SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
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(Name of Registrant as Specified in Its Charter)
QUAKER INVESTMENT TRUST
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
NOT APPLICABLE
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IMPORTANT NEWS FOR QUAKER ENHANCED
STOCK MARKET FUND SHAREHOLDERS
WHILE WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED PROXY STATEMENT,
HERE'S A BRIEF OVERVIEW OF MAJOR MATTERS TO BE VOTED UPON.
Q & A ABOUT THE ENCLOSED PROXY MATERIALS
Q. WHAT IS HAPPENING?
A. Fiduciary Asset Management Co. ("FAMCO"), the Investment Advisor to the
Quaker Enhanced Stock Market Fund (the "Fund") is resigning, effective
February 26, 1999. As a result, the Board of Trustees of the Fund has
undertaken a search for a new Advisor and has chosen Compu-Val Investments,
Inc. ("Compu-Val") 1702 Lovering Avenue, Wilmington, Delaware, 19806, to be
the Fund's new Advisor. Compu-Val currently serves as Advisor to the Quaker
Mid-Cap Value Fund, and will continue to serve in that capacity. You are
being asked to vote to approve the Board's choice of Compu-Val as Advisor
to the Fund.
During the negotiations between the Board of Trustees and Compu-Val
relating to the Fund, Compu-Val proposed, and the Board approved, changes
to certain fundamental investment policies of the Fund. The Board, after
full deliberations, has approved a change in the investment objectives and
policies of the Fund from its present investment approach to a large-cap
value oriented approach with tax-enhanced investing techniques. You are
being asked to approve the change in fundamental investment policy.
In keeping with the new investment policy of the Fund, the Board has also
approved a change in the name of the Fund. The Board has chosen "The Quaker
Large-Cap Value Fund" to be the new name for the Fund. You are being asked
to ratify the Board's decision.
The Board also seeks your vote to approve a revised Rule 12b-1 Plan* for
the Fund, and to ratify an increase in the fees paid to the Fund's sponsor,
Quaker Funds, Inc.
Q. WHY AM I BEING ASKED TO VOTE ON THE PROPOSED NEW INVESTMENT MANAGEMENT
AGREEMENTS?
A. The Investment Company Act of 1940 (the "Act") requires a vote of the
shareholders of a fund whenever there is a change in control of an
investment manager, or a material change to an existing investment
management agreement. Accordingly, the changeover in Advisors requires your
approval under the Act.
Q. WHY AM I BEING ASKED TO VOTE ON A CHANGE IN THE FUND'S FUNDAMENTAL
INVESTMENT POLICIES?
A. The Investment Company Act of 1940 (the "Act") requires a vote of the
shareholders of a fund whenever there is a change in any investment policy
which is "fundamental" to the operation of the Fund. Accordingly, the
proposed change in the investment policies of the Fund requires your
approval under the Act.
<PAGE>
Q. WHY AM I BEING ASKED TO VOTE ON A PROPOSED NEW 12B-1 DISTRIBUTION PLAN?
A. The Investment Company Act of 1940 requires a vote of a fund's shareholders
whenever there is a material amendment to, or an assignment of, a 12b-1
Plan. The 12b-1 Plan for the Fund currently is between the Fund and FAMCO.
After full consideration, the Board has decided to continue the 12b-1 Plan
with Compu-Val, which requires a new plan and shareholder approval.
Q. WHY AM I BEING ASKED TO RATIFY A NEW NAME FOR THE FUND AND NEW FEES TO THE
FUND'S SPONSOR?
A. The Board believes that it is in the best interests of the Fund if you know
what the Board is doing and approve of its actions. Since your vote is
already required on a number of other items relating to the Fund, the Board
felt it appropriate to seek your approval on these items as well.
Q. HOW WILL THESE CHANGES AFFECT ME AS A FUND SHAREHOLDER?
A. Your Fund will not change. You will still own the same shares in the
same Fund. Your Board has made every effort to choose a successor Advisor
who can provide excellent service and above-average returns to your Fund.
Compu-Val has committed to provide all resources necessary to provide your
Fund with top quality investment management and shareholder services. If
you approve the change in the Fund's fundamental investment policies,
Compu-Val believes that it will be much better able to achieve
significantly enhanced performance in the Fund relative to past returns.
The fees paid by your Fund will increase. The advisory fees will increase
by 0.25% per annum, and the fees paid by the Fund to its sponsor will
increase by 0.05% per year. The Board has agreed that these increases are
necessary in order for the Fund's service providers to be able to deliver
quality service to the Fund and you, as its shareholder.
Q. WILL THE INVESTMENT ADVISORY AND RULE 12B-1 FEES BE THE SAME?
A. The Investment Advisory fees under the new agreement with Compu-Val will
increase, from 0.50% to 0.75%. The Rule 12b-1 fees will stay the same.
Q. HOW DO THE BOARD MEMBERS OF MY FUND SUGGEST THAT I VOTE?
A. After careful consideration, the Board members of the Fund, including the
independent members, recommend that you vote "For" all the items on the
enclosed ballot.
Q. WHO IS PAYING THE COST OF THE SHAREHOLDER MEETING AND THIS PROXY
SOLICITATION?
A. Compu-Val is paying the costs of the Fund's shareholder meeting and proxy
solicitation. Quaker Funds, Inc. will pay the legal costs associated with
this proxy.
Q. WHOM DO I CALL FOR MORE INFORMATION?
A. Please call Shareholder Services at 1-800-220-8888
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* Rule 12b-1 of the Investment Company Act of 1940 sets forth the terms under
which an investment company (mutual fund) may use fund assets to pay for the
distribution of fund shares. Declaration Distributors, Inc., the principal
underwriter and distributor for each fund, distributes each fund's shares
according to a Rule 12b-1 plan.
<PAGE>
ABOUT THE BALLOT
Shown below is the ballot that you will use to vote on the matters described
above and hereafter in these proxy materials.
1. Approve a new investment management agreement with Compu-Val Investments,
Inc. on different terms from the current agreement between the Fund and
Fiduciary Asset Management Co.
For Against Abstain
/ / / / / /
2. Approve new fundamental investment policies for the Fund changing to a
large-cap value oriented approach with tax enhanced investing techniques.
