purpose of voting on such approval.
(b) This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Trust or a majority of the
Independent Trustees or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund or by Distributor,
on sixty days' written notice to the other party.
(c) This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
9. Limitation of Liability. The obligations of the Trust hereunder shall
not be binding upon any of the Trustees, officers or shareholders of the
Trust personally, but shall bind only the assets and property of the
Trust. The term "Quaker Investment Trust" means and refers to the
Trustees from time to time serving under the Agreement and Declaration
of Trust of the Trust, a copy of which is on file with the Secretary of
the Commonwealth of Massachusetts. The execution
5
<PAGE>
and delivery of this Agreement has been authorized by the Trustees, and
this Agreement has been signed on behalf of the Trust by an authorized
officer of the Trust, acting as such and not individually, and neither
such authorization by such Trustees nor such execution and delivery by
such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Trust as provided in the
Agreement and Declaration of Trust.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.
QUAKER INVESTMENT TRUST
Attest:
By:________________________________
QUAKER SMALL CAP VALUE FUND
Attest:
By:________________________________
QUAKER SECURITIES, INC.
Attest:
By:________________________________
6
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT made effective as of the 1st day of November 1996, by and between
QUAKER INVESTMENT TRUST, an unincorporated business trust organized under the
laws of The Commonwealth of Massachusetts (the "Trust"), and QUAKER SECURITIES,
INC., a Pennsylvania corporation ("Distributor").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is so registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests in the
QUAKER SECTOR ROTATION FUND (the "Fund") of the Trust, which Shares are divided
into two Classes of Investor and Institutional Shares, and has registered the
Shares under the Securities Act of 1933, as amended (the "1933 Act"), pursuant
to a registration statement on Form N-1A (the "Registration Statement"),
including a prospectus (the "Prospectus") and a statement of additional
information (the "Statement of Additional Information"); and
WHEREAS, the Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1
under the 1940 Act (the "Distribution Plan") with respect to the Investor Shares
of the Fund, and may enter into related agreements providing for the
distribution of Investor Shares of the Fund; and
WHEREAS, Distributor has agreed to act as distributor of the Shares
of the Fund for the period of this Agreement;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of Distributor.
(a) The Trust hereby appoints Distributor its exclusive agent for the
distribution of the Shares of the Fund in jurisdictions wherein such
Shares may be legally offered for sale; provided, however, that the
Trust in its absolute discretion may issue Shares of the Fund in
connection with (i) the payment or reinvestment of dividends or
distributions; (ii) any merger or consolidation of the Trust or of the
Fund with any other investment company or trust or any personal holding
company, or the acquisition of the assets of any such
<PAGE>
entity or another fund of the Trust; or (iii) any offer of exchange
permitted by Section 11 of the 1940 Act.
(b) Distributor hereby accepts such appointment as exclusive agent for
the distribution of the Shares of the Fund and agrees that it will sell
the Shares as agent for the Trust at prices determined as hereinafter
provided and on the terms hereinafter set forth, all according to
applicable federal and state laws and regulations and to the Agreement
and Declaration of Trust of the Trust.
(c) Distributor may sell Shares of the Fund to or through qualified
securities dealers or others. Distributor will require each dealer or
other such party to conform to the provisions hereof, the Registration
Statement and the Prospectus and Statement of Additional Information,
and applicable law; and neither Distributor nor any such dealers or
others shall withhold the placing of purchase orders for Shares so as to
make a profit thereby.
(d) Distributor shall order Shares of the Fund from the Trust only to
the extent that it shall have received purchase orders therefor.
Distributor will not make, or authorize any dealers or others to make:
(i) any short sales of Shares; or (ii) any sales of Shares to any
Trustee or officer of the Trust or to any officer or director of
Distributor or of any corporation or association furnishing investment
advisory, managerial or supervisory services to the Trust, or to any
such corporation or association, unless such sales are made in
accordance with the then current Prospectus and Statement of Additional
Information.
(e) Distributor is not authorized by the Trust to give any information
or make any representations regarding the Shares of the Fund, except
such information or representations as are contained in the Registration
Statement or in the current Prospectus or Statement of Additional
Information of the Fund, or in advertisements and sales literature
prepared by or on behalf of the Trust for Distributor's use.
(f) Notwithstanding any provision hereof, the Trust may terminate,
suspend or withdraw the offering of Shares of the Fund whenever, in its
sole discretion, it deems such action to be desirable.
2. Offering Price of Shares. All Fund Shares sold under
this Agreement shall be sold at the public offering price per
Share in effect at the time of the sale, as described in the
then current Prospectus of the Fund. The excess, if any, of
the public offering price over the net asset value of the
Shares sold by Distributor as agent shall be retained by
Distributor as a commission for its services hereunder. Out
2
<PAGE>
of such commission Distributor may allow commissions or concessions to
dealers and may allow them to others in its discretion in such amounts
as Distributor shall determine from time to time. Except as may be
otherwise determined by Distributor from time to time, such commissions
or concessions shall be uniform to all dealers. At no time shall the
Trust receive less than the full net asset value of the Shares,
determined in the manner set forth in the then current Prospectus and
Statement of Additional Information. Distributor shall also be entitled
to such commissions and other fees and payments as may be authorized by
the Trustees of the Trust from time to time under the Distribution Plan.
3. Furnishing of Information. The Trust shall furnish to Distributor
copies of any information, financial statements and other documents that
Distributor may reasonably request for use in connection with the sale
of Shares of the Fund under this Agreement. The Trust shall also make
available a sufficient number of copies of the Fund's current Prospectus
and Statement of Additional Information for use by the Distributor.
4. Expenses.
(a) The Trust will pay or cause to be paid the following expenses: (i)
preparation, printing and distribution to shareholders of the Prospectus
and Statement of Additional Information; (ii) preparation, printing and
distribution of reports and other communications to shareholders; (iii)
registration of the Shares under the federal securities laws; (iv)
qualification of the Shares for sale in certain states; (v)
qualification of the Trust as a dealer or broker under state law as well
as qualification of the Trust as an entity authorized to do business in
certain states; (vi) maintaining facilities for the issue and transfer
of Shares; (vii) supplying information, prices and other data to be
furnished by the Trust under this Agreement; and (viii) certain taxes
applicable to the sale or delivery of the Shares or certificates
therefor.
(b) Except to the extent such expenses are borne by the Trust pursuant
to the Distribution Plan, Distributor will pay or cause to be paid the
following expenses: (i) payments to sales representatives of the
Distributor and to securities dealers and others in respect of the sale
of Shares of the Fund; (ii) payment of compensation to and expenses of
employees of the Distributor and any of its affiliates to the extent
they engage in or support distribution of Fund Shares or render
shareholder support services not otherwise provided by the Trust's
transfer agent, administrator, or custodian, including, but not limited
to, answering routine inquiries regarding the Fund, processing
shareholder transactions, and
3
<PAGE>
providing such other shareholder services as the Trust may reasonably
request; (iii) formulation and implementation of marketing and
promotional activities, including, but not limited to, direct mail
promotions and television, radio, newspaper, magazine and other mass
media advertising; (iv) preparation, printing and distribution of sales
literature and of Prospectuses and Statements of Additional Information
and reports of the Trust for recipients other than existing shareholders
of the Fund; and (v) obtaining such information, analyses and reports
with respect to marketing and promotional activities as the Trust may,
from time to time, reasonably request.
(c) Distributor in connection with the Distribution Plan shall prepare
and deliver reports to the Trustees of the Trust on a regular basis, at
least quarterly, showing the expenditures with respect to the Fund
pursuant to the Distribution Plan and the purposes therefor, as well as
any supplemental reports as the Trustees of the Trust, from time to
time, may reasonably request.
5. Repurchase of Shares. Distributor as agent and for the account
of the Trust may repurchase Shares of the Fund offered for resale to it
and redeem such Shares at their net asset value.
6. Indemnification by the Trust. In absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of Distributor, the Trust agrees to indemnify
Distributor and its officers and partners against any and all claims,
demands, liabilities and expenses that Distributor may incur under the
1933 Act, or common law or otherwise, arising out of or based upon any
alleged untrue statement of a material fact contained in the
Registration Statement or any Prospectus or Statement of Additional
Information of the Fund, or in any advertisements or sales literature
prepared by or on behalf of the Trust for Distributor's use, or any
omission to state a material fact therein, the omission of which makes
any statement contained therein misleading, unless such statement or
omission was made in reliance upon and in conformity with information
furnished to the Trust in connection therewith by or on behalf of
Distributor. Nothing herein contained shall require the Trust to take
any action contrary to any provision of its Agreement and Declaration of
Trust or any applicable statute or regulation.
7. Indemnification by Distributor. Distributor agrees to
indemnify the Trust and its officers and Trustees against any
and all claims, demands, liabilities and expenses which the
Trust may incur under the 1933 Act, or common law or
otherwise, arising out of or based upon (i) any alleged untrue
4
<PAGE>
statement of a material fact contained in the Registration Statement or
any Prospectus or Statement of Additional Information of the Fund, or in
any advertisements or sales literature prepared by or on behalf of the
Trust for Distributor's use, or any omission to state a material fact
therein, the omission of which makes any statement contained therein
misleading, if such statement or omission was made in reliance upon and
in conformity with information furnished to the Trust in connection
therewith by or on behalf of Distributor; or (ii) any act or deed of
Distributor or its sales representatives, or securities dealers and
others authorized to sell Fund Shares hereunder, or their sales
representatives, that has not been authorized by the Trust in any
Prospectus or Statement of Additional Information of the Fund or by this
Agreement.
