Quaker Investment Trust · 485APOS · On 10/28/98

Filed On 10/28/98   ·   SEC Files 33-38074, 811-06260   ·   Accession Number 1012709-98-419

Post-Effective Amendment
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 485APOS     Quaker Investment Trust - Post Effective Amendment   123    553K 
 2: EX-99.B5.B  Investment Advisory Agreement - Core Equity Fund       5±    23K 
 3: EX-99.B5.C  Investment Advisory Agreement - Small-Cap Fund         6±    27K 
 4: EX-99.B6    Distribution Agreement                                11±    48K 
 5: EX-99.B9    Investment Company Services Agreement                 17±    69K 
 6: EX-99.B15   Plan of Distribution                                   3±    17K 
 7: EX-27.1     Quaker Core Equity Fund                                2±     9K 
 8: EX-27.2     Quaker Aggressive Growth Fund                          2±     9K 
 9: EX-27.3     Quaker Aggressive Growth Fund                          2±     9K 
10: EX-27.4     Quaker Small Cap Fund                                  2±     9K 
11: EX-27.5     Quaker Mid Cap Fund                                    2±     9K 
12: EX-27       Quaker Fixed Income Fund                               2±     9K 

485APOS   ·   Quaker Investment Trust - Post Effective Amendment
Document Table of Contents

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As filed with the Securities and Exchange Commission on October 28, 1998.   
Securities Act File number 33-38074.
 Investment Company Act number 811-6260.

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933                [X]      

Amendment No.                                                           12      

REGISTRATION STATEMENT UNDER THE INVESTMENT                                     

COMPANY ACT OF 1940                                                    [X]      
Post Effective Amendment No.                                            14      

 QUAKER INVESTMENT TRUST
 (formerly Branch Cabell Investment Trust)
1288 Valley Forge Road, Suite 76
 Post Office Box 987
Valley Forge, PA 19482
800-355-3553

 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 2, 1998, pursuant to Rule 485(a)(2)                             

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PART A

PROSPECTUS
Dated November 2, 1998

 The Quaker Investment Trust
1288 Valley Forge Road
 Post Office Box 987
Valley Forge, Pennsylvania 19482

The Quaker  Investment  Trust(TM)  (the  "Trust")  is a  diversified  management
investment  company  currently  consisting  of five  equity  portfolios  and one
fixed-income  portfolio  (each a "Fund",  and  collectively,  the  Funds").  The
investment  objective of the QUAKER  ENHANCED STOCK MARKET FUND, the QUAKER CORE
EQUITY FUND, the QUAKER  AGGRESSIVE  GROWTH FUND, the QUAKER MID-CAP VALUE FUND,
and the QUAKER  SMALL-CAP VALUE FUND is to provide  long-term  capital growth by
investing primarily in a diversified  portfolio of equity securities of domestic
U.S.  companies.  The QUAKER  FIXED  INCOME  FUND'S  investment  objective is to
generate current income,  preserve  capital,  and maximize total returns through
active  management  of  investment  grade,  fixed income  securities.  Each Fund
pursues its investment  objective by utilizing a different portfolio  management
policy and portfolio composition.                                               

The minimum investment in each Fund, or in any combination of Funds, is $10,000.
The minimum subsequent investment is $250. The Funds are all No-Load Funds. This
means that 100% of your  initial  investment  is invested in shares of whichever
Fund you choose.                                                                

This Prospectus  concisely sets forth the information you should know before you
invest.  Please  read  this  Prospectus  and  keep it for  future  reference.  A
Statement of  Additional  Information  (the "SAI")  regarding  the Trust,  dated
November 1, 1998,  has been filed with the  Securities  and Exchange  Commission
("SEC") and is  incorporated  by reference into this  Prospectus.  You can get a
copy of the SAI at no charge by writing or calling  the Trust at the  address or
telephone number listed above. The SEC maintains a web site  (www.sec.gov)  that
contains the Statement of Additional Information and other information regarding
the Trust and other registrants who file electronically.                        

THE FUNDS  DESCRIBED  IN THIS  PROSPECTUS  SHALL NOT BE  OFFERED IN ANY STATE IN
WHICH SUCH OFFERING IS UNAUTHORIZED.  NO SALES  REPRESENTATIVE,  DEALER OR OTHER
PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY  REPRESENTATIONS  OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS.                                        

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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 TABLE OF CONTENTS

PROSPECTUS SUMMARY.................................................             

FEE TABLE..........................................................             

FINANCIAL HIGHLIGHTS...............................................             

INVESTMENT OBJECTIVE AND POLICIES..................................             

RISK FACTORS.......................................................             

INVESTMENT LIMITATIONS.............................................             

FEDERAL INCOME TAXES...............................................             

DIVIDENDS AND DISTRIBUTIONS........................................             

HOW SHARES ARE VALUED..............................................             

HOW SHARES MAY BE PURCHASED........................................             

HOW SHARES MAY BE REDEEMED.........................................             

MANAGEMENT OF THE FUND.............................................             

OTHER INFORMATION..................................................             

PROSPECTUS SUMMARY

Funds Offered by this  Prospectus.  The Funds offered by this Prospectus are the
QUAKER  ENHANCED  STOCK  MARKET FUND,  the QUAKER CORE EQUITY  FUND,  the QUAKER
AGGRESSIVE  GROWTH FUND,  the QUAKER  MID-CAP VALUE FUND,  the QUAKER  SMALL-CAP
VALUE FUND (the  "Equity  Funds"),  and the QUAKER FIXED INCOME FUND (the "Fixed
Income  Fund").  The  Funds  are no  load,  diversified  series  of  the  Quaker
Investment  Trust (the "Trust"),  a registered  open-end  management  investment
company organized as a Massachusetts business trust.                            

Offering Price. Shares in the Funds are offered at net asset value. There are no
sales or other  transaction  charges  imposed on your purchase.  This means that
100% of your  money is  invested  in shares of your  chosen  Fund.  The  minimum
initial  investment  in the Funds is $10,000,  which you may allocate in any way
you choose among some or all of the Funds. The minimum subsequent  investment is
$250. See "How Shares May be Purchased."                                        

Investment  Objectives.  The primary investment objective of each Equity Fund is
long-term capital growth.  The investment  objective of the Fixed Income Fund is
to generate current income, preserve capital, and maximize total returns through
active  management of investment grade fixed income  securities.  Achievement of
any Fund's  investment  objective cannot, of course, be assured due to the risks
inherent  in  any  investment.  For  more  detailed  information  regarding  the
investment  objectives  and  policies  of  each  Fund,  please  see  "Investment
Objective and Policies."                                                        

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Risk  Considerations.  The Equity Funds will invest  primarily in common  stocks
traded on U.S.  securities  markets.  However,  each  Equity  Fund will  utilize
specific portfolio management  techniques unique to that Fund, resulting in both
potential rewards and special risk  considerations.  While the Fixed Income Fund
will invest  primarily in "high quality"  investment  grade bonds,  some of that
Fund's   investments   may  include   mortgage  and   asset-backed   securities,
collateralized  mortgage  obligations,  and other mortgage derivative  products,
which involve  certain  risks.  For a more complete  discussion of the potential
risks of investing in the Funds, see "Risk Factors."                            

Managers.  Each Fund is managed by a professional  investment  management  firm,
subject to the  supervision  and control of the Trust's  Board of Trustees.  The
managers for the Funds are:                                                     

Quaker Enhanced Stock Market Fund       Fiduciary Asset Management Co. ("FAM")  
Quaker Fixed Income Fund                Fiduciary Asset Management Co. ("FAM")  
Quaker Core Equity Fund                 Geewax, Terker & Co. (`GTC")            
Quaker Aggressive Growth Fund           DG Capital Management, Inc. ("DGCM")    
Quaker Mid-Cap Value Fund               Compu-Val Investments, Inc. ("CVI")     
Quaker Small-Cap Value Fund             Aronson + Partners ("Aronson")          

See  "Management of the Funds."                                                 

Dividends.  Capital gains, if any, are generally paid at least once each year by
each Fund. Income dividends, if any, are generally paid at least annually by the
Equity Funds.  The Fixed Income Fund normally will distribute  income  dividends
monthly.  Your  dividends  and capital  gains  distributions  are  automatically
reinvested in additional shares of your Fund at net asset value unless you elect
to receive cash. See "Dividends and Distributions."                             

Distributor.  Declaration  Distributors,  Inc.  ("DDI") serves as distributor of
shares of the Funds.                                                            

Distribution  Plan. The Funds have adopted Plans of  Distribution  (the "Plans")
pursuant to Rule 12b-1  under the  Investment  Company Act of 1940 (the  "Act").
Expenditures by a Fund under its Plan may not exceed 0.25% of average net assets
annually,  but will not be paid  directly  by the Funds.  Instead,  they will be
funded entirely through investment  advisory fees payable to a Fund's investment
advisor and. See "How Shares May Be Purchased" and "Distribution Plan."         

Sponsor and  Shareholder  Servicing.  Shareholder  servicing  activities will be
performed by Quaker Funds,  Inc. (the "Fund Sponsor") for a fee in an amount not
to exceed 0.25% of average net assets annually.  The shareholder service fee for
the Quaker  Enhanced Stock Market Fund and the Fixed Income Fund will not exceed
0.20% and 0.15% of average  net assets,  respectively.  See  "Management  of the
Funds-Sponsor of the Funds."                                                    

Redemption  of Shares.  There is no charge for  redemptions,  and you may redeem
your shares at any time. You may redeem shares by telephone  upon  submission of
appropriate authorization. See "How Shares May Be Redeemed."                    

Money Market Fund.  The  Custodian and  Distributor  of the Funds have agreed to
make  available  the  Evergreen  Money  Market  Fund,  a money  market  fund not
affiliated with the Trust, for automatic transfer of redemption  proceeds and/or
dividends paid on your account with the Funds.  You can get more information and
a  prospectus  for the  Evergreen  Money  Market  Fund by  calling  the Trust at
800-220-8888.                                                                   

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 FEE TABLE

Shareholder Transaction Expenses:                                               
---------------------------------                                               

The Funds are all No-Load Funds. There are no sales loads,  deferred sales loads
or other transaction charges imposed on purchases or reinvested dividends.  This
means that 100% of your initial investment is invested in shares of the Fund.*  

* The  Funds in  their  discretion  may  choose  to pass  through  to  redeeming
shareholders  any  charges  imposed  by  the  Custodian  for  wiring  redemption
proceeds.  The Custodian  currently  charges the Funds $7.00 per transaction for
wiring redemption proceeds.                                                     

Annual Fund Operating Expenses:  (as a percentage of net assets)                
-------------------------------                                                 

The following table sets forth the regular operating expenses that were paid out
of the Funds' average daily assets for the year ending June 30, 1998. These fees
are used to pay for  services  such as the  investment  management  of the Fund,
maintaining shareholder records and furnishing shareholder statements.          

Annual Fund Operating Expenses
After Fee Waivers and Expense Reimbursements 1,2,3
 (as a percentage of average net assets)

                                                                · Download Table

                            Enhanced  Core Equity                       
                            Stock     Aggressive Growth  Mid-Cap  Fixed 
                            Market    & Small-Cap Value  Value    Income

                                                                        
Investment advisory fees    0.00%     0.00%              0.23%    0.00% 
Rule 12b-1 Fees             0.00%     0.00%              0.00%    0.00% 
Shareholder servicing fees  0.00%     0.00%              0.00%    0.00% 
Other expenses              1.00%     1.35%              1.12%    0.90% 
                            -----     -----              -----    ----- 
Total operating expenses    1.00%     1.35%              1.35%    0.90% 


Example of Shareholder Expenses Over Time.                                      
------------------------------------------                                      

Based on the fee schedule set forth above, you would pay the following  expenses
on a  $1,000  investment,  assuming  (1) a 5%  annual  rate  of  return  and (2)
redemption at the end of each time period;                                      

                                                                · Download Table

                               1 Year    3 Years    5 Years    10 Years 
                              --------  ---------  ---------  ----------
                                                                        
Core Equity Fund                $14        $43        $74        $162   
Aggressive Growth Fund          $14        $43        $74        $162   
Mid-Cap Value Fund              $14        $43        $74        $162   
Small-Cap Value Fund @ 0.90%    $15        $47        $82        $179   
Enhanced Stock Market Fund      $10        $32        $55        $122   
Fixed Income Fund               $ 9        $29        $50        $111   

          THE  FOREGOING  SHOULD NOT BE CONSIDERED A  REPRESENTATION  OF PAST OR
          FUTURE  EXPENSES.  ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN.                                                      

1.  All  investment  advisory fees were waived for the fiscal year ended June   
30,1998 with the exception of the Quaker Mid-Cap Value Fund. Net of fee waivers,
the advisory fees for the Mid-Cap Value Fund totaled $16,418 for the fiscal year
ended June 30, 1998.  Absent such fee waivers,  the  percentages for "Investment
advisory  fees" for the fiscal year ended June 30,  1998,  would have been 0.75%
for the Core Equity, Aggressive Growth, Mid-Cap Value and Small-Cap Value, 0.50%
for the Enhanced  Stock Market Fund,                                            

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and 0.45% for the Fixed Income Fund.  Up to 25% of the  investment  advisory fee
for each fund may be paid for  distribution  activities  relating  to the Funds.
Each Fund has  adopted a  Distribution  Plan  pursuant  to Rule 12b-1  under the
Investment Company Act of 1940, as amended (the "1940 Act"), which provides that
a Fund  may pay up to 0.25% of its  average  net  assets  annually  for  certain
distribution  expenses  which  have  been  properly  submitted  to the  fund for
reimbursement.  All amounts paid under the plan for distribution activities will
be are funded entirely  through A reduction in investment  advisory fees payable
to the Funds'  investment  advisers and will not be paid  directly by the Funds.
Further,  any amounts paid to an adviser pursuant to a Plan may not exceed 0.25%
of a  particular  Fund's  net assets in any year in which the Plan is in effect.
For the fiscal year  ending  June 30,  1998,  no 12b-1  disbursements  were paid
pursuant to any Plan. See "How Shares May Be Purchased - Distribution Plan."    

2. Each Fund has adopted a Shareholder Servicing Agreement,  which provides that
the Fund will pay a  shareholder  servicing  fee to the Funds'  Sponsor,  Quaker
Funds, Inc., in the amount of 0.25% of the average daily net assets of the Fund,
except the  shareholder  servicing fee will be limited to 0.20% for the Enhanced
Stock Market Fund and 0.15% for the Fixed Income Fund.  See  "Management  of the
Funds-Sponsor of the Funds." All shareholder  servicing fees were waived for the
fiscal year ended June 30, 1998.  Absent such fee waivers,  the  percentages for
"Shareholder servicing fees" for the fiscal year ended June 30, 1998, would have
been 0.25% for the Core Equity,  Aggressive Growth, Small-Cap Value, and Mid-Cap
Value Funds,  0.20% for the Enhanced  Stock Market Fund, and 0.15% for the Fixed
Income Fund.                                                                    

3. The "Total  operating  expenses" shown above are based upon actual  operating
expenses incurred by each Fund for the fiscal year ended June 30, 1998 after fee
waivers and expense  reimbursements.  Absent  such  waivers and  reimbursements,
"Total  operating  expenses" for the fiscal year ended June 30, 1998, would have
been 3.48% for the Core Equity Fund, 8.09% for the Aggressive Growth Fund, 4.20%
for the Small-Cap  Value Fund,  1.97% for the Mid-Cap Value Fund,  5.58% for the
Enhanced  Stock Market Fund,  and 2.53% for the Fixed Income Fund.  The Advisors
and the Fund Sponsor have agreed to reduce or waive their fees in order to limit
"Total operating  expenses"  (exclusive of interest,  taxes,  brokerage fees and
commissions, and extraordinary expenses) to expense ratios noted in each column.
There can be no assurance that the Advisors' and Fund Sponsor's fee waivers,  or
the Fund  Sponsor's  voluntary  expense  reimbursements,  will  continue  in the
future.                                                                         

See "How Shares May Be Purchased"  and  "Management of the Funds" below for more
information  about the fees and costs of  operating  the Funds.  The  assumed 5%
annual  return  in the  example  is  required  by the  Securities  and  Exchange
Commission. The hypothetical rate of return is not intended to be representative
of past or future  performance  of the Funds;  the actual rate of return for the
Funds may be greater or less than 5%.                                           

FINANCIAL HIGHLIGHTS

The  financial  data  included in the table below for the fiscal year ended June
30, 1998 has been audited by Goldenberg Rosenthal Friedlander,  LLP, independent
auditors,  whose  reports  covering such period are included in the Statement of
Additional  Information.  The  information  in the table below should be read in
conjunction  with each Fund's  latest  audited  financial  statements  and notes
thereto,  which are also included in the  Statement of  Additional  Information.
Further  information  about the  performance  of the Funds is  contained  in the
Annual  Report of the  Funds,  a copy of which may be  obtained  at no charge by
calling the Funds.                                                              

QUAKER FAMILY OF FUNDS
FINANCIAL HIGHLIGHTS
 (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

                                                        · Enlarge/Download Table

--------------------------------------------------------------------------------------------------------- 
                                                                 CORE        AGGRESSIVE         ENHANCED  
                                                                EQUITY         GROWTH             STOCK   
                                                                 FUND           FUND           MARKET FUND
                                                              ----------     ----------        ---------- 
                                                                 YEAR           YEAR              YEAR    
                                                                ENDED          ENDED             ENDED    
                                                               JUNE 30,       JUNE 30,          JUNE 30,  
                                                                 1998           1998              1998    
                                                              ----------     ----------        ---------- 
                                                                                                          
NET ASSET VALUE, BEGINNING OF PERIOD                          $    11.99     $    11.16        $    11.99 
                                                              ----------     ----------        ---------- 
INCOME FROM INVESTMENT OPERATIONS                                                                         
  Net investment income (loss)                                     (0.05)          0.00             (0.05)
  Net realized and unrealized gain (loss) on                                                              
    investments                                                     2.02           2.70              2.02 
                                                              ----------     ----------        ---------- 
      TOTAL FROM INVESTMENT OPERATIONS                              1.97           2.70              1.97 
                                                              ----------     ----------        ---------- 
DISTRIBUTIONS TO SHAREHOLDERS FROM                                                                        
  Net investment income                                            (0.01)          0.00             (0.01)
  Net realized gain from investment transactions                   (0.01)         (1.38)            (0.01)
  Distribution in excess of net realized gain                      (0.67)         (0.46)            (0.67)
                                                              ----------     ----------        ---------- 
      TOTAL DISTRIBUTIONS                                          (0.69)         (1.84)            (0.69)
                                                              ----------     ----------        ---------- 

NET ASSET VALUE - END OF PERIOD                               $    13.27     $    12.02        $    13.27 
                                                              ==========     ==========        ========== 

TOTAL RETURN (B)                                                   17.30%         26.68%            17.30%

RATIOS/SUPPLEMENTAL DATA                                                                                  

NET ASSETS, END OF PERIOD                                     $   61,938     $1,613,803        $   61,938 

RATIO OF EXPENSES TO AVERAGE NET ASSETS                                                                   
  Before expense reimbursements and waived fees                     1.25%          8.07%(a)          1.25%
  After expense reimbursements and waived fees                      0.69%          1.35%(a)          0.69%

RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS                                               
  Before expense reimbursements and waived fees                     1.25%          6.68%(a)          1.25%
  After expense reimbursements and waived fees                      0.69%         (0.04%)(a)         0.69%

PORTFOLIO TURNOVER RATE                                            46.58%        887.13%            46.58%

AVERAGE BROKER COMMISSIONS PER SHARE                          $   0.0304                       $   0.0304 

(a)  Annualized.                                                                

(b)  Aggregate total return, not annualized.                                    