For Against Abstain
/ / / / / /
3. Ratify a change in the Fund's name from the Quaker Enhanced Stock Market
Fund to the Quaker Large-Cap Value Fund.
For Against Abstain
/ / / / / /
4. Ratify an increase in the fees paid to the Fund's sponsor, Quaker Funds,
Inc., from 0.20% per annum to 0.25% per annum.
For Against Abstain
/ / / / / /
5. Approve a new Rule 12b-1 distribution plan on the same terms as the current
plan.
For Against Abstain
/ / / / / /
Signature(s) (All registered owners of accounts shown to the left must sign. If
signing for a corporation, estate or trust, please indicate your capacity or
title.)
X
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Signature Date
X
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Signature Date
PLEASE VOTE TODAY!
Please vote all issues shown on your ballot.
Please vote on each issue using blue or black ink to mark an X in one of the
three boxes provided on each ballot. On all Items, mark -- For, Against or
Abstain. Then sign, date and return your ballot in the accompanying postage-paid
envelope. All registered owners of an account, as shown in the address on the
ballot, must sign the ballot. If you are signing for a corporation, trust or
estate, please indicate your title or position.
THANK YOU FOR MAILING YOUR BALLOT PROMPTLY!
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<PAGE>
Quaker Investment Trust
1288 Valley Forge Road, Suite 76
Valley Forge, Pennsylvania 19482
TELEPHONE 1-800-220-8888
February 15, 1999
Dear Shareholder:
As you read in the Questions and Answers (Q & A) on page 1, the Advisor to
your Fund has resigned and must be replaced.
We're sending this proxy statement to you because your vote is important to
the changes taking place in your Fund. Because of the change of Advisors, it is
necessary for you to approve a new investment management agreement and a new
Rule 12b-1 Plan. The Board also seeks your approval of a change in the Fund's
fundamental investment policies in order to allow the new Advisor to manage the
assets of the Fund for the greatest possible return to you.
Finally, the Board is asking you to ratify its decisions to change the name
of the Fund and to approve an increase in the annual fee paid by the Fund to the
Fund's sponsor.
As you review these materials, please keep in mind that if the new
investment management agreement and Rule 12b-1 Plan are approved, your fund
shares will not change. The advisory fees charged to your fund will increase, as
will the fee paid to the Fund's sponsor, but the fee rate payable under the
fund's rule 12b-1 plan will stay the same. If you approve the new investment
management agreement and Rule 12b-1 Plan, you should continue to receive the
high quality investment management and shareholder services that you have come
to expect.
Your Board of Trustees has approved the proposals and recommends them for
your approval. I encourage you to vote in favor of the proposals. Please read
the enclosed materials carefully before you vote on these proposals. The
materials explain in detail the reasons for the changes being proposed to you by
this proxy.
PLEASE VOTE NOW TO HELP SAVE THE COST OF ADDITIONAL SOLICITATIONS.
As always, we thank you for your confidence and support.
Sincerely,
/s/ Peter F. Waitneight
Chairman
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<PAGE>
QUAKER INVESTMENT TRUST
1288 Valley Forge Road, Suite 76
Valley Forge, PA 19482
TELEPHONE 1-800-220-8888
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 26, 1999 AND PROXY STATEMENT
February 15, 1999
To the Shareholders:
You are invited to attend a special meeting of shareholders of the Quaker
Enhanced Stock Market Fund (the "Fund"), a series of the Quaker Investment Trust
(the "Trust"):
The meeting will be held at 1288 Valley Forge Road, Suite 76, Valley Forge, PA
19482 on Friday, February 26, 1999 at 10:00 a.m., Eastern time, for the
following purposes and to transact such other business as may properly come
before the meeting or any adjournment of the meeting:
1. To approve a new investment management agreement with Compu-Val
Investments, Inc.
2. To approve a change in the fundamental investment policies of the
Fund, to a policy of investing in large-cap value stocks and employing
tax-enhancing investment techniques.
3. To ratify a change in the Fund's name to the Quaker Large-Cap Value
Fund
4. To ratify an increase in the fees paid to the Fund's sponsor, Quaker
Funds, Inc.
5. To approve a new Rule 12b-1 distribution plan on the same terms as the
current plan.
The Board of Trustees of your Fund has selected the close of business on January
31, 1999 as the record date for the determination of shareholders of the Fund
entitled to notice of and to vote at the meeting. Shareholders are entitled to
one vote for each share held.
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PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD. SIGN, DATE
AND RETURN IT IN THE ENVELOPE PROVIDED. TO SAVE THE COST OF ADDITIONAL
SOLICITATIONS, PLEASE MAIL YOUR PROXY PROMPTLY.
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The accompanying proxy is solicited by the Board of Trustees (the "Board") of
the Quaker Investment Trust for voting at the special meeting of shareholders to
be held on Friday, February 26, 1999, and at any and all adjournments thereof
(the "Meeting"). This proxy statement was first mailed to shareholders on or
about February 16, 1998.
<PAGE>
THE SERIES FUNDS. Quaker Investment Trust("Quaker" or the "Trust") is a "series
company" that issues various series of shares. (Each series also is sometimes
described herein as a "Fund.") Each series has its own investment objective and
policies and operates independently for purposes of investments, dividends and
redemptions.
The series of Quaker include:
Quaker Enhanced Stock Market Fund
Quaker Core Equity Fund
Quaker Aggressive Growth Fund
Quaker Mid-Cap Value Fund
Quaker Small-Cap Value Fund
Quaker Fixed Income Fund
Each Fund presently offers a single class of shares, the No-Load Class. Shares
of each Fund represent a proportionate interest in that Fund.
The items to be approved pursuant to this proxy only affect the shareholders of
the Quaker Enhanced Stock Market Fund (the "Fund"). Only the shareholders of the
Fund are being asked to vote on five items, approval of a new investment
management agreement with Compu-Val Investments, Inc., a change in certain
fundamental investment policies of the Fund, a change in the name of the Fund,
an increase in the fees paid to the Fund's sponsor, Quaker Funds, Inc., and
approval of a new 12b-1 Plan of Distribution. The Board of Trustees of your Fund
recommends an affirmative vote on all items. The vote required to approve each
item is described under the section of this proxy statement entitled
"Miscellaneous."