8. Term and Termination.
(a) This Agreement shall become effective on the date hereof. Unless
terminated as herein provided, this Agreement shall continue in effect
for one year from the date hereof and shall continue in full force and
effect for successive periods of one year thereafter, but only so long
as each such continuance is approved (i) by either the Trustees of the
Trust or by vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund and, in either event, (ii) by vote
of a majority of the Trustees of the Trust who are not parties to this
Agreement or interested persons (as defined in the 1940 Act) of any such
party and who have no direct or indirect financial interest in this
Agreement or in the operation of the Distribution Plan or in any
agreement related thereto ("Independent Trustees"), cast at a meeting
called for the purpose of voting on such approval.
(b) This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Trust or a majority of the
Independent Trustees or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund or by Distributor,
on sixty days' written notice to the other party.
(c) This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
9. Limitation of Liability. The obligations of the Trust hereunder shall
not be binding upon any of the Trustees, officers or shareholders of the
Trust personally, but shall bind only the assets and property of the
Trust. The term "Quaker Investment Trust" means and refers to the
Trustees from time to time serving under the Agreement and Declaration
of Trust of the Trust, a copy of which is on file with the Secretary of
the Commonwealth of Massachusetts. The execution
5
<PAGE>
and delivery of this Agreement has been authorized by the Trustees, and
this Agreement has been signed on behalf of the Trust by an authorized
officer of the Trust, acting as such and not individually, and neither
such authorization by such Trustees nor such execution and delivery by
such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Trust as provided in the
Agreement and Declaration of Trust.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.
QUAKER INVESTMENT TRUST
Attest:
By:________________________________
QUAKER SECTOR ROTATION FUND
Attest:
By:________________________________
QUAKER SECURITIES, INC.
Attest:
By:________________________________
6
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT made effective as of the 1st day of November 1996, by and between
QUAKER INVESTMENT TRUST, an unincorporated business trust organized under the
laws of The Commonwealth of Massachusetts (the "Trust"), and QUAKER SECURITIES,
INC., a Pennsylvania corporation ("Distributor").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is so registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests in the
QUAKER AGGRESSIVE GROWTH FUND (the "Fund") of the Trust, which Shares are
divided into two Classes of Investor and Institutional Shares, and has
registered the Shares under the Securities Act of 1933, as amended (the "1933
Act"), pursuant to a registration statement on Form N-1A (the "Registration
Statement"), including a prospectus (the "Prospectus") and a statement of
additional information (the "Statement of Additional Information"); and
WHEREAS, the Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1
under the 1940 Act (the "Distribution Plan") with respect to the Investor Shares
of the Fund, and may enter into related agreements providing for the
distribution of Investor Shares of the Fund; and
WHEREAS, Distributor has agreed to act as distributor of the Shares
of the Fund for the period of this Agreement;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of Distributor.
(a) The Trust hereby appoints Distributor its exclusive agent for the
distribution of the Shares of the Fund in jurisdictions wherein such
Shares may be legally offered for sale; provided, however, that the
Trust in its absolute discretion may issue Shares of the Fund in
connection with (i) the payment or reinvestment of dividends or
distributions; (ii) any merger or consolidation of the Trust or of the
Fund with any other investment company or trust or any personal holding
company, or the acquisition of the assets of any such
<PAGE>
entity or another fund of the Trust; or (iii) any offer of exchange
permitted by Section 11 of the 1940 Act.
(b) Distributor hereby accepts such appointment as exclusive agent for
the distribution of the Shares of the Fund and agrees that it will sell
the Shares as agent for the Trust at prices determined as hereinafter
provided and on the terms hereinafter set forth, all according to
applicable federal and state laws and regulations and to the Agreement
and Declaration of Trust of the Trust.
(c) Distributor may sell Shares of the Fund to or through qualified
securities dealers or others. Distributor will require each dealer or
other such party to conform to the provisions hereof, the Registration
Statement and the Prospectus and Statement of Additional Information,
and applicable law; and neither Distributor nor any such dealers or
others shall withhold the placing of purchase orders for Shares so as to
make a profit thereby.
(d) Distributor shall order Shares of the Fund from the Trust only to
the extent that it shall have received purchase orders therefor.
Distributor will not make, or authorize any dealers or others to make:
(i) any short sales of Shares; or (ii) any sales of Shares to any
Trustee or officer of the Trust or to any officer or director of
Distributor or of any corporation or association furnishing investment
advisory, managerial or supervisory services to the Trust, or to any
such corporation or association, unless such sales are made in
accordance with the then current Prospectus and Statement of Additional
Information.
(e) Distributor is not authorized by the Trust to give any information
or make any representations regarding the Shares of the Fund, except
such information or representations as are contained in the Registration
Statement or in the current Prospectus or Statement of Additional
Information of the Fund, or in advertisements and sales literature
prepared by or on behalf of the Trust for Distributor's use.
(f) Notwithstanding any provision hereof, the Trust may terminate,
suspend or withdraw the offering of Shares of the Fund whenever, in its
sole discretion, it deems such action to be desirable.
2. Offering Price of Shares. All Fund Shares sold under
this Agreement shall be sold at the public offering price per
Share in effect at the time of the sale, as described in the
then current Prospectus of the Fund. The excess, if any, of
the public offering price over the net asset value of the
Shares sold by Distributor as agent shall be retained by
Distributor as a commission for its services hereunder. Out
2
<PAGE>
of such commission Distributor may allow commissions or concessions to
dealers and may allow them to others in its discretion in such amounts
as Distributor shall determine from time to time. Except as may be
otherwise determined by Distributor from time to time, such commissions
or concessions shall be uniform to all dealers. At no time shall the
Trust receive less than the full net asset value of the Shares,
determined in the manner set forth in the then current Prospectus and
Statement of Additional Information. Distributor shall also be entitled
to such commissions and other fees and payments as may be authorized by
the Trustees of the Trust from time to time under the Distribution Plan.
3. Furnishing of Information. The Trust shall furnish to Distributor
copies of any information, financial statements and other documents that
Distributor may reasonably request for use in connection with the sale
of Shares of the Fund under this Agreement. The Trust shall also make
available a sufficient number of copies of the Fund's current Prospectus
and Statement of Additional Information for use by the Distributor.
4. Expenses.
(a) The Trust will pay or cause to be paid the following expenses: (i)
preparation, printing and distribution to shareholders of the Prospectus
and Statement of Additional Information; (ii) preparation, printing and
distribution of reports and other communications to shareholders; (iii)
registration of the Shares under the federal securities laws; (iv)
qualification of the Shares for sale in certain states; (v)
qualification of the Trust as a dealer or broker under state law as well
as qualification of the Trust as an entity authorized to do business in
certain states; (vi) maintaining facilities for the issue and transfer
of Shares; (vii) supplying information, prices and other data to be
furnished by the Trust under this Agreement; and (viii) certain taxes
applicable to the sale or delivery of the Shares or certificates
therefor.
(b) Except to the extent such expenses are borne by the Trust pursuant
to the Distribution Plan, Distributor will pay or cause to be paid the
following expenses: (i) payments to sales representatives of the
Distributor and to securities dealers and others in respect of the sale
of Shares of the Fund; (ii) payment of compensation to and expenses of
employees of the Distributor and any of its affiliates to the extent
they engage in or support distribution of Fund Shares or render
shareholder support services not otherwise provided by the Trust's
transfer agent, administrator, or custodian, including, but not limited
to, answering routine inquiries regarding the Fund, processing
shareholder transactions, and
3
<PAGE>
providing such other shareholder services as the Trust may reasonably
request; (iii) formulation and implementation of marketing and
promotional activities, including, but not limited to, direct mail
promotions and television, radio, newspaper, magazine and other mass
media advertising; (iv) preparation, printing and distribution of sales
literature and of Prospectuses and Statements of Additional Information
and reports of the Trust for recipients other than existing shareholders
of the Fund; and (v) obtaining such information, analyses and reports
with respect to marketing and promotional activities as the Trust may,
from time to time, reasonably request.
(c) Distributor in connection with the Distribution Plan shall prepare
and deliver reports to the Trustees of the Trust on a regular basis, at
least quarterly, showing the expenditures with respect to the Fund
pursuant to the Distribution Plan and the purposes therefor, as well as
any supplemental reports as the Trustees of the Trust, from time to
time, may reasonably request.
5. Repurchase of Shares. Distributor as agent and for the account
of the Trust may repurchase Shares of the Fund offered for resale to it
and redeem such Shares at their net asset value.
6. Indemnification by the Trust. In absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of Distributor, the Trust agrees to indemnify
Distributor and its officers and partners against any and all claims,
demands, liabilities and expenses that Distributor may incur under the
1933 Act, or common law or otherwise, arising out of or based upon any
alleged untrue statement of a material fact contained in the
Registration Statement or any Prospectus or Statement of Additional
Information of the Fund, or in any advertisements or sales literature
prepared by or on behalf of the Trust for Distributor's use, or any
omission to state a material fact therein, the omission of which makes
any statement contained therein misleading, unless such statement or
omission was made in reliance upon and in conformity with information
furnished to the Trust in connection therewith by or on behalf of
Distributor. Nothing herein contained shall require the Trust to take
any action contrary to any provision of its Agreement and Declaration of
Trust or any applicable statute or regulation.
