As filed with the Securities and Exchange Commission on September 14, 1999
Securities Act File No. 033-38074.
Investment Company Act No. 811-6260.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Amendment No. [13]
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [X]
Post Effective Amendment No. [15]
QUAKER INVESTMENT TRUST
(formerly Branch Cabell Investment Trust)
1288 Valley Forge Road, Suite 76
Post Office Box 987
Valley Forge, PA 19482
1-800-220-8888
AGENT FOR SERVICE
Terence P. Smith
555 North Lane, Suite 6160
Conshohocken, PA 19428
It is proposed that this filing will become effective:
[ ] Immediately upon filing pursuant to Rule 485(b), or
[ ] 60 days after filing pursuant to Rule 485(a)(1), or
[ ] 75 days after filing pursuant to Rule 485(a)(2), or
[ ] on ____________, pursuant to Rule 485(b), or
[X] 0n November 1, 1999, pursuant to Rule 485(a)(2)
<PAGE>
PROSPECTUS
Dated November 1, 1998
The Quaker Investment Trust
1288 Valley Forge Road, Suite 76
Valley Forge, PA 19482
1-800-220-8888
The Quaker Investment Trust(TM) (the "Trust") is a registered management
investment company currently offering the following portfolios (each a "Fund",
and collectively, the Funds"):
QUAKER CORE EQUITY FUND
QUAKER AGGRESSIVE GROWTH FUND
QUAKER LARGE-CAP VALUE MARKET FUND
QUAKER MID-CAP VALUE FUND
QUAKER SMALL-CAP VALUE FUND
QUAKER FIXED INCOME FUND
The Trust is offering three Classes of Shares by this Prospectus. Each Class
differs as to sales charges and ongoing expenses. However, each Class represents
an undivided interest in the same portfolio of securities. The Trust also offers
other Classes of shares without sales charges, but with different minimum
investment amounts. To receive a prospectus describing the Trust's other share
Classes, call the Trust.
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The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
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<PAGE>
TABLE OF CONTENTS
THE FUNDS
QUAKER CORE EQUITY FUND
What is the Fund's Investment Objective?...........................
What are the Fund's Primary Investment Strategies?.................
What are the Principal Risks of Investing in the Fund?.............
How Has the Fund Performed in the Past?............................
What are the Fund's Fees and Expenses?.............................
QUAKER AGGRESSIVE GROWTH FUND
What is the Fund's Investment Objective?...........................
What are the Fund's Primary Investment Strategies?.................
What are the Principal Risks of Investing in the Fund?.............
How Has the Fund Performed in the Past?............................
What are the Fund's Fees and Expenses?.............................
QUAKER LARGE-CAP VALUE FUND
What is the Fund's Investment Objective?...........................
What are the Fund's Primary Investment Strategies?.................
What are the Principal Risks of Investing in the Fund?.............
How Has the Fund Performed in the Past?............................
What are the Fund's Fees and Expenses?.............................
QUAKER MID-CAP VALUE FUND
What is the Fund's Investment Objective?...........................
What are the Fund's Primary Investment Strategies?.................
What are the Principal Risks of Investing in the Fund?.............
How Has the Fund Performed in the Past?............................
What are the Fund's Fees and Expenses?.............................
QUAKER SMALL-CAP VALUE FUND
What is the Fund's Investment Objective?...........................
What are the Fund's Primary Investment Strategies?.................
What are the Principal Risks of Investing in the Fund?.............
How Has the Fund Performed in the Past?............................
What are the Fund's Fees and Expenses?.............................
QUAKER FIXED INCOME FUND
What is the Fund's Investment Objective?...........................
What are the Fund's Primary Investment Strategies?.................
What are the Principal Risks of Investing in the Fund?.............
How Has the Fund Performed in the Past?............................
What are the Fund's Fees and Expenses?.............................
THE FUNDS' ADVISERS & SPONSOR
For the Quaker Core Equity Fund....................................
For the Quaker Aggressive Growth Fund..............................
For the Quaker Large-Cap and Mid-Cap Value Funds...................
For the Quaker Small-Cap Value Fund................................
For the Quaker Fixed-Income Fund...................................
The Funds' Sponsor.................................................
HOW TO BUY AND SELL SHARES
Investing In The Funds.............................................
Determining Share Prices...........................................
Variable Pricing System............................................
Distribution (12b-1) Fees..........................................
Minimum Investment Amounts.........................................
Opening and Adding To Your Account.................................
Purchasing Shares By Mail..........................................
Purchasing Shares By Wire Transfer.................................
Purchases through Financial Service Organizations..................
Purchasing Shares By Automatic Investment Plan.....................
Purchasing Shares By Telephone.....................................
Miscellaneous Purchase Information.................................
How to Sell (Redeem) Your Shares...................................
By Mail............................................................
Signature Guarantees...............................................
By Telephone.......................................................
By Wire............................................................
Redemption At The Option Of The Trust..............................
Dividends And Distributions........................................
Tax Considerations.................................................
General Information................................................
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<PAGE>
THE FUNDS
QUAKER CORE EQUITY FUND
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund's investment objective is long-term growth of capital. Current
income is not a significant investment consideration, and any such income
realized will be considered incidental to the Fund's investment objective.
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Adviser attempts to achieve the Fund's investment objective by:
o normally investing at least 65% of the Fund's total assets in US
common stocks;
o investing in common stocks of companies with large market
capitalizations (over $6 billion);
o holding from 60 to 200 stocks in the Fund's investment portfolio;
o maintaining an investment portfolio that has, on average, a higher
price/earnings ratio and lower yield than the S&P 500 Index;
o investing in companies with strong fundamentals, increasing sales and
earnings, a conservative balance sheet and reasonable expectations of
continuing earnings increases; and
o reducing capital gains taxes by controlling portfolio turnover.
The Fund's Adviser utilizes a broad spectrum of qualitative and
quantitative investment tools to select portfolio companies. Up to 25% of
the Fund's total investment portfolio may be invested in securities that do
not satisfy some or all of the above criteria.
The Fund may invest up to 25% of its total assets in foreign securities
that are traded on a U.S. exchange, in the form of American Depository
Receipts ("ADRs"). The Fund will only invest in ADRs that are issuer
sponsored. Sponsored ADRs typically are issued by a U.S. bank or trust
company and evidence ownership of underlying securities issued by a foreign
corporation.
The Fund will normally invest its remaining assets in cash and cash
equivalents, such as U.S. government debt instruments, other money market
mutual funds, and repurchase agreements.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
General Risks- All investments are subject to inherent risks, and the Fund
is no exception. Accordingly, you may lose money by investing in the Fund.
When you sell your Fund shares, they may be worth more or less than what
you paid for them because the value of the Fund's investments will vary
from day-to-day, reflecting changes in market conditions, interest rates
and numerous other factors.
Stock Market Risk- The stock market tends to trade in cyclical price
patterns, with prices generally rising or falling over sustained periods of
time. The Fund invests primarily in common stocks, so the Fund will be
subject to the risks associated with common stocks, including price
volatility and the creditworthiness of the issuing company.
1
<PAGE>
Foreign Securities Risk- Investments in foreign securities involve greater
risks compared to domestic investments for the following reasons:
o Foreign companies are not subject to the regulatory requirements of
U.S. companies, so there may be less publicly available information
about foreign issuers than U.S. companies.
o Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards.
o Dividends and interest on foreign securities may be subject to foreign
withholding taxes. Such taxes may reduce the net return to Fund
shareholders.
o Foreign securities are often denominated in a currency other than the
U.S. dollar. Accordingly, the Fund will be subject to the risks
associated with fluctuations in currency values.
o Although the Fund will only invest in foreign issuers that are
domiciled in nations considered to have stable and friendly
governments, there is the possibility of expropriation, confiscation,
taxation, currency blockage or political or social instability which
could negatively affect the Fund.
Temporary Defensive Positions- Ordinarily, the Fund's portfolio will be
invested primarily in common stocks. However, the Fund is not required to
be fully invested in common stocks and, in fact, usually maintains certain
cash reserves. Depending upon market conditions, cash reserves may be a
significant percentage of the Fund's total net assets. The Fund usually
invests its cash reserves in U.S. Government debt instruments, other
unaffiliated mutual funds (money market funds) and repurchase agreements.
During times when the Fund holds a significant portion of its net assets in
cash, it will not be investing according to its investment objectives, and
the Fund's performance may be negatively affected as a result.
Year 2000 Risks- As with other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Adviser and the Fund's other
service providers don't properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known
as the "Year 2000" or "Y2K" problem. The Adviser is taking steps to address
the Y2K problem with respect to the computer systems that it uses and to
obtain assurances that comparable steps are being taken by the Fund's other
major service providers. The Adviser will monitor the companies in which
the Fund invests for evidence of Y2K preparedness. However, there can be no
assurance that the Fund's portfolio will not be adversely affected by the
Y2K problem. Further, foreign issuers may not be as well prepared for the
Y2K problem as U.S. issuers, and this may pose additional risk to the Fund.
HOW HAS THE FUND PERFORMED IN THE PAST?
Because the Fund is offering Class A, Class B and Class C shares for the
first time by this Prospectus, a performance bar chart and table describing
the Fund's annual performance for those shares and comparing that
performance to appropriate indices is not yet available. Performance
information will be included in the Fund's first semi-annual and annual
reports, which will be sent to you without charge at your request. Simply
contact the Fund at 1-800-220-8888.
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2
<PAGE>
WHAT ARE THE FUND'S FEES AND EXPENSES?
This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund.
Class A Class B Class C
- --------------------------------------------------------------------------------
Shareholder Fees:
- -----------------
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases 5.50% None None
(As a percentage of offering price)
Maximum Deferred Sales Charge (Load) None 5.50%(1) 1.00%(2)
(As a percentage of redemption proceeds)
Redemption Fees None(3) None None
Annual Fund Operating Expenses: Class A Class B Class C
- --------------------------------------------------------------------------------
(expenses that are deducted from Fund assets)
Management Fees (4) 1.00% 1.00% 1.00%
Distribution (12b-1) Fees (5) 0.25% 1.00% 1.00%
Other Expenses (6) 0.25% 0.25% 0.25%
----- ----- -----
Total Annual Fund
Operating Expenses 1.50% 2.25% 2.25%
1. The maximum deferred sales charge of 5.50% is charged to shares redeemed
within the first year of purchase. These deferred sales charges decline to
0.00% over a period of six years.
2. Investments in Class C shares are not subject to an initial sales charge;
however, a contingent deferred sales charge of 1% is imposed in the event
of certain redemption transactions within thirteen months following such
investments.
3. If you are a participant in a qualified employee retirement benefit plan
with at least 100 eligible employees, you may purchase Class A shares
without any sales charges. However, if you redeem your shares within one
year of purchase, you will be charged a fee of 1.00% of the redemption
proceeds.
4. Management fees include a fee of 0.50% for investment advisory services and
0.25% for services provided to the Fund by the Fund's Sponsor.
5. Because 12b-1 fees are paid out of the assets of the Fund on an ongoing
basis, over time these fees will increase the cost of your investment and
may cost you more than paying other types of sales charges.
6. Other Expenses included fees paid to the Fund's transfer agent,
administrator and other service providers. Because the Fund is offering
these share Classes for the first time, these fees are estimated.
Example: This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
1 Year 3 Years
------ -------
Class A $----- $------
Class B $----- $------
Class C $----- $------
A maximum sales charge of 5.50% is included in the Class A Share expense
calculations. The maximum contingent deferred sales charge applicable to each
time period is included in the Class B and Class C expense calculations.
3
<PAGE>
If you did not redeem your shares, your expenses would be:
1 Year 3 Years
------ -------
Class A $----- $------
Class B $----- $------
Class C $----- $------
A maximum sales charge of 5.50% is included in the Class A Share expense
calculations. Contingent deferred sales charges are not included in the Class B
and Class C expense calculations.
Because the Fund has no operating history for these share classes, these expense
figures are based on estimated amounts for the Fund's first fiscal year.
- --------------------------------------------------------------------------------
QUAKER AGGRESSIVE GROWTH FUND
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund's investment objective is long-term growth of capital. Current
income is not a significant investment consideration, and any such income
realized will be considered incidental to the Fund's investment objective.
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Fund attempts to achieve its investment objective by;
o normally investing at least 65% of the Fund's total assets in US
common stocks;
o investing in common stocks of companies without regard to market
capitalizations;
o investing its assets in a limited number of equity securities of
companies which the Fund's Adviser believes show a high probability
for superior growth;
o investing in "special situation" securities when the Fund's Adviser
believes such investments will benefit the Fund;
o seeking a balance between investments in "special situation"
investments and investments in large to mid-capitalization equities (
in excess of $1 billion in market capitalization) with high or
accelerating profitability; and
o utilizing a conservative investment strategy of short selling
securities to reduce volatility and enhance potential investment gain.
The Fund will invest in "special situations" from time to time. A special
situation arises when, in the opinion of the Fund's Adviser, the securities
of a company will, within a reasonably estimated time period, be accorded
market recognition at an appreciated value solely by reason of a
development particularly or uniquely applicable to that company and
regardless of general business conditions or movements of the market as a
whole. Such developments and situations include, but are not limited to:
liquidations, reorganizations, recapitalizations or mergers, material
litigation, technological breakthroughs, and new management or management
policies.
In selecting portfolio companies for the Fund's Adviser seeks a balance
between "special situation" investments (spin-offs, corporate
restructurings and tracking stocks) and large to mid-capitalization
equities
4
<PAGE>
with high or accelerating profitability, an element of franchise value, and
reasonable valuations. In purchasing "special situation" securities, the
Fund's Adviser looks for two primary characteristics: 1) superior
risk/reward due to inefficient pricing of the security due to lack of
research coverage; and 2) a measure of downside risk protection due to the
company's low correlation to the capital markets.
The Fund's Adviser utilizes a broad spectrum of qualitative and
quantitative investment tools to select portfolio companies. The Fund will
also employ a conservative investment strategy of short selling securities
to reduce volatility and enhance potential investment gain. The Fund limits
short selling to 25% of its net assets. In addition, the Fund's Adviser
employs tight trading stops on securities sold short to reduce trading
risk.
Short selling involves the sale of securities not presently owned by the
Fund. If the Fund does not purchase that security on the same day as the
sale, the security must be borrowed. 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. Any gain or loss on the transaction is taxable as a short
term capital gain or loss.
The Fund may invest up to 25% of its total assets in foreign securities
that are traded on a U.S. exchange, in the form of American Depository
Receipts ("ADRs"). The Fund will only invest in ADRs that are issuer
sponsored. Sponsored ADRs typically are issued by a U.S. bank or trust
company and evidence ownership of underlying securities issued by a foreign
corporation.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
General Risks- All investments are subject to inherent risks, and the Fund
is no exception. Accordingly, you may lose money by investing in the Fund.
When you sell your Fund shares, they may be worth more or less than what
you paid for them because the value of the Fund's investments will vary
from day-to-day, reflecting changes in market conditions, interest rates
and numerous other factors.
Stock Market Risk- The stock market tends to trade in cyclical price
patterns, with prices generally rising or falling over sustained periods of
time. The Fund invests primarily in common stocks, so the Fund will be
subject to the risks associated with common stocks, including price
volatility and the creditworthiness of the issuing company.
Short Selling Risks- Short selling involves special risks, and the Fund
could at any time, suffer both a loss on the purchase or retention of one
security, if that security should decline in value, and a loss on a short
sale of another security, if the security sold short should increase in
value. When a short position is closed out, it may result in a short term
capital gain or loss for federal income tax purposes. 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 if, at the time of making the short sale,
the aggregate market value of all securities sold short will exceed 25% of
the value of the Fund's net assets. Short sales by the Fund are further
limited to 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
5
<PAGE>
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. Aggressive
Growth may only engage in short sale transactions in securities listed on
one or more national securities exchanges or on the NASDAQ.
Foreign Securities Risk- Investments in foreign securities involve greater
risks compared to domestic investments for the following reasons:
o Foreign companies are not subject to the regulatory requirements of
U.S. companies, so there may be less publicly available information
about foreign issuers than U.S. companies.
o Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards.
o Dividends and interest on foreign securities may be subject to foreign
withholding taxes. Such taxes may reduce the net return to Fund
shareholders.
o Foreign securities are often denominated in a currency other than the
U.S. dollar. Accordingly, the Fund will be subject to the risks
associated with fluctuations in currency values.
o Although the Fund will only invest in foreign issuers that are
domiciled in nations considered to have stable and friendly
governments, there is the possibility of expropriation, confiscation,
taxation, currency blockage or political or social instability which
could negatively affect the Fund.