(c)  Represents total commissions paid on portfolio  securities divided by total
shares purchased or sold on which commissions were charged.           

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QUAKER FAMILY OF FUNDS
FINANCIAL HIGHLIGHTS
 (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

                                                        · Enlarge/Download Table

--------------------------------------------------------------------------------------------------------- 
                                                              SMALL CAP    MID-CAP VALUE      FIXED INCOME
                                                             EQUITY FUND        FUND              FUND    
                                                              ----------     ----------        ---------- 
                                                                 YEAR           YEAR              YEAR    
                                                                ENDED          ENDED             ENDED    
                                                               JUNE 30,       JUNE 30,          JUNE 30,  
                                                                 1998           1998              1998    
                                                              ----------     ----------        ---------- 
                                                                                                          
NET ASSET VALUE, BEGINNING OF PERIOD                          $    11.99     $    11.99        $    11.99 
                                                              ----------     ----------        ---------- 
INCOME FROM INVESTMENT OPERATIONS                                                                         
Net investment income (loss)                                       (0.05)         (0.05)            (0.05)
Net realized and unrealized gain (loss) on                                                                
investments                                                         2.02           2.02              2.02 
                                                              ----------     ----------        ---------- 
TOTAL FROM INVESTMENT OPERATIONS                                    1.97           1.97              1.97 
                                                              ----------     ----------        ---------- 
DISTRIBUTIONS TO SHAREHOLDERS FROM                                                                        
Net investment income                                              (0.01)         (0.01)            (0.01)
Net realized capital gain                                          (0.67)         (0.67)            (0.67)
                                                              ----------     ----------        ---------- 
TOTAL DISTRIBUTIONS                                                (0.68)         (0.68)            (0.68)
                                                              ----------     ----------        ---------- 

NET ASSET VALUE - END OF PERIOD                               $    13.28     $    13.28        $    13.28 
                                                              ==========     ==========        ========== 

TOTAL RETURN (B)                                                   17.30%         17.30%            17.30%

RATIOS/SUPPLEMENTAL DATA                                                                                  

NET ASSETS, END OF PERIOD                                     $   61,938     $   61,938        $   61,938 

RATIO OF EXPENSES TO AVERAGE NET ASSETS                                                                   
Before expense reimbursements and waived fees                       1.25%          1.25%             1.25%
After expense reimbursements and waived fees                        0.69%          0.69%             0.69%

RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS                                               
Before expense reimbursements and waived fees                       1.25%          1.25%             1.25%
After expense reimbursements and waived fees                        0.69%          0.69%             0.69%

PORTFOLIO TURNOVER RATE                                            46.58%         46.58%            46.58%

AVERAGE COMMISSION RATE PAID                                  $   0.0304     $   0.0304        $   0.0304 

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 INVESTMENT OBJECTIVE AND POLICIES

 Quaker Enhanced Stock Market Fund
 Quaker Core Equity Fund
 Quaker Aggressive Growth Fund
 Quaker Mid-Cap Value Fund
 Quaker Small-Cap Value Fund

The investment  objective of the Quaker  Enhanced  Stock Market Fund  ("Enhanced
Fund"),  the Quaker  Core Equity Fund  ("Core  Equity"),  the Quaker  Aggressive
Growth Fund  ("Aggressive  Growth"),  the Quaker Mid-Cap Value Fund ("Mid-Cap"),
and the Quaker Small-Cap Value Fund  ("Small-Cap") is long-term  capital growth.
Current  income  is not a  significant  investment  consideration,  and any such
income  realized  will  be  considered   incidental  to  the  Fund's  investment
objective.  The Funds seek to achieve  their  investment  objective by investing
primarily in equity securities of domestic U.S. companies, and by utilizing each
Fund's unique  investment  policies and techniques  described  below. The Funds'
investment objective and fundamental  investment  limitations may not be altered
without the prior approval of a majority of the Funds' shareholders. There is no
guarantee that any Equity Fund will meet its investment objective.              

THE ENHANCED  FUND invests in a portfolio of securities  whose  diversification,
market  capitalization and volatility risk characteristics  approximate those of
the  Standard & Poors 500 Index (the "S&P 500"),  while also seeking to identify
industry sectors and individual securities which offer the opportunity to exceed
the total return of the S&P 500. The Enhanced Fund may contain up to 300 issues,
and may not contain a representation  of all sectors  comprising the S&P 500. In
contrast to other funds whose stated investment  objective is to passively track
the performance of S&P 500 by maintaining an investment portfolio  substantially
identical to the S&P 500, the Enhanced  Fund is actively  managed with  constant
attention  to  proprietary  models  designed  to  track  the S&P 500 in risk and
volatility, yet exceed the S&P 500 in potential price appreciation.             

Construction  of the Enhanced  Fund is highly  quantitative.  The Adviser to the
Enhanced Fund, FAM,  utilizes a proprietary  statistical model of historical and
current data to achieve the Enhanced Fund's objective.  Using these models,  FAM
develops for the Fund a diverse  portfolio of approximately  200 to 300 equities
selected  from   approximately  1200  domestic  equity  securities  with  market
capitalizations similar to the market capitalization of the companies in the S&P
500.                                                                            

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CORE  EQUITY  invests  primarily  (at  least  65% of  the  portfolio)  in  large
capitaliztion equity securities. Companies with strong fundamentals,  increasing
sales and earnings, a conservative balance sheet and reasonable  expectations of
continuing earnings increases will be included in the portfolio.                

GTC, investment advisor to Core Equity, also seeks to reduce capital gains taxes
by  controlling  portfolio  turnover.  Core  Equity's  investment  portfolio may
contain from 60 to 200 stocks, and not all industries will be represented in the
portfolio.  On average,  Core Equity's  investment  portfolio will have a higher
price/earnings  ratio  and  lower  yield  than  the  S&P  500.  Up to 25% of the
investment  portfolio may be invested in securities  that do not satisfy some or
all of the above criteria.                                                      

AGGRESSIVE  GROWTH  invests the Fund's  portfolio in a limited  number of equity
securities of companies  which DGCM,  investment  advisor to Aggressive  Growth,
believes show a high probability of superior prospects for growth.              

In selecting  portfolio  companies for Aggressive  Growth,  DGCM seeks a balance
between "special situation" investments (spin-offs, corporate restructurings and
tracking  stocks)  and  large  to  mid-capitalization   equities  with  high  or
accelerating  profitability,  an  element of  franchise  value,  and  reasonable
valuations.  In purchasing  "special situation"  securities,  DGCM 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.         

DGCM utilizes a broad spectrum of qualitative and quantitative  investment tools
to select portfolio  companies.  Aggressive  Growth also utilizes a conservative
investment strategy of short selling securities to reduce volatility and enhance
potential investment gain.  Aggressive Growth limits short selling to 25% of its
net assets.  In addition,  DGCM 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.                                                

Since 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.              

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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 Aggressive  Growth'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  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.                                                     

MID-CAP  invests in U.S. equity  securities of companies  which CVI,  investment
advisor to the Fund,  believes show a high probability of superior prospects for
above average total return. The universe of securities eligible for inclusion in
Mid-Cap are those equity securities with market  capitalizations  similar to the
market  capitalizations  of the companies included in the Russell Mid-Cap Index,
with an ultimate selection of 25-75 stocks for investment by the Fund.          

Under normal conditions, at least 65% of Mid-Cap's total assets will be invested
in equity securities of mid  capitalization  companies.  For these purposes "mid
capitalization"  companies are those companies with market capitalizations of up
to $6 billion.  The remaining portion of the Fund's total assets may be invested
in equity securities of other companies,  and other investments described below.
Under normal  conditions  CVI  anticipates  that 65% to 80% of the Fund's assets
will be invested in mid capitalization companies.                               

In selecting portfolio  companies,  CVI screens for asset rich and earnings rich
companies,  selling at relatively low market valuations,  with attractive growth
and momentum  characteristics.  CVI selects the  companies  for inclusion in the
portfolio using a cash flow based,  dividend  discount model. CVI 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.                              

SMALL-CAP  invests  in a  portfolio  of  securities  which  includes  a  broadly
diversified  number of U.S. equity securities which Aronson,  investment advisor
to Small-Cap,  believes show a high probability of superior  prospects for above
average  total  return.  The universe of  securities  eligible for  inclusion in
Small-Cap  consists  of those  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 for investment by Small-Cap.

Under  normal  conditions,  at least 65% of  Small-Cap's  total  assets  will be
invested  in  equity  securities  of  small  capitalization  companies.   "Small
capitalization"  companies are those companies with market capitalizations of up
to $1.5  billion.  The  remaining  portion of  Small-Cap's  total  assets may be
invested in equity securities of medium and large capitalization  companies, and
other investments described below.                                              

In selecting  portfolio  companies,  Aronson  focuses on asset rich and earnings
rich companies  selling at relatively  low market  valuations,  with  attractive
growth and momentum characteristics.  Small-Cap intends to remain fully invested
in these securities at all times,  subject to a minimum cash balance  maintained
for operational purposes.                                                       

Aronson  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,
Aronson 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.       

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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 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.                                    

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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.                           

QUAKER FIXED INCOME FUND                                                        

The  investment  objective of the Quaker Fixed Income Fund ("Fixed Income Fund")
is to generate  current  income,  preserve  capital and maximize  total  returns
through a portfolio of  investment  grade fixed income  securities.  There is no
guarantee that the Fixed Income Fund will meet its investment  objective.  Fixed
Income's investment objective and fundamental  investment limitations may not be
altered without the prior approval of a majority of the Fund's shareholders.    

Anyone may  invest in Fixed  Income,  but the Fund is  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.                                   

FAM, investment advisor to Fixed Income,  seeks to achieve the Fund's investment
objective by 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).  However, FAM may lengthen the duration
of the portfolio when yields appear  abnormally  high, and shorten duration when
yields appear abnormally low. FAM also looks for value in the shape of the yield
curve.  FAM also  examines 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 FAM's fixed  income  management
philosophy.  "Duration" is not the same thing as  "maturity".  Whereas  maturity
takes into account only the final principal payments to determine the price risk
of a particular fixed income security, duration weights all potential cash flows
- principal,  interest and  reinvestment  income - on an expected  present value
basis,  to  determine  the  `effective  life'  of the  security.  Once  FAM  has
determined the optimal duration target for the Fund, and determined which of the
Fund's  permissible  investments  has  the  highest  relative  valuations,   FAM
constructs and closely monitors a portfolio of the securities described below to
achieve its anticipated performance.                                            

U.S.  Government  Securities.   Fixed  Income  may  invest  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.                                                                         

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Collateralized  Mortgage Obligations.  Fixed Income 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.          

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 FAM,
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.                                        

Forward  Commitments  and  When-Issued  Securities.  Fixed  Income may  purchase
when-issued  securities and commit to purchase securities for a fixed price at a
future date beyond  customary  settlement time. The Fund is required to hold and
maintain in a segregated  account until settlement  date, cash, U.S.  Government
Securities or high-grade  debt  obligations in an amount  sufficient to meet the
purchase  price.  Purchasing  securities on a when-issued or forward  commitment
basis  involves  a risk of loss if the  value of the  security  to be  purchased
declines prior to the settlement  date, which risk is in addition to the risk of
decline in value of the Fund's other assets.  In addition,  no income accrues to
the  purchaser of  when-issued  securities  during the period prior to issuance.
Although  the  Fixed  Income  Fund  would  generally  purchase  securities  on a
when-issued  or  forward  commitment  basis  with  the  intention  of  acquiring
securities for its portfolio,  the Fund may dispose of a when-issued security or
forward commitment prior to settlement if FAM deems it appropriate to do so. The
Fund may realize short-term gains or losses upon such sales.                    

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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.                                                              

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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.                                                                   

RISK FACTORS

You may lose money by  investing  in the Funds.  Your risk of loss is greater if
you invest for shorter periods.  Special risk  considerations  for the Funds are
discussed at length in the Section entitled "Investment  Objective and Policies"
A more  complete  discussion  of  certain  of these  securities  and  investment
techniques  and their  associated  risks is also  contained in the  Statement of
Additional Information.                                                         

Fluctuations in Value.  The Funds' net asset value will fluctuate with rises and
falls in the prices of the securities  comprising  each Fund's  portfolio.  Some
Funds will exhibit more price  volatility than others.  Your shares may be worth
more or less than you paid for them when you redeem them.  Because there is risk
in any  investment,  there can be no  assurance  that any Fund will  achieve its
investment objective.                                                           

Portfolio  Turnover.  The Funds sell portfolio  securities without regard to the
length of time they have been held in order to take  advantage of new investment
opportunities.  The degree of portfolio  activity affects the brokerage costs of
the Funds and other  transaction costs related to the sale of securities and the
reinvestment in other securities.  Portfolio turnover may also have capital gain
tax consequences.  The portfolio  turnover rate for each Fund is set forth under
"Financial Highlights" above.                                                   

INVESTMENT LIMITATIONS

Investment  Grade  Securities.  Fixed Income 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.                                          

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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.                                        

FEDERAL INCOME TAXES

Taxation  of the Funds.  The  Internal  Revenue  Code of 1986,  as amended  (the
"Code"),  treats  each  series in the Trust as a separate  regulated  investment
company.  Each  series of the Trust  (each of the  Funds)  intends to qualify or
remain  qualified  as  a  regulated   investment   company  under  the  Code  by
distributing  substantially  all of its "net investment  income" to shareholders
and meeting other requirements of the Code.  Regulated  investment companies are
subject to a  non-deductible  4% excise tax to the extent they do not distribute
the statutorily  required amount of investment income,  determined on a calendar
year  basis,  and  capital  gain net  income.  The Funds  intend to  declare  or
distribute dividends during the calendar year in an amount sufficient to prevent
imposition of the 4% excise tax.                                                

For the fiscal year ended June 30,  1998,  each Fund was  considered a "personal
holding company" under the Code since 50% of the value of each Fund's shares was
owned directly or indirectly by five or fewer individuals at certain times. As a
result,  each  Fund  was  unable  to meet the  requirements  for  taxation  as a
regulated  investment  company and will be unable to meet such  requirements  as
long as it is classified as a personal  holding  company.  As a personal holding
company, each Fund is subject to federal income taxes on undistributed  personal
holding company income at the maximum individual income tax rate. For the fiscal
year ended June 30,  1998,  however,  no provision  was made for federal  income
taxes  for  any of  the  Funds,  since  substantially  all  taxable  income  was
distributed to shareholders.  For the current fiscal year, each Fund anticipates
that either it will qualify as a regulated investment company under the Code or,
if still considered a personal holding company,  distribute substantially all of
its taxable income for the current fiscal year to shareholders in order to avoid
individual income taxes.                                                        

Taxation of  Shareholders.  For federal  income tax purposes,  any dividends and
distributions from short-term capital gains that a shareholder  receives in cash
from the Funds or which are re-invested in additional  shares will be taxable as
ordinary income. If you are not required to pay a tax on income, you will not be
required  to pay  federal  income  taxes on the  amounts  distributed  to you. A
dividend declared in October, November or December of a year and paid in January
of the  following  year will be considered to be paid on December 31 of the year
of declaration.                                                                 

Distributions  paid by the Funds from long-term capital gains,  whether received
in cash or  reinvested in additional  shares,  are taxable as long-term  capital
gains,  regardless  of the  length of time you have  owned  shares in the Funds.
Capital gain  distributions  are made when a Fund  realizes net capital gains on
sales of  portfolio  securities  during the year.  Dividends  and  capital  gain
distributions  paid by the Funds  shortly  after  shares  have  been  purchased,
although  in  effect a return of  investment,  are  subject  to  federal  income
taxation.                                                                       

The sale of shares of each Fund is a taxable  event and may  result in a capital
gain or loss.  Capital gain or loss may be realized from an ordinary  redemption
of shares or an  exchange of shares  between two mutual  funds (or two series of
the Trust).                                                                     

The  Trust  will  inform  you of the  source  of  dividends  and  capital  gains
distributions  at the time you are paid  and,  promptly  after the close of each
calendar year, will issue an information return to advise you of the federal tax
status of such distributions and dividends. Dividends and distributions may also
be  subject  to state and local  taxes.  You  should  consult  your tax  adviser
regarding specific questions as to federal, state or local taxes.               