7. Indemnification by Distributor. Distributor agrees to
indemnify the Trust and its officers and Trustees against any
and all claims, demands, liabilities and expenses which the
Trust may incur under the 1933 Act, or common law or
otherwise, arising out of or based upon (i) any alleged untrue
4
<PAGE>
statement of a material fact contained in the Registration Statement or
any Prospectus or Statement of Additional Information of the Fund, or in
any advertisements or sales literature prepared by or on behalf of the
Trust for Distributor's use, or any omission to state a material fact
therein, the omission of which makes any statement contained therein
misleading, if such statement or omission was made in reliance upon and
in conformity with information furnished to the Trust in connection
therewith by or on behalf of Distributor; or (ii) any act or deed of
Distributor or its sales representatives, or securities dealers and
others authorized to sell Fund Shares hereunder, or their sales
representatives, that has not been authorized by the Trust in any
Prospectus or Statement of Additional Information of the Fund or by this
Agreement.
8. Term and Termination.
(a) This Agreement shall become effective on the date hereof. Unless
terminated as herein provided, this Agreement shall continue in effect
for one year from the date hereof and shall continue in full force and
effect for successive periods of one year thereafter, but only so long
as each such continuance is approved (i) by either the Trustees of the
Trust or by vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund and, in either event, (ii) by vote
of a majority of the Trustees of the Trust who are not parties to this
Agreement or interested persons (as defined in the 1940 Act) of any such
party and who have no direct or indirect financial interest in this
Agreement or in the operation of the Distribution Plan or in any
agreement related thereto ("Independent Trustees"), cast at a meeting
called for the purpose of voting on such approval.
(b) This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Trust or a majority of the
Independent Trustees or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund or by Distributor,
on sixty days' written notice to the other party.
(c) This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
9. Limitation of Liability. The obligations of the Trust hereunder shall
not be binding upon any of the Trustees, officers or shareholders of the
Trust personally, but shall bind only the assets and property of the
Trust. The term "Quaker Investment Trust" means and refers to the
Trustees from time to time serving under the Agreement and Declaration
of Trust of the Trust, a copy of which is on file with the Secretary of
the Commonwealth of Massachusetts. The execution
5
<PAGE>
and delivery of this Agreement has been authorized by the Trustees, and
this Agreement has been signed on behalf of the Trust by an authorized
officer of the Trust, acting as such and not individually, and neither
such authorization by such Trustees nor such execution and delivery by
such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Trust as provided in the
Agreement and Declaration of Trust.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.
QUAKER INVESTMENT TRUST
Attest:
By:________________________________
QUAKER FIXED INCOME FUND
Attest:
By:________________________________
QUAKER SECURITIES, INC.
Attest:
By:________________________________
6
<PAGE>
FUND ACCOUNTING
DIVIDEND DISBURSING & TRANSFER AGENT,
AND COMPLIANCE ADMINISTRATION
AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of November 1996 by and
between QUAKER INVESTMENT TRUST, a Massachusetts business trust (the "Trust"),
and THE NOTTINGHAM COMPANY, INC., a North Carolina corporation (the
"Administrator").
WHEREAS, the Trust is an open-end management investment company of the series
type which is registered under the Investment Company Act of 1940 (the "1940
Act"); and
WHEREAS, the Administrator is in the business of providing administrative
services to investment companies.
NOW THEREFORE, the Trust and the Administrator do mutually promise and agree as
follows:
1. Employment. The Trust hereby employs Administrator to act as fund accountant,
dividend disbursing and transfer agent and fund administrator for each Fund of
the Trust, unless the Administrator and an individual Fund of the Trust
determine it is in the best interests of that individual Fund to negotiate a
separate Schedule of Compensation under Exhibit C. Administrator, at its own
expense, shall render the services and assume the obligations herein set forth
subject to being compensated therefore as herein provided.
2. Delivery of Documents. The Trust has furnished the Administrator with copies
properly certified or authenticated of each of the following:
(a) The Trust's Declaration of Trust, as filed with the State of
Massachusetts (such Declaration, as presently in effect and as it
shall from time to time be amended, is herein called the
"Declaration");
(b) The Trust's By-Laws (such By-Laws, as presently in effect and as
they shall from time to time be amended, are herein called the
"By-Laws");
(c) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Administrator and approving this Agreement;
and
(d) The Trust's Registration Statement on Form N-1A under the 1940
Act and under the Securities Act of 1933 as amended, (the "1933
Act"), including all exhibits, relating to shares of beneficial
interest of, and containing the Prospectus of, each Fund of the
Trust (herein called the "Shares") as filed with the Securities
and Exchange Commission and all amendments thereto.
The Trust will furnish the Administrator with copies, properly certified or
authenticated, of all amendments of or supplements to the foregoing.
3. Duties of the Administrator. Subject to the policies and direction of the
Trust's Board of Trustees, the Administrator will provide a continuous executive
management program and day to day supervision for each of the Trust's Funds.
Services to be provided shall be in accordance with the Trust's organizational
and registration documents as listed in paragraph 2 hereof and with the
Prospectus of each Fund of the Trust. The Administrator further agrees that it:
(a) Will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and will, in addition, conduct
its activities under this Agreement in accordance with
regulations of any other Federal and State agencies which may now
or in the future have jurisdiction over its activities;
(b) Will maintain, except as may be required to be maintained by
third parties hired by the Trust under Rule 31a-3 of the 1940
Act, the account books and records of the Trust and each Fund of
<PAGE>
the Trust as required by Rule 31a-1 of the 1940 Act and will
preserve such records in accordance with Rule 31a-2 of the 1940
Act;
(c) Will provide, at its expense the necessary non-executive
personnel and data processing equipment and software to perform
the Portfolio Accounting Services, Expense Accrual and Payment
Services, Fund Valuation and Financial Reporting Services, Tax
Accounting Services, Compliance Control Services Registration
Services, SEC Filing Services, Drafting of Board of Trustee
Meeting Minutes, and Proxy Material Services shown on Exhibit A
hereof;
(d) Will provide, at its expense the non-executive personnel and data
processing equipment and software necessary to perform the
Shareholder Servicing functions shown on Exhibit B hereof;
(e) Will provide, at its expense, certain executive personnel for the
Trust as may be agreed upon from time to time with the Board of
Trustees; and
(f) Will provide all office space and general office equipment
necessary for the activities of the Trust except as may be
provided by third parties pursuant to separate agreements with
the Trust.
Notwithstanding anything contained in this Agreement to the contrary, the
Administrator (including its directors, officers, employees and agents) shall
not be required to perform any of the duties of, assume any of the obligations
or expenses of, or be liable for any of the acts or omissions of, any investment
advisor of a Fund of the Trust or other third party subject to separate
agreements with the Trust. The Administrator shall not be responsible hereunder
for the administration of the Code of Ethics of the Trust which shall be under
the responsibility of the investment advisors, except insofar as the Code of
Ethics applies to the personnel of the Administrator. It is the express intent
of the parties hereto that the Administrator shall not have control over or be
responsible for the placement (except as specifically directed by a Shareholder
of the Trust), investment or reinvestment of the assets of any Fund of the
Trust. The Administrator may from time to time, subject to the approval of the
Trustees, obtain at its own expense the services of consultants or other third
parties to perform part or all of its duties hereunder, and such parties may be
affiliates of the Administrator.
4. Services Not Exclusive. The management and administrative services furnished
by the Administrator hereunder are not to be deemed exclusive, and the
Administrator shall be free to furnish similar services to others
so long as its services under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Administrator hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
6. Expenses. During the term of this Agreement, the Administrator will pay all
expenses incurred by it in connection with the performance of its obligations
under this Agreement. Notwithstanding the foregoing, the Trust shall pay the
expenses and costs of the following:
(a) Taxes;
(b) Brokerage fees and commissions with regard to portfolio
transaction of the Funds;
(c) Interest charges, fees and expenses of the custodian of the
Funds' portfolio securities;
(d) Fees and expenses of the Trust's dividend disbursing and transfer
agent, fund accounting agent and administrator, in accordance
with paragraph 7 herein;
(e) Costs, as may be allocable to and agreed upon in advance by the
Trustees and the Administrator, of all non-executive and clerical
personnel and all data processing equipment and software in
connection with the provision of fund accounting and
recordkeeping services and shareholder servicing functions as
contemplated herein;
(f) Auditing and legal expenses of the Trust;
(g) Cost of maintenance of the Trust's existence as a legal entity;
(h) Cost of special forms, stationery and telephone services (but not
telephone equipment) for the Trust;
(i) Compensation of Independent Trustees who are not interested
persons of the Trust as that term is defined by law;
(j) Costs of Trust meetings;
<PAGE>
(k) Federal and State registration fees and expenses;
(l) Costs of setting in type, printing and mailing Prospectuses,
reports and notices to existing shareholders;
(m) The Advisory fees payable to each Funds' Investment Advisor;
(o) Direct out-of-pocket costs in connection with Trust activities,
such as the costs of long distance telephone and wire charges,
postage and the printing of special forms and stationery, copying
charges, financial publications used in connection with Trust
activities, etc., and
(p) Other actual out-of-pocket expenses of the Administrator as may
be agreed upon in writing from time to time by the Administrator
and the Trustees.
7. Compensation. For the services provided and the expenses assumed by the
Administrator pursuant to this Agreement, the Trust will pay the Administrator
and the Administrator will accept as full compensation the administrative fees
and expenses as set forth on Exhibit C attached hereto. Special projects, not
included herein and requested in writing by the Trustees, shall be completed by
the Administrator and invoiced to the Trust as mutually agreed upon.