The Board of Trustees has fixed the close of business on January 31, 1999 as the
record date for the determination of shareholders entitled to notice of and to
vote at the Meeting. As of January 31, 1999, the Fund had 126,544.85 Shares
issued and outstanding.
ITEM 1. NEW INVESTMENT MANAGEMENT AGREEMENT WITH COMPU-VAL INVESTMENTS, INC.
INTRODUCTION
Fiduciary Asset Management Co. ("FAMCO"), the current investment Advisor to the
Fund, has resigned as Advisor, effective February 26, 1999. FAMCO resigned as
Advisor in order to allow the Trust to seek other means of enhancing the asset
growth and performance of the Fund. FAMCO's resignation was entirely voluntary,
and was undertaken solely in an effort to enhance the future prospects for the
Fund. As a result, the Board of Trustees for the Fund has undertaken a
nationwide search to find a new Advisor, and after full consideration, has
chosen Compu-Val Investments, Inc. ("Compu-Val") to be the new Advisor for the
Fund (the "Changeover").
Compu-Val was established as a Delaware corporation in 1974, and is registered
under the Investment Advisors Act of 1940, as amended. Compu-Val currently
serves as investment advisor to over $170 million in assets, including serving
as investment advisor to the Quaker Mid-Cap Value Fund. It has been rendering
investment counsel, utilizing investment strategies substantially similar to
that of the Mid-Cap Value Fund, to individuals, banks and thrift institutions,
pension and profit sharing plans, trusts, estates, charitable organizations and
corporations since 1974. Compu-Val 's address is 1702 Lovering Avenue,
Wilmington, Delaware, 19806. CVI is controlled by James Kalil, Ph.D. and Donald
J. Kalil.
Christopher O'Keefe, Director of Equity Research for Compu-Val since 1995, is
the Fund's portfolio manager. From 1989 to 1995, Mr. O'Keefe was an investment
analyst with CoreStates investment Advisers, Philadelphia, PA.
The replacement of FAMCO by Compu-Val will constitute an "assignment" of the
Fund's current investment management agreement, as that term is defined in the
Investment Company Act of 1940 (the "1940 Act"). As required by the 1940 Act,
each current investment management agreement provides for its automatic
termination in the event of its assignment. In anticipation of the resignation
of FAMCO, a new investment management agreement between Quaker and Compu-Val
("management agreement") is being proposed for approval by shareholders of the
Fund. A copy of the form of the new management agreement is attached hereto as
Exhibit A. The new management agreement for the Fund is on the same terms as the
current management agreement, except that the management fee to be paid to
Compu-Val is 0.75% per annum instead of 0.50% per annum.
BOARD OF TRUSTEES RECOMMENDATION
The Board met on January 20, 1999 to consider the Changeover and the
qualifications of Compu-Val. The Board of Quaker, including a majority of the
Trustees who are not parties to such agreement or interested persons of any such
party, voted to approve the new management agreement and to recommend it to
shareholders for their approval.
For information about the Board's deliberations and the reasons for its
recommendation, please see "Board of Trustees Evaluation" near the end of this
Item 1.
The Board recommends that shareholders vote FOR approval of the new management
agreement.
1
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
The current and new management agreements both provide that the Fund's Advisor
will act as investment Advisor, manage its investments, administer its business
affairs, furnish offices, necessary facilities and equipment, provide clerical,
bookkeeping and administrative services, provide shareholder and information
services and permit any of its officers or employees to serve without
compensation as Trustees or officers of Quaker if duly elected to such
positions. Under the current and new management agreements, Quaker agrees to
assume and pay the charges and expenses of its operations including, by way of
example and not by way of limitation, the compensation of the Trustees other
than those affiliated with the investment manager, charges and expenses of
independent auditors, of legal counsel, of any transfer or dividend disbursing
agent, of any registrar of Quaker and of the custodian (including fees for
safekeeping of securities), costs of calculating net asset value, all costs of
acquiring and disposing of portfolio securities, interest, if any, on
obligations incurred by Quaker, costs of share certificates, membership dues in
the Investment Company Institute or any similar organization, reports and
notices to shareholders, other like miscellaneous expenses and all taxes and
fees to federal, state or other governmental agencies.
Listed below is a comparison of the annual management fee rates as a percentage
of average daily net assets payable under the current management agreement and
the new management agreement for the Fund.
CURRENT AGREEMENT NEW AGREEMENT
----------------- -------------
0.50% 0.75%
Each management agreement provides that the Advisor shall not be liable for any
error of judgment or of law, or for any loss suffered by Quaker in connection
with the matters to which the management agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Advisor in the performance of its obligations and duties or by reason of its
reckless disregard of its obligations and duties under the management agreement.
Each management agreement may be terminated by Quaker without penalty upon sixty
(60) days written notice by Quaker or Compu-Val, or by a majority vote of the
outstanding shares of the Fund, and automatically terminates in the event of its
assignment.
The new management agreement for the Fund will be dated as of February 26, 1999.
The new management agreement will continue in effect for an initial term of two
years, and may continue thereafter from year to year if specifically approved at
least annually by vote of "a majority of the outstanding voting securities" of
the Fund, as defined under the 1940 Act, or by the Board and, in either event,
the vote of a majority of the Trustees who are not parties to the agreement or
interested persons of any such party, cast in person at a meeting called for
such purpose.
At the Board meeting on January 20, 1999, the Board voted to recommend the new
agreement to the Fund's shareholders for their approval.
BOARD OF TRUSTEES EVALUATION
At a regular meeting of the Board on January 20, 1999, the Board discussed its
options with respect to the resignation of FAMCO, previously communicated to the
Board. The Board agreed that it would be necessary and in the best interests of
the Fund to replace the Advisor. Having previously directed management of the
Trust to search for a new Advisor, the Board evaluated several potential
replacement Advisors, as presented to the Board by management. In addition,
counsel to the Fund and the independent Trustees prepared and distributed an
analysis of the Board's fiduciary obligations. The Trustees discussed the
recommendations of management and reviewed their fiduciary obligations. There
was extended discussion of, and questioning about, Compu-Val's qualifications as
an investment Advisor and its plans for the Fund. As a result of their
investigation and consideration of Compu-Val and the new management agreement,
at its meeting on January 20, 1999, the Board voted to approve the new
management agreement and to recommend it to the shareholders of the Fund for
their approval.