Special Situation Risks- Although large and well-known companies may be
involved, special situations often involve much greater risk than is found
in the normal course of investing. These risks result from the subjective
nature of determining what a special situation is. For example, investing
in a company primarily because the Adviser believes that a merger is
imminent or that an announced merger will have exaggerated positive effects
on the company is inherently speculative. To minimize these risks, the Fund
will not invest in special situations unless the target company has at
least three years of continuous operations (including predecessors), or
unless the aggregate value of such investments is not greater than 25% of
the Fund's total net assets (valued at the time of investment).
Temporary Defensive Positions- Ordinarily, the Fund's portfolio will be
invested primarily in common stocks. However, the Fund is not required to
be fully invested in common stocks and, in fact, usually maintains certain
cash reserves. Depending upon market conditions, cash reserves may be a
significant percentage of the Fund's total net assets. The Fund usually
invests its cash reserves in U.S. Government debt instruments, other
unaffiliated mutual funds (money market funds) and repurchase agreements.
During times when the Fund holds a significant portion of its net assets in
cash, it will not be investing according to its investment objectives, and
the Fund's performance may be negatively affected as a result.
Year 2000 Risks- As with other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Adviser and the Fund's other
service providers don't properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known
as the "Year 2000" or "Y2K" problem. The Adviser is taking steps to address
the Y2K problem with respect to the computer systems that it uses and to
obtain assurances that comparable steps are being taken by the Fund's other
major service providers. The Adviser will monitor the companies in which
the Fund invests for evidence of Y2K preparedness. However, there can be no
assurance that the Fund's portfolio will not be adversely affected by the
Y2K problem. Further, foreign issuers may not be as well prepared for the
Y2K problem as U.S. issuers, and this may pose additional risk to the Fund.
6
<PAGE>
HOW HAS THE FUND PERFORMED IN THE PAST?
Because the Fund is offering Class A, Class B and Class C shares for the
first time by this Prospectus, a performance bar chart and table describing
the Fund's annual performance for those shares and comparing that
performance to appropriate indices is not yet available. Performance
information will be included in the Fund's first semi-annual and annual
reports, which will be sent to you without charge at your request. Simply
contact the Fund at 1-800-220-8888.
- --------------------------------------------------------------------------------
WHAT ARE THE FUND'S FEES AND EXPENSES?
This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund.
Class A Class B Class C
- --------------------------------------------------------------------------------
Shareholder Fees:
- -----------------
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases 5.50% None None
(As a percentage of offering price)
Maximum Deferred Sales Charge (Load) None 5.50%(1) 1.00%(2)
(As a percentage of redemption proceeds)
Redemption Fees None(3) None None
Annual Fund Operating Expenses: Class A Class B Class C
- --------------------------------------------------------------------------------
(expenses that are deducted from Fund assets)
Management Fees (4) 1.00% 1.00% 1.00%
Distribution (12b-1) Fees (5) 0.25% 1.00% 1.00%
Other Expenses (6) 0.25% 0.25% 0.25%
----- ----- -----
Total Annual Fund
Operating Expenses 1.50% 2.25% 2.25%
1. The maximum deferred sales charge of 5.50% is charged to shares redeemed
within the first year of purchase. These deferred sales charges decline to
0.00% over a period of six years.
2. Investments in Class C shares are not subject to an initial sales charge;
however, a contingent deferred sales charge of 1% is imposed in the event
of certain redemption transactions within thirteen months following such
investments.
3. If you are a participant in a qualified employee retirement benefit plan
with at least 100 eligible employees, you may purchase Class A shares
without any sales charges. However, if you redeem your shares within one
year of purchase, you will be charged a fee of 1.00% of the redemption
proceeds.
4. Management fees include a fee of 0.50% for investment advisory services and
0.25% for services provided to the Fund by the Fund's Sponsor.
5. Because 12b-1 fees are paid out of the assets of the Fund on an ongoing
basis, over time these fees will increase the cost of your investment and
may cost you more than paying other types of sales charges.
6. Other Expenses included fees paid to the Fund's transfer agent,
administrator and other service providers. Because the Fund is offering
these share Classes for the first time, these fees are estimated.
Example: This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
7
<PAGE>
1 Year 3 Years
------ -------
Class A $----- $------
Class B $----- $------
Class C $----- $------
A maximum sales charge of 5.50% is included in the Class A Share expense
calculations. The maximum contingent deferred sales charge applicable to each
time period is included in the Class B and Class C expense calculations.
IF YOU DID NOT REDEEM YOUR SHARES, YOUR EXPENSES WOULD BE:
1 Year 3 Years
------ -------
Class A $----- $------
Class B $----- $------
Class C $----- $------
A maximum sales charge of 5.50% is included in the Class A Share expense
calculations. Contingent deferred sales charges are not included in the Class B
and Class C expense calculations.
Because the Fund has no operating history for these share classes, these expense
figures are based on estimated amounts for the Fund's first fiscal year.
- --------------------------------------------------------------------------------
QUAKER LARGE-CAP VALUE FUND
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund's investment objective is long-term growth of capital. Current
income is not a significant investment consideration, and any such income
realized will be considered incidental to the Fund's investment objective.
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Adviser attempts to achieve the Fund's investment goals by:
o normally investing at least 65% of the Fund's total assets in US
common stocks;
o investing the Fund's assets mostly in large capitalization (greater
than $6 billion) companies;
o investing in companies considered by the Fund's Adviser to be
asset-rich and earnings-rich, selling at relatively low market
valuations, with attractive growth and momentum characteristics; and
o investing in a manner designed to minimize adverse tax consequences to
Fund shareholders by minimizing portfolio turnover.
The Fund's Adviser believes that the Fund's investment objective is best
achieved by investing in companies that exhibit the potential for
significant growth over the long term. The Adviser defines long-term as a
time horizon of at least three years. To identify companies that have
significant growth potential, the Adviser employs a value-oriented approach
to stock selection. To choose the securities in which the Fund will invest,
the Adviser seeks to identify companies which exhibit some or all of the
following criteria:
8
<PAGE>
o low price-to-earnings ratio ("P/E");
o low price-to-book value or tangible asset value;
o excellent prospects for growth;
o strong franchise;
o highly qualified management;
o consistent free cash flow; and
o high returns on invested capital
In order to choose the securities in which the Fund invests, the Adviser
employs its own proprietary cash-flow based, dividend discount analytical
model. The Adviser selects 50-100 securities which it believes to be
undervalued relative to comparable alternate investments, then focuses on
the fundamentals of these companies to choose which companies will
ultimately be included in the Fund.
The Fund may invest up to 25% of its total assets in foreign securities
that are traded on a U.S. exchange, in the form of American Depository
Receipts ("ADRs"). The Fund will only invest in ADRs that are issuer
sponsored. Sponsored ADRs typically are issued by a U.S. bank or trust
company and evidence ownership of underlying securities issued by a foreign
corporation.
The Fund will normally invest its remaining assets in cash and cash
equivalents, such as U.S. government debt instruments, other money market
mutual funds, and repurchase agreements.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
General Risks- All investments are subject to inherent risks, and the Fund
is no exception. Accordingly, you may lose money by investing in the Fund.
When you sell your Fund shares, they may be worth more or less than what
you paid for them because the value of the Fund's investments will vary
from day-to-day, reflecting changes in market conditions, interest rates
and numerous other factors.
Stock Market Risk- The stock market tends to trade in cyclical price
patterns, with prices generally rising or falling over sustained periods of
time. The Fund invests primarily in common stocks, so the Fund will be
subject to the risks associated with common stocks, including price
volatility and the creditworthiness of the issuing company.
Foreign Securities Risk- Investments in foreign securities involve greater
risks compared to domestic investments for the following reasons:
o Foreign companies are not subject to the regulatory requirements of
U.S. companies, so there may be less publicly available information
about foreign issuers than U.S. companies.
o Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards.
o Dividends and interest on foreign securities may be subject to foreign
withholding taxes. Such taxes may reduce the net return to Fund
shareholders.
o Foreign securities are often denominated in a currency other than the
U.S. dollar. Accordingly, the Fund will be subject to the risks
associated with fluctuations in currency values.
o Although the Fund will only invest in foreign issuers that are
domiciled in nations considered to have stable and friendly
governments, there is the possibility of expropriation, confiscation,
taxation, currency blockage or political or social instability which
could negatively affect the Fund.
9
<PAGE>
Temporary Defensive Positions- Ordinarily, the Fund's portfolio will be
invested primarily in common stocks. However, the Fund is not required to
be fully invested in common stocks and, in fact, usually maintains certain
cash reserves. Depending upon market conditions, cash reserves may be a
significant percentage of the Fund's total net assets. The Fund usually
invests its cash reserves in U.S. Government debt instruments, other
unaffiliated mutual funds (money market funds) and repurchase agreements.
During times when the Fund holds a significant portion of its net assets in
cash, it will not be investing according to its investment objectives, and
the Fund's performance may be negatively affected as a result.
Year 2000 Risks- As with other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Adviser and the Fund's other
service providers don't properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known
as the "Year 2000" or "Y2K" problem. The Adviser is taking steps to address
the Y2K problem with respect to the computer systems that it uses and to
obtain assurances that comparable steps are being taken by the Fund's other
major service providers. The Adviser will monitor the companies in which
the Fund invests for evidence of Y2K preparedness. However, there can be no
assurance that the Fund's portfolio will not be adversely affected by the
Y2K problem. Further, foreign issuers may not be as well prepared for the
Y2K problem as U.S. issuers, and this may pose additional risk to the Fund.
HOW HAS THE FUND PERFORMED IN THE PAST?
Because the Fund is offering Class A, Class B and Class C shares for the
first time by this Prospectus, a performance bar chart and table describing
the Fund's annual performance for those shares and comparing that
performance to appropriate indices is not yet available. Performance
information will be included in the Fund's first semi-annual and annual
reports, which will be sent to you without charge at your request. Simply
contact the Fund at 1-800-220-8888.
- --------------------------------------------------------------------------------
WHAT ARE THE FUND'S FEES AND EXPENSES?
This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund.
Class A Class B Class C
- --------------------------------------------------------------------------------
Shareholder Fees:
- -----------------
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases 5.50% None None
(As a percentage of offering price)
Maximum Deferred Sales Charge (Load) None 5.50%(1) 1.00%(2)
(As a percentage of redemption proceeds)
Redemption Fees None(3) None None
Annual Fund Operating Expenses: Class A Class B Class C
- --------------------------------------------------------------------------------
(expenses that are deducted from Fund assets)
Management Fees (4) 1.00% 1.00% 1.00%
Distribution (12b-1) Fees (5) 0.25% 1.00% 1.00%
Other Expenses (6) 0.25% 0.25% 0.25%
----- ----- -----
Total Annual Fund
Operating Expenses 1.50% 2.25% 2.25%
1. The maximum deferred sales charge of 5.50% is charged to shares redeemed
within the first year of purchase. These deferred sales charges decline to
0.00% over a period of six years.
2. Investments in Class C shares are not subject to an initial sales charge;
however, a contingent deferred sales charge of 1% is imposed in the event
of certain redemption transactions within thirteen months following such
investments.
10
<PAGE>
3. If you are a participant in a qualified employee retirement benefit plan
with at least 100 eligible employees, you may purchase Class A shares
without any sales charges. However, if you redeem your shares within one
year of purchase, you will be charged a fee of 1.00% of the redemption
proceeds.
4. Management fees include a fee of 0.50% for investment advisory services and
0.25% for services provided to the Fund by the Fund's Sponsor.
5. Because 12b-1 fees are paid out of the assets of the Fund on an ongoing
basis, over time these fees will increase the cost of your investment and
may cost you more than paying other types of sales charges.
6. Other Expenses included fees paid to the Fund's transfer agent,
administrator and other service providers. Because the Fund is offering
these share Classes for the first time, these fees are estimated.
Example: This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
1 Year 3 Years
------ -------
Class A $----- $------
Class B $----- $------
Class C $----- $------
A maximum sales charge of 5.50% is included in the Class A Share expense
calculations. The maximum contingent deferred sales charge applicable to each
time period is included in the Class B and Class C expense calculations.
If you did not redeem your shares, your expenses would be:
1 Year 3 Years
------ -------
Class A $----- $------
Class B $----- $------
Class C $----- $------
A maximum sales charge of 5.50% is included in the Class A Share expense
calculations. Contingent deferred sales charges are not included in the Class B
and Class C expense calculations.
Because the Fund has no operating history for these share classes, these expense
figures are based on estimated amounts for the Fund's first fiscal year.
- --------------------------------------------------------------------------------
QUAKER MID-CAP VALUE FUND
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund's investment objective is long-term growth of capital. Current
income is not a significant investment consideration, and any such income
realized will be considered incidental to the Fund's investment objective.
11
<PAGE>
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Adviser attempts to achieve the Fund's investment goals by:
o normally investing at least 65% of the Fund's total assets in US
common stocks;
o investing in equity securities with market capitalizations similar to
the market capitalizations of the companies included in the Russell
Mid-Cap Index;
o Generally maintaining an ultimate selection of 25-75 stocks for
investment by the Fund;
o investing in companies considered by the Fund's Adviser to be
asset-rich and earnings-rich, selling at relatively low market
valuations, with attractive growth and momentum characteristics; and
o investing in a manner designed to minimize adverse tax consequences to
Fund shareholders by minimizing portfolio turnover.
The Fund's Adviser believes that the Fund's investment objective is best
achieved by investing in companies that exhibit the potential for
significant growth over the long term. The Adviser defines long-term as a
time horizon of at least three years. To identify companies that have
significant growth potential, the Adviser employs a value-oriented approach
to stock selection. To choose the securities in which the Fund will invest,
the Adviser seeks to identify companies which exhibit some or all of the
following criteria:
o low price-to-earnings ratio ("P/E");
o low price-to-book value or tangible asset value;
o excellent prospects for growth;
o strong franchise;
o highly qualified management;
o consistent free cash flow; and
o high returns on invested capital.
In order to choose the securities in which the Fund invests, the Adviser
employs its own proprietary cash-flow based, dividend discount analytical
model. The Adviser selects 50-100 securities which it believes to be
undervalued relative to comparable alternate investments, then focuses on
the fundamentals of these companies to choose which companies will
ultimately be included in the Fund.
The Fund may invest up to 25% of its total assets in foreign securities
that are traded on a U.S. exchange, in the form of American Depository
Receipts ("ADRs"). The Fund will only invest in ADRs that are issuer
sponsored. Sponsored ADRs typically are issued by a U.S. bank or trust
company and evidence ownership of underlying securities issued by a foreign
corporation.
The Fund will normally invest its remaining assets in cash and cash
equivalents, such as U.S. government debt instruments, other money market
mutual funds, and repurchase agreements.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
General Risks- All investments are subject to inherent risks, and the Fund
is no exception. Accordingly, you may lose money by investing in the Fund.
When you sell your Fund shares, they may be worth more or less than what
you paid for them because the value of the Fund's investments will vary
from day-to-day, reflecting changes in market conditions, interest rates
and numerous other factors.
Stock Market Risk- The stock market tends to trade in cyclical price
patterns, with prices generally rising or falling over sustained periods of
time. The Fund invests primarily in common stocks, so the Fund will be
subject to the risks associated with common stocks, including price
volatility and the creditworthiness of the issuing company.
12
<PAGE>
Medium-Cap Stock Risks- The Fund invests in companies with smaller market
capitalizations (from $1.5 to $6 billion). Because these companies are
relatively small compared to large-cap companies, may be engaged in
business mostly within their own geographic region, and may be less
well-known to the investment community, they can have more volatile share
prices. Also, small companies often have less liquidity, less management
depth, narrower market penetrations, less diverse product lines, and fewer
resources than larger companies. As a result, their stock prices often
react more strongly to changes in the marketplace.
Foreign Securities Risk- Investments in foreign securities involve greater
risks compared to domestic investments for the following reasons:
o Foreign companies are not subject to the regulatory requirements of
U.S. companies, so there may be less publicly available information
about foreign issuers than U.S. companies.
o Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards.
o Dividends and interest on foreign securities may be subject to foreign
withholding taxes. Such taxes may reduce the net return to Fund
shareholders.
o Foreign securities are often denominated in a currency other than the
U.S. dollar. Accordingly, the Fund will be subject to the risks
associated with fluctuations in currency values.
o Although the Fund will only invest in foreign issuers that are
domiciled in nations considered to have stable and friendly
governments, there is the possibility of expropriation, confiscation,
taxation, currency blockage or political or social instability which
could negatively affect the Fund.