8.(a) Limitation of Liability. The Administrator shall not be liable for any
loss, damage or liability related to or resulting from the placement (except as
specifically directed by a Shareholder of the Trust), investment or reinvestment
of assets in any Fund of the Trust or the acts or omissions of any Fund's
investment advisor or any other third party subject to separate agreements with
the Trust. Further, the Administrator shall not be liable for any error of
judgment or mistake of law or for any loss or damage suffered by the Trust in
connection with the performance of this Agreement or any agreement with a third
party, except a loss resulting directly from (i) a breach of fiduciary duty on
the part of the Administrator with respect to the receipt of compensation for
services; or (ii) willful misfeasance, bad faith or gross negligence on the part
of the Administrator in the performance of its duties or from reckless disregard
by it of its duties under this Agreement.
8.(b) Indemnification of Administrator. Subject to the limitations set forth in
this Subsection 8(b), the Trust shall indemnify, defend and hold harmless (from
the assets of the Fund or Funds to which the conduct in question relates) the
Administrator against all loss, damage and liability, including but not limited
to amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable accountants' and counsel fees,
incurred by the Administrator 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, related to or resulting from this
Agreement or the performance of services hereunder, except with respect to any
matter as to which it has been determined that the loss, damage or liability is
a direct result of (i) a breach of fiduciary duty on the part of the
Administrator with respect to the receipt of compensation for services; or (ii)
willful misfeasance, bad faith or gross negligence on the part of the
Administrator in the performance of its duties or from reckless disregard by it
of its duties under this Agreement (either and both of the conduct described in
clauses (i) and (ii) above being referred to hereinafter as "Disabling
Conduct"). A determination that the Administrator is entitled to indemnification
may be made by (i) a final decision on the merits by a court or other body
before whom the proceeding was brought that the Administrator was not liable by
reason of Disabling Conduct, (ii) dismissal of a court action or an
administrative proceeding against the Administrator for insufficiency of
evidence of Disabling Conduct, or (iii) a reasonable determination, based upon a
review of the facts, that the Administrator was not liable by reason of
Disabling Conduct by, (a) vote of a majority of a quorum of Trustees who are
neither "interested persons" of the Trust as the quoted phrase is defined in
Section 2(a)(19) of the 1940 Act nor parties to the action, suit or other
proceeding on the same or similar grounds that is then or has been pending or
threatened (such quorum of such Trustees being referred to hereinafter as the
"Independent Trustees"), or (b) an independent legal counsel in a written
opinion. Expenses, including accountants' and counsel fees so incurred by the
Administrator (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), shall be paid from time to time by the
Fund or Funds to which the conduct in question related in advance of the final
disposition of any such action, suit or proceeding; provided, that the
Administrator shall have undertaken to repay the amounts so paid unless it is
ultimately determined that it is entitled to indemnification of such expenses
under this Subsection 8(b) and if (i) the Administrator shall have provided
security for such undertaking, (ii) the Trust shall be insured against losses
arising by reason of any lawful advances, or (iii) a majority of the Independent
Trustees, or an independent legal counsel in a written opinion, shall have
determined, based on a review of readily available facts (as opposed
<PAGE>
to a full trial-type inquiry), that there is reason to believe that the
Administrator ultimately will be entitled to indemnification hereunder.
As to any matter disposed of by a compromise payment by the Administrator
referred to in this Subsection 8(b), pursuant to a consent decree or otherwise,
no such indemnification either for said payment or for any other expenses shall
be provided unless such indemnification shall be approved (i) by a majority of
the Independent Trustees or (ii) by an independent legal counsel in a written
opinion. Approval by the Independent Trustees pursuant to clause (i) shall not
prevent the recovery from the Administrator of any amount paid to the
Administrator in accordance with either of such clauses as indemnification of
the Administrator is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief that the
Administrator's action was in or not opposed to 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 its conduct under the Agreement.
The right of indemnification provided by this Subsection 8(b) shall not be
exclusive of or affect any of the rights to which the Administrator may be
entitled. Nothing contained in this Subsection 8(b) shall affect any rights to
indemnification to which Trustees, officers or other personnel of the Trust, 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.
The Board of Trustees of the Trust shall take all such action as may be
necessary and appropriate to authorize the Trust hereunder to pay the
indemnification required by this Subsection 8(b) including, without limitation,
to the extent needed, to determine whether the Administrator is entitled to
indemnification hereunder and the reasonable amount of any indemnity due it
hereunder, or employ independent legal counsel for that purpose.
8.(c) The provisions contained in Section 8 shall survive the expiration or
other termination of this Agreement, shall be deemed to include and protect the
Administrator and its directors, officers, employees and agents and shall inure
to the benefit of its/their respective successors, assigns and personal
representatives.
9. Duration and Termination. This Agreement shall be continued, as amended and
restated as provided herein, effective as of the date first above written, and
shall continue in force and effect for a period of one year thereafter and shall
be continued on its terms from year to year thereafter unless sooner terminated
as permitted herein. This Agreement may be terminated at any time, without
payment of any penalty, by the Trust or the Administrator upon ninety days'
written notice to the other party.
10. Amendment. This Agreement may be amended by mutual written consent of the
parties. If, at any time during the existence of this Agreement, the Trust deems
it necessary or advisable in the best interests of the Trust that any amendment
of this Agreement be made in order to comply with the recommendations or
requirements of the Securities and Exchange Commission or state regulatory
agencies or other governmental authority, or to obtain any advantage under state
or federal laws, and shall notify the Administrator of the form of Amendment
which it deems necessary or advisable and the reasons therefor, and if the
Administrator declines to assent to such amendment, the Trust may terminate this
Agreement forthwith.
11. Notice. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be in writing, addressed or
delivered, or mailed postpaid to the other party at the principal place of
business of such party.
12. Construction. This Agreement shall be governed and enforced in accordance
with the laws of the State of North Carolina. If any provision of this
Agreement, or portion thereof, shall be determined to be void or unenforceable
by any court of competent jurisdiction, then such determination shall not affect
any other provision of this Agreement, or portion thereof, all of which other
provisions and portions thereof shall remain in full force and effect. If any
provision of this Agreement, or portion thereof, is capable of two
interpretations, one of which would render the provision, or portion thereof,
void and the other of which would render the provision, or portion thereof,
valid, then the provision, or portion thereof, shall have the meaning which
renders it valid.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their duly authorized officers effective as of the date indicated above.
QUAKER INVESTMENT TRUST
By:
(SEAL)
THE NOTTINGHAM COMPANY, INC.
By:
(SEAL)
<PAGE>
Exhibit A
FUND ACCOUNTING AND RECORDKEEPING SERVICES
Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date basis using security trade
information communicated from the investment manager on a timely basis.
(2) For each valuation date, obtain prices from a pricing source approved by
the Board of Trustees and apply those prices to the portfolio positions.
For those securities where market quotations are not readily available,
the Board of Trustees shall approve, in good faith, the method for
determining the fair market value for such securities.
(3) Identify interest and dividend accrual balances as of each valuation
date and calculate gross earnings on investments for the accounting
period.
(4) Determine gain/loss on security sales and identify them as to
short-short, short or long term status. Account for periodic
distributions of gain to shareholders and maintain undistributed gain or
loss balances as of each valuation date.
Expense Accrual and Payment Services:
(5) For each valuation date, calculate the expense accrual amounts as
directed by the Trust as to methodology, rate, or dollar amount.
(6) Issue payments for Fund expenses upon receipt of funds from the Trust's
Custodian.
(7) Account for Fund expenditures and maintain expense accrual balances at
the level of accounting detail specified by the Fund.
(8) Support periodic expense accrual review, i.e., comparison of actual
expense activity versus accrual amounts.
(9) Provide expense accrual and payment reporting.
Fund Valuation and Financial Reporting Services:
(10) Account for Fund share purchases, sales, exchanges, transfers, dividend
reinvestments, and other Fund share activity, for each of the Funds, as
reported by the Trust on a timely basis.
(11) Determine net investment income (earnings) for each of the Funds as of
each valuation date. Account for periodic distributions of earnings to
shareholders and maintain undistributed net investment income balances
as of each valuation date.
(12) Maintain a general ledger for each of the Funds in the form defined by
the Trust and produce a set of financial statements as may be agreed
upon from time to time as of each valuation date.
(13) For each day the Funds are opened as defined in the prospectuses,
determine the net asset value of each of the Funds according to the
accounting policies and procedures set forth in the prospectuses.
(14) Calculate per share net asset value, per share net earnings, and other
per share amounts reflective of fund operation at such time as required
by the nature and characteristics of the Funds. Perform the calculations
using the number of shares outstanding reported by the Trust to be
applicable at the time of calculation.
(15) Communicate, at an agreed upon time, the per share price for each
valuation date to parties as agreed upon from time to time.
(16) Prepare monthly reports which document the adequacy of accounting detail
to support month-end ledger balances.
Tax Accounting Services:
(17) Maintain tax accounting records for each of the Funds' investment
portfolio so as to support tax reporting required for IRS defined
regulated investment companies.
(18) Maintain tax lot detail for the investment portfolio.
<PAGE>
(19) Calculate taxable gain/loss on security sales using the tax cost basis
defined for each Fund.
(20) Report the taxable components of income and capital gains distributions
to the Trust to support tax reporting to the shareholders.
Compliance Control Services:
(21) Maintain accounting records to support compliance monitoring by the
Trust.
(22) Support reporting to regulatory bodies and support financial statement
preparation by making the Fund accounting records available to the
Trust, the Securities and Exchange Commission, and the outside auditors.
(23) Maintain accounting records according to the Investment Company Act of
1940 and regulations provided thereunder.
Registration Services
(24) Prepare all reports and filings required to maintain the registration
and qualification of the Fund and its shares under federal and state
securities laws, including the annual amendment to its Registration
Statement on From N-1A containing an updated a Prospectus and Statement
of Additional Information.