2
<PAGE>
During its deliberations, the Board used outside assistance in its analysis of
Compu-Val's financial status and other aspects of the Changeover to help
evaluate the potential effects upon the Fund and Quaker. Throughout the review
process the independent Trustees had the assistance of legal counsel.
The Board obtained from Compu-Val information regarding Compu-Val and the future
plans of Compu-Val with respect to the Fund. Included in the information
furnished to and discussed with the Board were financial statements and other
representations of the financial condition of Compu-Val.
In connection with the Board's consideration of Compu-Val, the Board noted that
Compu-Val was already serving as Advisor to another fund in the Quaker Family of
Funds, and that its performance had been satisfactory. Due to the existing
relationship between the Trust and Compu-Val, the Board was more comfortable
with Compu-Val's qualifications.
In evaluating the new management agreement, the Board took into account that the
new management agreement for the Fund, including the terms relating to the
services to be provided and the fees and expenses payable by Quaker, is on the
same terms as the current management agreement, except for an increase in
management fees. In that regard, the Board examined the proposed fees in light
of fees paid to other Advisors for similar funds, and for Advisors as a whole,
in light of the duties and responsibilities of the Advisor. As a result of its
deliberations, the Board found that, in the exercise of its reasonable business
judgement, the proposed management fee to be paid to Compu-Val under the new
management agreement was fair and reasonable.
The Board considered a number of factors in its evaluation of the proposed new
agreement, including the nature and quality of services provided by Compu-Val;
investment performance, both of Compu-Val itself and relative to that of
competitive investment Advisors; investment management fees and expense ratios
of Quaker and competitive investment companies; expected Compu-Val profitability
from managing the Fund; fall-out benefits to Compu-Val from its relationship to
Quaker, including revenues derived from services provided to Quaker by
affiliates of Compu-Val; and the potential benefits to Compu-Val and to Quaker
and their shareholders of receiving research services from broker/dealer firms
in connection with the allocation of portfolio transactions to such firms. The
Board discussed the Changeover and the financial condition of Compu-Val with the
senior management of Compu-Val and among themselves.
In evaluating the new management agreement, the Board gave great, though not
controlling, weight to the nature and quality of services provided by Compu-Val;
investment performance, both of Quaker itself and relative to that of
competitive investment companies; investment management fees and expense ratios
of Quaker and competitive investment companies; Compu-Val profitability from
managing the Fund; fall-out benefits to Compu-Val from its relationship to
Quaker, including revenues derived from services provided to Quaker by
affiliates of Compu-Val; and the potential benefits to Compu-Val and to Quaker
and their shareholders of receiving research services from broker/dealer firms
in connection with the allocation of portfolio transactions to such firms, were
all equally important factors leading the Board to conclude that the new
management agreement would be of benefit to the Fund. Of equal importance to the
Board were its findings that the financial condition of Compu-Val, its ongoing
financial viability, and its assurances to the Board that it would continue to
provide services to the Fund at the same level and in the same manner as in the
past, as well as the Board's past history with Compu-Val, made it more likely
that Compu-Val would perform well for the Fund's shareholders.
3
<PAGE>
As a result of their investigation and consideration of the Changeover and the
new management agreement, at its meeting on January 20, 1999, the Board voted to
approve the new management agreement and to recommend it to the shareholders of
the Fund for their approval.
The Board of Quaker recommends that shareholders of the Equity fund vote FOR
approval of the new management agreement.
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ITEM 2. NEW FUNDAMENTAL INVESTMENT POLICIES FOR THE FUND.
INTRODUCTION
At a regular meeting of the Board of Trustees on January 20, 1999, Compu-Val
proposed a change in certain of the Fund's fundamental investment policies.
Presently, the Fund invests in a portfolio of securities whose diversification,
market capitalization and volatility risk characteristics is designed to
approximate those of the Standard & Poors 500 Index (the "S&P 500"), while also
seeking to identify industry sectors and individual securities which offer the
opportunity to exceed the total return of the S&P 500. Currently, the Fund may
contain up to 300 issues, and may not contain a representation of all sectors
comprising the S&P 500. In contrast to other funds whose stated investment
objective is to passively track the performance of S&P 500 by maintaining an
investment portfolio substantially identical to the S&P 500, the Fund is
actively managed with constant attention to proprietary models designed to track
the S&P 500 in risk and volatility, yet exceed the S&P 500 in potential price
appreciation.
Compu-Val proposed to the Board that the investment objective of the Fund be
changed, and that the Fund concentrate its investments in large-cap value
stocks. Large-cap companies are defined as those companies that have a total
market capitalization in excess of $6 billion. In selecting securities for the
portfolio of the Fund, Compu-Val proposed that it use the same approach to
investing that it uses in managing the investment of the Quaker Mid-Cap Value
Fund; namely to seek asset-rich and earnings rich companies, selling at
relatively low market valuations, with attractive growth and momentum
characteristics. Compu-Val would employ the same analytical techniques used to
select securities for the Mid-Cap Fund, using its cash flow based, dividend
discount model. Compu-Val has extensive experience in the both the mid-cap and
large-cap markets.
Compu-Val also proposed that the Fund seek to invest in a manner designed to
minimize adverse tax consequences to shareholders. In that regard, Compu-Val
proposed that the Fund employ tax-enhanced investment techniques similar to
those currently being employed for the Quaker Core Equity Fund. This investment
policy involves minimizing portfolio turnover. Excessive portfolio turnover can
result in the realization of short term and long term capital gains, the
taxation of which is normally passed on to shareholders.
The adoption of the investment policies described above will constitute a
material alteration of some, but not all, of the Fund's fundamental investment
policies, and under the Investment Company Act of 1940 (the "1940 Act"), such a
material change must be approved by the shareholders of the affected fund.