Temporary Defensive Positions- Ordinarily, the Fund's portfolio will be
invested primarily in common stocks. However, the Fund is not required to
be fully invested in common stocks and, in fact, usually maintains certain
cash reserves. Depending upon market conditions, cash reserves may be a
significant percentage of the Fund's total net assets. The Fund usually
invests its cash reserves in U.S. Government debt instruments, other
unaffiliated mutual funds (money market funds) and repurchase agreements.
During times when the Fund holds a significant portion of its net assets in
cash, it will not be investing according to its investment objectives, and
the Fund's performance may be negatively affected as a result.
Year 2000 Risks- As with other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Adviser and the Fund's other
service providers don't properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known
as the "Year 2000" or "Y2K" problem. The Adviser is taking steps to address
the Y2K problem with respect to the computer systems that it uses and to
obtain assurances that comparable steps are being taken by the Fund's other
major service providers. The Adviser will monitor the companies in which
the Fund invests for evidence of Y2K preparedness. However, there can be no
assurance that the Fund's portfolio will not be adversely affected by the
Y2K problem. Further, foreign issuers may not be as well prepared for the
Y2K problem as U.S. issuers, and this may pose additional risk to the Fund.
HOW HAS THE FUND PERFORMED IN THE PAST?
Because the Fund is offering Class A, Class B and Class C shares for the
first time by this Prospectus, a performance bar chart and table describing
the Fund's annual performance for those shares and comparing that
performance to appropriate indices is not yet available. Performance
information will be included in the Fund's first semi-annual and annual
reports, which will be sent to you without charge at your request. Simply
contact the Fund at 1-800-220-8888.
- --------------------------------------------------------------------------------
13
<PAGE>
WHAT ARE THE FUND'S FEES AND EXPENSES?
This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund.
Class A Class B Class C
- --------------------------------------------------------------------------------
Shareholder Fees:
- -----------------
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases 5.50% None None
(As a percentage of offering price)
Maximum Deferred Sales Charge (Load) None 5.50%(1) 1.00%(2)
(As a percentage of redemption proceeds)
Redemption Fees None(3) None None
Annual Fund Operating Expenses: Class A Class B Class C
- --------------------------------------------------------------------------------
(expenses that are deducted from Fund assets)
Management Fees (4) 1.00% 1.00% 1.00%
Distribution (12b-1) Fees (5) 0.25% 1.00% 1.00%
Other Expenses (6) 0.25% 0.25% 0.25%
----- ----- -----
Total Annual Fund
Operating Expenses 1.50% 2.25% 2.25%
1. The maximum deferred sales charge of 5.50% is charged to shares redeemed
within the first year of purchase. These deferred sales charges decline to
0.00% over a period of six years.
2. Investments in Class C shares are not subject to an initial sales charge;
however, a contingent deferred sales charge of 1% is imposed in the event
of certain redemption transactions within thirteen months following such
investments.
3. If you are a participant in a qualified employee retirement benefit plan
with at least 100 eligible employees, you may purchase Class A shares
without any sales charges. However, if you redeem your shares within one
year of purchase, you will be charged a fee of 1.00% of the redemption
proceeds.
4. Management fees include a fee of 0.50% for investment advisory services and
0.25% for services provided to the Fund by the Fund's Sponsor.
5. Because 12b-1 fees are paid out of the assets of the Fund on an ongoing
basis, over time these fees will increase the cost of your investment and
may cost you more than paying other types of sales charges.
6. Other Expenses included fees paid to the Fund's transfer agent,
administrator and other service providers. Because the Fund is offering
these share Classes for the first time, these fees are estimated.
Example: This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
1 Year 3 Years
------ -------
Class A $----- $------
Class B $----- $------
Class C $----- $------
A maximum sales charge of 5.50% is included in the Class A Share expense
calculations. The maximum contingent deferred sales charge applicable to each
time period is included in the Class B and Class C expense calculations.
If you did not redeem your shares, your expenses would be:
1 Year 3 Years
------ -------
Class A $----- $------
Class B $----- $------
Class C $----- $------
14
<PAGE>
A maximum sales charge of 5.50% is included in the Class A Share expense
calculations. Contingent deferred sales charges are not included in the Class B
and Class C expense calculations.
Because the Fund has no operating history for these share classes, these expense
figures are based on estimated amounts for the Fund's first fiscal year.
- --------------------------------------------------------------------------------
QUAKER SMALL-CAP VALUE FUND
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund's investment objective is long-term growth of capital. Current
income is not a significant investment consideration, and any such income
realized will be considered incidental to the Fund's investment objective.
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Adviser attempts to achieve the Fund's investment goals by:
o normally investing at least 65% of the Fund's total assets in US
common stocks;
o normally investing in equity securities with market capitalizations
similar to the market capitalizations of companies included in the
Russell 2500 Index, with an ultimate selection of 140-160 stocks;
o investing in a portfolio of securities which includes a broadly
diversified number of U.S. equity securities which the Fund's Adviser
believes show a high probability of superior prospects for above
average total return.
Under normal conditions, at least 65% of the Fund's total assets will be
invested in equity securities of small capitalization companies. "Small
capitalization" companies are those companies with market capitalizations
of less than $1.5 billion.
In selecting portfolio companies, the Fund's Adviser focuses on asset rich
and earnings rich companies selling at relatively low market valuations,
with attractive growth and momentum characteristics. The Fund will normally
remain fully invested in these securities at all times, subject to a
minimum cash balance maintained for operational purposes.
The Fund's Adviser screens a broad universe of U.S. securities 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 Adviser identifies the most attractive
stocks by considering a number of balance sheet and income statement
criteria. A diversified portfolio is created with sector weights aligned to
the Russell 2500 Index and individual security weightings determined to
balance industry and other risk characteristics.
15
<PAGE>
The Fund may invest up to 25% of its total assets in foreign securities
that are traded on a U.S. exchange, in the form of American Depository
Receipts ("ADRs"). The Fund will only invest in ADRs that are issuer
sponsored. Sponsored ADRs typically are issued by a U.S. bank or trust
company and evidence ownership of underlying securities issued by a foreign
corporation.
The Fund may invest its remaining assets, if any, in equity securities of
medium and large capitalization companies, cash and cash equivalents, such
as U.S. government debt instruments, other money market mutual funds, and
repurchase agreements.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
General Risks- All investments are subject to inherent risks, and the Fund
is no exception. Accordingly, you may lose money by investing in the Fund.
When you sell your Fund shares, they may be worth more or less than what
you paid for them because the value of the Fund's investments will vary
from day-to-day, reflecting changes in market conditions, interest rates
and numerous other factors.
Stock Market Risk- The stock market tends to trade in cyclical price
patterns, with prices generally rising or falling over sustained periods of
time. The Fund invests primarily in common stocks, so the Fund will be
subject to the risks associated with common stocks, including price
volatility and the creditworthiness of the issuing company.
Small-Cap Stock Risks- The Fund may invest in companies with small to
medium market capitalizations (generally less than $1.5 billion). Because
these companies are relatively small compared to large-cap companies, may
be engaged in business mostly within their own geographic region, and may
be less well-known to the investment community, they can have more volatile
share prices. Also, small companies often have less liquidity, less
management depth, narrower market penetrations, less diverse product lines,
and fewer resources than larger companies. As a result, their stock prices
often react more strongly to changes in the marketplace.
Foreign Securities Risk- Investments in foreign securities involve greater
risks compared to domestic investments for the following reasons:
o Foreign companies are not subject to the regulatory requirements of
U.S. companies, so there may be less publicly available information
about foreign issuers than U.S. companies.
o Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards.
o Dividends and interest on foreign securities may be subject to foreign
withholding taxes. Such taxes may reduce the net return to Fund
shareholders.
o Foreign securities are often denominated in a currency other than the
U.S. dollar. Accordingly, the Fund will be subject to the risks
associated with fluctuations in currency values.
o Although the Fund will only invest in foreign issuers that are
domiciled in nations considered to have stable and friendly
governments, there is the possibility of expropriation, confiscation,
taxation, currency blockage or political or social instability which
could negatively affect the Fund.
16
<PAGE>
Temporary Defensive Positions- Ordinarily, the Fund's portfolio will be
invested primarily in common stocks. However, the Fund is not required to
be fully invested in common stocks and, in fact, usually maintains certain
cash reserves. Depending upon market conditions, cash reserves may be a
significant percentage of the Fund's total net assets. The Fund usually
invests its cash reserves in U.S. Government debt instruments, other
unaffiliated mutual funds (money market funds) and repurchase agreements.
During times when the Fund holds a significant portion of its net assets in
cash, it will not be investing according to its investment objectives, and
the Fund's performance may be negatively affected as a result.
Year 2000 Risks- As with other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Adviser and the Fund's other
service providers don't properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known
as the "Year 2000" or "Y2K" problem. The Adviser is taking steps to address
the Y2K problem with respect to the computer systems that it uses and to
obtain assurances that comparable steps are being taken by the Fund's other
major service providers. The Adviser will monitor the companies in which
the Fund invests for evidence of Y2K preparedness. However, there can be no
assurance that the Fund's portfolio will not be adversely affected by the
Y2K problem. Further, foreign issuers may not be as well prepared for the
Y2K problem as U.S. issuers, and this may pose additional risk to the Fund.
HOW HAS THE FUND PERFORMED IN THE PAST?
Because the Fund is offering Class A, Class B and Class C shares for the
first time by this Prospectus, a performance bar chart and table describing
the Fund's annual performance for those shares and comparing that
performance to appropriate indices is not yet available. Performance
information will be included in the Fund's first semi-annual and annual
reports, which will be sent to you without charge at your request. Simply
contact the Fund at 1-800-220-8888.
- --------------------------------------------------------------------------------
WHAT ARE THE FUND'S FEES AND EXPENSES?
This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund.
Class A Class B Class C
- --------------------------------------------------------------------------------
Shareholder Fees:
- -----------------
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases 5.50% None None
(As a percentage of offering price)
Maximum Deferred Sales Charge (Load) None 5.50%(1) 1.00%(2)
(As a percentage of redemption proceeds)
Redemption Fees None(3) None None
Annual Fund Operating Expenses: Class A Class B Class C
- --------------------------------------------------------------------------------
(expenses that are deducted from Fund assets)
Management Fees (4) 1.00% 1.00% 1.00%
Distribution (12b-1) Fees (5) 0.25% 1.00% 1.00%
Other Expenses (6) 0.25% 0.25% 0.25%
----- ----- -----
Total Annual Fund
Operating Expenses 1.50% 2.25% 2.25%
1. The maximum deferred sales charge of 5.50% is charged to shares redeemed
within the first year of purchase. These deferred sales charges decline to
0.00% over a period of six years.
2. Investments in Class C shares are not subject to an initial sales charge;
however, a contingent deferred sales charge of 1% is imposed in the event
of certain redemption transactions within thirteen months following such
investments.
3. If you are a participant in a qualified employee retirement benefit plan
with at least 100 eligible employees, you may purchase Class A shares
without any sales charges. However, if you redeem your shares within one
year of purchase, you will be charged a fee of 1.00% of the redemption
proceeds.
17
<PAGE>
4. Management fees include a fee of 0.50% for investment advisory services and
0.25% for services provided to the Fund by the Fund's Sponsor.
5. Because 12b-1 fees are paid out of the assets of the Fund on an ongoing
basis, over time these fees will increase the cost of your investment and
may cost you more than paying other types of sales charges.
6. Other Expenses included fees paid to the Fund's transfer agent,
administrator and other service providers. Because the Fund is offering
these share Classes for the first time, these fees are estimated.
Example: This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
1 Year 3 Years
------ -------
Class A $----- $------
Class B $----- $------
Class C $----- $------
A maximum sales charge of 5.50% is included in the Class A Share expense
calculations. The maximum contingent deferred sales charge applicable to each
time period is included in the Class B and Class C expense calculations.
If you did not redeem your shares, your expenses would be:
1 Year 3 Years
------ -------
Class A $----- $------
Class B $----- $------
Class C $----- $------
A maximum sales charge of 5.50% is included in the Class A Share expense
calculations. Contingent deferred sales charges are not included in the Class B
and Class C expense calculations.
Because the Fund has no operating history for these share classes, these expense
figures are based on estimated amounts for the Fund's first fiscal year.
- --------------------------------------------------------------------------------
QUAKER FIXED INCOME FUND
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund's investment objective is to generate current income, preserve
capital, and maximize total returns through active management of investment
grade fixed income securities.
Anyone may invest in the Fund, but the Fund is primarily designed for
tax-exempt institutional investors such as pension and profit-sharing
plans, endowments, foundations, employee benefit trusts, and certain
individuals. The Fund invests without regard to federal tax considerations
other than those that apply to Fixed Income's status as a tax-exempt
entity.
18
<PAGE>
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Fund's Adviser seeks to achieve the Fund's investment objective by:
o normally investing at least 65% of the Fund's total assets in a
variety of debt securities;
o normally establishing a duration target for the Fund's portfolio
similar to the duration of the popular bond market indices (e.g.
Salomon Brother's Broad Investment Grade Index).
o lengthening the duration of the Fund's portfolio when yields appear
abnormally high, and shortening duration when yields appear abnormally
low.
o Seeking to take advantage of value in the shape of the yield curve.
o Structuring the Fund's portfolio to take advantage of differences in
the relative valuation of U.S. Treasury securities versus mortgage
backed securities, asset backed securities, corporate bonds and U.S.
agency securities.
DURATION. Duration is an important concept in the Fund's fixed income
management philosophy. "Duration" is not the same thing as "maturity". The
risks of investing in debt securities generally rise as the maturity of
that security lengthens. However, measuring risk solely by a security's
maturity is not an entirely accurate method of gauging risk. Maturity takes
into account only the final principal payments to determine the price risk
of a particular fixed income security.
Duration, on the other hand, weighs all potential cash flows - principal,
interest and reinvestment income - on an expected present value basis, to
determine the "effective life" of the security. Using such an analysis, a
security with a maturity of ten years may only have a duration of six
years. Accordingly, that security has less actual time risk than its
maturity would lead you to believe.
Using a proprietary analytical model for predicting interest rate
movements, the Fund's Adviser determines the optimal duration target for
the Fund and determines which of the Fund's permissible investments has the
highest relative valuations. The Adviser then constructs and closely
monitors a portfolio of the securities described below that it feels will
most likely achieve its anticipated performance.
U.S. GOVERNMENT SECURITIES. The Fund invests in U.S. Government Securities,
such as U.S. Treasury notes, U.S. Treasury bonds, and U.S. Treasury bills;
securities guaranteed by the U.S. Government such as Government National
Mortgage Association ("GNMA"); and securities issued by U.S. Government
agencies and instrumentalities. Securities of some U.S. Government
sponsored entities are supported by the full faith and credit of the U.S.
Government (e.g. GNMA), some are supported by the right of the issuer to
borrow from the U.S. Government (e.g. FNMA, FHLMC), and some are supported
only by the credit of the issuer itself (e.g. SLMA, FFCB). You should be
aware that the U.S. Government is not obligated to support U.S. Government
agencies or instrumentalities in the future, other than as set forth above.
MORTGAGE PASS-THROUGH CERTIFICATES. Are securities representing undivided
ownership interests in pools of mortgages. Such certificates are guaranteed
as to payment of principal by the issuer. For securities issued by GNMA,
the payment of principal is also 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.
19
<PAGE>
COLLATERALIZED MORTGAGE OBLIGATIONS. The Fund may invest in collateralized
mortgage obligations ("CMOs"), which are generally securities backed by
mortgage pass-through certificates or whole mortgage loans. CMOs are
usually structured into classes of varying maturities and principal payment
priorities. CMOs pay interest and principal (including prepayments)
monthly, quarterly or semi-annually. FAM will invest in CMOs when it
determines that such securities fit the investment objective and policies
of the Fund.
ASSET-BACKED SECURITIES. In addition to CMOs, the Fund may also invest in
other asset-backed securities, such as securities backed by 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. You should be aware that 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. 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. Fixed Income 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 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. Fixed Income may invest in notes and bonds issued by U.S.
Corporations and foreign corporations rated by a U.S. rating service and
traded on a U.S. exchange. All corporate securities will be of investment
grade quality as determined by Moody's, S&P, Fitch, and D&P, or if no
rating exists, of equivalent quality as determined by FAM. See, "Investment
Limitations - Investment Grade Securities". FAM will monitor continuously
the ratings of securities held by the Fund and the creditworthiness of
their issuers.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
General Risks- All investments are subject to inherent risks, and the Fund
is no exception. Accordingly, you may lose money by investing in the Fund.
When you sell your Fund shares, they may be worth more or less than what
you paid for them because the value of the Fund's investments will vary
from day-to-day, reflecting changes in market conditions, interest rates
and numerous other factors.
Debt Securities. The Fund normally invests in debt securities. All of the
securities described above are considered to be debt securities. The
primary risks of investing in debt securities are interest rate risk and
credit risk.