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Federal income tax law requires you to certify that the social  security  number
or taxpayer  identification number provided to the Funds is correct and that you
are not subject to 31% withholding for previous  under-reporting to the Internal
Revenue  Service  (the  "IRS").  You  will  be  asked  to make  the  appropriate
certification on your  application to purchase shares.  If you have not complied
with the  applicable  statutory  and IRS  requirements,  the  Fund is  generally
required  by  federal  law to  withhold  and remit to the IRS 31% of  reportable
payments (which may include dividends and redemption amounts).                  

 DIVIDENDS AND DISTRIBUTIONS

Each Fund intends to distribute  substantially all of its net investment income,
if any, in the form of  dividends.  Each Equity Fund will  generally  pay income
dividends,  if any, at least annually.  Each Fund will generally  distribute net
realized  capital  gains,  if any,  at least  annually.  The Fixed  Income  Fund
generally intends to pay income dividends, if any, monthly.                     

Unless  you  elect  to  receive  cash,  dividends  and  capital  gains  will  be
automatically  reinvested  in  additional  full  and  fractional  shares  of the
respective Fund at the net asset value per share next  determined.  Shareholders
wishing  to receive  their  dividends  or  capital  gains in cash may make their
request in writing to the Funds  at555 North Lane,  Suite  6160,  P.O.  Box 844,
Conshohocken, PA 19428-0844. That request must be received by the Funds prior to
the record date to be  effective  as to the next  dividend.  You will  receive a
quarterly  summary of your account,  including  information as to any reinvested
dividends.  Tax consequences to of dividends and  distributions  are the same if
received in cash or in additional shares of the Funds.                          

 HOW SHARES ARE VALUED

Net asset  value of each  Equity Fund is  determined  at the close of  business,
currently 4:00 p.m., New York time,  Monday through  Friday,  except on business
holidays  when the New York Stock  Exchange  is closed.  Net asset  value of the
Fixed Income Fund is  determined  at 3:00 p.m.,  New York time,  Monday  through
Friday,  except on business holidays when the New York Stock Exchange and/or the
Federal Reserve  Banking System is closed.  The net asset value of the shares of
each Fund for purposes of pricing  sales and  redemptions  is equal to the total
market value of its investments and other assets,  less all of its  liabilities,
divided by the number of its outstanding shares.                                

Securities  that are  listed on a  securities  exchange  are  valued at the last
quoted  sales price at the time the  valuation  is made.  Price  information  on
listed  securities  is taken from the  exchange  where the security is primarily
traded by each Fund. Securities that are listed on an exchange and which are not
traded on the valuation date are valued at the mean of the bid and asked prices.
Unlisted securities for which market quotations are readily available are valued
at the latest  quoted  sales  price,  if  available,  at the time of  valuation,
otherwise,  at the latest  quoted bid price.  Temporary  cash  investments  with
maturities  of 60  days  or  less  will  be  valued  at  amortized  cost,  which
approximates  market  value.  Securities  for which no  current  quotations  are
readily  available  are valued at fair value as  determined  in good faith using
methods approved by the Board of Trustees of the Trust. Securities may be valued
on the basis of  prices  provided  by a pricing  service  when such  prices  are
believed to reflect the fair market value of such securities.                   

Fixed  income  securities  will  ordinarily  be traded  on the  over-the-counter
market.  When  market  quotations  are  not  readily  available,   fixed  income
securities  may be valued  based on prices  provided by a pricing  service.  The
prices   provided  by  the  pricing   service  are  generally   determined  with
consideration  given to  institutional  bid and last sale  prices  and take into
account  securities  prices,  yields,   maturities,   call  features,   ratings,
institutional trading in similar groups of securities,  and developments related
to specific  securities.  Such fixed income  securities may also be priced based
upon a matrix system of pricing similar bonds and other fixed income securities.
Such matrix system may be based upon the considerations  described above used by
other pricing  services and  information  obtained by the pricing agent from the
Advisors and other pricing sources deemed relevant by the pricing agent.        

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 HOW SHARES MAY BE PURCHASED

Assistance  in opening  accounts and a purchase  application  may be obtained by
calling 800-220-8888,  or by writing to the Funds at the address shown below for
purchases  by mail.  Assistance  is also  available  through  any  broker-dealer
authorized to sell shares in the Funds. Payment for shares purchased may also be
made through your account at the  broker-dealer  processing your application and
order to purchase. Your investment will purchase shares at each Fund's net asset
value next determined after your order is received by the Fund in proper form as
indicated  herein.  Since the  Funds are  offered  only on a  no-load  basis,  a
broker-dealer may charge a transaction fee for settlement services.             

The minimum initial  investment is $10,000 in the Trust.  Investors may allocate
their  investment  among the various series (Funds) of the Trust.  If an initial
investment is made in only one Fund, the minimum initial  investment is $10,000.
The minimum  subsequent  investment is $250. The Funds may, in the Distributor's
sole  discretion,  accept  certain  accounts  with less than the stated  minimum
initial investment. You may invest in the following ways:                       

Purchases  by  Mail.  Shares  may  be  purchased  initially  by  completing  the
application  accompanying  this Prospectus and mailing it, together with a check
payable and addressed to the Quaker Family of Funds, 555 North Lane, Suite 6160,
P.O. Box 844, Conshohocken, PA 19428-0844. Subsequent investments in an existing
account  in any  Fund  may be made at any  time in  minimum  amounts  of $250 by
sending a check to the address  stated  above.  Please  enclose the stub of your
account  statement  and  include the amount of the  investment,  the name of the
account for which the investment is to be made and the account number.          

Purchases by Wire. To purchase  shares by wiring federal  funds,  each Fund must
first be  notified  by calling  800-220-8888  to  request an account  number and
furnish the Fund with your tax identification number.  Following notification to
a Fund, federal funds and registration  instructions should be wired through the
Federal Reserve System to:                                                      

 First Union National Bank of North Carolina
 Charlotte, North Carolina
 ABA # 053000219
 For the Quaker Enhanced Stock Market Fund
 Acct #2000000862084
 For the Quaker Core Equity Fund
 Acct #2000000862039
 For the Quaker Aggressive Growth Fund
 Acct #2000000862071
 For the Quaker Small-Cap Value Fund
Acct #20000001067875
For the Quaker Sector Allocation Equity Fund
 Acct #2000000862149
For the Quaker Fixed Income Fund
 Acct #2000000862136
For further credit to (shareholder's name and SS# or EIN#)

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It is  important  that the wire contain all the  information  and that the Funds
receive  prior  telephone  notification  to ensure  proper  credit.  A completed
application with signature(s) of registrant(s)  must be mailed to the applicable
Fund  immediately  after the initial wire as described under "Purchases by Mail"
above. Investors should be aware that some banks may impose a wire service fee. 

General.  All purchases of shares are subject to acceptance  and are not binding
until  accepted.  Each Fund  reserves  the right to reject  any  application  or
investment.  Orders  become  effective,  and shares are  purchased  at, the next
determined  net asset value per share after an investment has been received by a
Fund, which is as of 4:00 p.m., New York time, Monday through Friday,  exclusive
of business holidays. Orders received by a Fund and effective prior to such 4:00
p.m. time will purchase  shares at the net asset value  determined at that time.
Otherwise, your order will purchase shares as of such 4:00 p.m. time on the next
business day. For purposes of the Fixed Income Fund, the foregoing references to
4:00 p.m. will instead be to 3:00 p.m., New York time,  Monday  through  Friday,
exclusive  of  business   holidays.   For  orders  placed  through  a  qualified
broker-dealer,  such firm is  responsible  for  promptly  transmitting  purchase
orders to the Funds.  Investors may be charged a fee if they effect transactions
in Fund shares through a broker or agent.                                       

If checks are returned unpaid due to nonsufficient  funds, stop payment or other
reasons,  the Trust will charge  $20.  To recover  any such loss or charge,  the
Trust reserves the right,  without further notice,  to redeem shares of any Fund
of the Trust already owned by any purchaser whose order is cancelled, and such a
purchaser may be prohibited from placing  further orders unless  investments are
accompanied by full payment by wire or cashier's check.                         

Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S.  dollars.  Under  certain  circumstances  the  Distributor,   at  its  sole
discretion,  may allow  payment in kind for Fund shares  purchased  by accepting
securities in lieu of cash.  Any  securities so accepted  would be valued on the
date  received  and  included in the  calculation  of the net asset value of the
Fund. See the Statement of Additional  Information for additional information on
purchases in kind.                                                              

The  Administrator  is required by federal law to withhold  and remit to the IRS
31% of the  dividends,  capital  gains  distributions  and,  in  certain  cases,
proceeds of redemptions  paid to any  shareholder  who fails to furnish the Fund
with a correct taxpayer  identification  number,  who under-reports  dividend or
interest  income or who fails to  provide  certification  of tax  identification
number. Instructions to exchange or transfer shares held in established accounts
will be refused until the  certification  has been  provided.  In order to avoid
this  withholding  requirement,  you must certify on your  application,  or on a
separate  W-9 Form  supplied  by the Funds,  that your  taxpayer  identification
number is correct and that you are not currently  subject to backup  withholding
or you are exempt  from  backup  withholding.  For  individuals,  your  taxpayer
identification number is your social security number.                           

Distribution Plan. Declaration  Distributors,  Inc., 555 North Lane, Suite 6160,
P.O. Box 844, Conshohocken,  PA 19428-0844 (the "Distributor"),  is the national
distributor  for the Funds under a Distribution  Agreement  with the Trust.  The
Distributor may sell Fund shares to or through qualified  securities  dealers or
others.                                                                         

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The Trust has adopted a Distribution Plan (the "Plan") for all Funds pursuant to
Rule  12b-1  under the 1940 Act.  Under  the Plan the  Funds may  reimburse  any
expenditures to finance any activity primarily intended to result in sale of the
shares of the Funds, including,  but not limited to, the following: (i) payments
to the Distributor and its agents,  securities dealers,  and others for the sale
of  shares of the  Funds;  (ii)  payment  of  compensation  to and  expenses  of
personnel  who engage in or  support  distribution  of shares of the Funds;  and
(iii) formulation and  implementation  of marketing and promotional  activities.
The categories of expenses for which  reimbursement  is made are approved by the
Board of Trustees of the Trust.  Expenditures  by the Funds pursuant to the Plan
are  accrued  based on the  average  daily  net  assets of each Fund and may not
exceed 0.25% of average net assets for each year elapsed  subsequent to adoption
of the Plan.  All  expenditures  under the Plan  will be  funded  entirely  from
investment  advisory fees payable to the Funds' investment advisors and will not
be paid directly by the Funds. The Investment  Advisory  Agreements entered into
by the Funds and each of the  investment  advisors  provides  for the payment of
such  distribution  fees and expenses from the investment  advisory fees payable
thereunder.                                                                     

The Plan may not be amended to increase  materially the amount to be spent under
the Plan without  shareholder  approval.  The  continuation  of the Plan must be
approved  by the Board of Trustees  annually.  At least  quarterly  the Board of
Trustees must review a written report of amounts  expended  pursuant to the Plan
and the purposes for which such expenditures were made. No amounts were expended
pursuant to the Plan for the fiscal year ended June 30, 1998.                   

The Distributor,  at its expense,  may also provide  additional  compensation to
dealers  in  connection  with  sales of shares of the  Funds.  Compensation  may
include financial assistance to dealers in connection with conferences, sales or
training  programs for their  employees,  seminars  for the public,  advertising
campaigns regarding the Funds, and/or other dealer-sponsored  special events. In
some instances,  this compensation may be made available only to certain dealers
whose  representatives have sold or are expected to sell a significant amount of
such shares.  Compensation  may include payment for travel  expenses,  including
lodging,   incurred  in  connection  with  trips  taken  by  invited  registered
representatives  and members of their families to locations within or outside of
the United States for meetings or seminars of a business nature. Dealers may not
use sales of the Funds'  shares to qualify for this  compensation  to the extent
such may be prohibited by the laws of any state or any  self-regulatory  agency,
such  as the  National  Association  of  Securities  Dealers,  Inc.  None of the
aforementioned compensation is paid for by the Funds or their shareholders.     

Exchange Feature.  Investors will have the privilege of exchanging shares of any
Fund for  shares  of any other  Fund of the  Trust.  An  exchange  involves  the
simultaneous  redemption  of  shares of one  series  and  purchase  of shares of
another series at the respective closing net asset value next determined after a
request for redemption has been received,  and is a taxable transaction.  Shares
of each Fund may be exchanged for shares of any other series of the Trust at the
net asset value plus that series'  sales charge,  if any.  Exchanges may only be
made by investors in states where shares of the other series are  qualified  for
sale.  An investor  may direct a Fund to  exchange  his shares by writing to the
Fund at its  principal  office.  The  request  must  be  signed  exactly  as the
investor's  name  appears on the  account,  and it must also provide the account
number,  number of shares to be  exchanged,  the name of the series to which the
exchange will take place and a statement as to whether the exchange is a full or
partial redemption of existing shares.                                          

A pattern of frequent exchange  transactions may be deemed by the Distributor to
be an abusive  practice that is not in the best interests of the shareholders of
the Funds. Such a pattern may, at the discretion of the Distributor,  be limited
by that Fund's refusal to accept further purchase and/or exchange orders from an
investor,   after  providing  the  investor  with  60  days  prior  notice.  The
Distributor will consider all factors it deems relevant in determining whether a
pattern of frequent  purchases,  redemptions  and/or  exchanges  by a particular
investor  is  abusive  and not in the best  interests  of the Funds or its other
shareholders.                                                                   

A shareholder  should  consider the  investment  objectives  and policies of any
series into which the  shareholder  will be making an exchange,  as described in
the prospectus. The Board of Trustees of the Trust reserves the right to suspend
or terminate, or amend the terms of, the exchange privilege upon 60 days written
notice to the shareholders.                                                     

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Automatic Investment Plan. The automatic investment plan enables shareholders to
make  regular  monthly or  quarterly  investments  in shares  through  automatic
charges to their  checking  account.  With  shareholder  authorization  and bank
approval,  the Funds will  automatically  charge the  checking  account  for the
amount specified ($100 minimum),  which will be automatically invested in shares
at the  public  offering  price on or  about  the  21st  day of the  month.  The
shareholder  may change the amount of the investment or discontinue  the plan at
any time by writing to the Funds.                                               

Stock  Certificates.  Stock  certificates  will not be issued  for your  shares.
Evidence of ownership will be given by issuance of periodic  account  statements
that will show the number of shares owned.                                      

HOW SHARES MAY BE REDEEMED

Shares  of each  Fund may be  redeemed  (the  Funds  will  repurchase  them from
shareholders) by mail or telephone.  Any redemption may be more or less than the
purchase  price of your  shares  depending  on the  market  value of the  Fund's
portfolio  securities.  All  redemption  orders  received  in  proper  form,  as
indicated  herein, by a Fund,  whether by mail or telephone,  prior to 4:00 p.m.
New York time, Monday through Friday, except for business holidays,  will redeem
shares at the net asset  value next  determined  at that time.  Otherwise,  your
order will redeem  shares as of 4:00 p.m. on the next business day. For purposes
of the Fixed Income Fund, the foregoing  references to 4:00 p.m. will instead be
to 3:00 p.m.,  New York time,  Monday  through  Friday,  exclusive  of  business
holidays. There is no charge for redemptions from the Funds, other than possible
charges for wiring redemption proceeds.  You may also redeem your shares through
a broker-dealer or other institution, who may charge you a fee for its services.

The Board of Trustees  reserves  the right to  involuntarily  redeem any account
having a net asset value of less than $10,000 (due to redemptions,  exchanges or
transfers,  and not due to market  action) upon 30 days written  notice.  If the
shareholder  brings his account net asset value up to $10,000 or more during the
notice period,  the account will not be redeemed.  Redemptions  from  retirement
plans may be subject to tax withholding.                                        

If you are uncertain of the  requirements  for  redemption,  please  contact the
Funds at 800-220-8888, or write to the address shown below.                     