SEC Filing Services
(25) Prepare and make periodic SEC filings, including From N-SAR, annual and
semi-annual shareholder reports, other shareholder reports, and fidelity
bond amendments but not including preparation and filing of any sales
literature and preparation of President's letter contained in
shareholder reports.
Minutes, Proxy Material Services
(26) Preparation of minutes and other records of meetings of the Board of
Trustees.
(27) Preparation of any proxy material and related shareholder meetings and
records.
<PAGE>
Exhibit B
SHAREHOLDER SERVICING FUNCTIONS
(1) Process new accounts.
(2) Process purchases, both initial and subsequent in accordance with
conditions set forth in the Fund's prospectus.
(3) Transfer shares of capital stock to an existing account or to a new
account upon receipt of required documentation in good order.
(4) Distribute dividends and/or capital gain distributions. This includes
disbursement as cash or reinvestment and to change the disbursement option
at the request of shareholders.
(5) Process exchanges between funds, (process and direct purchase/redemption
and initiate new account or process to existing account).
(6) Make miscellaneous changes to records, including, but not necessarily
limited to, address changes and changes in plans (such as systematic
withdrawal, dividend reinvestment, etc.).
(7) Prepare and mail a year-to-date confirmation and statement as each
transaction is recorded in a shareholder account as follows: original to
shareholder. Duplicate confirmations to be available on request within
current year.
(8) Handle telephone calls and correspondence in reply to shareholder requests
except those items otherwise set forth herein.
(9) Daily control and reconciliation of Fund shares.
(10) Prepare address labels or confirmations for four reports to shareholders
per year.
(11) Mail and tabulate proxies for one Meeting of Shareholders annually,
including preparation of certified shareholder list and daily report to
Fund management, if required.
(12) Prepare and mail annual Form 1099, Form W-2P and 5498 to shareholders to
whom dividends or distributions are paid, with a copy for the IRS.
(13) Provide readily obtainable data which may from time to time be requested
for audit purposes.
(14) Replace lost or destroyed checks.
(15) Continuously maintain all records for active and closed accounts according
to the Investment Company Act of 1940 and regulations provided thereunder.
(16) Furnish shareholder data information for a current calendar year in
connection with IRA and Keogh Plans in a format suitable for mailing to
shareholders.
<PAGE>
Exhibit C
ADMINISTRATOR'S COMPENSATION SCHEDULE
For the services delineated in the FUND ACCOUNTING, DIVIDEND DISBURSING &
TRANSFER AGENT AND COMPLIANCE ADMINISTRATION AGREEMENT, the Administrator shall
be compensated monthly, as of the last day of each month, within five business
days of the month end, a base fee plus a fee based upon net assets according to
the following schedule. The fee is calculated based upon the average daily net
assets of each Fund:
Base fee $2,000 per month
Class Fee: $ 750 per month for each
--------- additional Class
Asset based fee
Annual
Net Assets Fee
On the first $50 million 0.175%
On the next $50 million 0.150%
On all assets over $100 million 0.125%
Shareholder servicing fee
$15.00 per shareholder per year; minimum fee of $500 per month
Securities pricing
$0.15 per equity per pricing day priced
$0.20 per U.S. Treasury
$0.40 per asset backed security per pricing day
$0.40 per corporate bond per pricing day
$2.00 per equity per month for corporate action
Blue Sky administration
$150 per registration per state per year
<PAGE>
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
WHEREAS, Quaker Investment Trust, an unincorporated business trust organized and
existing under the laws of the Commonwealth of Massachusetts (the "Trust"),
engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests in the
QUAKER ENHANCED EQUITY INDEX FUND (the "Fund") of the Trust, which Shares are
divided into two Classes of Investor and Institutional Shares;
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Non-Interested Trustees"), having determined, in
the exercise of reasonable business judgment and in light of their fiduciary
duties under state law and under Section 36(a) and (b) of the 1940 Act, that
there is a reasonable likelihood that this Plan will benefit the Trust and its
shareholders, have approved this Plan by votes cast at a meeting called for the
purpose of voting hereon and on any agreements related hereto; and
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with Rule 12b-1
under the 1940 Act, on the following terms and conditions:
1. Distribution and Servicing Activities. Subject to the supervision of
the Trustees of the Trust, the Trust may, directly or indirectly, engage in any
activities primarily intended to result in the sale of Investor Shares of the
Fund, which activities may include, but are not limited to, the following: (a)
payments to the Trust's Distributor and to securities dealers and others in
respect of the sale of Investor Shares of the Fund; (b) payment of compensation
to and expenses of personnel (including personnel of organizations with which
the Trust has entered into agreements related to this Plan) who engage in or
support distribution of Investor Shares of the Fund or who render shareholder
support services not otherwise provided by the Trust's transfer agent,
administrator, or custodian, including but not limited to, answering inquiries
regarding the Trust, processing shareholder transactions, providing personal
services and/or the maintenance of shareholder accounts, providing other
shareholder liaison services, responding to shareholder inquiries, providing
information on shareholder investments in the Fund, and providing such other
<PAGE>
shareholder services as the Trust may reasonably request; (c) formulation and
implementation of marketing and promotional activities, including, but not
limited to, direct mail promotions and television, radio, newspaper, magazine
and other mass media advertising; (d) preparation, printing and distribution of
sales literature; (e) preparation, printing and distribution of prospectuses and
statements of additional information and reports of the Trust for recipients
other than existing shareholders of the Trust; and (f) obtaining such
information, analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, deem advisable. The Trust is
authorized to engage in the activities listed above, and in any other activities
primarily intended to result in the sale of Investor Shares of the Fund, either
directly or through other persons with which the Trust has entered into
agreements related to this Plan.
2. Maximum Expenditures. The expenditures to be made by the Trust
pursuant to this Plan and the basis upon which payment of such expenditures will
be made shall be determined by the Trustees of the Trust, but in no event may
such expenditures exceed an amount calculated at the rate of 0.25% per annum of
the average daily net asset value of the Investor Shares of the Fund for each
year or portion thereof included in the period for which the computation is
being made, elapsed since the inception of this Plan to the date of such
expenditures. Notwithstanding the foregoing, in no event may such expenditures
paid by the Trust as service fees exceed an amount calculated at the rate of
0.25% of the average annual net assets of the Investor Shares of the Fund, nor
may such expenditures paid as service fees to any person who sells Investor
Shares of the Fund exceed an amount calculated at the rate of 0.25% of the
average annual net asset value of such shares. Such payments for distribution
and shareholder servicing activities may be made directly by the Trust or to
other persons with which the Trust has entered into agreements related to this
Plan.
3. Term and Termination. (a) This Plan shall become effective as of the
1st day of August, 1996. Unless terminated as herein provided, this Plan shall
continue in effect for one year from the date hereof and shall continue in
effect for successive periods of one year thereafter, but only so long as each
such continuance is specifically approved by votes of a majority of both (i) the
Trustees of the Trust and (ii) the Non-Interested Trustees, cast at a meeting
called for the purpose of voting on such approval.
(b) This Plan may be terminated at any time with respect to the Fund by
a vote of a majority of the Non-Interested Trustees or by a vote of a majority
of the outstanding voting securities of the Investor Class of the Fund as
defined in the 1940 Act.
4. Amendments. This Plan may not be amended to increase
materially the maximum expenditures permitted by Section 2 hereof
2
<PAGE>
unless such amendment is approved by a vote of the majority of the outstanding
voting securities of the Investor Class of the Fund as defined in the 1940 Act
with respect to which a material increase in the amount of expenditures is
proposed, and no material amendment to this Plan shall be made unless approved
in the manner provided for annual renewal of this Plan in Section 3(a) hereof.
5. Selection and Nomination of Trustees. While this Plan is
in effect, the selection and nomination of the Non-Interested
Trustees of the Trust shall be committed to the discretion of such
Non-Interested Trustees.
6. Quarterly Reports. The Treasurer of the Trust shall
provide to the Trustees of the Trust and the Trustees shall review
quarterly a written report of the amounts expended pursuant to this
Plan and any related agreement and the purposes for which such
expenditures were made.
7. Recordkeeping. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 6 hereof, for a
period of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
8. Limitation of Liability. Any obligations of the Trust hereunder shall
not be binding upon any of the Trustees, officers or shareholders of the Trust
personally, but shall bind only the assets and property of the Trust. The term
"Quaker Investment Trust" means and refers to the Trustees from time to time
serving under the Agreement and Declaration of Trust of the Trust, a copy of
which is on file with the Secretary of The Commonwealth of Massachusetts. The
execution of this Plan has been authorized by the Trustees, and this Plan has
been signed on behalf of the Trust by an authorized officer of the Trust, acting
as such and not individually, and neither such authorization by such Trustees
nor such execution by such officer shall be deemed to have been made by any of
them individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Trust as provided in the
Agreement and Declaration of Trust.
*
*
*
*
*
*
*
IN WITNESS THEREOF, the parties hereto have caused this Plan to be executed as
of the date written above.