20
<PAGE>
As interest rates generally rise, the value of debt securities generally
fall. The longer a debt security has until it matures, the more severely
its price will change when interest rates change.
The value of a debt security can change due to a change in the
creditworthiness of the issuer. The less creditworthy the issuer, the less
desirable the security and the lower its value. Debt securities guaranteed
as to principal and interest by the full faith and credit of the U.S.
Government are essentially credit-risk free. The creditworthiness of other
securities largely depends upon the creditworthiness of the issuer. The
issuer's credit rating can change over time, and when this happens it can
have a negative affect on the value of such issuer's securities.
All securities purchased for the Fund 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 as
determined by the Adviser, under the Supervision of the Board of Trustees.
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.
Year 2000 Risks- As with other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Adviser and the Fund's other
service providers don't properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known
as the "Year 2000" or "Y2K" problem. The Adviser is taking steps to address
the Y2K problem with respect to the computer systems that it uses and to
obtain assurances that comparable steps are being taken by the Fund's other
major service providers. The Adviser will monitor the companies in which
the Fund invests for evidence of Y2K preparedness. However, there can be no
assurance that the Fund's portfolio will not be adversely affected by the
Y2K problem. Further, foreign issuers may not be as well prepared for the
Y2K problem as U.S. issuers, and this may pose additional risk to the Fund.
HOW HAS THE FUND PERFORMED IN THE PAST?
Because the Fund is offering Class A, Class B and Class C shares for the
first time by this Prospectus, a performance bar chart and table describing
the Fund's annual performance for those shares and comparing that
performance to appropriate indices is not yet available. Performance
information will be included in the Fund's first semi-annual and annual
reports, which will be sent to you without charge at your request. Simply
contact the Fund at 1-800-220-8888.
- --------------------------------------------------------------------------------
WHAT ARE THE FUND'S FEES AND EXPENSES?
This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund.
Class A Class B Class C
- --------------------------------------------------------------------------------
Shareholder Fees:
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases 5.50% None None
(As a percentage of offering price)
Maximum Deferred Sales Charge (Load) None 5.50%(1) 1.00%(2)
(As a percentage of redemption proceeds)
Redemption Fees None(3) None None
21
<PAGE>
Annual Fund Operating Expenses: Class A Class B Class C
- --------------------------------------------------------------------------------
(expenses that are deducted from Fund assets)
Management Fees (4) 1.00% 1.00% 1.00%
Distribution (12b-1) Fees (5) 0.25% 1.00% 1.00%
Other Expenses (6) 0.25% 0.25% 0.25%
----- ----- -----
Total Annual Fund
Operating Expenses 1.50% 2.25% 2.25%
1. The maximum deferred sales charge of 5.50% is charged to shares redeemed
within the first year of purchase. These deferred sales charges decline to
0.00% over a period of six years.
2. Investments in Class C shares are not subject to an initial sales charge;
however, a contingent deferred sales charge of 1% is imposed in the event
of certain redemption transactions within thirteen months following such
investments.
3. If you are a participant in a qualified employee retirement benefit plan
with at least 100 eligible employees, you may purchase Class A shares
without any sales charges. However, if you redeem your shares within one
year of purchase, you will be charged a fee of 1.00% of the redemption
proceeds.
4. Management fees include a fee of 0.50% for investment advisory services and
0.25% for services provided to the Fund by the Fund's Sponsor.
5. Because 12b-1 fees are paid out of the assets of the Fund on an ongoing
basis, over time these fees will increase the cost of your investment and
may cost you more than paying other types of sales charges.
6. Other Expenses included fees paid to the Fund's transfer agent,
administrator and other service providers. Because the Fund is offering
these share Classes for the first time, these fees are estimated.
Example: This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
1 Year 3 Years
------ -------
Class A $----- $------
Class B $----- $------
Class C $----- $------
A maximum sales charge of 5.50% is included in the Class A Share expense
calculations. The maximum contingent deferred sales charge applicable to each
time period is included in the Class B and Class C expense calculations.
If you did not redeem your shares, your expenses would be:
1 Year 3 Years
------ -------
Class A $----- $------
Class B $----- $------
Class C $----- $------
A maximum sales charge of 5.50% is included in the Class A Share expense
calculations. Contingent deferred sales charges are not included in the Class B
and Class C expense calculations.
Because the Fund has no operating history for these share classes, these expense
figures are based on estimated amounts for the Fund's first fiscal year.
- --------------------------------------------------------------------------------
22
<PAGE>
THE FUNDS' INVESTMENT ADVISORS & SPONSOR
FOR THE QUAKER CORE EQUITY FUND:
Geewax, Terker & Co. ("GTC") provides the Core Equity Fund with a continuous
program of investment management, including the composition of its portfolio,
and furnishes advice and recommendations with respect to investments, investment
policies and the purchase and sale of securities.
GTC was established as a Pennsylvania partnership in 1982, and is registered as
an investment adviser under the Investment Advisors Act of 1940, as amended. GTC
currently serves as investment advisor to over $3.5 billion in assets. GTC
generally operates as an investment advisory firm, and has been rendering
investment counsel, utilizing investment strategies substantially similar to
that of the Core Equity Fund, to individuals, pension and profit sharing plans,
trusts, estates, charitable organizations and corporations since 1987. GTC's
address is 99 Starr Street, Phoenixville, Pennsylvania 19460. GTC is controlled
by John J. Geewax and Bruce E. Terker.
John J. Geewax, general partner of GTC, has responsibility for the day-to-day
management of the Fund's portfolio. Prior to establishing Geewax, Terker & Co.
in 1982, Mr. Geewax served as a portfolio manager with Pennsylvania Asset
Services beginning in 1980. He was also an instructor at the Wharton School of
the University of Pennsylvania from 1980 to 1982.
Messrs. Geewax and Terker, under the aegis Geewax, Terker & Co., have provided
investment management services and counseling to a significant number of
individual clients, large institutional clients and other registered investment
companies, including the Noah Fund and Vanguard Trustees Equity Fund since
founding the company.
Under the Advisory Agreement with the Trust, GTC receives a monthly management
fee equal to an annual rate of 0.75% of the average daily net asset value of the
Fund.
FOR THE QUAKER AGGRESSIVE GROWTH FUND:
DG Capital Management, Inc. ("DGCM") provides the Quaker Aggressive Growth Fund
with a continuous program of investment management, 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 was established as a Massachusetts corporation in 1996, and is registered
under the Investment Advisors Act of 1940, as amended. DGCM currently serves as
investment advisor to over $10 million in assets. 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 121 High Street,
Boston, Massachusetts 02110. DGCM is controlled by Manu Daftary. Mr. Daftary is
the President of DGCM and the firm's sole shareholder.
Manu Daftary is the Fund's portfolio manager and 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 & Co. from 1988-1993. Investment advisory services are the sole
business of both DGCM and Mr. Daftary.
23
<PAGE>
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.
FOR THE QUAKER LARGE-CAP VALUE AND MID-CAP VALUE FUNDS:
Compu-Val Investments, Inc. ("CVI") provides the Large-Cap Value Fund and the
Mid-Cap Value Fund with a continuous program of investment management, 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.
CVI was established as a Delaware corporation in 1974 and is registered under
the Investment Advisors Act of 1940, as amended. CVI currently serves as
investment advisor to over $170 million in assets. CVI 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 1974. CVI'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 the Advisor since 1995, is
the Fund's portfolio manager. Previously, Mr. O'Keefe was an investment analyst
with CoreStates Investment Advisors, Philadelphia, PA , since 1989.
Under the Advisory Agreement with the Trust, CVI receives a monthly management
fee equal to an annual rate of 0.75% of the average daily net asset value of the
Fund.
FOR THE QUAKER SMALL-CAP VALUE FUND:
Aronson + Partners ("Aronson") provides the Quaker Small-Cap Value Fund with a
continuous program of investment management, 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
amended Investment Advisory Agreement ("Advisory Agreement") with the Trust,
dated October 19, 1998.
Aronson was established as a Pennsylvania partnership in 1984 and is registered
as an investment adviser under the Investment Advisors Act of 1940, as amended.
Aronson currently serves as investment advisor to over $1.4 billion in assets.
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 19012.
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 is paid a base fee (Base
Fee) at an annual rate of 0.90% of the daily net assets of the Fund to be
computed and paid quarterly when the cumulative investment results for the Fund
over the prior running twelve (12) months exceed the return for the Russell 2000
Index for the same period by at least 3.0%. Adjustment factors will be applied
to the investment advisory fee according to the following formula.:
24
<PAGE>
Cumulative 12 months Performance Fee
Return versus the Index Adjustment
Less than + 1.0% 0.3333 X Base Fee
Between +1.0 and +1.5% 0.4664 X Base Fee
Between +1.5 and +2.0% 0.5998 X Base Fee
Between +2.0 and +2.5% 0.7332 X Base Fee
Between +2.5 and + 3.0% 0.8666 X Base Fee
At +3.0% 1.0000 X Base Fee
Between +3.0 and + 3.5% 1.1334 X Base Fee
Between +3.5 and + 4.0% 1.2668 X Base Fee
Between +4.0 and + 4.5% 1.4002 X Base Fee
Between +4.5 and + 5.0% 1.5336 X Base Fee
More than +5.0% 1.6667 X Base Fee
FOR THE QUAKER FIXED-INCOME FUND
Fiduciary Asset Management Co. ("FAM") provides the Quaker Fixed Income Fund
with a continuous program of investment management, including the composition of
the 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 was established as a Missouri corporation in 1994 and is registered as an
investment adviser under the Investment Advisors Act of 1940, as amended. FAM
currently serves as investment advisor to over $3.7 billion in assets, rendering
investment counsel and utilizing investment strategies substantially similar to
that of the Fund, 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 Charles D. Walbrandt.
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 0.45% of the average daily net asset value of the
Fixed Income Fund.
THE FUNDS' SPONSOR:
Pursuant to a Shareholder Servicing Agreement adopted by the Trust for each
Fund, Quaker Funds, Inc., provides shareholder servicing activities for each
Fund not otherwise provided by each Fund's Administrator or Custodian, for which
it will receive a fee at an annual rate of 0.25% of the average daily net assets
of each Fund. Quaker Funds, Inc. also provides oversight with respect to each
Advisor, arranges for payment of investment advisory and administrative fees,
coordinates payments under each Fund's Distribution Plan, develops
communications with existing Fund shareholders, assists in responding to
shareholder inquiries, and provides other shareholder servicing tasks.
25
<PAGE>
HOW TO BUY AND SELL SHARES OF THE FUND
INVESTING IN THE FUND
Determining Share Prices
- ------------------------
Shares of each Share Class of the Fund are offered at the public offering price
for each share Class. The public offering price is each share's net asset value
("NAV"), plus the applicable sales charge, if any. NAV per share is calculated
by adding the value of Fund investments, cash and other assets, subtracting Fund
liabilities, and then dividing the result by the number of shares outstanding.
The Fund generally determines the total value of its shares by using market
prices for the securities comprising its portfolio. Securities for which
quotations are not available and any other assets are valued at fair market
value as determined in good faith by each Fund's Advisor, subject to the review
and supervision of the Board of Trustee. Each Fund's per share NAV and public
offering price is computed on all days on which the New York Stock Exchange
("NYSE") is open for business, at the close of regular trading hours on the
Exchange, currently 4:00 p.m. Eastern time. In the event that the NYSE closes
early, the share price will be determined as of the time of closing.
Variable Pricing System
- -----------------------
Each Fund in the Quaker Family of Funds offers three classes of shares so that
you can choose the class that best suits your investment needs. The main
differences between each class are sales charges and ongoing fees. In choosing
which class of shares to purchase, you should consider which will be most
beneficial to you, given the amount of your purchase and the length of time you
expect to hold the shares. All three classes of shares in any Fund represent
interests in the same portfolio of investments in that Fund.
CLASS A SHARES.
Class A shares are offered at their public offering price, which is net asset
value per share plus the applicable sales charge. The sales charge varies,
depending on how much you invest. There are no sales charges on reinvested
distributions. The following sales charges apply to your purchases of Class A
shares of each Fund except the Quaker Fixed-Income Fund:
SALES CHARGE
AS A % OF DEALER
AMOUNT INVESTED OFFERING PRICE REALLOWANCE
- --------------- -------------- -----------
Less than $49,999 5.50% 5.00%
$50,000 to $99,999 4.75% 4.25%
$100,000 to $249,999 3.75% 3.25%
$250,000 to $499,999 2.75% 2.50%
$500,000 to $999,999 2.00% 1.75%
$1,000,000 or more 0.00% 0.00%
The following sales charges apply to your purchases of Class A shares of the
Quaker Fixed-Income Fund:
SALES CHARGE
AS A % OF DEALER
AMOUNT INVESTED OFFERING PRICE REALLOWANCE
- --------------- -------------- -----------
Less than $99,999 4.25% 4.00%
$100,000 to $249,999 3.75% 3.50%
$250,000 to $499,999 2.75% 2.50%
$500,000 to $999,999 2.00% 1.75%
$1,000,000 or more 0.00% 0.00%
26
<PAGE>
If you purchase more than $1,000,000 in any Fund's shares, or if you are a
participant in a qualified employee retirement benefit plan with at least 100
eligible employees, you may purchase Class A shares without any sales charges.
However, if you redeem your shares within one year of purchase, you will be
charged a fee of 1.00% of the redemption proceeds.
Declaration Distributors, Inc, ("DDI") the Trust's principal underwriter, will
pay the appropriate dealer concession to those selected dealers who have entered
into an agreement with DDI to sell shares of the Funds. The dealer's concession
may be changed from time to time. DDI may from time to time offer incentive
compensation to dealers who sell shares of the Funds subject to sales charges,
allowing such dealers to retain an additional portion of the sales load. A
dealer who receives all of the sales load may be deemed to be an "underwriter"
under the Securities Act of 1933, as amended.
Exemptions from sales charges
- -----------------------------
The Trust will waive sales charges for purchases by fee-based registered
investment advisers for their clients, broker/dealers with wrap fee accounts,
registered investment advisers or brokers for their own accounts, employees and
employee related accounts of the Advisor, and for an organization's retirement
plan that places either (i) 200 or more participants or (ii) $300,000 or more of
combined participant initial assets into the Fund. For purchasers that qualify
for fee waiver, shares will be purchased at net asset value.
Reduced sales charges
- ---------------------
You may qualify for a reduced sales charge by aggregating the net asset value of
all your load shares previously purchased in all Funds with the dollar amount of
shares to be purchased. For example, if you already owned Class A shares in the
Fund with a combined aggregate net asset value of $450,000, and you decided to
purchase an additional $60,000 of Class A shares of any Fund except the
Fixed-Income Fund, there would be a sales charge of 2.00% on your $60,000
purchase instead of the normal 4.75% on that purchase, because you had
accumulated more than $500,000 total in the Funds.
Letter of intent
- ----------------
You can immediately qualify for a reduced or eliminated sales charge by signing
a non-binding letter of intent stating your intention to buy an amount of shares
in the Fund(s) during the next thirteen (13) months sufficient to qualify for
the reduction. Your letter will not apply to purchases made more than 90 days
prior to the letter. During the term of your letter of intent, the transfer
agent will hold in escrow shares representing the highest applicable sales load
for the Fund(s) each time you make a purchase. Any shares you redeem during that
period will count against your commitment. If, by the end of your commitment
term, you have purchased all the shares you committed to purchase, the escrowed
shares will be released to you. If you have not purchased the full amount of
your commitment, your escrowed shares will be redeemed in an amount equal to the
sales charge that would apply if you had purchased the actual amount in your
account all at once. Any escrowed shares not needed to satisfy that charge would
be released to you.
CLASS B SHARES
Unlike Class A shares, Class B shares are sold at net asset value without an
initial sales charge. Instead, a Contingent Deferred Sales Charge ("CDSC") is
imposed on certain redemptions of Class B shares. This means that all of your
initial investment is invested in the Fund(s) of your choice, and you will only
incur a sales charge if you redeem shares within eight years. In that case, a
CDSC may be imposed on your redemption. If a CDSC is imposed, it will be
calculated on an amount equal to the lesser of the current market value or the
cost of the shares redeemed. What this means is that no sales charge is imposed
on increases in the net asset value of your shares above their original purchase
price. Also, no charge is assessed on shares derived from reinvestment of
dividend or capital gains distributions.