Regular Mail  Redemptions.  Your request should be addressed to the Funds at 555
North Lane, Suite 6160, P.O. Box 844, Conshohocken,  PA 19428-0844. Your request
for redemption must include:                                                    

1) Your letter of instruction  specifying the account number,  and the number of
shares  or dollar  amount to be  redeemed.  This  request  must be signed by all
registered shareholders in the exact names in which they are registered;        

2) Any required signature guarantees (see "Signature Guarantees" below); and    

3) Other supporting legal documents, if required in the case of estates, trusts,
guardianships,  custodianships,  corporations,  partnerships,  pension or profit
sharing plans, and other organizations.                                         

Your redemption  proceeds will be sent to you within seven days after receipt of
your redemption  request.  However,  the Funds may delay forwarding a redemption
check for recently  purchased  shares while they determine  whether the purchase
payment will be honored.  Such delay (which may take up to 15 days from the date
of  purchase)  may be reduced or avoided if the  purchase  is made by  certified
check or wire transfer.  In all cases the net asset value next determined  after
the  receipt  of the  request  for  redemption  will be used in  processing  the
redemption.  The Funds may suspend redemption privileges or postpone the date of
payment  (i) during any period that the New York Stock  Exchange  is closed,  or
trading  on the New York Stock  Exchange  is  restricted  as  determined  by the
Securities and Exchange  Commission (the  "Commission"),  (ii) during any period
when an emergency  exists as defined by the rules of the  Commission as a result
of which it is not reasonably practicable for the Funds to dispose of securities
owned by them, or to fairly  determine the value of their assets,  and (iii) for
such other periods as the Commission may permit.                                

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Telephone and Bank Wire Redemptions.  The Funds offer shareholders the option of
redeeming shares by telephone under certain limited  conditions.  The Funds will
redeem shares when requested by the shareholder if, and only if, the shareholder
confirms redemption instructions in writing.                                    

The Funds may rely upon  confirmation  of redemption  requests  transmitted  via
facsimile (FAX# 610-832-1067). The confirmation instructions must include:      

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 Funds.                                                            

The net asset  value used in  processing  the  redemption  will be the net asset
value  next  determined  after the  telephone  request is  received.  Redemption
proceeds will not be distributed  until written  confirmation  of the redemption
request  is  received,  per  the  instructions  above.  You can  choose  to have
redemption  proceeds  mailed to you at your address of record,  your bank, or to
any other authorized  person,  or you can have the proceeds sent by bank wire to
your bank ($5,000  minimum).  Shares of the Funds may not be redeemed by wire on
days on which your bank, and/or the Funds' Custodian,  is not open for business.
You can change your redemption  instructions anytime you wish by filing a letter
including  your new  redemption  instructions  with the Funds.  (See  "Signature
Guarantees"  below.) The  Distributor  reserves  the right to restrict or cancel
telephone and bank wire redemption privileges for shareholders,  without notice,
if the Distributor believes it to be in the best interest of the shareholders to
do so.  During  drastic  economic and market  conditions,  telephone  redemption
privileges may be difficult to implement.                                       

The  Funds  in  their  discretion  may  choose  to  pass  through  to  redeeming
shareholders  any charges by the Custodian for wire  redemptions.  The Custodian
currently charges $7.00 per transaction for wiring redemption proceeds.  If this
cost is passed through to redeeming  shareholders by the Funds,  the charge will
be deducted automatically from the shareholder's account by redemption of shares
in the  account.  The  shareholder's  bank or  brokerage  firm may also impose a
charge for  processing  the wire.  If wire  transfer of funds is  impossible  or
impractical,  the  redemption  proceeds  will be sent by mail to the  designated
account.                                                                        

You may redeem shares,  subject to the procedures outlined above, by calling the
Funds at 800-220-8888. Redemption proceeds will only be sent to the bank account
or  person  named in your Fund  Shares  Application  currently  on file with the
Funds.  Telephone redemption  privileges authorize the applicable Fund to act on
telephone instructions from any person representing himself or herself to be the
investor  and  reasonably  believed  by the Fund to be  genuine.  The Funds will
employ   reasonable   procedures,   such  as   requiring   a  form  of  personal
identification,  to confirm that  instructions  are genuine,  and if they do not
follow  such  procedures,  the  Funds  will  be  liable  for any  losses  due to
fraudulent  or  unauthorized  instructions.  The Funds  will not be  liable  for
following telephone instructions reasonably believed to be genuine.             

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Transfer on Redemption  to Money Market  Account.  Shareholders  wishing to have
redemption proceeds and/or income and capital gain dividends transferred into an
account in their name in a money  market fund may so  indicate on their  Account
Application.  The Custodian and Distributor of the Funds have made available the
Evergreen  Money  Market  Fund for use of Fund  shareholders.  Purchases  and/or
transfers into this money market fund may only be made after the shareholder has
received the current  prospectus  for such Fund. For further  information  and a
prospectus please call the Funds at 800-220-8888.                               

Systematic  Withdrawal  Plan. A shareholder  who owns shares of one of the Funds
valued at $10,000 or more at current net asset value may  establish a Systematic
Withdrawal  Plan to receive a monthly or quarterly  check in a stated amount not
less than $100. Each month or quarter as specified,  the Fund will automatically
redeem  sufficient  shares from your  account to meet the  specified  withdrawal
amount.  Call or write the Funds for an  application  form. See the Statement of
Additional Information for further details.                                     

Signature  Guarantees.  To  protect  your  account  and the  Funds  from  fraud,
signature  guarantees  are  required  to be sure that you are the person who has
authorized a change in registration, or standing instructions, for your account.
Signature guarantees are required for (1) change of registration  requests,  (2)
requests to  establish or change  exchange  privileges  or telephone  redemption
service other than through your initial  account  application,  and (3) requests
for redemptions in excess of $50,000. Signature guarantees are acceptable from a
member  bank of the Federal  Reserve  System,  a savings  and loan  institution,
credit  union  (if  authorized  under  state  law),  registered   broker-dealer,
securities  exchange  or  association  clearing  agency,  and must appear on the
written request for redemption,  establishment or change in exchange privileges,
or change of registration.                                                      

 MANAGEMENT OF THE FUNDS

Trustees and Officers. Each Fund is a series of the Quaker Investment Trust (the
"Trust"), an investment company organized as a Massachusetts business trust. The
Board of Trustees of the Trust is responsible for the management of the business
and affairs of the Trust.  The Trustees and executive  officers of the Trust and
their  principal  occupations  for the  last  five  years  are set  forth in the
Statement of Additional Information under "Management of the Fund - Trustees and
Officers."  The Board of  Trustees  of the Trust is  primarily  responsible  for
overseeing the conduct of the Trust's business. The Board of Trustees elects the
officers  of the  Trust  who are  responsible  for its  and the  Funds'  overall
operations.                                                                     

Fiduciary  Asset  Management Co. Under the supervision of the Board of Trustees,
Fiduciary Asset  Management Co. ("FAM")  provides the Enhanced Stock Market Fund
and the Fixed Income Fund with a continuous  program of  investment  management,
including the  composition of each Fund's  portfolio,  and furnishes  advice and
recommendations  with  respect  to  investments,  investment  policies  and  the
purchase and sale of securities,  pursuant to an Investment  Advisory  Agreement
("Advisory Agreement") with the Trust.                                          

FAM 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 Funds, to individuals,  banks and thrift  institutions,  pension and
profit sharing plans, trusts, estates, charitable organizations and corporations
since its inception in 1994. FAM's address is 8112 Maryland  Avenue,  Suite 310,
Clayton, Missouri 63105. FAM is controlled by Charles D. Walbrandt.             

John L. Dorian has been  responsible  for day-to-day  management of the Enhanced
Stock Market Fund's portfolio since its inception.  Mr. Dorian has been with FAM
since April 1995.  Previously  Mr. Dorian was a Managing  Director and Portfolio
Manager with First Quadrant Corp., Pasadena, California.                        

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Wiley D. Angell has been  responsible  for  day-to-day  management  of the Fixed
Income Fund's portfolio since its inception.  Mr. Angell has been with FAM since
its inception in June 1994. Previously Mr. Angell was Corporate Director,  Fixed
Income Portfolio Manager with General Dynamics Corporation.                     

Under the Advisory  Agreement with the Trust, FAM receives a monthly  management
fee equal to an annual rate of 0.50% of the average daily net asset value of the
Enhanced  Stock  Market  Fund.  For the fiscal  year ended  June 30,  1998,  FAM
voluntarily waived its entire fee in the amount of $6,443.                      

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.  For the fiscal year
ended  June 30,  1998,  FAM  voluntarily  waived its entire fee in the amount of
$12,948.                                                                        

Geewax,  Terker & Co Under the  supervision  of the Board of  Trustees,  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,  pursuant  to an  Investment  Advisory
Agreement  ("Advisory  Agreement")  with the Trust,  dated October 19, 1998. GTC
became  Adviser to the Fund after the previous  Adviser,  West  Chester  Capital
Advisers, Inc., resigned. GTC was chosen to become the Adviser to Core Equity by
the  Board of  Trustees,  and was  approved  as  Adviser  by a  majority  of the
outstanding  shares of Core Equity at a Special Meeting of Shareholders  held on
October 19, 1998.                                                               

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 fiscal year ended June 30, 1998,  West Chester  Capital  Advisors,
Inc., the former Advisor to the Fund,  voluntarily  waived its entire fee in the
amount of $17,770.                                                              

DG Capital Management,  Inc. Under the supervision of the Board of Trustees,  DG
Capital  Management,  Inc.  ("DGCM")  provides the 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.            

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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.                                          

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 fiscal  year ended June 30,  1998,  DGCM  voluntarily  waived its
entire fee in the amount of $10,415.                                            

Compu-Val  Investments,  Inc.  Under the  supervision  of the Board of Trustees,
Compu-Val  Investments,  Inc.  ("CVI")  provides  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.  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  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 Adviser since 1995, is
the Fund's portfolio manager.  Previously, Mr. O'Keefe was an investment analyst
with CoreStates investment Advisers, 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 fiscal year ended June 30, 1998, CVI  voluntarily  waived fees in
the amount of $9,928.                                                           

Aronson + Partners.  Under the  supervision of the Board of Trustees,  Aronson +
Partners ("Aronson") provides the 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.                                                               

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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 prior to October 19, 1998,  Aronson
received  a  monthly  management  fee  equal to an  annual  rate of 0.75% of the
average daily net asset value of the Fund. On October 19, 1998, the shareholders
of the Fund approved a new Advisory  Agreement  with Aronson,  instituting a new
fee schedule. Listed below is a comparison of the annual management fee rates as
a percentage  of average daily net assets  payable under the current  management
agreement and the new management agreement for the Value Fund.                  

                                      PRIOR AGREEMENT            NEW AGREEMENT
                                      ---------------            -------------
Present to September 30, 1998               0.75%                     0.75%     
October 19, 1998- October 1, 1999           0.75%                     0.90%     
Thereafter                                  0.75%             Performance Based 
                                                                   As Follows:

From October 1, 1999  forward,  a performance  fee concept will be  implemented.
This will provide for an investment advisory 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 twelve (12) months
exceed the return for the Russell  2000 Index for the same period by 3.0%.  this
comparison  will be repeated  each  quarter,  using the data from the  immediate
prior twelve (12) months.  Adjustment  factors will be applied to the investment
advisory fee according to the following formula.:                               

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 fiscal year ended June 30, 1998,  Aronson  voluntarily waived its entire
fee in the amount of $16,356.                                                   

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General  Advisor Duties.  Each Advisor  supervises and implements the investment
activities of their respective Fund,  including the making of specific decisions
as to the purchase and sale of portfolio investments. Among the responsibilities
of each  Advisor  under the Advisory  Agreement is the  selection of brokers and
dealers through whom  transactions in the Funds'  portfolio  investments will be
effected.  Each  Advisor  attempts  to obtain  the best  execution  for all such
transactions. If it is believed that more than one broker is able to provide the
best  execution,  each Advisor will consider the receipt of quotations and other
market  services  and of  research,  statistical  and other data and the sale of
shares of the Fund in selecting a broker.  Research  services  obtained  through
Fund  brokerage  transactions  may be used by the Advisor for its other  clients
and,  conversely,  each Fund may benefit from research services obtained through
the brokerage transactions of the Advisor's other clients. The Advisors may also
utilize a brokerage firm affiliated with the Trust, 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.  For further  information,  see  "Investment  Objective  and  Policies
-Investment Transactions" in the Statement of Additional Information.           

Administrator.  The Trust has entered into a Fund Administration  Agreement with
Declaration  Service Company (the  "Administrator"),555  North Lane, Suite 6160,
P.O. Box 844, Conshohocken, PA 19428-0844. Subject to the authority of the Board
of  Trustees,  the  services  the  Administrator  provides to each Fund  include
coordinating and monitoring any third parties furnishing  services to the Funds;
providing  the  necessary  office  space,  equipment  and  personnel  to perform
administrative and clerical  functions for the Funds; and preparing,  filing and
distributing  proxy materials,  periodic  reports to shareholders,  registration
statements and other documents.                                                 

The Administrator also performs certain accounting and pricing services for each
Fund as pricing agent,  including the daily calculation of each Fund's net asset
value.                                                                          

Transfer Agent. The 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.                                    

Sponsor of the Funds.  Quaker Funds, Inc., will engage in shareholder  servicing
activities for the Funds not otherwise  provided by the Funds'  Administrator or
Custodian,  for which it will  receive a fee at the annual  rate of 0.25% of the
average daily net assets of the Funds, except the shareholder servicing fee will
be limited to 0.20% for the  Enhanced  Stock Market Fund and 0.15% for the Fixed
Income Fund. Pursuant to a Shareholder  Servicing Agreement adopted by the Trust
for each Fund,  Quaker Funds,  Inc. will provide  oversight with respect to each
Advisor,  arrange for payment of investment  advisory and  administrative  fees,
coordinate payments under each Fund's Distribution Plan, develop  communications
with existing Fund shareholders,  assist in responding to shareholder inquiries,
and provide other shareholder  servicing tasks. Laurie Keyes, Jeffry H. King and
Peter F.  Waitneight,  each of whom is a Trustee  of the Trust,  control  Quaker
Funds, Inc. Quaker Funds, Inc. was formed as a Pennsylvania  corporation in 1996
and is located at 1288 Valley Forge Road,  Suite 76, Valley Forge,  Pennsylvania
19482.  See footnote 3 to the Fee Table  regarding  the  Sponsor's  agreement to
reduce its fee, if  necessary,  to limit  operating  expenses  and  maintain the
expense ratio of the Fund. No shareholder  servicing fees were paid by the Funds
for the fiscal year ended June 30, 1998.                                        

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Custodian.  First Union National Bank (the "Custodian"),  serves as Custodian of
the Funds' assets. The Custodian acts as the depository for the Funds,  provides
safekeeping  for their  portfolio  securities,  collects  all  income  and other
payments with respect to portfolio  securities,  disburses  monies at the Funds'
request and maintains records in connection with its duties.                    

Other Expenses. Each Fund is responsible for the payment of its expenses.  These
include,  for example,  the fees payable to the Advisor,  or expenses  otherwise
incurred in  connection  with the  management  of the  investment  of the Funds'
assets,  the fees and  expenses of the  Custodian,  the fees and expenses of the
Administrator,  the fees and  expenses of Trustees,  outside  auditing and legal
expenses,  all taxes and  corporate  fees payable by each Fund,  Securities  and
Exchange  Commission  fees,  state  securities   qualification  fees,  costs  of
preparing and printing prospectuses for regulatory purposes and for distribution
to shareholders,  costs of shareholder reports and shareholder meetings, and any
extraordinary  expenses.  Each  Fund  also pays for  brokerage  commissions  and
transfer  taxes (if any) in  connection  with the purchase and sale of portfolio
securities.  Expenses  attributable to a particular  series of the Trust will be
charged to that series, and expenses not readily  identifiable as belonging to a
particular series will be allocated by or under procedures approved by the Board
of  Trustees  among one or more  series  in such a manner  as it deems  fair and
equitable.                                                                      

 OTHER INFORMATION

Description of Shares. The Trust was organized as a Massachusetts business trust
on October 24,  1990 under a  Declaration  of Trust.  The  Declaration  of Trust
permits  the  Board  of  Trustees  to  issue  an  unlimited  number  of full and
fractional  shares and to create an  unlimited  number of series of shares.  The
Board of Trustees may also classify and reclassify any unissued  shares into one
or more classes of shares.                                                      

When  issued,  the  shares  of each  series  of the  Trust  will be fully  paid,
nonassessable  and  redeemable.  The  Trust  does  not  intend  to  hold  annual
shareholder  meetings;  it may, however,  hold special shareholder  meetings for
purposes such as changing fundamental  policies or electing Trustees.  The Board
of  Trustees  shall  promptly  call a meeting  for the  purpose of  electing  or
removing  Trustees when requested in writing to do so by the record holders of a
least 10% of the  outstanding  shares of the  Trust.  The term of office of each
Trustee is of  unlimited  duration.  The holders of at least  two-thirds  of the
outstanding  shares of the Trust may remove a Trustee from that position  either
by declaration in writing filed with the Custodian or by votes cast in person or
by proxy at a meeting called for that purpose.                                  