3
<PAGE>
QUAKER INVESTMENT TRUST
Attest:
By__________________________________
Attest:
QUAKER ENHANCED EQUITY INDEX FUND
By__________________________________
4
<PAGE>
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
WHEREAS, Quaker Investment Trust, an unincorporated business trust organized and
existing under the laws of the Commonwealth of Massachusetts (the "Trust"),
engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests in the
QUAKER CORE EQUITY FUND (the "Fund") of the Trust, which Shares are divided into
two Classes of Investor and Institutional Shares;
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Non-Interested Trustees"), having determined, in
the exercise of reasonable business judgment and in light of their fiduciary
duties under state law and under Section 36(a) and (b) of the 1940 Act, that
there is a reasonable likelihood that this Plan will benefit the Trust and its
shareholders, have approved this Plan by votes cast at a meeting called for the
purpose of voting hereon and on any agreements related hereto; and
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with Rule 12b-1
under the 1940 Act, on the following terms and conditions:
1. Distribution and Servicing Activities. Subject to the supervision of
the Trustees of the Trust, the Trust may, directly or indirectly, engage in any
activities primarily intended to result in the sale of Investor Shares of the
Fund, which activities may include, but are not limited to, the following: (a)
payments to the Trust's Distributor and to securities dealers and others in
respect of the sale of Investor Shares of the Fund; (b) payment of compensation
to and expenses of personnel (including personnel of organizations with which
the Trust has entered into agreements related to this Plan) who engage in or
support distribution of Investor Shares of the Fund or who render shareholder
support services not otherwise provided by the Trust's transfer agent,
administrator, or custodian, including but not limited to, answering inquiries
regarding the Trust, processing shareholder transactions, providing personal
services and/or the maintenance of shareholder accounts, providing other
shareholder liaison services, responding to shareholder inquiries, providing
information on shareholder investments in the Fund, and providing such other
<PAGE>
shareholder services as the Trust may reasonably request; (c) formulation and
implementation of marketing and promotional activities, including, but not
limited to, direct mail promotions and television, radio, newspaper, magazine
and other mass media advertising; (d) preparation, printing and distribution of
sales literature; (e) preparation, printing and distribution of prospectuses and
statements of additional information and reports of the Trust for recipients
other than existing shareholders of the Trust; and (f) obtaining such
information, analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, deem advisable. The Trust is
authorized to engage in the activities listed above, and in any other activities
primarily intended to result in the sale of Investor Shares of the Fund, either
directly or through other persons with which the Trust has entered into
agreements related to this Plan.
2. Maximum Expenditures. The expenditures to be made by the Trust
pursuant to this Plan and the basis upon which payment of such expenditures will
be made shall be determined by the Trustees of the Trust, but in no event may
such expenditures exceed an amount calculated at the rate of 0.25% per annum of
the average daily net asset value of the Investor Shares of the Fund for each
year or portion thereof included in the period for which the computation is
being made, elapsed since the inception of this Plan to the date of such
expenditures. Notwithstanding the foregoing, in no event may such expenditures
paid by the Trust as service fees exceed an amount calculated at the rate of
0.25% of the average annual net assets of the Investor Shares of the Fund, nor
may such expenditures paid as service fees to any person who sells Investor
Shares of the Fund exceed an amount calculated at the rate of 0.25% of the
average annual net asset value of such shares. Such payments for distribution
and shareholder servicing activities may be made directly by the Trust or to
other persons with which the Trust has entered into agreements related to this
Plan.
3. Term and Termination. (a) This Plan shall become effective as of the
1st day of August, 1996. Unless terminated as herein provided, this Plan shall
continue in effect for one year from the date hereof and shall continue in
effect for successive periods of one year thereafter, but only so long as each
such continuance is specifically approved by votes of a majority of both (i) the
Trustees of the Trust and (ii) the Non-Interested Trustees, cast at a meeting
called for the purpose of voting on such approval.
(b) This Plan may be terminated at any time with respect to the Fund by
a vote of a majority of the Non-Interested Trustees or by a vote of a majority
of the outstanding voting securities of the Investor Class of the Fund as
defined in the 1940 Act.
4. Amendments. This Plan may not be amended to increase
materially the maximum expenditures permitted by Section 2 hereof
2
<PAGE>
unless such amendment is approved by a vote of the majority of the outstanding
voting securities of the Investor Class of the Fund as defined in the 1940 Act
with respect to which a material increase in the amount of expenditures is
proposed, and no material amendment to this Plan shall be made unless approved
in the manner provided for annual renewal of this Plan in Section 3(a) hereof.
5. Selection and Nomination of Trustees. While this Plan is
in effect, the selection and nomination of the Non-Interested
Trustees of the Trust shall be committed to the discretion of such
Non-Interested Trustees.
6. Quarterly Reports. The Treasurer of the Trust shall provide to
the Trustees of the Trust and the Trustees shall review quarterly a written
report of the amounts expended pursuant to this Plan and any related agreement
and the purposes for which such expenditures were made.
7. Recordkeeping. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 6 hereof, for a
period of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
8. Limitation of Liability. Any obligations of the Trust hereunder shall
not be binding upon any of the Trustees, officers or shareholders of the Trust
personally, but shall bind only the assets and property of the Trust. The term
"Quaker Investment Trust" means and refers to the Trustees from time to time
serving under the Agreement and Declaration of Trust of the Trust, a copy of
which is on file with the Secretary of The Commonwealth of Massachusetts. The
execution of this Plan has been authorized by the Trustees, and this Plan has
been signed on behalf of the Trust by an authorized officer of the Trust, acting
as such and not individually, and neither such authorization by such Trustees
nor such execution by such officer shall be deemed to have been made by any of
them individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Trust as provided in the
Agreement and Declaration of Trust.
*
*
*
*
*
*
*
IN WITNESS THEREOF, the parties hereto have caused this Plan to be executed as
of the date written above.
3
<PAGE>
QUAKER INVESTMENT TRUST
Attest:
By__________________________________
Attest:
QUAKER CORE EQUITY FUND
By__________________________________
4
<PAGE>
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
WHEREAS, Quaker Investment Trust, an unincorporated business trust organized and
existing under the laws of the Commonwealth of Massachusetts (the "Trust"),
engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests in the
QUAKER AGGRESSIVE GROWTH FUND (the "Fund") of the Trust, which Shares are
divided into two Classes of Investor and Institutional Shares;
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Non-Interested Trustees"), having determined, in
the exercise of reasonable business judgment and in light of their fiduciary
duties under state law and under Section 36(a) and (b) of the 1940 Act, that
there is a reasonable likelihood that this Plan will benefit the Trust and its
shareholders, have approved this Plan by votes cast at a meeting called for the
purpose of voting hereon and on any agreements related hereto; and
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with Rule 12b-1
under the 1940 Act, on the following terms and conditions:
1. Distribution and Servicing Activities. Subject to the supervision of
the Trustees of the Trust, the Trust may, directly or indirectly, engage in any
activities primarily intended to result in the sale of Investor Shares of the
Fund, which activities may include, but are not limited to, the following: (a)
payments to the Trust's Distributor and to securities dealers and others in
respect of the sale of Investor Shares of the Fund; (b) payment of compensation
to and expenses of personnel (including personnel of organizations with which
the Trust has entered into agreements related to this Plan) who engage in or
support distribution of Investor Shares of the Fund or who render shareholder
support services not otherwise provided by the Trust's transfer agent,
administrator, or custodian, including but not limited to, answering inquiries
regarding the Trust, processing shareholder transactions, providing personal
services and/or the maintenance of shareholder accounts, providing other
shareholder liaison services, responding to shareholder inquiries, providing
information on shareholder investments in the Fund, and providing such other
<PAGE>
shareholder services as the Trust may reasonably request; (c) formulation and
implementation of marketing and promotional activities, including, but not
limited to, direct mail promotions and television, radio, newspaper, magazine
and other mass media advertising; (d) preparation, printing and distribution of
sales literature; (e) preparation, printing and distribution of prospectuses and
statements of additional information and reports of the Trust for recipients
other than existing shareholders of the Trust; and (f) obtaining such
information, analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, deem advisable. The Trust is
authorized to engage in the activities listed above, and in any other activities
primarily intended to result in the sale of Investor Shares of the Fund, either
directly or through other persons with which the Trust has entered into
agreements related to this Plan.
2. Maximum Expenditures. The expenditures to be made by the Trust
pursuant to this Plan and the basis upon which payment of such expenditures will
be made shall be determined by the Trustees of the Trust, but in no event may
such expenditures exceed an amount calculated at the rate of 0.25% per annum of
the average daily net asset value of the Investor Shares of the Fund for each
year or portion thereof included in the period for which the computation is
being made, elapsed since the inception of this Plan to the date of such
expenditures. Notwithstanding the foregoing, in no event may such expenditures
paid by the Trust as service fees exceed an amount calculated at the rate of
0.25% of the average annual net assets of the Investor Shares of the Fund, nor
may such expenditures paid as service fees to any person who sells Investor
Shares of the Fund exceed an amount calculated at the rate of 0.25% of the
average annual net asset value of such shares. Such payments for distribution
and shareholder servicing activities may be made directly by the Trust or to
other persons with which the Trust has entered into agreements related to this
Plan.
3. Term and Termination. (a) This Plan shall become effective as of the
1st day of August, 1996. Unless terminated as herein provided, this Plan shall
continue in effect for one year from the date hereof and shall continue in
effect for successive periods of one year thereafter, but only so long as each
such continuance is specifically approved by votes of a majority of both (i) the
Trustees of the Trust and (ii) the Non-Interested Trustees, cast at a meeting
called for the purpose of voting on such approval.
(b) This Plan may be terminated at any time with respect to the Fund by
a vote of a majority of the Non-Interested Trustees or by a vote of a majority
of the outstanding voting securities of the Investor Class of the Fund as
defined in the 1940 Act.
4. Amendments. This Plan may not be amended to increase
materially the maximum expenditures permitted by Section 2 hereof
2
<PAGE>
unless such amendment is approved by a vote of the majority of the outstanding
voting securities of the Investor Class of the Fund as defined in the 1940 Act
with respect to which a material increase in the amount of expenditures is
proposed, and no material amendment to this Plan shall be made unless approved
in the manner provided for annual renewal of this Plan in Section 3(a) hereof.