27
<PAGE>
The amount of the CDSC, if any, varies depending on the number of years you have
held your shares. To determine that time period, all purchases made in any month
are aggregated together and deemed to have been made on the last day of the
month. For Class B shares of all Funds except the Fixed-Income Fund, the
following CDSC charges apply:
REDEMPTION WITHIN CDSC PERCENTAGE
1st Year.............................5.50%
2nd Year.............................5.00%
3rd Year.............................4.50%
4th Year.............................4.00%
5th Year.............................3.00%
6th Year.............................2.00%
7th Year.............................1.00%
8th Year and Thereafter..............NONE
For Class B shares of the Fixed-Income Fund, the following CDSC charges apply:
REDEMPTION WITHIN CDSC PERCENTAGE
1st Year.............................4.00%
2nd Year.............................3.50%
3rd Year.............................3.00%
4th Year.............................2.00%
5th Year.............................1.00%
6th Year.............................2.00%
7th Year.............................NONE
8th Year and Thereafter..............NONE
When you send a redemption request to the Trust, unless you specify otherwise,
shares not subject to the CDSC are redeemed first, then shares that have been
held the longest, and so on. That way, you will be subject to the smallest
charge possible.
CDSC waivers
- ------------
The CDSC is waived on redemptions of Class B shares (i) following the death or
disability (as defined in the Code) of a shareholder (ii) in connection with
certain distributions from an IRA or other retirement plan (iii) for annual
withdrawals up to 10% of the value of the account, (iv) pursuant to the right of
the Fund to liquidate a shareholder's account.
Conversion feature
- ------------------
Class B shares automatically convert to Class A shares once the economic
equivalent of a 5.50% (4.00% for Fixed-Income fund Class B Shares) sales charge
is recovered by the Fund(s) for each investment account. The sales charge is
recoverable by the Fund(s) through the distribution fees paid under each Fund's
Plan of Distribution for its Class B shares. Class B shares converting to Class
A shares are not subject to additional sales charges.
28
<PAGE>
CLASS C SHARES
Class C Shares are sold at net asset value without an initial sales charge. This
means that 100% of your initial investment is placed into shares of the Fund(s)
of your choice. However, Class C shares pay an annual 12b-1 distribution fee of
0.25% of average daily net assets and an additional shareholder servicing fee of
0.75% per annum of average daily net assets.
In order to recover commissions paid to dealers on investments in Class C
Shares, you will be charged a contingent deferred sales charge ("CDSC") of 1.00%
of the value of your redemption if you redeem your shares within thirteen months
from the date of purchase. You will not be charged a CDSC on reinvested
dividends or capital gains, amounts purchased more than one year prior to the
redemption, and increases in the value of your shares.
FACTORS TO CONSIDER WHEN CHOOSING A SHARE CLASS
When deciding which class of shares to purchase, you should consider your
investment goals, present and future amounts you may invest in the Fund(s), and
the length of time you intend to hold your shares. You should consider, given
the length of time you may hold your shares, whether the ongoing expenses of
Class C or Class B shares will be greater than the front-end sales charge of
Class A shares, and to what extent such differences may be offset by the higher
dividends on Class A shares. To help you make a determination as to which class
of shares to buy, please refer back to the examples of each Fund's expenses over
time in the "FUNDS" Section of this Prospectus.
Distribution Fees
- -----------------
Quaker Investment Trust (the "Trust") has adopted distribution plans (the
"Distribution Plans"), pursuant to Rule 12b-1 under The Investment Company Act
of 1940, as amended (the "1940 Act"), by Class of Shares, for each Fund. The
Distribution Plans provide for fees to be deducted from the average net assets
of the Funds in order to compensate the Sponsor or others for expenses relating
to the promotion and sale of shares of each Fund.
Under the Class A Plan, the Class A shares of each Fund compensate the Sponsor
and others for distribution expenses at a maximum annual rate of 0.25% (of
which, the full amount may be service fees), payable on a monthly basis, of each
Fund's average daily net assets attributable to Class A shares.
Under the Class B Plan, the Class B Shares of the Fund compensate the Sponsor
and others for distribution and service fees at an annual rate of 1.00% (0.25%
of which is a service fee) payable on a monthly basis, of each Fund's average
daily net assets attributable to Class B shares. Amounts paid under the Class B
Plan are paid to the Sponsor and others to compensate it for services provided
and expenses incurred in the distribution of Class B shares, including the
paying of commissions for sales of Class B shares. The Class B Plan is designed
to allow investors to purchase Class B shares without incurring a front-end
sales load and to permit the distributor to compensate authorized dealers for
selling such shares. Accordingly, the Class B Plan combined with the CDSC for
Class B shares is to provide for the financing of the distribution of Class B
shares.
Under the Class C Plan, Class C Shares of each Fund compensate the Sponsor and
others for distribution and service fees at an annual rate of 1.00% (0.75% of
which is a service fee) payable on a monthly basis, of each Fund's average daily
net assets attributable to Class C shares. Amounts paid under the Class C Plan
are paid to the Sponsor and others to compensate it for services provided and
expenses incurred in the distribution of Class C shares, including the paying of
ongoing "trailer" commissions for sales of Class C shares. The Class C Plan is
designed to allow investors to purchase Class C shares without incurring a
front-end sales load or a CDSC charge, and to permit the distributor to
compensate authorized dealers for selling such shares. Accordingly, the Class C
Plan's purpose is to provide for the financing of the distribution of Class C
shares.
29
<PAGE>
The Distribution Plans provide that the Funds may finance activities which are
primarily intended to result in the sale of the Funds' shares, including but not
limited to, advertising, printing of prospectuses and reports for other than
existing shareholders, preparation and distribution of advertising materials and
sales literature, and payments to dealers and shareholder servicing agents.
The Distribution Plans are reviewed annually by the Trust's Board of Trustees,
and may be renewed only by majority vote of the shareholders of the Funds'
Classes, or by majority vote of the Board, and in both cases also a majority
vote of the "disinterested" Trustees of the Trust, as that term is defined in
the 1940 Act.
Minimum Investment Amounts
- --------------------------
Payments for Fund shares should be in U.S. dollars, and in order to avoid fees
and delays, should be drawn on a U.S. bank. Fund management may reject any
purchase order for Fund shares and may waive the minimum investment amounts in
its sole discretion.
Your purchase of Fund shares is subject to the following minimum investment
amounts:
MINIMUM MINIMUM
TYPE OF INVESTMENT SUBSEQUENT
ACCOUNT TO OPEN ACCOUNT INVESTMENTS
- --------------------------------------------------------------------------------
REGULAR $2,000 $1,000
IRAs $1,000 $ 100
- --------------------------------------------------------------------------------
AUTOMATIC INVESTMENT PLAN MEMBERS
MINIMUM MINIMUM
TYPE OF INVESTMENT SUBSEQUENT
ACCOUNT TO OPEN ACCOUNT INVESTMENTS
- --------------------------------------------------------------------------------
REGULAR $2,000 $100 per month minimum
IRAs $2,000 $100 per month minimum
- --------------------------------------------------------------------------------
Opening and Adding To Your Account
- ----------------------------------
You can invest in the Funds by mail, wire transfer and through participating
financial service professionals. After you have established your account and
made your first purchase, you may also make subsequent purchases by telephone.
You may also invest in the Funds through an automatic payment plan. Any
questions you may have can be answered by calling 1-800-220-8888.
Purchasing Shares By Mail
- -------------------------
To make your initial investment in the Funds, simply complete the Account
Registration Form included with this Prospectus, make a check payable to the
Fund of your choice, and mail the Form and check to:
Quaker Investment Trust
c/o Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19460
To make subsequent purchases, simply make a check payable to the Fund of your
choice and mail the check to the above-mentioned address. Be sure to note your
Fund account number on the check.
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<PAGE>
Your purchase order, if accompanied by payment, will be processed upon receipt
by Declaration Service Company, the Fund's Transfer Agent. If the Transfer Agent
receives your order and payment by the close of regular trading on the NYSE
(currently 4:00 p.m. Eastern time), your shares will be purchased at the Fund's
NAV calculated at the close of regular trading on that day. Otherwise, your
shares will be purchased at the NAV determined as of the close of regular
trading on the next business day.
Purchasing Shares by Wire Transfer
- ----------------------------------
To make an initial purchase of shares by wire transfer, you need to take the
following steps:
1. Call 1-800-220-8888 to inform us that a wire is being sent.
2. Obtain an account number from the Transfer Agent.
3. Fill out and mail or fax an Account Application to the Transfer Agent
4. Ask your bank to wire funds to the account of:
First Union National Bank of North Carolina
Charlotte, North Carolina, ABA # 053000219
Acct #2000000862039 (For the Quaker Core Equity Fund)
Acct #2000000862071 (For the Quaker Aggressive Growth Fund)
Acct #2000000862084 (For the Quaker Large-Cap Value Fund)
Acct #2000000862149 (For the Quaker Mid-Cap Value Fund)
Acct #20000001067875 (For the Quaker Small-Cap Value Fund)
Acct #2000000862136 (For the Quaker Fixed Income Fund)
For further credit to (Your Name and Account #)
Include your name(s), address and taxpayer identification number or Social
Security number on the wire transfer instructions. The wire should state that
you are opening a new Fund account.
To make subsequent purchases by wire, ask your bank to wire funds using the
instructions listed above, and be sure to include your account number on the
wire transfer instructions.
If you purchase Fund shares by wire, you must complete and file an Account
Registration Form with the Transfer Agent before any of the shares purchased can
be redeemed. Either fill out and mail the Application Form included with this
prospectus, or call the transfer agent and they will send you an application.
You should contact your bank (which will need to be a commercial bank that is a
member of the Federal Reserve System) for information on sending funds by wire,
including any charges that your bank may make for these services.
Purchases through Financial Service Organizations
- -------------------------------------------------
You may purchase shares of the Funds through participating brokers, dealers, and
other financial professionals. Simply call your investment professional to make
your purchase. If you are a client of a securities broker or other financial
organization, such organizations may charge a separate fee for administrative
services in connection with investments in Fund shares and may impose account
minimums and other requirements. These fees and requirements would be in
addition to those imposed by the Fund. If you are investing through a securities
broker or other financial organization, please refer to its program materials
for any additional special provisions or conditions that may be different from
those described in this Prospectus (for example, some or all of the services and
privileges described may not be available to you). Securities brokers and other
financial organizations have the responsibility of transmitting purchase orders
and funds, and of crediting their customers' accounts following redemptions, in
a timely manner in accordance with their customer agreements and this
Prospectus.
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<PAGE>
Purchasing Shares by Automatic Investment Plan
- ----------------------------------------------
You may purchase shares of the Funds through an Automatic Investment Plan
("Plan"). The Plan provides a convenient way for you to have money deducted
directly from your checking, savings, or other accounts for investment in shares
of the Funds. You can take advantage of the Plan by filling out the Automatic
Investment Plan application on page __ of this Prospectus. You may only select
this option if you have an account maintained at a domestic financial
institution which is an Automated Clearing House member for automatic
withdrawals under the Plan. The Trust may alter, modify, amend or terminate the
Plan at any time, and will notify you at least 30 days in advance if it does so.
For more information, call the Transfer Agent at 1-800-220-8888.
Purchasing Shares by Telephone
- ------------------------------
In order to be able to purchase shares by telephone, your account authorizing
such purchases must have been established prior to your call. Your initial
purchase of shares may not be made by telephone. Shares purchased by telephone
will be purchased at their per share public offering price determined at the
close of business on the day that the Transfer Agent receives payment through
the Automated Clearing House, which could be as many as two days after you place
your order for shares. Call the Transfer Agent for details.
You may make purchases by telephone only if you have an account at a bank that
is a member of the Automated Clearing House. Most transfers are completed within
three business days of your call. To preserve flexibility, the Trust may revise
or eliminate the ability to purchase Fund shares by phone, or may charge a fee
for such service, although the Trust does not currently expect to charge such a
fee.
The Funds' Transfer Agent employs certain procedures designed to confirm that
instructions communicated by telephone are genuine. Such procedures may include,
but are not limited to, requiring some form of personal identification prior to
acting upon telephonic instructions, providing written confirmations of all such
transactions, and/or tape recording all telephonic instructions. Assuming
procedures such as the above have been followed, neither the Transfer Agent nor
the applicable Fund will be liable for any loss, cost, or expense for acting
upon telephone instructions that are believed to be genuine. The Trust shall
have authority, as your agent, to redeem shares in your account to cover any
such loss. As a result of this policy, you will bear the risk of any loss unless
the Trust and/or Transfer Agent has failed to follow procedures such as the
above. However, if the Trust and/or Transfer Agent fails to follow such
procedures, it may be liable for such losses.
Miscellaneous Purchase Information
- ----------------------------------
All applications to purchase shares of the Fund are subject to acceptance or
rejection by authorized officers of the Company and are not binding until
accepted. Applications will not be accepted unless they are accompanied by
payment in U.S. funds. Payment must be made by check or money order drawn on a
U.S. bank, savings and loan association or credit union. The Fund's custodian
will charge a $______ fee against your account, in addition to any loss
sustained by the Fund, for any payment check returned to the custodian for
insufficient funds. The Fund reserves the right to refuse to accept applications
under circumstances or in amounts considered disadvantageous to shareholders. If
you place an order for Fund shares through a securities broker, and you place
your order in proper form before 4:00 p.m. Eastern time on any business day in
accordance with their procedures, your purchase will be processed at the NAV
calculated at 4:00 p.m. on that day, provided the securities broker transmits
your order to the Transfer Agent before 5:00 p.m. Eastern time. The securities
broker must send to the Transfer Agent immediately available funds in the amount
of the purchase price within three business days for the order.
32
<PAGE>
HOW TO SELL (REDEEM) YOUR SHARES
You may sell your shares at any time. You may request the sale of your shares
either by mail, by telephone or by wire.
By Mail
- -------
Sale requests should be mailed via U.S. mail or overnight courier service to:
Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19460
The redemption price you receive will be your Fund's per share NAV next
calculated after receipt of all required documents in good order. Payment of
redemption proceeds will be made no later than the third business day after the
valuation date unless otherwise expressly agreed by the parties at the time of
the transaction. If you purchase your shares by check and then redeem your
shares before your check has cleared, the Trust may hold your redemption
proceeds until your check clears, or for 15 days, whichever comes first.
"Good order" means that your redemption request must include:
1. Your account number;
2. The Fund from which you are redeeming shares;
3. The number of shares to be sold (redeemed) or the dollar value of the
amount to be redeemed;
4. The signatures of all account owners exactly as they are registered on the
account;
5. Any required signature guarantees; and 6. Any supporting legal
documentation that is required in the case of estates, trusts, corporations
or partnerships and certain other types of accounts.
Signature Guarantees --
- --------------------
A signature guarantee of each owner is required to redeem shares in the
following situations, for all size transactions:
o if you change the ownership on your account;
o when you want the redemption proceeds sent to a different address than is
registered on the account;
o if the proceeds are to be made payable to someone other than the account's
owner(s);
o any redemption transmitted by federal wire transfer to your bank; and
o if a change of address request has been received by the Trust or the
Transfer Agent within 15 days previous to the request for redemption.
In addition, signature guarantees are required for all redemptions of $25,000 or
more from any Fund shareholder account. A redemption will not be processed until
the signature guarantee, if required, is received by the Transfer Agent.
Signature guarantees are designed to protect both you and the Trust from fraud.
To obtain a signature guarantee, you should visit a bank, trust company, member
of a national securities exchange, other broker-dealer, or other eligible
guarantor institution. (Notaries public cannot provide signature guarantees.)
Guarantees must be signed by an authorized person at one of these institutions
and be accompanied by the words, "Signature Guarantee."
The Trust may also rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 610-832-1067). The confirmation instructions must include:
33
<PAGE>
1) Shareholder name, name of applicable Fund, 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 Trust.
By Telephone
- ------------
You may redeem your shares by calling the Transfer Agent at 1-800-220-8888 if
you elected to use telephone redemption on your account application when you
initially purchased shares. Redemption proceeds must be transmitted directly to
you or to your pre-designated account at a domestic bank. You may not redeem by
telephone if a change of address request has been received by the Trust or the
Transfer Agent within 15 days prior to the request for redemption. During
periods of substantial economic or market changes, telephone redemptions may be
difficult to implement. If you are unable to contact the Transfer Agent by
telephone, shares may be redeemed by delivering your redemption request in
person or by mail. In addition, interruptions in telephone service may mean that
you will be unable to effect a redemption by telephone exactly when desired.
By Wire
- -------
You may request the redemption proceeds be wired to your designated bank if it
is a member bank or a correspondent of a member bank of the Federal Reserve
System. The Fund's Custodian charges a $___ fee for outgoing wires.