Shareholders of the Trust will vote in the aggregate and not by series (Fund) or
class,  except  as  otherwise  required  by the 1940  Act or when  the  Board of
Trustees determines that the matter to be voted on affects only the interests of
the  shareholders  of  a  particular  series  or  class.  Matters  affecting  an
individual series,  include, but are not limited to, the investment  objectives,
policies  and  restrictions  of  that  series.   Shares  have  no  subscription,
preemptive or conversion  rights.  Share  certificates will not be issued.  Each
share  is  entitled  to  one  vote  (and  fractional   shares  are  entitled  to
proportionate  fractional votes) on all matters submitted for a vote, and shares
have equal  voting  rights  except that only shares of a  particular  series are
entitled  to vote on  matters  affecting  only that  series.  Shares do not have
cumulative  voting  rights.  Therefore,  the  holders  of more  than  50% of the
aggregate  number  of  shares  of all  series  of the  Trust  may  elect all the
Trustees.                                                                       

Under  Massachusetts  law,  shareholders  of a business trust may, under certain
circumstances,  be held personally liable as partners for the obligations of the
trust.  The  Declaration  of Trust,  therefore,  contains  provisions  which are
intended to  mitigate  such  liability.  See  "Description  of the Trust" in the
Statement of Additional  Information for further information about the Trust and
its shares.                                                                     

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As of June 30, 1998, the following  persons owned of record or beneficially more
than 25% of the shares of the Funds: Manu Daftary IRA, record owner with respect
to 28.24% of the  Aggressive  Growth  Fund;  Accordingly,  these  persons may be
deemed to be a "controlling  person" of the indicated Fund within the meaning of
the Investment Company Act.                                                     

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.                                               

Calculation of Performance Data. From time to time the Funds may advertise their
average  annual total  return.  The "average  annual total  return" of each Fund
refers to the average  annual  compounded  rates of return over 1, 5 and 10 year
periods  that would  equate an initial  amount  invested at the  beginning  of a
stated period to the ending redeemable value of the investment.  The calculation
assumes the  reinvestment  of all  dividends  and  distributions,  includes  all
recurring  fees that are  charged to all  shareholder  accounts  and deducts all
nonrecurring  charges at the end of each period.  If the Fund has been operating
less  than 1, 5 or 10  years,  the time  period  during  which the Fund has been
operating is substituted.                                                       

In addition,  each Fund may advertise other total return  performance data. This
data shows as a percentage  rate of return  encompassing  all elements of return
(i.e. income and capital appreciation or depreciation);  it assumes reinvestment
of all  dividends and capital gain  distributions.  Such other total return data
may be quoted  for the same or  different  periods  as those  for which  average
annual total return is quoted. This data may consist of a cumulative  percentage
rate of return, actual year-by-year rates or any combination thereof. Cumulative
total return  represents the cumulative change in value of an investment in each
Fund for various periods.                                                       

From  time to time the Fixed  Income  Fund may also  advertise  its  yield.  The
"yield" of a Fund is computed by dividing  the net  investment  income per share
earned during the most recent  practicable period stated in the advertisement by
the maximum  offering  price per share on the last day of the period  (using the
average  number of shares  entitled  to receive  dividends).  For the purpose of
determining net investment  income,  the calculation  includes among expenses of
the Fund all recurring fees that are charged to all shareholder accounts and any
nonrecurring charges for the period stated.                                     

The total  return  and yield of each Fund could be  increased  to the extent the
Advisor,  the  Administrator  or the Fund  Sponsor may waive all or a portion of
their  fees.  Total  return  and  yield  figures  are  based  on the  historical
performance of each Fund, show the performance of a hypothetical investment, and
are not intended to indicate future performance.  The Funds' quotations may from
time to time be used in advertisements,  sales literature,  shareholder reports,
or other communications. For further information, see "Additional Information on
Performance" in the Statement of Additional Information.                        

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THE QUAKER FAMILY OF FUNDS                                                      

PROSPECTUS                                                                      

November 1, 1998                                                                

DISTRIBUTOR                                                                     
Declaration Distributors, Inc.                                                  
555 North Lane, Suite 6160                                                      
Conshohocken, PA  19428                                                         

CUSTODIAN                                                                       
First Union National Bank of North Carolina                                     

ADMINISTRATOR                                                                   
Declaration Service Company                                                     
P.O. Box 844                                                                    
Conshohocken, PA  19428-0844                                                    

TRANSFER AGENT                                                                  
Declaration Service Company                                                     
P.O. Box 844                                                                    
Conshohocken, PA  19428-0844                                                    

INDEPENDENT AUDITORS                                                            
Goldenberg Rosenthal Friedlander, LLP                                           
101 West Avenue                                                                 
P.O. Box 458                                                                    
Jenkintown, Pennsylvania 19046-0458                                             

FUND SPONSOR                                                                    
Quaker Funds, Inc.                                                              
1288 Valley Forge Road, Suite 76                                                
Valley Forge, Pennsylvania 19482                                                

INVESTMENT ADVISORS                                                             
Aronson + Partners                                                              
Philadelphia, Pennsylvania                                                      

Compu-Val Investments, Inc.                                                     
Wilmington, Delaware                                                            

DG Capital Management                                                           
Wayland, Massachusetts                                                          

Fiduciary Asset Management                                                      
St. Louis, Missouri                                                             
Bellevue, Washington                                                            

Geewax, Terker & Co.                                                            
Phoenixville, Pennsylvania                                                      

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PART B
 STATEMENT OF ADDITIONAL INFORMATION

THE QUAKER FAMILY OF FUNDS
 Series of
 QUAKER INVESTMENT TRUST

555 North Lane, Post Office Box 0844
Suite 6160
 Conshohocken, PA 19428-0844
Telephone 800-220-8888

Table of Contents 

INVESTMENT OBJECTIVE AND POLICIES............................................  2
INVESTMENT LIMITATIONS.......................................................  8
NET ASSET VALUE..............................................................  9
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION............................... 10
DESCRIPTION OF THE TRUST..................................................... 11
ADDITIONAL INFORMATION CONCERNING TAXES...................................... 11
MANAGEMENT OF THE FUNDS...................................................... 13
SPECIAL SHAREHOLDER SERVICES................................................. 20
ADDITIONAL INFORMATION ON PERFORMANCE........................................ 21
APPENDIX A - DESCRIPTION OF RATINGS.......................................... 24
ANNUAL REPORTS OF THE FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 1998.....ATTACHED

This Statement of Additional  Information (the "Additional  Statement") is meant
to be read in conjunction with the Prospectus,  dated, November 2, 1998, for the
Quaker  Enhanced  Stock  Market Fund,  the Quaker Core Equity  Fund,  the Quaker
Aggressive  Growth Fund,  the Quaker  Mid-Cap Value Fund,  the Quaker  Small-Cap
Value  Fund,  and the  Quaker  Fixed  Income  Fund  (individually  a "Fund"  and
collectively the "Funds"), as the Prospectus may be amended or supplemented from
time to  time,  and is  incorporated  by  reference  in its  entirety  into  the
Prospectus.  Because this  Additional  Statement is not itself a prospectus,  no
investment  in shares of the Funds  should be made solely  upon the  information
contained  herein.  Copies of the Funds' Prospectus may be obtained at no charge
by writing or calling  the Funds at the address and phone  number  shown  above.
Capitalized  terms used but not defined  herein have the same meanings as in the
Prospectus.                                                                     

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 INVESTMENT OBJECTIVE AND POLICIES

The following policies supplement each Fund's investment  objective and policies
as set forth in the Prospectus for each Fund.                                   

Additional  Information  on  Fund  Instruments.   Attached  to  this  Additional
Statement is Appendix A, which contains  descriptions of the rating symbols used
by Rating Agencies for fixed income securities in which the Funds may invest.   

Investment Transactions. Subject to the general supervision of the Trust's Board
of Trustees,  the Advisor to each Fund is responsible  for, makes decisions with
respect  to,  and  places  orders  for all  purchases  and  sales  of  portfolio
securities for the Fund managed by such Advisor.                                

The annualized  portfolio  turnover rate for each Fund is calculated by dividing
the lesser of  purchases  or sales of  portfolio  securities  for the  reporting
period by the monthly average value of the portfolio securities owned during the
reporting  period.  The calculation  excludes all securities whose maturities or
expiration  dates at the  time of  acquisition  are one year or less.  Portfolio
turnover  of each  Fund may vary  greatly  from year to year as well as within a
particular year. Portfolio turnover will not be a limiting factor in making Fund
decisions,  and each Fund may  engage  in short  term  trading  to  achieve  its
investment objectives.                                                          

Purchases  of money  market  instruments  by the Funds  are made  from  dealers,
underwriters  and  issuers.  The  Funds  currently  do not  expect  to incur any
brokerage   commission  expense  on  such  transactions   because  money  market
instruments  are  generally  traded  on a "net"  basis  by a  dealer  acting  as
principal  for its own  account  without a stated  commission.  The price of the
security, however, usually includes a profit to the dealer. Securities purchased
in  underwritten  offerings  include  a  fixed  amount  of  compensation  to the
underwriter,  generally referred to as the underwriter's concession or discount.
When  securities are purchased  directly from or sold directly to an issuer,  no
commissions or discounts are paid.                                              

Transactions on U.S. stock exchanges involve the payment of negotiated brokerage
commissions.  On  exchanges on which  commissions  are  negotiated,  the cost of
transactions   may  vary   among   different   brokers.   Transactions   in  the
over-the-counter  market are generally on a net basis (i.e., without commission)
through  dealers,  which may  include a dealer  mark-up,  or  otherwise  involve
transactions directly with the issuer of an instrument.                         

Normally,  most  of the  Funds'  fixed  income  portfolio  transactions  will be
principal transactions executed in over the counter markets and will be executed
on a "net" basis, which may include a dealer mark-up. With respect to securities
traded  only in the  over the  counter  market,  orders  will be  executed  on a
principal  basis with  primary  market  makers in such  securities  except where
better  prices or  executions  may be obtained on an agency  basis or by dealing
with other than a primary market maker.                                         

The Funds may participate,  if and when practicable, in bidding for the purchase
of Fund  securities  directly  from an issuer in order to take  advantage of the
lower purchase price available to members of a bidding group. A Fund will engage
in this  practice,  however,  only when the  Advisor to each  Fund,  in its sole
discretion, believes such practice to be otherwise in the Fund's interest.      

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In executing Fund transactions and selecting brokers or dealers,  the Advisor to
each Fund will seek to obtain the best overall terms available for each Fund. In
assessing the best overall terms  available  for any  transaction,  each Advisor
shall consider factors it deems relevant, including the breadth of the market in
the security,  the price of the security,  the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, both for the specific  transaction and on a continuing  basis.  The sale of
Fund shares may be  considered  when  determining  the firms that are to execute
brokerage  transactions for the Funds. In addition,  the Advisor to each Fund is
authorized to cause the Fund to pay a broker-dealer  which  furnishes  brokerage
and research  services a higher  commission  than that which might be charged by
another  broker-dealer  for  effecting the same  transaction,  provided that the
Advisor  determines in good faith that such commission is reasonable in relation
to  the  value  of  the  brokerage  and  research   services  provided  by  such
broker-dealer,  viewed  in terms of either  the  particular  transaction  or the
overall responsibilities of the Advisor to the Fund. Such brokerage and research
services might consist of reports and statistics  relating to specific companies
or  industries,  general  summaries  of  groups  of  stocks  or bonds  and their
comparative  earnings  and yields,  or broad  overviews  of the stock,  bond and
government securities markets and the economy.                                  

Supplementary  research  information  so received is in addition  to, and not in
lieu of, services  required to be performed by the Advisor to each Fund and does
not  reduce  the  advisory  fees  payable  by  the  Funds.   The  Trustees  will
periodically  review any commissions  paid by the Funds to consider  whether the
commissions paid over representative  periods of time appear to be reasonable in
relation to the benefits  inuring to the Funds.  It is possible  that certain of
the supplementary research or other services received will primarily benefit one
or more  other  investment  companies  or other  accounts  for which  investment
discretion is exercised by an Advisor.  Conversely, the Funds may be the primary
beneficiary  of the  research  or services  received  as a result of  securities
transactions effected for such other account or investment company.             

The Advisor to each Fund may also utilize a brokerage firm  affiliated  with the
Trust  or the  Advisor  if it  believes  it can  obtain  the best  execution  of
transactions  from such  broker.  The  Distributor  is a  registered  securities
broker-dealer, but it is unlikely that the Distributor will execute transactions
on behalf of the Funds.                                                         

The Funds will not execute portfolio  transactions  through,  acquire securities
issued by, make savings deposits in or enter into repurchase  agreements with an
Advisor or an  affiliated  person of an Advisor  (as such term is defined in the
1940 Act) acting as principal,  except to the extent permitted by the Securities
and  Exchange  Commission  ("SEC").  In  addition,  a  Fund  will  not  purchase
securities  during the existence of any  underwriting  or selling group relating
thereto of which the Advisor to the Fund, or an affiliated person of the Advisor
to the Fund,  is a member,  except to the  extent  permitted  by the SEC.  Under
certain  circumstances,  the Funds  may be at a  disadvantage  because  of these
limitations  in comparison  with other  investment  companies  that have similar
investment objectives but are not subject to such limitations.                  

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Investment decisions for each Fund will be made independently from those for any
other  Fund  and any  other  series  of the  Trust,  if any,  and for any  other
investment  companies  and  accounts  advised or managed by the  Advisor to each
Fund. Such other  investment  companies and accounts may also invest in the same
securities as a Fund.  To the extent  permitted by law, an Advisor may aggregate
the  securities  to be sold or  purchased  for a Fund  with  those to be sold or
purchased  for  another  Fund or  other  investment  companies  or  accounts  in
executing transactions.  When a purchase or sale of the same security is made at
substantially  the same  time on behalf of a Fund and  another  Fund or  another
investment company or account,  the transaction will be averaged as to price and
available  investments  allocated as to amount, in a manner which the Advisor to
each Fund  believes  to be  equitable  to the Funds  and such  other  investment
company or account. In some instances,  this investment  procedure may adversely
affect the price paid or received by a Fund or the size of the position obtained
or sold by a Fund.                                                              

For the fiscal year ended June 30, 1998,  the total  dollar  amount of brokerage
commissions paid by the Enhanced Stock Market Fund was $3,000, all of which was 
paid during such period to the former  Distributor,  Quaker  Securities , Inc. .
Transactions  in which the Enhanced  Stock Market Fund used the  Distributor  as
broker involved 100% of the aggregate  dollar amount of  transactions  involving
the payment of commissions and 100% of the aggregate brokerage  commissions paid
by the Enhanced Stock Market Fund for the fiscal year ended June 30, 1998.      

For the fiscal year ended June 30, 1998,  the total  dollar  amount of brokerage
commissions  paid by the Core  Equity  Fund was  $6,199,  all of which  was paid
during such  period to the former  Distributor.  Transactions  in which the Core
Equity Fund used the Distributor as broker involved 100% of the aggregate dollar
amount of  transactions  involving  the payment of  commissions  and 100% of the
aggregate brokerage commissions paid by the Core Equity Fund for the fiscal year
ended June 30, 1998.                                                            

For the fiscal year ended June 30, 1998,  the total  dollar  amount of brokerage
commissions paid by the Aggressive Growth Fund was $45,320, of which $45,094 was
paid  during such period to the former  Distributor.  Transactions  in which the
Aggressive  Growth Fund used the  Distributor as broker  involved  98.41% of the
aggregate dollar amount of transactions involving the payment of commissions and
99.50% of the aggregate brokerage commissions paid by the Aggressive Growth Fund
for the fiscal year ended June 30, 1998.                                        

For the fiscal year ended June 30, 1998,  the total  dollar  amount of brokerage
commissions paid by the Small-Cap Value Fund was $11,095, none of which was paid
during  such  period  to the  former  Distributor.  Transactions  in  which  the
Small-Cap  Value  Fund used the  Distributor  as broker  involved  00.00% of the
aggregate dollar amount of transactions involving the payment of commissions and
00.00% of the aggregate  brokerage  commissions paid by the Small-Cap Value Fund
for the fiscal year ended June 30, 1998.                                        

For the fiscal year ended June 30, 1998,  the total  dollar  amount of brokerage
commissions  paid by the Mid-Cap  Value Fund was $19,086,  all of which was paid
during such period to the former Distributor.  Transactions in which the Mid-Cap
Value  Fund  used the  Distributor  as  broker  involved  100% of the  aggregate
brokerage commissions paid by the commissions paid by the Mid-Cap Value Fund for
the fiscal year ended June 30, 1998.                                            

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Repurchase  Agreements.  Each Fund may acquire  U.S.  Government  Securities  or
corporate  debt  securities  subject  to  repurchase  agreements.  A  repurchase
transaction  occurs when, at the time the Fund purchases a security  (normally a
U.S. Treasury  obligation),  it also resells it to the vendor (normally a member
bank of the Federal Reserve or a registered  Government  Securities  dealer) and
must  deliver the security  (and/or  securities  substituted  for them under the
repurchase  agreement)  to the vendor on an agreed upon date in the future.  The
repurchase  price  exceeds the  purchase  price by an amount  which  reflects an
agreed upon market  interest rate  effective for the period of time during which
the  repurchase  agreement  is in effect.  Delivery  pursuant to the resale will
occur within one to five days of the purchase.                                  

Repurchase agreements are considered "loans" under the Investment Company Act of
1940, as amended (the "1940 Act"),  collateralized  by the underlying  security.
The Trust will implement  procedures to monitor on a continuous  basis the value
of the collateral serving as security for repurchase obligations.  Additionally,
the Advisor to each Fund will consider the  creditworthiness  of the vendor.  If
the vendor fails to pay the agreed upon resale price on the delivery  date,  the
Fund will retain or attempt to dispose of the collateral.  A Fund's risk is that
such  default may include  any decline in value of the  collateral  to an amount
which is less than 100% of the repurchase  price, any costs of disposing of such
collateral,  and any  loss  resulting  from  any  delay  in  foreclosing  on the
collateral.  The Funds will not enter into any repurchase  agreement  which will
cause more than 10% of their net assets to be invested in repurchase  agreements
which extend beyond seven days and other illiquid securities.                   