Accordingly, you are being asked to approve the new investment policies. All
other fundamental policies of the Fund not specifically addressed in this proxy
will remain unchanged.
BOARD OF TRUSTEES RECOMMENDATION
The Board met on January 20, 1999 to consider the proposed new investment
policies. The Board of Quaker, including a majority of the Trustees who are not
parties to such agreement or interested persons of any such party, voted to
approve the new investment policies and to recommend them to shareholders for
their approval.
4
<PAGE>
For information about the Board's deliberations and the reasons for its
recommendation, please see "Board of Trustees Evaluation" near the end of this
Item 2.
The Board recommends that shareholders vote FOR approval of the new fundamental
investment policies.
BOARD OF TRUSTEES EVALUATION
At a regular meeting of the Board on January 20, 1999, the Board considered the
proposal of Compu-Val to change the investment policies of the Fund to
concentrate the Fund's investments in large-cap stocks and to employ investment
techniques designed to minimize taxation to shareholders. The Board discussed
its options with respect to Compu-Val's request in light of Compu-Val's
performance as investment Advisor to the Mid-Cap Fund over the Fund's lifetime.
There was extended discussion of, and questioning about, Compu-Val's
qualifications as an investment advisor, its past performance history and its
future plans for the Fund. There was also extended discussion of the likelihood
that such a change would result in a positive benefit for the shareholders of
the Fund. As a result of their investigation and consideration of Compu-Val's
proposal, at its meeting on January 20, 1999, the Board voted to approve the new
investment policies and to recommend them to the shareholders of the Fund for
their approval.
During its deliberations, the Board used outside assistance in its analysis of
Compu-Val's historical performance in the area of large-cap stock investing and
other aspects of Compu-Val to help evaluate the potential effects upon the Fund
and Quaker. Throughout the review process the independent Trustees had the
assistance of legal counsel.
As a result of their investigations and considerations, at its meeting on
January 20, 1999, the Board voted to approve the new investment policies and to
recommend them to the shareholders of the Fund for their approval.
The Board of Quaker recommends that shareholders of the Fund vote FOR approval
of the new investment policies.
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ITEM 3. NAME CHANGE FOR THE FUND
As described above, at its meeting on January 20, 1999, the Board of Trustees of
the Fund voted to change certain fundamental investment policies of the Fund and
recommend that the shareholders of the Fund approve those changes. Because the
Board anticipates that such changes will be approved, the Fund's current name
will no longer accurately reflect the investment policies and strategies of the
Fund. Accordingly, the Board, after full consideration, approved a change in the
Fund's name, from the Quaker Enhanced Stock Market Fund to the Quaker Large-Cap
Value Fund.
In deciding to change the Fund's name, the Board determined that the name of the
Fund should reflect the actual investment policies and philosophies of the Fund
to the greatest extent possible. The Board also desired to give the Fund a name
that would be both descriptive, accurate, and that would compliment the other
Funds in the Trust. Accordingly, after full deliberation, the Board voted to
rename the Fund the Quaker Large-Cap Value Fund.
The Board, at its meeting on January 20, 1999, agreed that the shareholders of
the Fund have an opportunity to ratify the Board's choice. Accordingly, the name
change is being submitted for ratification. If the fundamental investment policy
changes described in Item 2 above are not approved, the Board will take
appropriate action with respect to the Fund's name.
5
<PAGE>
The Board of Quaker recommends that shareholders of the Fund vote FOR approval
of the name change for the Fund.
ITEM 4. APPROVAL OF AN INCREASE IN FEES TO THE FUND'S SPONSOR, QUAKER FUNDS,
INC.
At its meeting on January 20, 1999, the Board considered an increase in the fees
paid to the Fund's sponsor, Quaker Funds, Inc.("QFI"). Pursuant to a Shareholder
Servicing Agreement (the "Agreement") previously adopted by the Trust for the
Fund, QFI provides oversight with respect to the Advisor, arranges for payment
of investment advisory and administrative fees, coordinates payments under the
Fund's Distribution Plan, develops communications with existing Fund
shareholders, assists in responding to shareholder inquiries, and provides other
shareholder servicing tasks. 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, Suite 76, Valley Forge, Pennsylvania 19482.
QFI currently operates under a voluntary agreement to waive receipt of its fee,
if necessary, to limit operating expenses and maintain the expense ratio of the
Fund. No shareholder servicing fees were paid to QFI by the Fund for the fiscal
year ended June 30, 1998.
As part of its continuing efforts to maximize services to shareholders, the
Board considered the fee arrangement with QFI, in light of the contemplated
changes to the Fund. The Trust presently has entered into similar agreements
with QFI for each fund in the Trust. QFI receives a fee of 0.25% annually of the
net asset value of each fund's assets for all funds in the Trust except for the
Fixed Income Fund, which pays a fee of 0.15% to QFI, and the Fund, which
currently pays a fee of 0.20% annually.
At its meeting on January 20, 1999, the Board considered the services provided
to the Fund by QFI and considered the impact of the changes to the Fund on QFI
and its responsibilities under its Agreement. There was extensive discussion
among the Board as to the potential increases in the responsibilities of QFI
with respect to the Fund in determining whether to increase the fees paid to QFI
under the Agreement.
As a result of its considerations and deliberations, at its meeting on January
20, 1999, the Board voted to approve an increase in fees paid to QFI under the
Agreement to an annual rate of 0.25% of average daily net assets. This action
was undertaken in order to achieve parity among the funds in the expenses paid
to QFI for similar services. In approving the fee increase, the Board gave great
weight to the assurances of QFI that it would continue to operate under the same
voluntary agreement to waive receipt of its fees in order to control Fund
expenses.
Although the Board has the authority to approve the changes described above, the
Board again desires to involve shareholders in decisions which materially affect
their investments. Accordingly, this issue is being submitted to the
shareholders for their ratification.
The Board of Quaker recommends that shareholders of the Fund vote FOR approval
of the Shareholder Servicing Agreement fee increase for QFI.
ITEM 5. NEW RULE 12B-1 DISTRIBUTION PLAN
INTRODUCTION
Rule 12b-1 under the 1940 Act (the "Rule"), provides, among other things, that
an investment company (mutual fund) may bear expenses of distributing its shares
only pursuant to a plan (a "Rule 12b-1 Plan") adopted in accordance with the
Rule. FAMCO. is a party to the Fund's current Rule 12b-1 Plan.