Redemption At The Option Of The Trust
- -------------------------------------
If the value of the shares in your account falls to less than $2000, the Trust
may notify you that, unless your account is increased to $2000 in value, it will
redeem all your shares and close the account by paying you the redemption
proceeds and any dividends and distributions declared and unpaid at the date of
redemption. You will have thirty days after notice to bring the account up to
$2000 before any action is taken. This right of redemption shall not apply if
the value of your account drops below $2000 as the result of market action. The
Trust reserves this right because of the expense to the Fund of maintaining
relatively small accounts.
Exchange Feature.
- -----------------
You may exchange your shares of any Fund for the same share class of any other
Fund of the Trust without incurring any additional sales charges. An exchange
involves the simultaneous redemption of shares of one Fund and purchase of
shares of another Fund 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 Fund of the Trust
at the net asset value. You may direct the Trust to exchange your shares by
contacting the Transfer Agent. 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, 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. 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.
34
<PAGE>
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 Funds
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 Trust. If you prefer to receive 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"). 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 Transfer Agent.
DIVIDENDS AND DISTRIBUTIONS
Dividends paid by the Funds are derived from their net investment income. Net
investment income will be distributed at least annually. The Funds' net
investment income is made up of dividends received from the stocks and other
securities they hold, as well as interest accrued and paid on any other
obligations that might be held in their portfolios.
The Funds realize capital gains when they sell a security for more than they
paid for it. The Funds may make distributions of their net realized capital
gains (after any reductions for capital loss carry forwards), generally, once a
year.
Unless you elect to have your distributions paid in cash, your distributions
will be reinvested in additional shares of the Fund(s). You may change the
manner in which your dividends are paid at any time by writing to the Transfer
Agent.
TAX CONSIDERATIONS
Each Fund intends to qualify as a regulated investment company under Subchapter
M of the Internal Revenue Code of 1986, as amended, so as to be relieved of
federal income tax on its capital gains and net investment income currently
distributed to its shareholders.
Dividends from investment income and net short-term capital gains are generally
taxable to you as ordinary income. Distributions of long-term capital gains are
taxable as long-term capital gains regardless of the length of time shares in a
Fund have been held. Distributions are taxable, whether received in cash or
reinvested in shares of a Fund.
You will be advised annually of the source of distributions for federal income
tax purposes.
A redemption of shares is a taxable event and, accordingly, a capital gain or
loss may be recognized. You should consult a tax adviser regarding the effect of
federal, state, local, and foreign taxes on an investment in the Fund(s).
35
<PAGE>
GENERAL INFORMATION
The Funds will not issue stock certificates evidencing shares. Instead, your
account will be credited with the number of shares purchased, relieving you of
responsibility for safekeeping of certificates and the need to deliver them upon
redemption. Written confirmations are issued for all purchases of shares.
In reports or other communications to investors, or in advertising material, the
Funds may describe general economic and market conditions affecting them and may
compare their performance with other mutual funds as listed in the rankings
prepared by Lipper Analytical Services, Inc. or similar nationally recognized
rating services and financial publications that monitor mutual fund performance.
The Funds may also, from time to time, compare their performance to the one or
more appropriate indices.
36
<PAGE>
FOR MORE INFORMATION
Additional information about the Funds is available in the Trust's Statement of
Additional Information (SAI). The SAI contains more detailed information on all
aspects of the Funds. A current SAI, dated November 1, 1999, has been filed with
the SEC and is incorporated by reference into this prospectus.
To receive information concerning the Funds, or to request a copy of the SAI or
other documents relating to the Funds, please contact the Trust at:
Quaker Investment Trust
c/o Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19460
1-800-220-8888
A copy of your requested document(s) will be sent to you within three days of
your request.
You may also receive information concerning the Funds, or request a copy of the
SAI or other documents relating to the Funds, by contacting the Securities and
Exchange Commission:
IN PERSON: at the SEC's Public Reference Room in Washington, D.C.
BY PHONE: 1-800-SEC-0330
BY MAIL: Public Reference Section, Securities and Exchange Commission,
Washington, D.C. 20549-6009 (duplicating fee required)
ON THE INTERNET: www.sec.gov
Investment Company Act No.
811-06260
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
QUAKER INVESTMENT TRUST
555 North Lane, Suite 6160
Conshohocken, PA 19428-0844
Telephone 800-220-8888
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus of the Quaker Core Equity Fund, Quaker
Aggressive Growth Fund, Quaker Large-Cap Value Fund, Quaker Mid-Cap Value Fund,
Quaker Small-Cap Value Fund, and Quaker Fixed-Income Fund (each a "Fund" and
together the "Funds"), dated November 1, 1999. You may obtain a copy of the
Prospectus, free of charge, by writing to Quaker Investment Trust ("Trust") c/o
Declaration Service Company, 555 North Lane, Suite 6160, Conshohocken, PA 19460
or by calling 1-800-220-8888.
TABLE OF CONTENTS
Investment Policies and Restrictions
Investment Restrictions
Investment Advisor
Directors and Officers
Performance Information
Purchasing and Redeeming Shares
Tax Information
Portfolio Transactions
Custodian
Transfer Agent
Administration
Distributor
Independent Accountants
Legal Counsel
Distribution Plan
General Information
Financial Statements
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
The Fund's investment objectives and the manner in which the Fund pursues its
investment objectives are generally discussed in the prospectus. This section
provides additional information concerning the Fund's investments and its
investment restrictions.
INVESTMENT GRADE SECURITIES. Quaker Fixed Income Fund limits its investment
purchases to high quality investment grade securities. The securities industry
defines investment grade securities as obligations which 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. Although considered to be of "investment grade" quality, securities rated
BBB by S&P, Fitch, and D&P or Baa by Moody's, while normally exhibiting adequate
protection parameters, have speculative characteristics. For a description of
each rating grade, see Appendix A to the Statement of Additional Information.
Fixed Income limits 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 the Adviser. 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.
OTHER INVESTMENT LIMITATIONS. The investment objective of each Fund is
fundamental, and may only be changed upon approval of a "majority" of that
Fund's outstanding shares, as defined in the Investment Company Act of 1940. For
a complete listing of the Funds' limitations, both fundamental and those which
may be changed by vote of the Board of Trustees, See "Investment Limitations" in
the Statement of Additional Information.
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.
INVESTMENT SECURITIES COMMON TO ALL EQUITY FUNDS
EQUITY SECURITIES. The Equity Funds may invest in 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). Stocks held in the portfolios of the Equity Funds
will generally be traded on either the New York
1
<PAGE>
Stock Exchange, American Stock Exchange or the NASDAQ over-the-counter market.
Under normal conditions, at least 90% of the Equity Funds' total assets will be
invested in equity securities. Warrants and rights are excluded for purposes of
this calculation.
FOREIGN SECURITIES. Because of the inherent risk of foreign securities over
domestic issues, the Equity Funds will only purchase foreign securities 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. . See
"Investment Limitations."
SHORT-TERM INVESTMENTS. The Equity Funds also will normally 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. As a temporary defensive
measure, 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 such
securities as a temporary defensive measure, they will not be not pursuing their
stated investment objective. See, "Quaker Fixed Income Fund" below.
All of the Equity Funds may make short sales against the box, i.e. short sales
made when a particular Fund owns securities identical those sold short.
OPTIONS. Each Equity Fund may invest in options on equity securities and
securities indices, and options on futures contacts. The primary risks
associated with these investments are; (1) the risk that a position cannot be
easily closed out due to the lack of a liquid secondary market, and (2) the risk
that changes in the value of the investment will not correlate to changes in the
value of the underlying security. Further. over-the-counter options can be less
liquid than exchange-traded options. Accordingly, an Equity Fund will treat
over-the-counter options as illiquid securities. Investing in options involves
specialized skills and techniques different from those associated with ordinary
portfolio transactions. Each Equity Fund may invest not more than 10% of its
total assets in options transactions. Options may be purchased for hedging
purposes, or to provide a viable substitute for direct investment in, and/or
short sales of, specific equity securities. The Equity Funds will write (sell)
stock or stock index options only for hedging purposes or to close out positions
in stock or stock index options that an Equity Fund has purchased. The Equity
Funds may only write (sell) "covered" options.
FUTURES CONTRACTS AND RELATED OPTIONS. To hedge against changes in securities
prices or interest rates, each Equity Fund may purchase and sell various kinds
of futures contracts, and purchase and write call and put options on such
futures contracts. Permissible futures contracts investments are limited to
futures on various equity securities and other financial instruments and
indices. An Equity Fund will engage in futures and related options transactions
for bona-fide hedging or other non-hedging purposes as permitted by regulations
of the Commodity Futures Trading Commission.
An Equity Fund may only purchase or sell non-hedging futures contracts, or
purchase or sell related non-hedging options, except for closing purchase or
sale transactions, if immediately thereafter the sum of the amount of initial
margin deposits on the Equity Fund's existing non-hedging futures and related
non-hedging options positions, and the amount of premiums paid for existing
non-hedging options on futures (net of the amount the positions are "in the
money") does not exceed 5% of the market value of the Fund's total assets.
Otherwise, each Equity Fund may invest up to 10% of its total assets in initial
margins and premiums on futures and related options. Additional information on
permitted futures transactions of the Equity Funds and their associated risks is
contained in the Statement of Additional Information.
2
<PAGE>
PERMISSIBLE INVESTMENTS COMMON TO ALL QUAKER FUNDS
MONEY MARKET INSTRUMENTS. Money market instruments mature in thirteen months or
less from the date of purchase and include U.S. Government Securities, corporate
debt securities, bankers acceptances and certificates of deposit of domestic
branches of U.S. banks, and commercial paper rated in one of the two highest
rating categories by any of the nationally recognized statistical rating
organizations or if not rated, of equivalent quality in the Adviser's opinion.
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 a Fund. An Adviser may,
when it believes that unusually volatile or unstable economic and market
conditions exists, depart from a Fund's normal investment approach and invest up
to 100% of the net assets of a Fund in these instruments for temporary and
defensive purposes.
U.S. GOVERNMENT SECURITIES. Each Fund may invest a portion of its portfolio in
U.S. Government Securities, as defined under "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 seven days of the
purchase. A Fund will not enter into any repurchase agreement which will cause
more than 10% of its net assets to be invested seven days. In the event of the
bankruptcy of the other party to a repurchase agreement, a Fund could experience
delays in recovering its cash, or a loss in value due to a decline in the value
of the securities held.
INVESTMENT COMPANIES. In order to achieve its investment objective, a Fund may
invest up to 10% of the value of its total assets in securities of other
investment companies. Each Fund may invest in any type of investment company
consistent with the Fund's investment objective and policies. 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. 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.
REAL ESTATE SECURITIES. The Funds may invest in readily marketable interests in
real estate investment trusts ("REITs"). REITs are pooled investment vehicles
which invest primarily in income-producing real estate or real estate related
loans or interests. REITs are generally classified as equity REITs, mortgage
REITs or a combination of equity and mortgage REITs. Equity REITs invest the
majority of their assets directly in real property and derive income primarily
from the collection of rents. Equity REITs can also realize capital gains by
selling properties that have appreciated in value. Mortgage REITs invest the
majority of their assets in real estate mortgages and derive income from the
collection of interest payments. 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 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.
3
<PAGE>
You should be aware that Equity REITs may be affected by changes in the value of
the underlying property owned by the REITs, while mortgage REITs may be affected
by the quality of any credit extended (which may also be affected by changes in
the value of the underlying property). REITs are dependent upon management
skills, often have limited diversification, and are subject to the risks of
financing projects. REITs are subject to heavy cash flow dependency, default by
borrowers, self-liquidation, and the possibilities of failing to qualify for
exemption from tax for distributed income under the Internal Revenue Code and
failing to maintain their exemptions from the Investment Company Act. Certain
REITs have relatively small market capitalizations, which may result in less
market liquidity and greater price volatility of their securities.
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. Included within the category of illiquid securities are 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.
SPECIAL SITUATIONS. The Aggressive Growth Fund intends to invest in special
situations from time to time. A special situation arises when, in the opinion of
Fund management, the securities of a company will, within a reasonably estimated
time period, be accorded market recognition at an appreciated value solely by
reason of a development particularly or uniquely applicable to that company and
regardless of general business conditions or movements of the market as a whole.
Such developments and situations include, but are not limited to: liquidations,
reorganizations, recapitalizations or mergers, material litigation,
technological breakthroughs, and new management or management policies. Although
large and well-known companies may be involved, special situations often involve
much greater risk than is found in the normal course of investing. To minimize
these risks, the Fund will not invest in special situations unless the target
company has at least three years of continuous operations (including
predecessors), or unless the aggregate value of such investments is not greater
than 25% of the Fund's total net assets (valued at the time of investment).
WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS. The Fund may purchase
securities on a when-issued basis, and it may purchase or sell securities for
delayed-delivery. These transactions occur when securities are purchased or sold
by the Fund with payment and delivery taking place at some future date. The Fund
may enter into such transactions when, in the Advisor's opinion, doing so may
secure an advantageous yield and/or price to the Fund that might otherwise be
unavailable. The Fund has not established any limit on the percentage of assets
it may commit to such transactions, but to minimize the risks of entering into
these transactions, the Fund will maintain a segregated account with its
custodian consisting of cash, or other high-grade liquid debt securities,
denominated in U.S. dollars or non-U.S. currencies, in an amount equal to the
aggregate fair market value of its commitments to such transactions.
MASTER-FEEDER OPTION. Notwithstanding its other investment policies, the Funds
may seek to achieve their investment objective by investing all of their
investable net assets in another investment company having the same investment
objective and substantially the same investment policies and restrictions as
those of the Fund. Although such an investment may be made in the sole
discretion of the Trustees, the Fund's shareholders will be given 30 days prior
notice of any such investment. There is no current intent to make such an
investment.
PORTFOLIO TURNOVER. The Funds have no operating history and therefore have s no
annual reportable portfolio turnover. The Funds will generally purchase and sell
securities without regard to the length of time the security has been held.
Accordingly, it can be expected that the rate of portfolio turnover may be
substantial. The Funds expect annual portfolio turnover rates will not exceed
100% under normal conditions. However, there can be no assurance that the Funds
will not exceed this rate, and the portfolio turnover rate may vary from year to
year.
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<PAGE>
High portfolio turnover in any year will result in the payment by the Fund of
above-average transaction costs and could result in the payment by shareholders
of above-average amounts of taxes on realized investment gains. Distributions to
shareholders of such investment gains, to the extent they consist of short-term
capital gains, will be considered ordinary income for federal income tax
purposes.
Portfolio turnover rate is calculated by dividing (1) the lesser of purchases or
sales of portfolio securities for the for the fiscal year by (2) the monthly
average of the value of portfolio securities owned during the fiscal year. A
100% turnover rate would occur if all the securities in the Fund's portfolio,
with the exception of securities whose maturities at the time of acquisition
were one year or less, were sold and either repurchased or replaced within one
year.
INVESTMENT RESTRICTIONS
Each Fund has adopted the following fundamental investment limitations, which
cannot be changed without approval by holders of a majority of the outstanding
voting securities" of the Fund as defined in the Investment Company Act of 1940
(the "1940 Act"). As provided in the 1940 Act, a vote of a "majority of the
outstanding voting securities" of the Fund means the affirmative vote of the
lesser of (1) more than 50% of the outstanding shares of the Fund, or (2) 67% or
more of the shares of the Fund present at a meeting, if more than 50% of the
shares are represented at the meeting in person or by proxy. Except with respect
to borrowing, changes in values of the Fund's assets as a whole will not cause a
violation of the following investment restrictions so long as percentage
restrictions are observed by the Fund at the time it purchases any security.
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);
(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 underwriting under the federal
securities laws;
5
<PAGE>
(7) 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 each 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);
(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 sell puts, calls, straddles, spreads, or combinations
thereof or futures contracts or related options (except that the Equity Funds
may engage in certain transactions in options and futures to the extent
described in the Prospectus);
(5) 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;
or
(6) Purchase any securities on margin except in connection with such short-term
credits as may be necessary for the clearance of transactions.
6
<PAGE>
INVESTMENT ADVISORS
Information on each Fund's Investment Advisor is set forth in the Prospectus.
This section contains additional information concerning the Advisors and their
obligations to the Funds.
General Adviser Duties.
- ------- ---------------
Each Adviser 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, such as the Distributor, if it
believes it can obtain the best execution of transactions from such broker,
subject to periodic review of such executions and procedures by the Board of
Trustees.
The Advisory Agreements provide that each Advisor shall not be liable for any
loss suffered by the Fund or its shareholders as a consequence of any act or
omission in connection with services under the Advisory Agreement, except by
reason of the Advisor's willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties.
Each Advisory Agreement has a term of two years, but may be continued thereafter
from year to year so long as its continuance is approved at least annually (a)
by the vote of a majority of the Directors of the Fund who are not "interested
persons" of the Fund or the Advisor cast in person at a meeting called for the
purpose of voting on such approval, and (b) by the Board of Directors as a whole
or by the vote of a majority (as defined in the 1940 Act) of the outstanding
shares of the Fund.