Description of Money Market  Instruments.  Money market  instruments may include
U.S. Government Securities or corporate debt securities (including those subject
to repurchase agreements),  provided that they mature in thirteen months or less
from the date of  acquisition  and are  otherwise  eligible  for purchase by the
Funds.  Money  market  instruments  also may include  Banker's  Acceptances  and
Certificates of Deposit of domestic branches of U.S. banks, Commercial Paper and
Variable Amount Demand Master Notes ("Master Notes").  Banker's  Acceptances are
time drafts drawn on and "accepted" by a bank. When a bank "accepts" such a time
draft,  it assumes  liability  for its payment.  When a Fund acquires a Banker's
Acceptance  the bank which  "accepted"  the time draft is liable for  payment of
interest and principal when due. The Banker's  Acceptance carries the full faith
and  credit of such  bank.  A  Certificate  of  Deposit  ("CD") is an  unsecured
interest  bearing debt obligation of a bank.  Commercial  Paper is an unsecured,
short term debt obligation of a bank, corporation or other borrower.  Commercial
Paper  maturity  generally  ranges from two to 270 days and is usually sold on a
discounted basis rather than as an interest bearing  instrument.  The Funds will
invest  in  Commercial  Paper  only if it is  rated  one of the  top two  rating
categories by Moody's Investors  Service,  Inc.  ("Moody's"),  Standard & Poor's
Ratings Group ("S&P"),  Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps
("D&P")  or, if not  rated,  of  equivalent  quality in the  Advisor's  opinion.
Commercial Paper may include Master Notes of the same quality.  Master Notes are
unsecured  obligations  which are redeemable upon demand of the holder and which
permit the  investment  of  fluctuating  amounts at varying  rates of  interest.
Master  Notes are  acquired by the Funds only through the Master Note program of
the Funds' custodian bank, acting as administrator  thereof. The Advisor to each
Fund will monitor,  on a continuous  basis,  the earnings  power,  cash flow and
other liquidity ratios of the issuer of a Master Note held by a Fund.           

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Illiquid  Investments.  Each  Fund may  invest  up to 10% of its net  assets  in
illiquid securities, which are investments that cannot be sold or disposed of in
the ordinary course of business within seven days at approximately the prices at
which they are  valued.  Under the  supervision  of the Board of  Trustees,  the
Advisor to each Fund  determines  the  liquidity  of a Fund's  investments  and,
through  reports from each Advisor,  the Board monitors  investments in illiquid
instruments.  In determining the liquidity of a Fund's investments,  the Advisor
to each Fund may consider various factors  including (1) the frequency of trades
and  quotations,  (2) the number of dealers and  prospective  purchasers  in the
marketplace,  (3) dealer  undertakings  to make a market,  (4) the nature of the
security  (including  any demand or tender  features)  and (5) the nature of the
marketplace  for trades  (including  the  ability to assign or offset the Fund's
rights  and  obligations  relating  to the  investment).  Investments  currently
considered  by the  Funds  to be  illiquid  include  repurchase  agreements  not
entitling the holder to payment of principal and interest  within seven days and
over-the-counter  options.  If through a change in  values,  net assets or other
circumstances,  a Fund were in a position  where more than 10% of its net assets
were invested in illiquid securities, it would seek to take appropriate steps to
protect liquidity.                                                              

Restricted   Securities.   Within  its  limitation  on  investment  in  illiquid
securities,  the Fund may purchase  restricted  securities that generally can be
sold  in  privately  negotiated  transactions,  pursuant  to an  exemption  from
registration  under the  federal  securities  laws,  or in a  registered  public
offering.  Where registration is required,  the Fund may be obligated to pay all
or part of the registration expense and a considerable period may elapse between
the time it decides to seek  registration and the time the Fund may be permitted
to sell a security under an effective registration  statement.  If during such a
period,  adverse market conditions were to develop, the Fund might obtain a less
favorable  price than  prevailed  when it decided  to seek  registration  of the
security.                                                                       

Options Trading. The Equity Funds may also purchase or sell certain put and call
options for hedging purposes. This is a highly specialized activity that entails
greater than ordinary investment risks.  Regardless of how much the market price
of the underlying  security  increases or decreases,  the option buyer's risk is
limited to the amount of the original investment for the purchase of the option.
However,  options  may be more  volatile  than the  underlying  securities,  and
therefore,  on a percentage  basis,  an  investment in options may be subject to
greater  fluctuation than an investment in the underlying  securities.  A listed
call option  gives the  purchaser of the option the right to buy from a clearing
corporation,   and  a  writer  has  the  obligation  to  sell  to  the  clearing
corporation,  the underlying  security at the stated  exercise price at any time
prior to the  expiration  of the option,  regardless  of the market price of the
security. The premium paid to the writer is in consideration for undertaking the
obligations  under the option contract.  A listed put option gives the purchaser
the right to sell to a  clearing  corporation  the  underlying  security  at the
stated  exercise price at any time prior to the  expiration  date of the option,
regardless of the market price of the security.  Put and call options  purchased
by the Equity  Funds will be valued at the last sale price or, in the absence of
such a price, at the mean between bid and asked prices.                         

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The  obligation  of an Equity Fund to sell a security  subject to a covered call
option written by it, or to purchase a security  subject to a secured put option
written by it, may be terminated  prior to the expiration  date of the option by
the  Fund  executing  a  closing  purchase  transaction,  which is  effected  by
purchasing  on an exchange an option of the same series (i.e.,  same  underlying
security,  exercise price and expiration date) as the option previously written.
Such a  purchase  does not  result  in the  ownership  of an  option.  A closing
purchase  transaction  will  ordinarily  be  effected  to realize a profit on an
outstanding  option,  to prevent an underlying  security  from being called,  to
permit the sale of the  underlying  security  or to permit the  writing of a new
option containing different terms on such underlying security.  The cost of such
a liquidation  purchase plus  transaction  costs may be greater than the premium
received upon the original option, in which event that Fund will have incurred a
loss in the  transaction.  An  option  position  may be  closed  out  only on an
exchange  that  provides a  secondary  market for an option of the same  series.
There is no assurance that a liquid  secondary  market on an exchange will exist
for any  particular  option.  A covered call option  writer,  unable to effect a
closing purchase  transaction,  will not be able to sell the underlying security
until the option expires or the  underlying  security is delivered upon exercise
with the  result  that the writer in such  circumstances  will be subject to the
risk of market decline in the underlying  security during such period. An Equity
Fund will write an option on a particular  security only if that Fund's  Advisor
believes that a liquid secondary market will exist on an exchange for options of
the  same  series  which  will  permit  the  Fund  to  make a  closing  purchase
transaction in order to close out its position.                                 

When an Equity Fund writes a covered  call  option,  an amount  equal to the net
premium (the premium  less the  commission)  received by the Fund is included in
the liability  section of the Fund's  statement of assets and  liabilities  as a
deferred  credit.  The  amount  of the  deferred  credit  will  be  subsequently
marked-to-market to reflect the current value of the option written. The current
value of the traded  option is the last sale price or, in the absence of a sale,
the  average of the closing bid and asked  prices.  If an option  expires on the
stipulated  expiration  date  or if the  Fund  enters  into a  closing  purchase
transaction,  it will realize a gain (or loss if the cost of a closing  purchase
transaction  exceeds the net premium  received when the option is sold), and the
deferred credit related to such option will be eliminated. Any gain on a covered
call  option may be offset by a decline in the  market  price of the  underlying
security  during the option  period.  If a covered call option is exercised,  an
Equity Fund may  deliver  the  underlying  security  held by it or purchase  the
underlying  security in the open market.  In either  event,  the proceeds of the
sale will be increased by the net premium originally received, and the Fund will
realize a gain or loss. If a secured put option is exercised, the amount paid by
the Fund for the underlying  security will be partially  offset by the amount of
the premium  previously paid to the Fund.  Premiums from expired options written
by an Equity Fund and net gains from closing  purchase  transactions are treated
as  short-term  capital  gains for federal  income tax  purposes,  and losses on
closing purchase transactions are short-term capital losses.                    

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Stock Index  Options.  The Equity  Funds may purchase or sell put and call stock
index options for hedging purposes. Stock index options are put options and call
options on various stock indexes. In most respects, they are identical to listed
options on common stocks. The primary difference between stock options and index
options occurs when index options are  exercised.  In the case of stock options,
the underlying security, common stock, is delivered.  However, upon the exercise
of an index  option,  settlement  does not occur by delivery  of the  securities
comprising the index.  The option holder who exercises the index option receives
an amount of cash if the closing  level of the stock index upon which the option
is based is greater  than, in the case of a call, or less than, in the case of a
put,  the  exercise  price of the  option.  This  amount of cash is equal to the
difference  between the closing price of the stock index and the exercise  price
of the option  expressed in dollars  times a specified  multiple.  A stock index
fluctuates  with  changes in the market  values of the  stocks  included  in the
index.                                                                          

The Equity Funds may purchase  call and put stock index options in an attempt to
either hedge against the risk of unfavorable price movements adversely affecting
the value of a Fund's  securities,  or  securities  the Fund  intends to buy, or
otherwise in furtherance of that Fund's investment objectives.  The Equity Funds
will sell (write) stock index options for hedging  purposes or in order to close
out positions in stock index options which that Fund has purchased.             

The use by an Equity  Fund of stock index  options is subject to certain  risks.
Successful  use by the Equity Funds of options on stock  indexes will be subject
to the ability of each Advisor to correctly  predict movements in the directions
of the  stock  market.  This  requires  different  skills  and  techniques  than
predicting  changes in the prices of  individual  securities.  In  addition,  an
Equity Fund's ability to effectively hedge all or a portion of the securities in
its  portfolio,   in   anticipation  of  or  during  a  market  decline  through
transactions  in put  options on stock  indexes,  depends on the degree to which
price  movements in the underlying  index  correlate with the price movements in
that Fund's  portfolio  securities.  Inasmuch as each  Equity  Fund's  portfolio
securities will not duplicate the components of an index,  the correlation  will
not be  perfect.  Consequently,  each  Equity  Fund  will bear the risk that the
prices of its portfolio securities being hedged will not move in the same amount
as the  prices of that  Fund's  put  options  on the stock  indexes.  It is also
possible  that there may be a negative  correlation  between  the index and each
Equity  Fund's  portfolio  securities  that would  result in a loss on both such
portfolio  securities  and the options on stock  indexes  acquired by the Equity
Fund.                                                                           

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Futures  Contracts and Related  Options.  To hedge against changes in securities
prices,  each  Equity  Fund may  purchase  and  sell  various  kinds of  futures
contracts,  and  purchase  and write  (sell) call and put options on any of such
futures  contracts.  The futures contracts will be limited to futures on various
securities (such as U.S. Government  securities),  securities indices, and other
financial  instruments  and  indices.  An Equity  Fund may engage in futures and
related options  transactions for bona-fide hedging and non-hedging  purposes as
described  below. All futures  contracts  entered into by an Equity Fund will be
traded on U.S.  exchanges or boards of trade that are licensed and  regulated by
the Commodity Futures Trading Commission (the "CFTC").                          

A futures  contract may  generally  be  described  as an  agreement  between two
parties to buy and sell  particular  financial  instruments  for an agreed price
during a designated month (or to deliver the final cash settlement price, in the
case of a contract  relating to an index or  otherwise  not calling for physical
delivery at the end of trading in the contract).                                

When interest rates are rising or securities prices are falling,  an Equity Fund
can seek to offset a decline in the value of its  current  portfolio  securities
through  the sale of  futures  contracts.  When  interest  rates are  falling or
securities  prices are rising,  an Equity Fund,  through the purchase of futures
contracts,  can  attempt to secure  better  rates or prices  than might later be
available in the market when it effects anticipated purchases.                  

Positions taken in the futures markets are not normally held to maturity but are
instead liquidated through offsetting transactions, which may result in a profit
or a loss. A clearing corporation  associated with the exchange on which futures
on securities  are traded  guarantees  that, if still open, the sale or purchase
will be performed on the settlement date.                                       

Hedging, by use of futures contracts, seeks to establish with more certainty the
effective  price and rate of return on portfolio  securities and securities that
an Equity Fund owns or proposes to  acquire.  An Equity Fund may,  for  example,
take a "short"  position in the futures market by selling  futures  contracts in
order  to hedge  against  an  anticipated  rise in  interest  rates  that  would
adversely  affect the value of the Fund's  portfolio  securities.  Such  futures
contracts may include contracts for the future delivery of securities held by an
Equity Fund or  securities  with  characteristics  similar to those of an Equity
Fund's portfolio securities. If, in the opinion of the Advisor to the particular
Equity Fund in question,  there is a sufficient  degree of  correlation  between
price trends for the Fund's portfolio  securities and futures contracts based on
securities indices,  the Fund may also enter into such futures contracts as part
of its hedging strategy.  Although under some circumstances prices of securities
in an Equity  Fund's  portfolio may be more or less volatile than prices of such
futures  contracts,  the Advisor  will  attempt to  estimate  the extent of this
volatility  difference based on historical  patterns and compensate for any such
differential by having the Fund enter into a greater or lesser number of futures
contracts or by attempting to achieve only a partial hedge against price changes
affecting the Fund's  securities  portfolio.  When hedging of this  character is
successful,  any  depreciation  in the  value of  portfolio  securities  will be
substantially  offset by appreciation in the value of the futures  position.  On
the other  hand,  any  unanticipated  appreciation  in the  value of the  Fund's
portfolio  securities would be substantially offset by a decline in the value of
the futures position.                                                           

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On other  occasions,  an Equity Fund may take a "long"  position  by  purchasing
futures  contracts.  This  would be  done,  for  example,  when an  Equity  Fund
anticipates  the subsequent  purchase of particular  securities  when it has the
necessary cash, but expects the prices or currency exchange rates then available
in the  applicable  market to be less  favorable  than  prices or rates that are
currently available.                                                            

The acquisition of put and call options on futures contracts will give an Equity
Fund the right  (but not the  obligation)  for a  specified  price to sell or to
purchase,  respectively,  the underlying futures contract at any time during the
option period.  As the purchaser of an option on a futures  contract,  an Equity
Fund  obtains the benefit of the futures  position if prices move in a favorable
direction  but  limits  its risk of loss in the  event of an  unfavorable  price
movement to the loss of the premium and transaction costs.                      

The writing of a call option on a futures  contract  generates a premium,  which
may partially  offset a decline in the value of the Fund's assets.  By writing a
call option, an Equity Fund becomes obligated,  in exchange for the premium,  to
sell a futures contract,  which may have a value higher than the exercise price.
Conversely,  the  writing  of a put  option on a futures  contract  generates  a
premium,  which may partially offset an increase in the price of securities that
the Fund intends to purchase;  however, the Fund becomes obligated to purchase a
futures  contract,  which may have a value lower than the exercise price.  Thus,
the loss incurred by an Equity Fund in writing options on futures is potentially
unlimited and may exceed the amount of the premium received. An Equity Fund will
incur transaction costs in connection with the writing of options on futures.   

The  holder or writer of an option  on a  futures  contract  may  terminate  its
position by selling or purchasing an offsetting option on the same series. There
is no guarantee that such closing transactions can be effected. An Equity Fund's
ability to establish  and close out positions on such options will be subject to
the development and maintenance of a liquid market.                             

An Equity Fund may use options on futures  contracts  for  bona-fide  hedging or
non-hedging purposes as discussed below.                                        

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An Equity Fund will engage in futures and related options  transactions only for
bona-fide  hedging or non-hedging  purposes in accordance with CFTC regulations,
which permit  investment  companies  registered  under the 1940 Act to engage in
such transactions without requiring their sponsors to be registered as commodity
pool  operators.  No Equity Fund is permitted to engage in  speculative  futures
trading.  An Equity  Fund will  determine  that the  price  fluctuations  in the
futures  contracts  and  options  on  futures  used  for  hedging  purposes  are
substantially related to price fluctuations in securities held by the Fund or in
securities  which it  expects to  purchase.  Except  for the  limited  amount of
permitted  non-hedging  transactions stated in the Prospectus,  an Equity Fund's
futures  transactions  will be entered into for traditional  hedging purposes --
i.e.,  futures  contracts will be sold to protect against a decline in the price
of  securities  that the Fund owns,  or futures  contracts  will be purchased to
protect the Fund  against an increase in the price of  securities  it intends to
purchase.  In particular  cases,  when it is  economically  advantageous  for an
Equity Fund to do so, a long futures position may be terminated or an option may
expire without the corresponding purchase of securities or other assets.        

INVESTMENT LIMITATIONS

Each Fund has adopted the following fundamental  investment  limitations,  which
cannot be changed  without  approval by holders of a majority of the outstanding
voting shares of the Fund. A "majority" for this purpose, means, with respect to
a Fund, the lesser of (i) 67% of the Fund's  outstanding  shares  represented in
person or by proxy at a meeting at which more than 50% of its outstanding shares
are  represented,  or (ii)  more  than  50% of its  outstanding  shares.  Unless
otherwise indicated, percentage limitations apply at the time of purchase.      

As a matter of fundamental policy, each Fund may not:                           

(1)  Issue senior securities, borrow money, or pledge its assets, except that it
     may borrow  from banks as a  temporary  measure  (a) for  extraordinary  or
     emergency purposes,  in amounts not exceeding 5% of its total assets or (b)
     in order to meet redemption  requests,  in amounts not exceeding 15% of its
     total assets;  the Fund will not make any investments if borrowing  exceeds
     5% of its total assets until such time as total  borrowing  represents less
     than 5% of Fund assets (except that the  Aggressive  Growth Fund may engage
  in short sales of securities to the extent described in the Prospectus);

(2)  With respect to 75% of its assets,  invest more than 5% of the value of its
     total assets in the  securities of any one issuer or purchase more than 10%
     of the outstanding  voting securities of any class of securities of any one
     issuer  (except that  securities of the U.S.  Government,  its agencies and
instrumentalities are not subject to this limitation);                

(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;                                                               

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(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;                                              

(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;               

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(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.        