5. Selection and Nomination of Trustees. While this Plan is
in effect, the selection and nomination of the Non-Interested
Trustees of the Trust shall be committed to the discretion of such
Non-Interested Trustees.
6. Quarterly Reports. The Treasurer of the Trust shall
provide to the Trustees of the Trust and the Trustees shall review
quarterly a written report of the amounts expended pursuant to this
Plan and any related agreement and the purposes for which such
expenditures were made.
7. Recordkeeping. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 6 hereof, for a
period of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
8. Limitation of Liability. Any obligations of the Trust hereunder shall
not be binding upon any of the Trustees, officers or shareholders of the Trust
personally, but shall bind only the assets and property of the Trust. The term
"Quaker Investment Trust" means and refers to the Trustees from time to time
serving under the Agreement and Declaration of Trust of the Trust, a copy of
which is on file with the Secretary of The Commonwealth of Massachusetts. The
execution of this Plan has been authorized by the Trustees, and this Plan has
been signed on behalf of the Trust by an authorized officer of the Trust, acting
as such and not individually, and neither such authorization by such Trustees
nor such execution by such officer shall be deemed to have been made by any of
them individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Trust as provided in the
Agreement and Declaration of Trust.
*
*
*
*
*
*
*
IN WITNESS THEREOF, the parties hereto have caused this Plan to be executed as
of the date written above.
3
<PAGE>
QUAKER INVESTMENT TRUST
Attest:
By__________________________________
Attest:
QUAKER AGGRESSIVE GROWTH FUND
By__________________________________
4
<PAGE>
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
WHEREAS, Quaker Investment Trust, an unincorporated business trust organized and
existing under the laws of the Commonwealth of Massachusetts (the "Trust"),
engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests in the
QUAKER SMALL CAP VALUE FUND (the "Fund") of the Trust, which Shares are divided
into two Classes of Investor and Institutional Shares;
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Non-Interested Trustees"), having determined, in
the exercise of reasonable business judgment and in light of their fiduciary
duties under state law and under Section 36(a) and (b) of the 1940 Act, that
there is a reasonable likelihood that this Plan will benefit the Trust and its
shareholders, have approved this Plan by votes cast at a meeting called for the
purpose of voting hereon and on any agreements related hereto; and
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with Rule 12b-1
under the 1940 Act, on the following terms and conditions:
1. Distribution and Servicing Activities. Subject to the supervision of
the Trustees of the Trust, the Trust may, directly or indirectly, engage in any
activities primarily intended to result in the sale of Investor Shares of the
Fund, which activities may include, but are not limited to, the following: (a)
payments to the Trust's Distributor and to securities dealers and others in
respect of the sale of Investor Shares of the Fund; (b) payment of compensation
to and expenses of personnel (including personnel of organizations with which
the Trust has entered into agreements related to this Plan) who engage in or
support distribution of Investor Shares of the Fund or who render shareholder
support services not otherwise provided by the Trust's transfer agent,
administrator, or custodian, including but not limited to, answering inquiries
regarding the Trust, processing shareholder transactions, providing personal
services and/or the maintenance of shareholder accounts, providing other
shareholder liaison services, responding to shareholder inquiries, providing
information on shareholder investments in the Fund, and providing such other
<PAGE>
shareholder services as the Trust may reasonably request; (c) formulation and
implementation of marketing and promotional activities, including, but not
limited to, direct mail promotions and television, radio, newspaper, magazine
and other mass media advertising; (d) preparation, printing and distribution of
sales literature; (e) preparation, printing and distribution of prospectuses and
statements of additional information and reports of the Trust for recipients
other than existing shareholders of the Trust; and (f) obtaining such
information, analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, deem advisable. The Trust is
authorized to engage in the activities listed above, and in any other activities
primarily intended to result in the sale of Investor Shares of the Fund, either
directly or through other persons with which the Trust has entered into
agreements related to this Plan.
2. Maximum Expenditures. The expenditures to be made by the Trust
pursuant to this Plan and the basis upon which payment of such expenditures will
be made shall be determined by the Trustees of the Trust, but in no event may
such expenditures exceed an amount calculated at the rate of 0.25% per annum of
the average daily net asset value of the Investor Shares of the Fund for each
year or portion thereof included in the period for which the computation is
being made, elapsed since the inception of this Plan to the date of such
expenditures. Notwithstanding the foregoing, in no event may such expenditures
paid by the Trust as service fees exceed an amount calculated at the rate of
0.25% of the average annual net assets of the Investor Shares of the Fund, nor
may such expenditures paid as service fees to any person who sells Investor
Shares of the Fund exceed an amount calculated at the rate of 0.25% of the
average annual net asset value of such shares. Such payments for distribution
and shareholder servicing activities may be made directly by the Trust or to
other persons with which the Trust has entered into agreements related to this
Plan.
3. Term and Termination. (a) This Plan shall become effective as of the
1st day of August, 1996. Unless terminated as herein provided, this Plan shall
continue in effect for one year from the date hereof and shall continue in
effect for successive periods of one year thereafter, but only so long as each
such continuance is specifically approved by votes of a majority of both (i) the
Trustees of the Trust and (ii) the Non-Interested Trustees, cast at a meeting
called for the purpose of voting on such approval.
(b) This Plan may be terminated at any time with respect to the Fund by
a vote of a majority of the Non-Interested Trustees or by a vote of a majority
of the outstanding voting securities of the Investor Class of the Fund as
defined in the 1940 Act.
4. Amendments. This Plan may not be amended to increase
materially the maximum expenditures permitted by Section 2 hereof
2
<PAGE>
unless such amendment is approved by a vote of the majority of the outstanding
voting securities of the Investor Class of the Fund as defined in the 1940 Act
with respect to which a material increase in the amount of expenditures is
proposed, and no material amendment to this Plan shall be made unless approved
in the manner provided for annual renewal of this Plan in Section 3(a) hereof.
5. Selection and Nomination of Trustees. While this Plan is
in effect, the selection and nomination of the Non-Interested
Trustees of the Trust shall be committed to the discretion of such
Non-Interested Trustees.
6. Quarterly Reports. The Treasurer of the Trust shall provide to
the Trustees of the Trust and the Trustees shall review quarterly a written
report of the amounts expended pursuant to this Plan and any related agreement
and the purposes for which such expenditures were made.
7. Recordkeeping. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 6 hereof, for a
period of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
8. Limitation of Liability. Any obligations of the Trust hereunder shall
not be binding upon any of the Trustees, officers or shareholders of the Trust
personally, but shall bind only the assets and property of the Trust. The term
"Quaker Investment Trust" means and refers to the Trustees from time to time
serving under the Agreement and Declaration of Trust of the Trust, a copy of
which is on file with the Secretary of The Commonwealth of Massachusetts. The
execution of this Plan has been authorized by the Trustees, and this Plan has
been signed on behalf of the Trust by an authorized officer of the Trust, acting
as such and not individually, and neither such authorization by such Trustees
nor such execution by such officer shall be deemed to have been made by any of
them individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Trust as provided in the
Agreement and Declaration of Trust.
*
*
*
*
*
*
*
IN WITNESS THEREOF, the parties hereto have caused this Plan to be executed as
of the date written above.
3
<PAGE>
QUAKER INVESTMENT TRUST
Attest:
By_________________________________
Attest:
QUAKER SMALL CAP VALUE FUND
By_________________________________
4
<PAGE>
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
WHEREAS, Quaker Investment Trust, an unincorporated business trust organized and
existing under the laws of the Commonwealth of Massachusetts (the "Trust"),
engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests in the
QUAKER SECTOR ROTATION EQUITY FUND (the "Fund") of the Trust, which Shares are
divided into two Classes of Investor and Institutional Shares;
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Non-Interested Trustees"), having determined, in
the exercise of reasonable business judgment and in light of their fiduciary
duties under state law and under Section 36(a) and (b) of the 1940 Act, that
there is a reasonable likelihood that this Plan will benefit the Trust and its
shareholders, have approved this Plan by votes cast at a meeting called for the
purpose of voting hereon and on any agreements related hereto; and
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with Rule 12b-1
under the 1940 Act, on the following terms and conditions:
1. Distribution and Servicing Activities. Subject to the supervision of
the Trustees of the Trust, the Trust may, directly or indirectly, engage in any
activities primarily intended to result in the sale of Investor Shares of the
Fund, which activities may include, but are not limited to, the following: (a)
payments to the Trust's Distributor and to securities dealers and others in
respect of the sale of Investor Shares of the Fund; (b) payment of compensation
to and expenses of personnel (including personnel of organizations with which
the Trust has entered into agreements related to this Plan) who engage in or
support distribution of Investor Shares of the Fund or who render shareholder
support services not otherwise provided by the Trust's transfer agent,
administrator, or custodian, including but not limited to, answering inquiries
regarding the Trust, processing shareholder transactions, providing personal
services and/or the maintenance of shareholder accounts, providing other
shareholder liaison services, responding to shareholder inquiries, providing
information on shareholder investments in the Fund, and providing such other
<PAGE>
shareholder services as the Trust may reasonably request; (c) formulation and
implementation of marketing and promotional activities, including, but not
limited to, direct mail promotions and television, radio, newspaper, magazine
and other mass media advertising; (d) preparation, printing and distribution of
sales literature; (e) preparation, printing and distribution of prospectuses and
statements of additional information and reports of the Trust for recipients
other than existing shareholders of the Trust; and (f) obtaining such
information, analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, deem advisable. The Trust is
authorized to engage in the activities listed above, and in any other activities
primarily intended to result in the sale of Investor Shares of the Fund, either
directly or through other persons with which the Trust has entered into
agreements related to this Plan.