Each Advisory Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act).
DIRECTORS AND OFFICERS
The Board Of Trustees ("Board" or "Trustees") has overall responsibility for
conduct of the Trust's affairs. The day-to-day operations of each Fund are
managed by the Fund's Advisor, subject to the Bylaws of the Trust and review by
the Board. The Trustees of the Trsut, including those Trsutees who are also
officers, are listed below.
<TABLE>
<CAPTION>
Position Principal Occupation for
Name, Age with Fund The Last Five Years
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Howard L. Gleit, 59 Trustee Of Counsel, Connolly Epstein Chicco 1515
Market Street, Philadelphia, Pennsylvania
since 1997;. Foxman Engelmyer & Ewing
Philadelphia, Pennsylvania previously, Of
Counsel Zapruder & Odell Bala Cynwyd,
Pennsylvania since 1994; previously, Partner
Pepper, Hamilton & Scheetz Philadelphia,
Pennsylvania
7
<PAGE>
Everett T. Keech, 59 Trustee Chairman and CEO Pico Products, Inc. One
Tower Bridge, Suite 501 West Conshohocken,
Pennsylvania
Laurie Keyes, 49* Trustee Chief Operating Officer, Quaker Securities,
Inc., 1288 Valley Forge Road, Suite 75,
Valley Forge, Pennsylvania
Jeffry H. King, 55* Trustee Chairman and CEO, Quaker Securities, Inc.
Chairman 1288 Valley Forge Road Suite 75Valley Forge,
Pennsylvania
Louis P. Pektor III, 48 Trustee President, Ashley Development Company 961
Marcon Boulevard, Suite 300, Allentown,
Pennsylvania since 1993; President, Greystone
Capital, Allentown, Pennsylvania since 1993;
previously, Executive Vice President, Wall
Street Mergers & Acquisitions, Allentown,
Pennsylvania
Peter F. Waitneight, 57* Trustee President Quaker Funds, Inc. 1288 Valley
President Forge Road, Suite 76, Valley Forge,
Pennsylvania since 1996 (Sponsor to the
Quaker Family of Funds); previously,
President, Paragon Financial Consulting
Malvern, Pennsylvania 1995-96; previously,
Marketing Director Turner Investment Partners
Berwyn, Pennsylvania 1993-95;
</TABLE>
- ----------------------------
* Indicates that Trustee is an "interested person" of the Trust for purposes of
the 1940 Act because of his or her position with one of the Advisors, the
Distributor, or the Sponsor to the Trust.
There are no family relationships between the Trustees and executive officers of
the Trust, except between Ms. Keyes and Mr. King, who are married.
Compensation
- ------------
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 meeting
attended in person and $100 per meeting attended by telephone. All Trustees are
reimbursed for any out-of-pocket expenses incurred in connection with attendance
at meetings.
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<PAGE>
Name of Director Compensation Pension Annual Total Compensation
from Company Benefits Benefits Paid to Director
- --------------------------------------------------------------------------------
Howard L. Gleit $0.00 None None $0.00
Trustee
Everett T. Keech $0.00 None None $0.00
Trustee
Laurie Keyes None None None None
Trustee
Jeffry H. King None None None None
Trustee
Louis P. Pektor III $0.00 None None $0.00
Trustee
Peter F. Waitneight None None None None
Trustee
Control Persons and Shareholders Owning in Excess of 5% of Fund Shares
- ----------------------------------------------------------------------
The Sponsor intends to purchase all of the outstanding shares of the Funds prior
to each Fund's effective date, and will accordingly be deemed to then control
the Funds.
PERFORMANCE INFORMATION
From time to time a Fund may quote total return figures. "Total Return" for a
period is the percentage change in value during the period of an investment in
Fund shares, including the value of shares acquired through reinvestment of all
dividends and capital gains distributions. "Average Annual Total Return" is the
average annual compounded rate of change in value represented by the Total
Return Percentage for the period.
Average Annual Total Return is computed as follows: P(1+T)[n] = ERV
Where: P = a hypothetical initial investment of $1000]
T = average annual total return
n = number of years
ERV = ending redeemable value of shares at the end of the period
The Fund's performance is a function of conditions in the securities markets,
portfolio management, and operating expenses. Although information such as that
shown above is useful in reviewing the Fund's performance and in providing some
basis for comparison with other investment alternatives, it should not be used
for comparison with other investments using different reinvestment assumptions
or time periods.
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
determined according to the following formula:
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<PAGE>
6
Yield =2[((A-B)/CD + 1) -1]
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.
In sales literature, each Fund's performance may be compared with that of market
indices and other mutual funds. In addition to the above computations, each Fund
might use comparative performance as computed in a ranking determined by Lipper
Analytical Services, Morningstar, Inc., or that of another service.
PURCHASING AND REDEEMING SHARES
Redemptions of each Fund's shares will be made at net asset value ("NAV"). Each
Fund's NAV is determined on days on which the New York Stock Exchange ("NYSE")
is open for trading. For purposes of computing the NAV of a share of a Fund,
securities traded on security exchanges, or in the over-the-counter market in
which transaction prices are reported, are valued at the last sales price at the
time of valuation or, lacking any reported sales on that day, at the most recent
bid quotations. Securities for which quotations are not available and any other
assets are valued at a fair market value as determined in good faith by the
Advisor, subject to the review and supervision of the Board. The price per share
for a purchase order or redemption request is the NAV next determined after
receipt of the order.
The Funds are open for business on each day that the NYSE is open. Each Fund's
share price or NAV is normally determined as of 4:00 p.m., Eastern time. Each
Fund's share price is calculated by subtracting its liabilities from the closing
fair market value of its total assets and dividing the result by the total
number of shares outstanding on that day. Fund liabilities include accrued
expenses and dividends payable, and its total assets include the market value of
the portfolio securities as well as income accrued but not yet received.
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.
TAX INFORMATION
The Funds intend to qualify as a regulated investment company ("RIC") under
Subchapter M of the Internal Revenue Code of 1986, as amended, so as to be
relieved of federal income tax on its capital gains and net investment income
currently distributed to its shareholders. To qualify as a RIC, the Funds must,
among other things, derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, gains from the sale or
other disposition of stock, securities, or other income derived with respect to
its business of investing in such stock or securities.
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<PAGE>
If the Funds qualifies as a RIC and distributes at least 90% of its net
investment income, the Funds will not be subject to Federal income tax on the
income so distributed. However, the Funds would be subject to corporate income
tax on any undistributed income other than tax-exempt income from municipal
securities.
The Funds intends to distribute to shareholders, at least annually,
substantially all net investment income and any net capital gains realized from
sales of the Fund's portfolio securities. Dividends from net investment income
and distributions from any net realized capital gains are reinvested in
additional shares of the Funds unless the shareholder has requested in writing
to have them paid by check.
If shares are purchased shortly before a record date for a distribution, the
shareholder will, in effect, receive a return of a portion of his investment,
but the distribution will be taxable to him even if the net asset value of the
shares is reduced below the shareholder's cost. However, for federal income tax
purposes the original cost would continue as the tax basis.
If a shareholder fails to furnish his social security or other tax
identification number or to certify properly that it is correct, the Funds may
be required to withhold federal income tax at the rate of 31% (backup
withholding) from dividend, capital gain and redemption payments to him.
Dividend and capital gain payments may also be subject to backup withholding if
the shareholder fails to certify properly that he is not subject to backup
withholding due to the under-reporting of certain income.
Taxation of the Shareholder. Taxable distributions generally are included in a
shareholder's gross income for the taxable year in which they are received.
However, dividends declared in October, November and December and made payable
to shareholders of record in such month will be deemed to have been received on
December 31st if paid by the Funds during the following January.
Distributions by the Funds will result in a reduction in the fair market value
of the Fund's shares. Should a distribution reduce the fair market value below a
shareholder's cost basis, such distribution would be taxable to the shareholder
as ordinary income or as a long-term capital gain, even though, from an
investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares of the Fund just prior to a distribution. The price of such shares
include the amount of any forthcoming distribution so that those investors may
receive a return of investment upon distribution which will, nevertheless, be
taxable to them.
Dividends. A portion of the Fund's income may qualify for the dividends-received
deduction available to corporate shareholders to the extent that the Fund's
income is derived from qualifying dividends. Because the Fund may earn other
types of income, such as interest, income from securities loans, non-qualifying
dividends, and short-term capital gains, the percentage of dividends from the
Fund that qualifies for the deduction generally will be less than 100%. The Fund
will notify corporate shareholders annually of the percentage of Fund dividends
that qualifies for the dividend received deductions.
A portion of the Fund's dividends derived from certain U.S. Government
obligations may be exempt from state and local taxation. Short-term capital
gains are distributed as dividend income. The Fund will send each shareholder a
notice in January describing the tax status of dividends and capital gain
distributions for the prior year.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities for each Fund are made by the Advisor. In
placing purchase and sale orders for portfolio securities for a Fund, it is the
policy of the Advisor to seek the best execution of orders at the most favorable
price. In selecting brokers to effect portfolio transactions, the determination
of what is expected to result in the best execution at the most favorable price
involves a number of largely judgmental considerations.
11
<PAGE>
Among these are the Advisor's evaluation of the broker's efficiency in executing
and clearing transactions, the rate of commission or the size of the
broker-dealer's "spread", the size and difficulty of the order, the nature of
the market for the security, operational capabilities of the broker-dealer, and
the research and other services provided. A Fund may pay more than the lowest
available commission in return for brokerage and research services. Research and
other services may include information as to the availability of securities for
purchase or sale, statistical or factual information or opinions pertaining to
securities and reports and analysis concerning issuers and their
creditworthiness. The Advisor may use research and other services to service all
of its clients, rather than the particular clients whose commissions may pay for
research or other services. In other words, the Fund's brokerage may be used to
pay for a research service that is used in managing another client of the
Advisor.
The Advisor may purchase or sell portfolio securities on behalf of a Fund in
agency or principal transactions. In agency transactions, the Fund generally
pays brokerage commissions. In principal transactions, the Fund generally does
not pay commissions. However, the price paid for the security may include an
undisclosed commission or "mark-up" or selling concessions. The Advisor normally
purchases fixed-income securities on a net basis from primary market makers
acting as principals for the securities. The Advisor may purchase certain money
market instruments directly from an issuer without paying commissions or
discounts. Over-the-counter securities are generally purchased and sold directly
with principal market makers who retain the difference in their cost in the
security and its selling price. In some instances, the Advisor feels that better
prices are available from non-principal market makers who are paid commissions
directly.
The Advisor may combine transaction orders placed on behalf of the Fund with
orders placed on behalf of any other fund or private account managed by the
Advisor for the purpose of negotiating brokerage commissions or obtaining a more
favorable transaction price. In these cases, transaction costs are shared
proportionately by the fund or account, as applicable, which are part of the
block. If an aggregated trade is not completely filled, then the Advisor
typically allocates the trade among the funds or accounts, as applicable, on a
pro rata basis based upon account size. Exemptions are permitted on a
case-by-case basis when judged by the Advisor to be fair and reasonable to the
funds or accounts involved.
Trading by the Portfolio Manager
- --------------------------------
Pursuant to Section 17(j) of the 1940 Act and Rule 17j-1 thereunder, the Funds,
the Advisor, and the Distributor have adopted Codes of Ethics restricting
personal securities trading by the Fund's Advisors. These Codes are on public
file, and are available from the Securities and Exchange Commission. While the
Codes permit personal transactions by the Advisors in securities held or to be
acquired by each Fund, the Codes prohibit and are designed to prevent fraudulent
activity in connection with such personal transactions.
CUSTODIAN
First Union National Bank (the "Custodian"), 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.
12
<PAGE>
TRANSFER AGENT
Declaration Service Company (the "Transfer Agent") serves as the Funds'
transfer, dividend paying, and shareholder servicing agent. The Transfer Agent,
subject to the authority of the Board of Trustees, provides transfer agency
services pursuant to an agreement with the Administrator, which has been
approved by the Trust. The Transfer Agent maintains the records of each
shareholder's account, answers shareholder inquiries concerning accounts,
processes purchases and redemptions of Fund shares, acts as dividend and
distribution disbursing agent, and performs other shareholder servicing
functions. The Transfer Agent is compensated for its services by the
Administrator and not directly by the Funds.
ADMINISTRATION
DSC also acts as administrator to the Trust pursuant to a written agreement with
the Trust. DSC supervises all aspects of the operations of the Funds except
those performed by the Fund's Advisors under the Fund's investment advisory
agreements. DSC is responsible for:
(a) calculating each Fund's net asset value;
(b) preparing and maintaining the books and accounts specified in Rule 31a-1;
and 31a-2 of the Investment Company Act of 1940;
(c) preparing financial statements contained in reports to stockholders of the;
Fund
(d) preparing each Fund's federal and state tax returns;
(e) preparing reports and filings with the Securities and Exchange Commission;
(f) preparing filings with state Blue Sky authorities; and
(g) maintaining each Fund's financial accounts and records.
For the services to be rendered as administrator, the Trust pays DSC an annual
fee, paid monthly, based on the average net assets of each Fund, as determined
by valuations made as of the close of each business day of the month.
DISTRIBUTOR
Declaration Distributors, Inc. (DDI), 555 North Lane, Suite 6160, Conshohocken,
PA 19460, acts as the principal underwriter of each Fund's shares pursuant to a
written agreement with the Trust ("Distribution Agreement"). DDI and DSC are
both wholly-owned subsidiaries of Declaration Holdings, Inc., a Delaware
corporation.
Pursuant to the Distribution Agreement, DDI facilitates the registration of each
Funds' shares under state securities laws and assists in the sale of shares. For
providing underwriting services to the Funds, DDI is paid an annual fixed fee by
the Trust.
The Distribution Agreement may be terminated by either party upon 60 days' prior
written notice to the other party.
13
<PAGE>
SPONSOR
Quaker Funds, Inc. (the "Sponsor"), 1288 Valley Forge Road, Post Office Box 987,
Valley Forge, Pennsylvania 19482, acts as sponsor for each Fund and provides
certain shareholder services (more thoroughly described in the Prospectus)
pursuant to a Shareholder Servicing Agreement between the Trust and the Sponsor
for each Fund approved by the Board of Trustees of the Trust. The Shareholder
Servicing Agreement may be terminated by each party upon 60 days prior written
notice to the other party.
Laurie Keyes, Jeffrey 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.
INDEPENDENT ACCOUNTANTS
The firm of Goldenberg Rosenthal Friedlander, LLP, 101 West Avenue, P.O. Box
458, Jenkintown, Pennsylvania 19046-0468, 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.
LEGAL COUNSEL
___________________________________________, has passed on certain matters
relating to this registration statement and acts as counsel to the Trust.
DISTRIBUTION PLAN
As noted in the Fund's Prospectus, the Trust has adopted plans pursuant to Rule
12b-1 under the 1940 Act (the "Plan") whereby each share class of the Funds is
authorized to pay a fee per annum of the Fund's average daily net assets to the
Sponsor and others to compensate them for certain expenses incurred in the
distribution of the Fund's shares and the servicing or maintaining of existing
Fund shareholder accounts. The fees may be paid on a monthly basis, in arrears.
GENERAL INFORMATION
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 and 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 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.
14
<PAGE>
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 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.
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.
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
15
<PAGE>
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 Funds
will send to each shareholder having an account directly with the 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 555 North Lane, Suite 6160, Conshohocken, PA
19428 or by calling 800-220-8888.
FINANCIAL STATEMENTS
Because the Funds are offering these share classes for the first time, financial
data is not yet available. The Trust will include such data at the appropriate
time.
16
<PAGE>
APPENDIX A
DESCRIPTION OF RATINGS
The Funds may generally 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 securities 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.
17
<PAGE>
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.
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.
18
<PAGE>
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.
19
<PAGE>
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.
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:
20
<PAGE>
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.