Whenever any fundamental  investment policy or investment  restriction  states a
maximum  percentage of assets, it is intended that if the percentage  limitation
is met at the  time  the  investment  is  made,  a later  change  in  percentage
resulting  from  changing  total or net assets  values will not be  considered a
violation of such policy.                                                       

 NET ASSET VALUE

The net asset value per share of each Fund is  determined at the closing time of
the New York Stock Exchange for the Equity Funds (4 p.m.  except on holidays and
days in which New York Stock Exchange  trading limits may be  implemented),  and
the closing  time of the fixed  income  futures  markets  (3:00 p.m.  except for
holidays and days in which trading  limits may be  implemented),  Monday through
Friday,  except on business  holidays when the New York Stock  Exchange,  or the
Federal  Reserve  Banking  System for the Fixed Income Fund, is closed.  The New
York Stock Exchange  recognizes the following  holidays:  New Year's Day, Martin
Luther King, Jr.'s Birthday,  President's Day, Good Friday, Memorial Day, Fourth
of July,  Labor Day,  Thanksgiving  Day, and  Christmas  Day. Any other  holiday
recognized by the New York Stock Exchange will be considered a business  holiday
on which each Fund's net asset value will not be determined.                    

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The net asset value per share of each Fund is  calculated  separately  by adding
the value of the  Fund's  securities  and other  assets  belonging  to the Fund,
subtracting the liabilities  charged to the Fund, and dividing the result by the
number of  outstanding  shares.  "Assets  belonging  to" a Fund  consist  of the
consideration received upon the issuance of shares of the Fund together with all
net  investment  income,  realized  gains/losses  and proceeds  derived from the
investment  thereof,  including any proceeds from the sale of such  investments,
any funds or payments  derived from any  reinvestment  of such  proceeds,  and a
portion  of any  general  assets  of the  Trust not  belonging  to a  particular
investment  Fund.  Assets  belonging  to a Fund  are  charged  with  the  direct
liabilities  of the  Fund and with a share  of the  general  liabilities  of the
Trust,  which are  normally  allocated  in  proportion  to the  number of or the
relative net asset values of all of the Trust's series at the time of allocation
or in  accordance  with  other  allocation  methods  approved  by the  Board  of
Trustees. Subject to the provisions of the Declaration of Trust,  determinations
by the Board of Trustees  as to the direct and  allocable  liabilities,  and the
allocable portion of any general assets, with respect to a Fund are conclusive. 

For the fiscal year ended June 30, 1998,  the net expenses after fee waivers and
expense  reimbursements were $12,856 for the Enhanced Stock Market Fund, $32,357
for the Core Equity Fund,  $18,863 for the Aggressive  Growth Fund,  $47,305 for
the Mid-Cap Value Fund,  $29,585 for the Small-Cap  Value Fund,  and $25,781 for
the Fixed Income Fund.                                                          

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Purchases.  Shares of each Fund are offered and sold on a  continuous  basis and
may be purchased through authorized investment dealers or directly by contacting
the  Distributor  or the  Funds.  Selling  dealers  have the  responsibility  of
transmitting  orders promptly to the Funds.  The public offering price of shares
of each Fund  equals  net  asset  value.  Declaration  Distributors,  Inc.  (the
"Distributor") serves as Distributor of shares of the Funds. See "How Shares May
Be Purchased" in the Prospectus.                                                

Plan Under Rule 12b-1. The Trust has adopted a Plan of Distribution (the "Plan")
for each Fund  pursuant to Rule 12b-1 under the 1940 Act (see "How Shares May Be
Purchased - Distribution Plan" in the Prospectus).  Under the Plan each Fund may
expend up to 0.25% of its  average net assets  annually to finance any  activity
which is  primarily  intended  to  result  in the sale of  shares  of the  Fund,
provided the Trust's Board of Trustees has approved the category of expenses for
which  payment  is being  made.  All  expenditures  under  the Plan will be paid
entirely through the investment  advisory fees payable to the Fund's  investment
advisors.  Potential  benefits of the Plan to the Funds  include  savings to the
Funds in transfer agency costs,  benefits to the investment  process from growth
and  stability of assets and  maintenance  of a financially  healthy  sponsoring
organization.  No amounts were expended under the Plan for the fiscal year ended
June 30, 1998.                                                                  

All of the distribution expenses incurred by the Distributor and others, such as
broker-dealers,  in excess of the amount paid by the Funds will be borne by such
persons  without  any  reimbursement  from the Funds.  Subject  to seeking  best
execution,  the Funds may, from time to time, buy or sell  portfolio  securities
from or to firms that receive payments under the Plan.                          

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From  time to time  the  Distributor  may pay  additional  amounts  from its own
resources  to  dealers  for  aid  in   distribution  or  for  aid  in  providing
administrative services to shareholders.                                        

The Plan for each Fund and the Distribution  Agreement with the Distributor have
been approved by the Board of Trustees of the Trust, including a majority of the
Trustees  who are not  "interested  persons" (as defined in the 1940 Act) of the
Trust and who have no direct or indirect  financial  interest in the Plan or any
related  agreements,  by vote cast in person or at a meeting duly called for the
purpose of voting on the Plan and such  Agreement.  Continuation of the Plan and
the Distribution Agreement must be approved annually by the Board of Trustees in
the same manner as specified above.                                             

Each year the Trustees  must  determine  whether  continuation  of the Plan with
respect to each Fund is in the best  interest of  shareholders  of that Fund and
that there is a reasonable  likelihood  of its providing a benefit to such Fund,
and the Board of Trustees has made such a determination  for the current year of
operations  under  the  Plan.  The Plan and the  Distribution  Agreement  may be
terminated at any time without  penalty by a majority of those  trustees who are
not "interested  persons" or by a majority vote of the Fund's outstanding voting
stock. Any amendment materially  increasing the maximum percentage payable under
the Plan must  likewise be approved  with respect to any Fund by a majority vote
of the Fund's  outstanding  voting stock, as well as by a majority vote of those
trustees who are not "interested persons." Also, any other material amendment to
the Plan  must be  approved  by a  majority  vote of the  trustees  including  a
majority  of the  independent  Trustees  of the Trust  having no interest in the
Plan. In addition, in order for the Plan to remain effective,  the selection and
nomination  of Trustees  who are not  "interested  persons" of the Trust must be
effected by the Trustees who  themselves  are not  "interested  persons" and who
have no direct or indirect financial interest in the Plan. Persons authorized to
make payments under the Plan must provide  written reports at least quarterly to
the Board of Trustees for their review.                                         

Redemptions.  Under the 1940 Act,  each Fund may suspend the right of redemption
or postpone the date of payment for shares during any period when (a) trading on
the New York Stock Exchange is restricted by applicable rules and regulations of
the SEC; (b) the Exchange is closed for other than customary weekend and holiday
closings;  (c)  the  SEC  has by  order  permitted  such  suspension;  or (d) an
emergency  exists  as  determined  by the SEC.  Each  Fund may also  suspend  or
postpone the recordation of the transfer of shares upon the occurrence of any of
the foregoing conditions.                                                       

In addition to the situations  described in the Prospectus under "How Shares may
be Redeemed,"  each Fund may redeem shares  involuntarily  to reimburse the Fund
for any loss  sustained by reason of the failure of a  shareholder  to make full
payment  for  shares  purchased  by the  shareholder  or to  collect  any charge
relating to a  transaction  effected for the benefit of a  shareholder  which is
applicable to Fund shares as provided in the Prospectus from time to time.      

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DESCRIPTION OF THE TRUST

The Trust is an unincorporated  business trust organized under Massachusetts law
on October 24, 1990. The Trust's  Declaration  of Trust  authorizes the Board of
Trustees  to divide  shares  into  series,  each  series  relating to a separate
portfolio of  investments,  and to classify and reclassify  any unissued  shares
into one or more classes of shares of each such series. The Declaration of Trust
currently provides for the shares of six series, as follows: the Quaker Enhanced
Stock Market Fund and the Quaker  Fixed  Income Fund,  both managed by Fiduciary
Asset  Management,  Inc.  of St.  Louis,  Missouri;  the Quaker Core Equity Fund
managed by  Geewax,  Terker & Co.,  of  Phoenixville,  Pennsylvania;  the Quaker
Aggressive  Growth  Fund  managed by DG Capital  Management,  Inc.  of  Wayland,
Massachusetts;  the Quaker Mid-Cap Value Fund managed by Compu-Val  Investments,
Inc. of Wilmington,  Delaware;  and the Quaker  Small-Cap  Value Fund managed by
Aronson + Partners of Philadelphia,  Pennsylvania. ; 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.                                            

Shareholders of all of the series of the Trust,  including the Funds,  will vote
together and not  separately  on a  series-by-series  or  class-by-class  basis,
except as  otherwise  required by law or when the Board of  Trustees  determines
that the matter to be voted upon affects only the interests of the  shareholders
of a particular series or class. Rule 18f-2 under the 1940 Act provides that any
matter  required  to be  submitted  to the  holders  of the  outstanding  voting
securities  of an  investment  company  such as the Trust shall not be deemed to
have been effectively acted upon unless approved by the holders of a majority of
the outstanding  shares of each series or class affected by the matter. A series
or class is affected by a matter  unless it is clear that the  interests of each
series or class in the matter  are  substantially  identical  or that the matter
does not  affect any  interest  of the series or class.  Under Rule  18f-2,  the
approval of an investment advisory  agreement,  a Rule 12b-1 plan, or any change
in a fundamental  investment policy would be effectively acted upon with respect
to a series only if approved  by a majority  of the  outstanding  shares of such
series. However, the Rule also provides that the ratification of the appointment
of independent accountants, the approval of principal underwriting contracts and
the election of Trustees may be effectively  acted upon by  shareholders  of the
Trust voting together, without regard to a particular series or class.          

When used in the  Prospectus  or this  Additional  Statement,  a  "majority"  of
shareholders  means the vote of the lesser of (1) 67% of the shares of the Trust
or the  applicable  series or class  present at a meeting if the holders of more
than 50% of the  outstanding  shares are  present in person or by proxy,  or (2)
more than 50% of the outstanding shares of the Trust or the applicable series or
class.                                                                          

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When issued for  payment as  described  in the  Prospectus  and this  Additional
Statement, shares of each Fund will be fully paid and non-assessable.           

The  Declaration  of Trust  provides  that the Trustees of the Trust will not be
liable in any event in connection with the affairs of the Trust,  except as such
liability may arise from his or her own bad faith,  willful  misfeasance,  gross
negligence,  or reckless  disregard of duties.  It also  provides that all third
parties  shall look  solely to the Trust  property  for  satisfaction  of claims
arising in connection with the affairs of the Trust. With the exceptions stated,
the  Declaration  of Trust  provides that a Trustee or officer is entitled to be
indemnified against all liability in connection with the affairs of the Trust.  

 ADDITIONAL INFORMATION CONCERNING TAXES

The  following  summarizes  certain  additional  tax  considerations   generally
affecting  each  Fund  and  its  shareholders  that  are  not  described  in the
Prospectus.  No attempt is made to  present a  detailed  explanation  of the tax
treatment of each Fund or its  shareholders,  and the discussion here and in the
Prospectus is not intended as a substitute for careful tax planning and is based
on tax laws and regulations that are in effect on the date hereof; such laws and
regulations may be changed by legislative,  judicial, or administrative  action.
Investors are advised to consult  their tax advisors with specific  reference to
their own tax situations.                                                       

Each  series of the Trust,  including  each Fund,  will be treated as a separate
corporate  entity under the Code and intends to qualify or remain qualified as a
regulated investment company. In order to so qualify,  each series must elect to
be a regulated  investment  company or have made such an election for a previous
year and must satisfy, in addition to the distribution  requirement described in
the Prospectus,  certain  requirements  with respect to the source of its income
for a taxable  year.  At least 90% of the gross  income of each  series  must be
derived from  dividends,  interest,  payments with respect to securities  loans,
gains  from the sale or other  disposition  of  stocks,  securities  or  foreign
currencies,  and other income  derived  with respect to the series'  business of
investing  in such stock,  securities  or  currencies.  Any income  derived by a
series from a  partnership  or trust is treated as derived  with  respect to the
series'  business of investing in stock,  securities or  currencies  only to the
extent that such income is  attributable to items of income that would have been
qualifying  income  if  realized  by the  series  in the same  manner  as by the
partnership or trust.                                                           

An investment company may not qualify as a regulated  investment company for any
taxable  year  unless it  satisfies  certain  requirements  with  respect to the
diversification  of its  investments at the close of each quarter of the taxable
year.  In  general,  at least  50% of the  value  of its  total  assets  must be
represented  by cash,  cash items,  government  securities,  securities of other
regulated  investment  companies and other securities which, with respect to any
one issuer,  do not represent more than 5% of the total assets of the investment
company nor more than 10% of the outstanding  voting  securities of such issuer.
In addition,  not more than 25% of the value of the investment  company's  total
assets may be invested in the securities  (other than  government  securities or
the securities of other regulated investment  companies) of any one issuer. Each
Fund  intends to satisfy  all  requirements  on an ongoing  basis for  continued
qualification as a regulated investment company.                                

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Each series of the Trust,  including each Fund, will designate any  distribution
of long term capital gains as a capital gain dividend in a written notice mailed
to  shareholders  within 60 days after the close of the  series'  taxable  year.
Shareholders  should note that,  upon the sale or exchange of series shares,  if
the  shareholder  has not held such shares for at least six months,  any loss on
the sale or exchange of those  shares will be treated as long term  capital loss
to the extent of the capital gain dividends received with respect to the shares.

A 4% nondeductible  excise tax is imposed on regulated investment companies that
fail to currently  distribute an amount equal to specified  percentages of their
ordinary  taxable  income and capital gain net income  (excess of capital  gains
over capital losses). Each series of the Trust,  including each Fund, intends to
make sufficient  distributions  or deemed  distributions of its ordinary taxable
income and any capital gain net income prior to the end of each calendar year to
avoid liability for this excise tax.                                            

If for any taxable year a series does not qualify for the special federal income
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to federal  income tax at regular  corporate  rates (without any
deduction  for  distributions  to its  shareholders).  In such  event,  dividend
distributions  (whether or not derived from interest on  tax-exempt  securities)
would be taxable as ordinary income to shareholders to the extent of the series'
current and  accumulated  earnings  and  profits,  and would be eligible for the
dividends received deduction for corporations.                                  

Each series of the Trust, including each Fund, will be required in certain cases
to withhold and remit to the U.S.  Treasury  31% of taxable  dividends or 31% of
gross  proceeds  realized  upon sale  paid to  shareholders  who have  failed to
provide a correct tax identification  number in the manner required,  or who are
subject to withholding by the Internal  Revenue Service for failure  properly to
include on their return payments of taxable  interest or dividends,  or who have
failed to  certify to the Fund that they are not  subject to backup  withholding
when required to do so or that they are "exempt recipients."                    

Depending upon the extent of each Fund's  activities in states and localities in
which its offices are maintained, in which its agents or independent contractors
are located or in which it is otherwise deemed to be conducting  business,  each
Fund may be subject to the tax laws of such states or  localities.  In addition,
in those states and  localities  that have income tax laws,  the  treatment of a
Fund and its shareholders  under such laws may differ from their treatment under
federal income tax laws.                                                        

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 MANAGEMENT OF THE FUNDS

Trustees and Officers.  The Trustees and executive  officers of the Trust, their
ages, and their principal occupations for the last five years are as follows:   

Name, Age, Position(s)                  Principal Occupation(s)                 
and Address                       During Past 5 Years               

Howard L. Gleit, 58                     Of  Counsel   Connolly   Epstein  Chicco
Trustee                                 Foxman  Engelmyer & Ewing  Philadelphia,
1515 Market Street                      Pennsylvania since 1997; previously,  Of
Philadelphia, Pennsylvania              Counsel  Zapruder & Odell  Bala  Cynwyd,
                                        Pennsylvania  since  1994;   previously,
                                        Partner   Pepper,   Hamilton  &  Scheetz
                          Philadelphia, Pennsylvania

Everett T. Keech, 58                    Chairman  and CEO  Pico  Products,  Inc.
Trustee                                 Lakeview Terrace, California            
One Tower Bridge, Suite 501                                                     
West Conshohocken, Pennsylvania                                                 

Laurie Keyes, 48*                       Chief    Operating     Officer    Quaker
Trustee                                 Securities,     Inc.    Valley    Forge,
Suite 75                                Pennsylvania  (Distributor to the Quaker
1288 Valley Forge Road                  Family of Funds)                        
Valley Forge, Pennsylvania                                                      

Jeffry H. King, 55*                     Chairman and CEO Quaker Securities, Inc.
Trustee and Chairman                    Valley Forge,  Pennsylvania (Distributor
Suite 75                                to the Quaker Family of Funds)          
1288 Valley Forge Road                                                          
Valley Forge, Pennsylvania                                                      

Louis P. Pektor III, 47                 President  Ashley  Development   Company
Trustee                                 Allentown,   Pennsylvania   since  1993;
961 Marcon Boulevard, Suite 300         President  Greystone Capital  Allentown,
Allentown, Pennsylvania                 Pennsylvania  since  1993;   previously,
                                        Executive  Vice  President  Wall  Street
                                        Mergers   &   Acquisitions    Allentown,
            Pennsylvania

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Peter F. Waitneight, 56*                President  Quaker  Funds,   Inc.  Valley
Trustee and President                   Forge,  Pennsylvania since 1996 (Sponsor
Suite 76                                to  the   Quaker   Family   of   Funds);
1288 Valley Forge Road                  previously, President, Paragon Financial
Valley Forge, Pennsylvania              Consulting     Malvern,     Pennsylvania
                                        1995-96; previously,  Marketing Director
                                        Turner   Investment   Partners   Berwyn,
                     Pennsylvania 1993-95;

----------------------------                                                    
*    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.  Each
such Trustee voluntarily waived his fee for the fiscal year ended June 30, 1998.
All  Trustees  are  reimbursed  for  any  out-of-pocket   expenses  incurred  in
connection with attendance at meetings.                                         

Compensation Table

                                   Pension                         Total
                                      Retirement                    Compensation
                      Aggregate      Benefits        Estimated      from the
                   Compensation    Accrued As        Annual          Trust
Name of Person,         from the     Part of Fund    Benefits Upon     Paid to  
Position                  Trust        Expenses       Retirement      Trustees  
--------                  -----        --------       ----------      --------  

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                                                                         

Figures are for the fiscal year ended June 30, 1998.                            