2. Maximum Expenditures. The expenditures to be made by the Trust
pursuant to this Plan and the basis upon which payment of such expenditures will
be made shall be determined by the Trustees of the Trust, but in no event may
such expenditures exceed an amount calculated at the rate of 0.25% per annum of
the average daily net asset value of the Investor Shares of the Fund for each
year or portion thereof included in the period for which the computation is
being made, elapsed since the inception of this Plan to the date of such
expenditures. Notwithstanding the foregoing, in no event may such expenditures
paid by the Trust as service fees exceed an amount calculated at the rate of
0.25% of the average annual net assets of the Investor Shares of the Fund, nor
may such expenditures paid as service fees to any person who sells Investor
Shares of the Fund exceed an amount calculated at the rate of 0.25% of the
average annual net asset value of such shares. Such payments for distribution
and shareholder servicing activities may be made directly by the Trust or to
other persons with which the Trust has entered into agreements related to this
Plan.
3. Term and Termination. (a) This Plan shall become effective as of the
1st day of August, 1996. Unless terminated as herein provided, this Plan shall
continue in effect for one year from the date hereof and shall continue in
effect for successive periods of one year thereafter, but only so long as each
such continuance is specifically approved by votes of a majority of both (i) the
Trustees of the Trust and (ii) the Non-Interested Trustees, cast at a meeting
called for the purpose of voting on such approval.
(b) This Plan may be terminated at any time with respect to the Fund by
a vote of a majority of the Non-Interested Trustees or by a vote of a majority
of the outstanding voting securities of the Investor Class of the Fund as
defined in the 1940 Act.
4. Amendments. This Plan may not be amended to increase
materially the maximum expenditures permitted by Section 2 hereof
2
<PAGE>
unless such amendment is approved by a vote of the majority of the outstanding
voting securities of the Investor Class of the Fund as defined in the 1940 Act
with respect to which a material increase in the amount of expenditures is
proposed, and no material amendment to this Plan shall be made unless approved
in the manner provided for annual renewal of this Plan in Section 3(a) hereof.
5. Selection and Nomination of Trustees. While this Plan is in
effect, the selection and nomination of the Non-Interested Trustees of the Trust
shall be committed to the discretion of such
Non-Interested Trustees.
6. Quarterly Reports. The Treasurer of the Trust shall provide to
the Trustees of the Trust and the Trustees shall review quarterly a written
report of the amounts expended pursuant to this Plan and any related agreement
and the purposes for which such expenditures were made.
7. Recordkeeping. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 6 hereof, for a
period of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
8. Limitation of Liability. Any obligations of the Trust hereunder shall
not be binding upon any of the Trustees, officers or shareholders of the Trust
personally, but shall bind only the assets and property of the Trust. The term
"Quaker Investment Trust" means and refers to the Trustees from time to time
serving under the Agreement and Declaration of Trust of the Trust, a copy of
which is on file with the Secretary of The Commonwealth of Massachusetts. The
execution of this Plan has been authorized by the Trustees, and this Plan has
been signed on behalf of the Trust by an authorized officer of the Trust, acting
as such and not individually, and neither such authorization by such Trustees
nor such execution by such officer shall be deemed to have been made by any of
them individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Trust as provided in the
Agreement and Declaration of Trust.
*
*
*
*
*
*
*
IN WITNESS THEREOF, the parties hereto have caused this Plan to be executed as
of the date written above.
3
<PAGE>
QUAKER INVESTMENT TRUST
Attest:
By__________________________________
Attest:
QUAKER SECTOR ROTATION EQUITY FUND
By__________________________________
4
<PAGE>
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
WHEREAS, Quaker Investment Trust, an unincorporated business trust organized and
existing under the laws of the Commonwealth of Massachusetts (the "Trust"),
engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests in the
QUAKER FIXED INCOME FUND (the "Fund") of the Trust, which Shares are divided
into two Classes of Investor and Institutional Shares;
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Non-Interested Trustees"), having determined, in
the exercise of reasonable business judgment and in light of their fiduciary
duties under state law and under Section 36(a) and (b) of the 1940 Act, that
there is a reasonable likelihood that this Plan will benefit the Trust and its
shareholders, have approved this Plan by votes cast at a meeting called for the
purpose of voting hereon and on any agreements related hereto; and
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with Rule 12b-1
under the 1940 Act, on the following terms and conditions:
1. Distribution and Servicing Activities. Subject to the supervision of
the Trustees of the Trust, the Trust may, directly or indirectly, engage in any
activities primarily intended to result in the sale of Investor Shares of the
Fund, which activities may include, but are not limited to, the following: (a)
payments to the Trust's Distributor and to securities dealers and others in
respect of the sale of Investor Shares of the Fund; (b) payment of compensation
to and expenses of personnel (including personnel of organizations with which
the Trust has entered into agreements related to this Plan) who engage in or
support distribution of Investor Shares of the Fund or who render shareholder
support services not otherwise provided by the Trust's transfer agent,
administrator, or custodian, including but not limited to, answering inquiries
regarding the Trust, processing shareholder transactions, providing personal
services and/or the maintenance of shareholder accounts, providing other
shareholder liaison services, responding to shareholder inquiries, providing
information on shareholder investments in the Fund, and providing such other
<PAGE>
shareholder services as the Trust may reasonably request; (c) formulation and
implementation of marketing and promotional activities, including, but not
limited to, direct mail promotions and television, radio, newspaper, magazine
and other mass media advertising; (d) preparation, printing and distribution of
sales literature; (e) preparation, printing and distribution of prospectuses and
statements of additional information and reports of the Trust for recipients
other than existing shareholders of the Trust; and (f) obtaining such
information, analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, deem advisable. The Trust is
authorized to engage in the activities listed above, and in any other activities
primarily intended to result in the sale of Investor Shares of the Fund, either
directly or through other persons with which the Trust has entered into
agreements related to this Plan.
2. Maximum Expenditures. The expenditures to be made by the Trust
pursuant to this Plan and the basis upon which payment of such expenditures will
be made shall be determined by the Trustees of the Trust, but in no event may
such expenditures exceed an amount calculated at the rate of 0.25% per annum of
the average daily net asset value of the Investor Shares of the Fund for each
year or portion thereof included in the period for which the computation is
being made, elapsed since the inception of this Plan to the date of such
expenditures. Notwithstanding the foregoing, in no event may such expenditures
paid by the Trust as service fees exceed an amount calculated at the rate of
0.25% of the average annual net assets of the Investor Shares of the Fund, nor
may such expenditures paid as service fees to any person who sells Investor
Shares of the Fund exceed an amount calculated at the rate of 0.25% of the
average annual net asset value of such shares. Such payments for distribution
and shareholder servicing activities may be made directly by the Trust or to
other persons with which the Trust has entered into agreements related to this
Plan.
3. Term and Termination. (a) This Plan shall become effective as of the
1st day of August, 1996. Unless terminated as herein provided, this Plan shall
continue in effect for one year from the date hereof and shall continue in
effect for successive periods of one year thereafter, but only so long as each
such continuance is specifically approved by votes of a majority of both (i) the
Trustees of the Trust and (ii) the Non-Interested Trustees, cast at a meeting
called for the purpose of voting on such approval.
(b) This Plan may be terminated at any time with respect to the Fund by
a vote of a majority of the Non-Interested Trustees or by a vote of a majority
of the outstanding voting securities of the Investor Class of the Fund as
defined in the 1940 Act.
4. Amendments. This Plan may not be amended to increase materially
the maximum expenditures permitted by Section 2 hereof
2
<PAGE>
unless such amendment is approved by a vote of the majority of the outstanding
voting securities of the Investor Class of the Fund as defined in the 1940 Act
with respect to which a material increase in the amount of expenditures is
proposed, and no material amendment to this Plan shall be made unless approved
in the manner provided for annual renewal of this Plan in Section 3(a) hereof.
5. Selection and Nomination of Trustees. While this Plan is
in effect, the selection and nomination of the Non-Interested
Trustees of the Trust shall be committed to the discretion of such
Non-Interested Trustees.
6. Quarterly Reports. The Treasurer of the Trust shall
provide to the Trustees of the Trust and the Trustees shall review
quarterly a written report of the amounts expended pursuant to this
Plan and any related agreement and the purposes for which such
expenditures were made.
7. Recordkeeping. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 6 hereof, for a
period of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
8. Limitation of Liability. Any obligations of the Trust hereunder shall
not be binding upon any of the Trustees, officers or shareholders of the Trust
personally, but shall bind only the assets and property of the Trust. The term
"Quaker Investment Trust" means and refers to the Trustees from time to time
serving under the Agreement and Declaration of Trust of the Trust, a copy of
which is on file with the Secretary of The Commonwealth of Massachusetts. The
execution of this Plan has been authorized by the Trustees, and this Plan has
been signed on behalf of the Trust by an authorized officer of the Trust, acting
as such and not individually, and neither such authorization by such Trustees
nor such execution by such officer shall be deemed to have been made by any of
them individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Trust as provided in the
Agreement and Declaration of Trust.
*
*
*
*
*
*
*
IN WITNESS THEREOF, the parties hereto have caused this Plan to be executed as
of the date written above.
3
<PAGE>
QUAKER INVESTMENT TRUST
Attest:
By__________________________________
Attest:
QUAKER FIXED INCOME FUND
By__________________________________
4