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 N-1A
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Declaration of Trust - Amended and Restated Declaration of
Trust-Incorporated by reference; filed 8/29/96
(b) By-Laws - Amended and Restated By-Laws- Incorporated by reference;
filed 8/29/96
(c) Not Applicable
(d) Investment Advisory Agreements:
(1) for Quaker Core Equity Fund- Incorporated by reference; filed 10/26/98
(2) for Quaker Aggressive Growth Fund- Incorporated by reference; filed
8/29/96
(3) for Quaker Large-Cap Value Fund- Incorporated by reference, filed
02/15/99
(4) for Quaker Small Cap Value Fund- Incorporated by reference; filed
10/26/98
(5) for Quaker Mid-Cap Value Fund-Incorporated by reference; filed
10/27/97
(6) for Quaker Fixed Income Fund-Incorporated by reference; filed 8/29/96
(e) Distribution Agreement between the Registrant and Declaration
Distributors, Inc.- Incorporated by reference; filed 10/26/98
(f) Not Applicable
(g) Custodian Agreement - Incorporated by reference; filed 9/5/97
(h) Other Material Contracts -
(1) Investment Services Agreement between the Registrant and Declaration
Services Company- Incorporated by reference; filed 10/26/98
(2) Sponsorship Agreement between the Trust and Quaker Funds, Inc.-
Incorporated by reference; filed 9/05/97
(3) Copies of Powers of Attorney- Incorporated by reference; filed 9/05/97
(i) Opinion and Consent of Counsel - Attached as Exhibit 23I
(j) Other Opinions - Not Applicable
(k) Not Applicable
(l) Not Applicable
(m) Rule 12b-1 Plans:
(1) Class A Shares - Attached as Exhibit 23M(1)
(2) Class B Shares - Attached as Exhibit 23M(2)
(3) Class C Shares - Attached as Exhibit 23M(3)
(n) Financial Data Schedule - Not Applicable
(o) Rule 18f-3 Plan - Incorporated by reference; filed 9/05/97
ITEM 24. Persons Controlled by or Under Common Control with Registrant
-------------------------------------------------------------
No person is controlled by or under common control with Registrant.
ITEM 25. 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.
<PAGE>
ITEM 26. Business and other Connections of Investment Advisors
-----------------------------------------------------
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 27. Principal Underwriter
---------------------
(a) Declaration Distributors, Inc. ("DDI")is underwriter and
distributor for The Quaker Family of Funds. DDI serves as
underwriter or distributor for 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 28. Location of Accounts and Records
--------------------------------
All account books and records not normally held by First Union
National Bank of North Carolina, the Custodian to the Registrant, are
held by the Registrant, in the offices of Declaration Service Company,
Fund Accountant, Administrator, and Transfer Agent to the Registrant,
or by the Advisors to the Registrant (Fiduciary Asset Management,
Inc., West Chester Capital Advisors, Inc., DG Capital Management,
Inc., Aronson + Partners, Logan Capital Management, Inc., and
Compu-Val Investments, Inc.).The address of Declaration Service
Company is 555 North Lane, Suite 6160, Conshohocken, PA 19428. The
address of First Union National Bank of North Carolina is Two First
Union Center, Charlotte, North Carolina 28288-1151.The address of
Fiduciary Asset Management Co. is 8112 Maryland Avenue, Suite310,
Clayton, Missouri 63105. The address of West Chester Capital Advisors,
Inc. is 106 South Church Street, West Chester, Pennsylvania 19382. The
address of DG Capital Management, Inc. is 8 Waybridge Lane, Wayland,
Massachusetts 01778. The address of Aronson + Partners is 230 South
Broad Street, 20th Floor, Philadelphia, Pennsylvania 19012. The
address of Logan Capital Management, Inc. is One Liberty Place, Suite
2700, Philadelphia, Pennsylvania 19103. The address of Compu-Val
Investments, Inc. is 1702 Lovering Avenue, Wilmington, Delaware,
19806.
ITEM 29. Management Services.
--------------------
The substantive provisions of the Fund Accounting, Dividend Disbursing
&Transfer Agent and Administration Agreement, as amended, between the
Registrant and The Declaration Service Company are discussed in Part B
hereof.
ITEM 30. Undertakings.
-------------
The Registrant hereby undertakes to comply with Section 16(c) of the
Investment Company Act of 1940. 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 Valley Forge, State of Pennsylvania on
the 14th day of September, 1999.
QUAKER INVESTMENT TRUST
By: /s/ Peter F. Waitneight
-----------------------
Peter F. Waitneight
Trustee and President
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/ Howard L. Gleit September 13, 1999
- -----------------------------
Howard L. Gleit, Trustee
/s/ Everett T. Keech September 13, 1999
- -----------------------------
Everett T. Keech, Trustee
/s/ Laurie Keyes September 13, 1999
- -----------------------------
Laurie Keyes, Trustee
/s/ Jeff King September 13, 1999
- -----------------------------
Jeff King, Trustee and Chairman
/s/ Louis P. Pektor III September 13, 1999
- -----------------------------
Louis P. Pektor III, Trustee
/s/ Peter F. Waitneight September 13, 1999
- -----------------------------
Peter F. Waitneight, Trustee and President
/s/ Paul Giorgio September 13, 1999
- -----------------------------
Paul Giorgio (Chief Principal Financial Officer)
<PAGE>
QUAKER INVESTMENT TRUST
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
EXHIBIT 23I OPINION AND CONSENT OF COUNSEL
EXHIBIT 23M(1) PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1 FOR CLASS A SHARES
EXHIBIT 23M(2) PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1 FOR CLASS B SHARES
EXHIBIT 23M(3) PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1 FOR CLASS C SHARES
EXHIBIT 23I
OPINION AND CONSENT OF COUNSEL
THE LAW OFFICES OF DAVID D. JONES, P.C.
518 Kimberton, # 134
Phoenixville, PA 19460
(610) 718-5381 (phone)
(610) 718-5391 (facsimile)
[email protected] (e-mail)
Quaker Investment Trust September 3, 1999
1288 Valley Forge, Suite 76
Valley Forge, PA 19460
Dear Sirs:
As counsel to The Quaker Investment Trust (the "Trust"), an unincorporated
business trust organized under the laws of the State of Massachusetts, I have
been asked to render my opinion with respect to the issuance of an indefinite
number of shares of beneficial interest of the Trust (the "Shares") representing
proportionate interests in The Quaker Core Equity Fund, Quaker Aggressive Growth
Fund, Quaker Large-Cap Value Fund, Quaker Mid-Cap Value Fund, Quaker Small-Cap
Value Fund, and Quaker Fixed-Income Fund (the "Funds"). The Shares of the Funds
are series of the Trust consisting of three classes of shares, Class A, Class B
and Class C, all as more fully described in the Prospectus and Statement of
Additional Information contained in the Registration Statement on Form N-1A, to
which this opinion is an exhibit, to be filed with the Securities and Exchange
Commission.
I have examined the Company's Declaration of Trust, by-laws, the Prospectus and
Statement of Additional Information contained in the Registration Statement, and
such other documents, records and certificates as deemed necessary for the
purposes of this opinion.
Based on the foregoing, I am of the opinion that the Shares, when issued,
delivered and paid for in accordance with the terms of the Prospectus and
Statement of Additional Information, will be legally issued, fully paid, and
non-assessable by the Trust. I also give my consent for the Trust to included
this opinion as an Exhibit to the Trust's Registration Statement on Form N-1A.
Very Truly Yours,
/s/ David D. Jones
David D. Jones
Attorney & Counselor at Law
EXHIBIT 23M(1)
PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1 FOR CLASS A SHARES
PLAN OF DISTRIBUTION
PURSUANT TO RULE 12B-1
CLASS A SHARES
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 (the "Portfolio");
and
WHEREAS, the Trust offers the following series of such Shares:
Quaker Core Equity Fund
Quaker Aggressive Growth Fund
Quaker Large-Cap Value Fund
Quaker Mid-Cap Value Fund
Quaker Small-Cap Value Fund
Quaker Fixed Income Fund; and
WHEREAS, the Trust has further divided each series of the Trust into various
Classes of Shares, each representing an undivided proportionate interest in the
Portfolio of each series and differing in sales charges and ongoing fees and
expenses; and
WHEREAS, each series of the Trust offers Class A Shares, which Class is sold to
the public with a front-end sales charge (Load); and
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 of
Distribution Pursuant to Rule 12b-1 (the "Plan") or in any agreement relating
hereto (the "Non-Interested Trustees"), having determined, in the exercise of
their 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 the Plan will benefit the Trust and its shareholders,
have approved the 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 Class A Shares of
each series of the Trust, which activities may include, but are not limited
to, the following:
(a) payments to the Trust's Sponsor and to securities dealers and others
in respect of the sale of Class A Shares of each series;
<PAGE>
(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 Class A Shares of each series 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 each series, 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 Class A
Shares of each series of the Trust, either directly or through other
persons with which the Trust has entered into agreements related to this
Plan.
2. MAXIMUM EXPENDITURES. During the period in which this Plan is effective,
the Trust shall pay to Quaker Funds, Inc. (the "Sponsor") a monthly fee for
distribution and shareholder servicing activities in an amount calculated
at the rate of 0.25% per annum of the average daily net asset value of the
Class A Shares of each series of the Trust.
Notwithstanding the foregoing, 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, and in no event may such
expenditures paid by the Trust exceed an amount calculated at the rate of 0.25%
of the average annual net assets of the Class A Shares of each series of the
Trust, nor may such expenditures paid as service fees to any person who sells
Class A Shares of any series of the Trust exceed an amount calculated at the
rate of 0.25% of the average annual net asset value of such Shares. At the
request of the Sponsor, such payments for distribution and shareholder servicing
activities may be made directly by the Trust 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 31st
day of October, 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 in person at a meeting called for the purpose of voting on such
approval. (b) This Plan may be terminated at any time with respect to any
series of the Trust 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
Class A Shares of such series 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 for any series of the Trust
unless such amendment is approved by a vote of the majority of the
outstanding voting securities of the Class A Shares of such series, 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.
<PAGE>
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 agreements and
the purposes for which such expenditures were made.
7. RECORD KEEPING. The Trust shall preserve copies of this Plan and any
related agreements 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 agreements 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 Trustees of the Trust, including a majority of the
Non-Interested Trustees, have adopted this Plan at a meeting held on August 18,
1999, and have further directed that the Plan be made effective as of the date
first written above.
QUAKER INVESTMENT TRUST
- -------------------------------------
Peter F. Waitneight
Chairman
EXHIBIT 23M(2)
PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1 FOR CLASS B SHARES
PLAN OF DISTRIBUTION
PURSUANT TO RULE 12B-1
CLASS B SHARES
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 (the "Portfolio");
and
WHEREAS, the Trust offers the following series of such Shares:
Quaker Core Equity Fund
Quaker Aggressive Growth Fund
Quaker Large-Cap Value Fund
Quaker Mid-Cap Value Fund
Quaker Small-Cap Value Fund
Quaker Fixed Income Fund; and
WHEREAS, the Trust has further divided each series of the Trust into various
Classes of Shares, each representing an undivided proportionate interest in the
portfolio of each series and differing in sales charges and ongoing fees and
expenses; and
WHEREAS, each series of the Trust offers Class B Shares, which Class is sold to
the public with contingent deferred sales charges which decline to zero over a
period of years; and
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 of
Distribution Pursuant to Rule 12b-1 (the "Plan") or in any agreement relating
hereto (the "Non-Interested Trustees"), having determined, in the exercise of
their 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 the Plan will benefit the Trust and its shareholders,
have approved the 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 Class B Shares of
each series of the Trust, which activities may include, but are not limited
to, the following:
(a) payments to the Trust's Sponsor and to securities dealers and others
in respect of the sale of Class B Shares of each series of the Trust;
<PAGE>
(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 Class B Shares of each series of the Trust 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 each series of the Trust, 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 Class B Shares
of each series of the Trust, either directly or through other persons with
which the Trust has entered into agreements related to this Plan.
2. MAXIMUM EXPENDITURES. During the period in which this Plan is effective,
the Trust shall pay to Quaker Funds, Inc. (the "Sponsor") a monthly fee for
distribution activities in an amount calculated at the rate of 0.25% per
annum of the average daily net asset value of the Class B Shares of each
series of the Trust. Further, the Trust shall also pay to the Sponsor a
monthly fee for shareholder servicing activities in an amount calculated at
the rate of 0.75% per annum of the average daily net asset value of the
Class B Shares of each series of the Trust. The fees payable for
shareholder servicing activities shall be paid to the Sponsor for a period
not to exceed seven (7) years from the date such shares are purchased.
Notwithstanding the foregoing, 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, and in no event may such
expenditures paid by the Trust as distribution fees exceed an amount calculated
at the rate of 0.25% of the average annual net assets of the Class B Shares of
each series of the Trust, nor may such expenditures paid as service fees to any
person who sells Class B Shares of each series of the Trust exceed an amount
calculated at the rate of 0.75% of the average annual net asset value of such
shares. At the request of the Sponsor, such payments for distribution and/or
shareholder servicing activities may be made directly by the Trust 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 31st
day of October, 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 in person at a meeting called for the purpose of voting on such
approval. (b) This Plan may be terminated at any time with respect to any
series 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 Class B Shares of
such series as defined in the 1940 Act.
<PAGE>
4. AMENDMENTS. This Plan may not be amended to increase materially the maximum
expenditures permitted by Section 2 hereof for any series of the Trust
unless such amendment is approved by a vote of the majority of the
outstanding voting securities of the Class B Shares of such series, 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 agreements and
the purposes for which such expenditures were made.
7. RECORD KEEPING. The Trust shall preserve copies of this Plan and any
related agreements 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 agreements 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 Trustees of the Trust, including a majority of the
Non-Interested Trustees, have adopted this Plan at a meeting held on August 18,
1999, and have further directed that the Plan be made effective as of the date
first written above.
QUAKER INVESTMENT TRUST
- -------------------------------------
Peter F. Waitneight
Chairman
EXHIBIT 23M(3)
PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1 FOR CLASS C SHARES
PLAN OF DISTRIBUTION
PURSUANT TO RULE 12B-1
CLASS C SHARES
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 (the "Portfolio");
and
WHEREAS, the Trust offers the following series of such Shares:
Quaker Core Equity Fund
Quaker Aggressive Growth Fund
Quaker Large-Cap Value Fund
Quaker Mid-Cap Value Fund
Quaker Small-Cap Value Fund
Quaker Fixed Income Fund; and
WHEREAS, the Trust has further divided each series of the Trust into various
Classes of Shares, each representing an undivided proportionate interest in the
portfolio of each series and differing in sales charges and ongoing fees and
expenses; and
WHEREAS, each series of the Trust offers Class C Shares, which Class is sold to
the public without front-end sales charges or contingent deferred sales charges;
and
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 of
Distribution Pursuant to Rule 12b-1 (the "Plan") or in any agreement relating
hereto (the "Non-Interested Trustees"), having determined, in the exercise of
their 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 the Plan will benefit the Trust and its shareholders,
have approved the 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 Class C Shares of
each series of the Trust, which activities may include, but are not limited
to, the following:
(a) payments to the Trust's Sponsor and to securities dealers and others
in respect of the sale of Class C Shares of each series of the Trust;
<PAGE>
(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 Class C Shares of each series of the Trust 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 each series of the Trust, 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 Class C
Shares of each series of the Trust, either directly or through other
persons with which the Trust has entered into agreements related to this
Plan.
2. MAXIMUM EXPENDITURES. During the period in which this Plan is effective,
the Trust shall pay to Quaker Funds, Inc. (the "Sponsor") a monthly fee for
distribution activities in an amount calculated at the rate of 0.25% per
annum of the average daily net asset value of the Class C Shares of each
series of the Trust. Further, the Trust shall also pay to the Sponsor a
monthly fee for shareholder servicing activities in an amount calculated at
the rate of 0.75% per annum of the average daily net asset value of the
Class C Shares of each series of the Trust.
Notwithstanding the foregoing, 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, and in no event may such
expenditures paid by the Trust as distribution fees exceed an amount calculated
at the rate of 0.25% of the average annual net assets of the Class C Shares of
any series of the Trust, nor may such expenditures paid as service fees to any
person who sells Class C Shares of any series of the Trust exceed an amount
calculated at the rate of 0.75% of the average annual net asset value of such
Shares. At the request of the Sponsor, such payments for distribution and/or
shareholder servicing activities may be made directly by the Trust 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 31st
day of October, 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 in person at a meeting called for the purpose of voting on such
approval. (b) This Plan may be terminated at any time with respect to any
series of the Trust 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
Class C Shares of such series as defined in the 1940 Act.
<PAGE>
4. AMENDMENTS. This Plan may not be amended to increase materially the maximum
expenditures permitted by Section 2 hereof for any series of the Trust
unless such amendment is approved by a vote of the majority of the
outstanding voting securities of the Class C Shares of such series, 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 agreements and
the purposes for which such expenditures were made.
7. RECORD KEEPING. The Trust shall preserve copies of this Plan and any
related agreements 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 agreements 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 Trustees of the Trust, including a majority of the
Non-Interested Trustees, have adopted this Plan at a meeting held on August 18,
1999, and have further directed that the Plan be made effective as of the date
first written above.
QUAKER INVESTMENT TRUST
- -------------------------------------
Peter F. Waitneight
Chairman