6
<PAGE>
Due to the pending resignation of FAMCO as Advisor to the Fund, pursuant to a
vote of Quaker's Board and independent Trustees, voting separately, Compu-Val
was chosen to be the new Advisor to the Fund. As required by the 1940 Act, each
Fund's Rule 12b-1 Plan provides for its automatic termination in the event of
its assignment. Accordingly, a new Rule 12b-1 Plan is being submitted for
shareholder approval. THE NEW RULE 12B-1 PLAN IS ON THE SAME TERMS AS QUAKER'S
CURRENT RULE 12B-1 PLAN. A form of the new Rule 12b-1 Plan is attached hereto as
Exhibit C. NO CHANGE IN FEES IS BEING PROPOSED.
On January 20, 1999, the Board, including a majority of the "non-interested"
Trustees, voted to approve the new Rule 12b-1 Plan and directed that the Plan be
submitted to the Fund shareholders at the Meeting, along with a recommendation
that such shareholders approve the Rule 12b-1 Plan.
If the new Rule 12b-1 Plan is approved by the Fund shareholders, it will become
effective and will replace the current Rule 12b-1 Plan immediately. If the
shareholders do not approve the new Rule 12b-1 Plan, the Board would consider
appropriate action.
DESCRIPTION OF THE NEW RULE 12B-1 PLANS
As noted above, a form of the new Rule 12b-1 Plan is attached as Exhibit C and
this summary is qualified in its entirety by reference to Exhibit C. THE TERMS
OF THE NEW RULE 12B-1 PLAN DESCRIBED BELOW ARE THE SAME AS IN THE CURRENT RULE
12B-1 PLAN.
Under the new Rule 12b-1 Plan, Compu-Val and others may receive a distribution
fee, payable as an expense of the Shares of the Fund, which Compu-Val would use
to pay for distribution services which it had previously provided to the Fund.
If Rule 12b-1 fees are paid under the Plan for such services, the investment
advisory fees paid to Compu-Val will decrease by the same amount as the Rule
12b-1 fees paid, so that total Fund expenses will be unaffected. Compu-Val bears
all the expenses of providing such services, including the payment of any
commissions or distribution fees. Compu-Val provides for the preparation of
advertising or sales literature and bears the cost of printing and mailing
prospectuses to persons other than shareholders. Quaker bears the cost of
qualifying and maintaining the qualification of Shares for sale under the
securities laws of the various states, and the expense of registering its Shares
with the SEC.
Fund Shares are sold to the public at net asset value. Like the current Plan,
Compu-Val may receive a distribution fee, payable monthly upon presentation to
the Fund of receipts evidencing proper expenditures, at an annual rate of not
greater than 0.25% of average daily net assets of the Fund Shares. However, like
the current Plan, Compu-Val's investment advisory fee will decrease by any
amounts paid pursuant to the Plan, so that the effect on shareholders will be
that overall fees will not increase.
No fees have been paid to date from the current Rule 12b-1 Plan.
The new Rule 12b-1 Plan will continue in effect for an initial term of one year,
and may continue thereafter from year to year if specifically approved at least
annually by vote of "a majority of the outstanding voting securities" of the
Fund, as defined under the 1940 Act, or by the Board, including, in either
event, the vote of a majority of the "non interested" Trustees, cast in person
at a meeting called for such purpose. Pursuant to the new Rule 12b-1 Plan,
Compu-Val will prepare reports to the Board on a quarterly basis showing the
amounts paid to the various firms, if any, and such other information as from
time to time the Board may reasonably request.
7
<PAGE>
In approving the new Rule 12b-1 Plan, the Board determined, as with the current
Rule 12b-1 Plan, that there is a reasonable likelihood that the new Rule 12b-1
Plan would benefit Quaker, the Fund and its shareholders. In doing so, the Board
considered several factors, including that the new Rule 12b-1 Plans would likely
(i) facilitate distribution of the Fund's shares, (ii) help maintain the
competitive position of Quaker in relation to other funds that have implemented
or are seeking to implement similar distribution arrangements; and (iii) permit
possible economies of scale through increased Fund size.
BOARD OF TRUSTEES RECOMMENDATION
As a result of their consideration of the foregoing factors, the Board voted to
approve the new Rule 12b-1 Plan and to submit it to the shareholders for their
approval.
The Board recommends that shareholders vote FOR approval of the new Rule 12b-1
Plans.
- --------------------------------------------------------------------------------
OTHER INFORMATION
UNDERWRITER.
Declaration Distributors, Inc. ("DDI") is a broker/dealer registered as such
with the Securities and Exchange Commission, and is a member in good standing of
the National Association of Securities Dealers. DDI has been providing
underwriting services to mutual fund companies for ten years. DDI is a
wholly-owned subsidiary of Declaration Holdings, Inc. ("DHI"), a Delaware
corporation. Declaration Service Company ("DSC"), another wholly-owned
subsidiary of DHI, provides transfer agency, accounting and administrative
services to mutual fund companies, including Quaker.
DDI receives a flat fee of $10,000 per year from Quaker as principal underwriter
for all series of Quaker. Quaker receives in all cases the full net asset value
of the shares sold.
ALLOCATION OF PORTFOLIO TRANSACTIONS. Compu-Val will be the investment manager
for the Fund. Compu-Val, in effecting purchases and sales of portfolio
securities for the account of the Fund, implements Quaker's policy of seeking
best execution of orders, which includes best net prices, except to the extent
that Compu-Val may be permitted to pay higher brokerage commissions for research
services as described below. Consistent with this policy, orders for portfolio
transactions are placed with broker-dealer firms giving consideration to the
quality, quantity and nature of each firm's professional services, which include
execution, clearance procedures, wire service quotations and statistical and
other research information provided to the Fund and Compu-Val. Any research
benefits derived are available for all clients, including clients of affiliated
companies. Since statistical and other research information is only
supplementary to research efforts of the Advisor and still must be analyzed and
reviewed by its staff, the receipt of research information is not expected to
materially reduce its expenses. In selecting among firms believed to meet the
criteria for handling a particular transaction, Compu-Val may give consideration
to those firms that have sold or are selling shares of Quaker, as well as to
those firms that provide market, statistical and other research information to
Quaker and to Compu-Val. Compu-Val is not authorized to pay higher commissions
or in the case of principal trades, higher prices, to firms that provide such
services, except as provided below.
Compu-Val may in certain instances be permitted to pay higher brokerage
commissions solely for receipt of market, statistical and other research
services. Subject to Section 28(e) of the Securities Exchange Act of 1934 and
procedures adopted by the Board, the Fund could pay to a firm that provides
research services to Compu-Val a commission for effecting a securities
transaction for a Fund in excess of the amount other firms would have charged
for the transaction. The Fund could do this if Compu-Val determines in good
faith that the greater commission is reasonable in relation to the value of the
research services provided by the executing firm viewed in terms either of a
particular transaction or Compu-Val's overall responsibilities to the Fund or
other clients. Not all such research services may be useful or of value in
advising a particular series. Research benefits will be available for all
clients of Compu-Val and its subsidiaries. In addition, the investment
management fee paid by the Fund to Compu-Val is not reduced because it receives
these research services.
8
<PAGE>
MISCELLANEOUS
GENERAL
The cost of preparing, printing and mailing the enclosed proxy, accompanying
notice and proxy statement and all other costs in connection with solicitation
of proxies will be paid by Compu-Val, including any additional solicitation made
by letter, telephone or telegraph. The legal costs associated with the
preparation of this proxy will be paid by Quaker Funds, Inc. In addition to
solicitation by mail, certain officers and representatives of Quaker, officers
and employees of Compu-Val and certain financial services firms and their
representatives, who will receive no extra compensation for their services, may
solicit proxies by telephone, telegram or personally. In addition, Quaker and/or
Compu-Val may retain a firm to solicit proxies on behalf of the Board, the fee
for which will be borne by the party incurring the expense.
A COPY OF YOUR FUND'S ANNUAL REPORT AND ANY MORE RECENT SEMI-ANNUAL REPORT ARE
AVAILABLE WITHOUT CHARGE UPON REQUEST BY WRITING TO QUAKER, P.O. BOX 844,
CONSHOHOCKEN, PA 19428-0844, OR BY CALLING 1-800-220-8888.
PROPOSALS OF SHAREHOLDERS
As a Massachusetts Business Trust, Quaker is not required to hold annual
shareholder meetings, but will hold special meetings as required or deemed
desirable. Since Quaker does not hold regular meetings of shareholders, the
anticipated date of the next shareholders meeting cannot be provided. Any
shareholder proposal that may properly be included in the proxy solicitation
material for a special shareholder meeting must be received by Quaker no later
than four months prior to the date when proxy statements are mailed to
shareholders.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Trustees of Quaker is not aware of any matters that will be
presented for action at the Meeting other than the matters set forth herein.
Should any other matters requiring a vote of shareholders arise, the proxy in
the accompanying form will confer upon the person or persons entitled to vote
the shares represented by such proxy the discretionary authority to vote the
shares as to any such other matters in accordance with their best judgment in
the interest of Quaker.
VOTING, QUORUM
Each share of a Fund is entitled to one vote on each matter submitted to a vote
of the holders of that shares of such Fund at the Meeting; no shares have
cumulative voting rights.
Each valid proxy will be voted in accordance with the instructions on the proxy
and as the persons named in the proxy determine on such other business as may
come before the Meeting. If no instructions are given, the proxy will be voted
FOR all items on the proxy. Shareholders who execute proxies may revoke them at
any time before they are voted, either by writing to Quaker or in person at the
time of the Meeting. Proxies given by telephone or electronically transmitted
instruments may be counted if obtained pursuant to procedures designed to verify
that such instructions have been authorized.
9
<PAGE>
All Items to be voted on by this proxy require the affirmative vote of a
"majority of the outstanding voting securities" of the Fund. The term "majority
of the outstanding voting securities" as defined in the 1940 Act means: the
affirmative vote of the lesser of (1) 67% of the voting securities of the Fund
present at the meeting if more than 50% of the outstanding shares of the Fund
are present in person or by proxy or (2) more than 50% of the outstanding shares
of the Fund.
The Declaration of Trust and by-laws of Quaker provide that the presence at a
shareholder meeting in person or by proxy of at least 33.3% of the shares of a
series constitutes a quorum for that series. Thus, the meeting for a particular
series could not take place on its scheduled date if less than 33.3% of the
shares of that series were represented. If, by the time scheduled for the
meeting, a quorum of shareholders of a series is not present or if a quorum is
present but sufficient votes in favor of any of the items are not received, the
persons named as proxies may propose one or more adjournments of the meeting for
that series to permit further soliciting of proxies from its shareholders. Any
such adjournment will require the affirmative vote of a majority of the shares
of the series as to which the meeting is being adjourned present (in person or
by proxy) at the session of the meeting to be adjourned. The persons named as
proxies will vote in favor of any such adjournment if they determine that such
adjournment and additional solicitation are reasonable and in the interest of
the respective series' shareholders.
In tallying shareholder votes, abstentions and "broker non-votes" (i.e., shares
held by brokers or nominees as to which (i) instructions have not been received
from the beneficial owners or persons entitled to vote and (ii) the broker or
nominee does not have discretionary voting power on a particular matter) will be
counted for purposes of determining whether a quorum is present for purposes of
convening the Meeting. On Item 1 & 2, abstentions and broker non-votes will not
be counted as "votes cast" and will have no effect on the result of the vote. On
Item 3, abstentions and broker non-votes will be considered to be both present
at the Meeting and issued and outstanding and, as a result, will have the effect
of being counted as voted against the Items. The Board of Trustees of Quaker
recommends an affirmative vote on all items.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Board of Trustees,
Peter F. Waitneight
President
10
<PAGE>
EXHIBIT A
HOLDERS OF MORE THAN
5% OF THE FUND'S SHARES
NAME AND ADDRESS % OWNERSHIP # SHARES
- ---------------- ----------- --------
PETER F. WAITNEIGHT 16.53% 20,912
LAURIE KEYES 8.97% 11,356
TRUST COMPANY
OF ILLINOIS 19.54% 24,732
DONALDSON, LUFKIN
& JENRETTE, SEC COR 6.10% 7,715
<PAGE>
EXHIBIT B
FORM OF
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT ADVISOR AGREEMENT
AGREEMENT, made this 26 day of February, 1999, between Quaker Investment
Trust (the "Trust") and Compu-Val Investments, Inc., a Delaware 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 Quake Large-Cap Value Fund (the "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,
agree as follows:
1. Appointment
-----------
The Trust hereby appoints the Advisor to act as Investment Advisor to the
Quaker Large-Cap Value Fund (the "Fund") for the periods and on the terms set
forth in this Agreement. The Advisor accepts the 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 copies 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
may be from time to time amended, are herein called the "by-laws")
c. Resolutions of the Trust's Board of Trustees 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
called the "Shares") as filed with the Securities and Exchange
Commission ("SEC") and all amendments thereto;
e. The Fund's Prospectus, 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")
<PAGE>
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 or 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.
4. Services not Exclusive
----------------------
The advisory services to be furnished by the Advisor hereunder are not to be
considered 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 a similar investment objective to that of the fund.
5. Books and Records
-----------------
In compliance with Rule 31a-3 promulgated under the 1940 Act, that 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.
<PAGE>
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 costs 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 therefore.
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 the 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. All
parties to this Agreement do hereby authorize and instruct the Declaration
Group, the Fund's Administrator, to provide a calculation each month of the
gross amount due the Advisor and to deduct from such amount all applicable
amounts of fee waivers as well as the amounts set forth in Exhibit A, if
applicable, prior to remitting fee payments hereunder.
8. Limitation of Liability
-----------------------
The Advisor shall not be liable for any error of judgement, 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 malfeasance, 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 resignation of the existing
investment advisor to the Fund 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 the 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 payment
of any penalty. Provided that termination by the Fund must be authorized 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).
<PAGE>
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 and 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.
<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 written
above.
Attest: QUAKER INVESTMENT TRUST
By: By: /s/ Peter F. Waitneight
--------------------------- ------------------------------
Title: Title: Chairman
Attest: COMPU-VAL INVESTMENTS, INC.
By: By:
--------------------------- ------------------------------
Title: Title:
EXHIBIT A
---------
12b-1 Fees
For shares sold through the Charles Schwab Mutual Fund Marketplace,
Fidelity Brokerage Services, Inc., Waterhouse Securities, Inc., Jack White &
Company, or other companies providing similar services, the 12b-1 fees to be
paid shall be equal to 0.20% of the purchase price of such shares.
For shares sold through an authorized wholesaler, the 12b-1 fees to be paid
shall be equal to:
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.
<PAGE>
EXHIBIT C
FORM OF
PLAN PURSUANT TO RULE 12B-1
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 LARGE-CAP VALUE FUND (the "Fund") of the Trust;
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 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 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 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 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 Shares of the Fund,
either directly or through other persons with which the Trust has entered
into agreements related to this Plan.
<PAGE>
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 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 of0.25% of the average annual net assets of the
Shares of the Fund, nor may such expenditures paid as service fees to any
person who sells 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 the26thth
day of February, 1999. 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 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. Record keeping. 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.
<PAGE>
IN WITNESS THEREOF, the parties hereto have caused this Plan to be executed as
of the date written above.
QUAKER INVESTMENT TRUST
Attest: By
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QUAKER LARGE-CAP VALUE FUND
Attest: By
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Thank you for mailing your ballot promptly!
We appreciate your continuing support and look forward to serving your future
investment needs.
<PAGE>
QUAKER INVESTMENT TRUST
1. Approve a new investment management agreement with Compu-Val Investments,
Inc. on different terms than the current agreement between the Fund and
Fiduciary Asset Management Co.
For Against Abstain
/ / / / / /
2. Approve new fundamental investment policies for the Fund changing to a
large-cap value oriented approach with tax enhanced investing techniques.
For Against Abstain
/ / / / / /
3. Ratify a change in the Fund's name from the Quaker Enhanced Stock Market
Fund to the Quaker Large-Cap Value Fund.
For Against Abstain
/ / / / / /
4. Ratify an increase in the fees paid to the Fund's sponsor, Quaker Funds,
Inc., from 0.20% per annum to 0.25% per annum.
For Against Abstain
/ / / / / /
5. Approve a new Rule 12b-1 distribution plan on the same terms as the current
plan.
For Against Abstain
/ / / / / /
Signature(s) (All registered owners of accounts shown to the left must sign. If
signing for a corporation, estate or trust, please indicate your capacity or
title.)
X
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Signature Date
X
- --------------------------------------------------------------------------------
Signature Date
PLEASE VOTE TODAY!
Please vote all issues shown on your ballot.
Please vote on each issue using blue or black ink to mark an X in one of the
three boxes provided on each ballot. On all Items, mark -- For, Against or
Abstain. Then sign, date and return your ballot in the accompanying postage-paid
envelope. All registered owners of an account, as shown in the address on the
ballot, must sign the ballot. If you are signing for a corporation, trust or
estate, please indicate your title or position.
THANK YOU FOR MAILING YOUR BALLOT PROMPTLY!
Your vote is needed! Please vote on the reverse side of this form and sign in
the space provided. Return your completed proxy in the enclosed envelope today.
You may receive additional proxies for your other accounts with Quaker. These
are not duplicates; you should sign and return each proxy card in order for your
votes to be counted. Please return them as soon as possible to help save the
cost of additional mailings.
The signers of this proxy hereby appoint David F. Ganley and Paul L. Giorgio,
and each of them, attorneys and proxies, with power of substitution in each, to
vote all shares for the signers at the special meeting of shareholders to be
held February 26, 1999, and at any adjournments thereof, as specified herein,
and in accordance with their best judgement, on any other business that may
properly come before this meeting. If no specification is made herein, all
shares will be voted "FOR" the proposals set forth on this proxy. The proxy is
solicited by the Board of Quaker which recommends a vote "FOR" all matters.