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Principal  Holders of Voting  Securities.  As of June 30, 1998, the Trustees and
Officers of the Trust as a group owned  beneficially  (i.e.,  had voting  and/or
investment power) 39.814% of the then outstanding  shares of the Enhanced Market
Fund, 6.423% of the then outstanding  shares of the Core Equity Fund, 20.252% of
the then outstanding  shares of the Aggressive Growth Fund,  12.012% of the then
outstanding  shares  of the  Small-Cap  Value  Fund,  and  7.276%  of  the  then
outstanding  shares of the Fixed  Income  Fund.  On the same date the  following
shareholders  owned  of  record  more  than  5% of  the  outstanding  shares  of
beneficial  interest of the Funds.  Except as provided below, no person is known
by the  Trust  to be the  beneficial  owner of more  than 5% of the  outstanding
shares of the Funds as of June 30, 1998.                                        

 QUAKER ENHANCED STOCK MARKET FUND

Name and Address of                       Amount and Nature of                  
Beneficial Owner                          Beneficial Ownership*        Percent  

Peter Waitneight IRA                       17,046.242 shares           14.887%**
One Hunt Club Lane                                                              
Malvern, PA  19355                                                              

Laurie Keyes                                 9256.867 shares            8.084%  
402 Chester Rd                                                                  
Devon, PA  19333                                                                

Charles Cook IRA                             8966.336 shares            7.861%  
26 Broadway                                                                     
New York, NY  10004                                                             

Anthony Cirillo, IRA                        2334.554  shares           10.772%**
726 Floyd Street                                                                
Englewood Cliffs, NJ  76320                                                     

SEC Corp IRA FBO Alexandre                   6289.149 shares            5.492%  
PO Box 2052                                                                     
Jersey City, NJ  73030                                                          

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 QUAKER CORE EQUITY FUND

Name and Address of                       Amount and Nature of                  
Beneficial Owner                          Beneficial Ownership*        Percent  

St Mary's County Sheriff's Pension Fund    257441.673 shares           77.716%**
PO Box 30758                                                                    
Cayman Islands, CJ                                                              

 QUAKER MID-CAP VALUE FUND

Name and Address of                       Amount and Nature of                  
Beneficial Owner                          Beneficial Ownership*        Percent  

National Investor Services FBO                    268626.568           32.502%**
55 Water Street, 32nd Floor                                                     
New York, NY  10041                                                             

Trust Company of Illinois FBO                     519497.432           62.857%**

 QUAKER SMALL-CAP VALUE FUND

Name and Address of                       Amount and Nature of                  
Beneficial Owner                          Beneficial Ownership*        Percent  

Altru Company                               45687.353 shares           15.432%**
c/o Keystone Financial Trust Operations                                         
P.O. Box 2450                                                                   
Altoona, PA  16603-2450                                                         

Theodore Aronson IRA                        44428.809 shares           15.007%**
1234 Country Club Lane                                                          
Gladwyn, PA  19035                                                              

Charles Schwab & Co. FBO                    21866.262 shares            7.385%  

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 QUAKER AGGRESSIVE GROWTH FUND

Name and Address of                       Amount and Nature of                  
Beneficial Owner                          Beneficial Ownership*        Percent  

Manu Daftary IRA                            33539.108 shares           23.497%**
8 Waybridge Lane                                                                
Wayland, MA  0177-4550                                                          

Peter Scholfield                            10784.547 shares            7.555%  
111 Cratin Lane                                                                 
West Chester, PA  19380                                                         

Laurie Keyes                                10452.446 shares            7.322%  
402 Chester Rd                                                                  
Devon, PA  19333                                                                

Peter Waitneight IRA                         7428.548 shares            5.204%  
One Hunt Club Lane                                                              
Malvern, PA  19355                                                              

Mary L. Grover                               8305.648 shares            5.818%  
3 Regal Point                                                                   
Barrington, RI  28060                                                           

QUAKER FIXED INCOME FUND

Name and Address of                       Amount and Nature of                  
Beneficial Owner                          Beneficial Ownership*        Percent  

Peter Waitneight IRA                        30331.923 shares            5.555%  
One Hunt Club Lane                                                              
Malvern, PA  19355                                                              

St Mary's County Sheriff's Pension                429839.737           78.721%**
Rt 245, PO Box 653                                                              
Leonardtown, MD  20650                                                          

*    The shares  indicated  are believed by the Trust to be owned both of record
and beneficially.                                                     

**   Pursuant to  applicable  SEC  regulations,  this  shareholder  is deemed to
control the indicated Fund.                                           

Investment Advisor.  Information about the investment advisor to each Fund (each
the  "Advisor") and its duties and  compensation  as Advisor is contained in the
Prospectus.                                                                     

The fee paid to Aronson + Partners,  Advisor to the Quaker Small-Cap Value Fund,
after  September  1999 may be increased  or decreased by applying an  adjustment
each quarter to the base fee at the annual rate of 0.90%. These adjustments will
be made  quarterly  depending on the Fund's  investment  performance  for the 12
months  immediately  preceding the  determination  relative to the return of the
Russell 2000 Index for the same time period.                                    

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The following table sets forth the adjustment factors to the base fee payable to
Aronson + Partners under the investment advisory agreement now in effect.       

12 months performance                       Performance Fee     
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   

Under each  Advisory  Agreement,  the Advisor to each Fund is not liable for any
error of  judgment  or  mistake of law or for any loss  suffered  by the Fund in
connection with the performance of such Agreement,  except a loss resulting from
a breach of  fiduciary  duty with  respect to the  receipt of  compensation  for
services  or a loss  resulting  from  willful  misfeasance,  bad  faith or gross
negligence on the part of the Advisor in the  performance  of its duties or from
its reckless disregard of its duties and obligations under the Agreement.       

Administrator  and  Transfer  Agent.  The Trust has entered  into an  Investment
Company   Services   Agreement   with   Declaration    Services   Company   (the
"Administrator"), 555 North Lane, Suite 6160, Conshohocken, Pennsylvania, 19428,
pursuant to which the Administrator  receives a fee at the annual rate of 0.175%
of the average daily net assets of each Fund on the first $50 million; 0.150% of
the next $50  million;  and 0.125% of its average  daily net assets in excess of
$100 million. In addition,  the Administrator  currently receives a base monthly
fee of $2,000 for  accounting  and  recordkeeping  services  for each Fund.  The
Administrator  also charges each Fund for certain costs  involved with the daily
valuation of investment securities and is reimbursed for out-of-pocket expenses.
The Administrator  charges a minimum fee of $3,000 per month per Fund for all of
its fees taken in the aggregate, analyzed monthly.                              

The  Administrator  will  perform  the  following  services  for each Fund:  (1)
coordinate  with the Custodian and monitor the services it provides to the Fund;
(2) coordinate with and monitor any other third parties  furnishing  services to
the Fund; (3) provide the Fund with necessary office space, telephones and other
communications  facilities and personnel competent to perform administrative and
clerical  functions for the Fund; (4) supervise the maintenance by third parties
of such books and records of the Fund as may be required by  applicable  federal
or state law; (5) prepare or supervise the  preparation  by third parties of all
federal,  state  and local tax  returns  and  reports  of the Fund  required  by
applicable  law; (6) prepare and, after approval by the Trust,  file and arrange
for the  distribution of proxy materials and periodic reports to shareholders of
the Fund as required by applicable  law; (7) prepare and,  after approval by the
Trust,  arrange  for  the  filing  of such  registration  statements  and  other
documents  with the  Securities  and Exchange  Commission  and other federal and
state  regulatory  authorities as may be required by applicable  law; (8) review
and submit to the  officers  of the Trust for their  approval  invoices or other
requests for payment of Fund expenses and instruct the Custodian to issue checks
in payment  thereof;  and (9) take such other action with respect to the Fund as
may be necessary in the opinion of the Administrator to perform its duties under
the  agreement.  The  Administrator  also will provide  certain  accounting  and
pricing services for each Fund.                                                 

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Distributor. Declaration Distributors, Inc. (the "Distributor"), 555 North Lane,
Suite  6160,  Conshohocken,  Pennsylvania,  19428,  acts as an  underwriter  and
distributor  of  each  Fund's  shares  for  the  purpose  of  facilitating   the
registration of shares of the Fund under state  securities laws and to assist in
sales of Fund shares  pursuant to a Distribution  Agreement  (the  "Distribution
Agreement") approved by the Board of Trustees of the Trust.                     

In this regard,  the  Distributor  has agreed at its own expense to qualify as a
broker-dealer  under all applicable  federal or state laws in those states which
each Fund shall from time to time identify to the Distributor as states in which
it wishes to offer its shares for sale, in order that state registrations may be
maintained for the Fund.                                                        

The Distributor is a  broker-dealer  registered with the Securities and Exchange
Commission  and a  member  in  good  standing  of the  National  Association  of
Securities Dealers, Inc.                                                        

The Distribution  Agreement may be terminated by either party upon 60 days prior
written notice to the other party.                                              

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.                                        

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.

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.                                                                       

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SPECIAL SHAREHOLDER SERVICES

Each Fund offers the following shareholder services:                            

Regular Account. The regular account allows for voluntary investments to be made
at  any  time.  Available  to  individuals,  custodians,  corporations,  trusts,
estates,  corporate  retirement  plans and  others,  investors  are free to make
additions and  withdrawals to or from their account as often as they wish.  When
an investor  makes an initial  investment in the Fund, a shareholder  account is
opened in accordance with the investor's  registration  instructions.  Each time
there  is  a  transaction  in a  shareholder  account,  such  as  an  additional
investment or the  reinvestment of a dividend or  distribution,  the shareholder
will receive a confirmation  statement  showing the current  transaction and all
prior transactions in the shareholder  account during the calendar year to date,
along with a summary of the status of the account as of the transaction date. As
stated in the Prospectus, share certificates are not issued.                    

Automatic Investment Plan. The automatic investment plan enables shareholders to
make regular monthly or quarterly investment in shares through automatic charges
to their checking account. With shareholder authorization and bank approval, the
Funds will  automatically  charge the checking  account for the amount specified
($100 minimum) which will be  automatically  invested in shares at the net asset
value on or about the 21st day of the  month.  The  shareholder  may  change the
amount of the investment or  discontinue  the plan at any time by writing to the
Funds.                                                                          

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 Funds. If
the shareholder  prefers to receive his systematic  withdrawal proceeds in cash,
or if such  proceeds  are less than the $5,000  minimum for a bank wire,  checks
will be made payable to the designated recipient and mailed within 7 days of the
valuation  date.  If the  designated  recipient  is other  than  the  registered
shareholder,  the  signature  of  each  shareholder  must be  guaranteed  on the
application (see "Signature  Guarantees" in the  Prospectus).  A corporation (or
partnership)  must also submit a "Corporate  Resolution" (or  "Certification  of
Partnership")  indicating  the names,  titles and required  number of signatures
authorized  to act on its  behalf.  The  application  must be  signed  by a duly
authorized  officer(s)  and the corporate seal affixed.  No redemption  fees are
charged  to  shareholders  under  this  plan.  Costs  in  conjunction  with  the
administration of the plan are borne by the Funds.  Shareholders should be aware
that such  systematic  withdrawals  may deplete or use up entirely their initial
investment and may result in realized  long-term or short-term  capital gains or
losses.  The  Systematic  Withdrawal  Plan may be  terminated at any time by the
Funds upon sixty days written notice or by a shareholder  upon written notice to
the Funds. Applications and further details may be obtained by calling the Funds
at 800-220-8888, or by writing to:                                              

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The Quaker Family of Funds
555 North Lane, Suite 6160
Post Office Box 0844
Conshohocken, PA 19428

Purchases in Kind.  Each Fund may accept  securities  in lieu of cash in payment
for the purchase of shares in the Fund. The acceptance of such  securities is at
the sole  discretion of the Advisor to each Fund based upon the  suitability  of
the securities accepted for inclusion as a long term investment of the Fund, the
marketability of such  securities,  and other factors which the Advisor may deem
appropriate.  If accepted, the securities will be valued using the same criteria
and methods as described in "How Shares are Valued" in the Prospectus.          

Redemptions in Kind.  The Funds do not intend,  under normal  circumstances,  to
redeem  their  securities  by payment in kind.  It is  possible,  however,  that
conditions may arise in the future which would,  in the opinion of the Trustees,
make it  undesirable  for the Funds to pay for all  redemptions in cash. In such
case,  the  Board  of  Trustees  may  authorize  payment  to be made in  readily
marketable portfolio securities of the Fund.  Securities delivered in payment of
redemptions  would be valued at the same value assigned to them in computing the
net asset value per share.  Shareholders  receiving  them would incur  brokerage
costs when these  securities  are sold. An  irrevocable  election has been filed
under  Rule 18f-1 of the 1940 Act,  wherein  each Fund  committed  itself to pay
redemptions  in cash,  rather than in kind, to any  shareholder of record of the
Fund who redeems during any ninety-day period, the lesser of (a) $250,000 or (b)
one percent (1%) of the Fund's net asset value at the beginning of such period. 

Transfer of  Registration.  To transfer shares to another owner,  send a written
request to the applicable Fund at the address shown herein.  Your request should
include the following: (1) the Fund name and existing account registration;  (2)
signature(s) of the registered owner(s) exactly as the signature(s) appear(s) on
the account  registration;  (3) the new account  registration,  address,  social
security or taxpayer  identification  number and how dividends and capital gains
are to be distributed;  (4) signature  guarantees (See the Prospectus  under the
heading  "Signature  Guarantees");  and (5) any additional  documents  which are
required  for transfer by  corporations,  administrators,  executors,  trustees,
guardians,  etc. If you have any questions about  transferring  shares,  call or
write the Funds.                                                                

 ADDITIONAL INFORMATION ON PERFORMANCE

From  time to time,  the  total  return  of each Fund and the yield of the Fixed
Income  Fund may be  quoted in  advertisements,  sales  literature,  shareholder
reports or other communications to shareholders. Each Fund computes the "average
annual total return" of each Fund by determining  the average annual  compounded
rates of return during specified periods that equate the initial amount invested
to the ending  redeemable value of such investment.  This is done by determining
the ending  redeemable  value of a  hypothetical  $1,000 initial  payment.  This
calculation is as follows:                                                      

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 n
 P(1+T)  = ERV

Where:  P =  a hypothetical initial payment of $1,000   
T =  average annual total return        
 N =  number of years (exponential number)
               ERV =  ending  redeemable  value of a  hypothetical  $1,000
                      payment made at the beginning of the 1, 5 or 10 year
           periods at the end of the year or period;

Each Fund may also compute the  aggregate  total  return of each Fund,  which is
calculated in a similar manner, except that the results are not annualized.  The
calculation  of average  annual total return and  aggregate  total return assume
that there is a reinvestment of all dividends and capital gain  distributions on
the  reinvestment  dates  during  the  period.  The ending  redeemable  value is
determined by assuming  complete  redemption of the hypothetical  investment and
the deduction of all  nonrecurring  charges at the end of the period  covered by
the computations.                                                               

The  aggregate  total return for the fiscal year from the inception of each Fund
(November 25, 1996) through June 30, 1998,  was 44.70% for the Core Equity Fund,
42.73% for the Aggressive Growth Fund, 52.89% for the Small-Cap Value Fund,     
9.20% for the Mid-Cap Value Fund, 52.76% for the Enhanced Stock Market Fund, and
11.69% for the Fixed Income Fund.  These  performance  quotations  should not be
considered as  representative  of the performance of the Funds for any specified
period in the future.  Aggregate total return is calculated  similarly to annual
total return, except that the return is aggregated, rather than annualized.     

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:                                  
                 6
 Yield =2[(A - B + 1) - 1]
 -----
  CD

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.                                                                         

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Each Fund's  performance may be compared in  advertisements,  sales  literature,
shareholder reports, and other communications to the performance of other mutual
funds having similar objectives or to standardized  indices or other measures of
investment performance.  In particular, each Fund may compare its performance to
the S&P 500 Index.  The Fixed Income Fund may also compare its performance  with
the Salomon  Brothers Broad Investment Grade Index. The Small-Cap Value Fund may
also compare its performance with the Russell 2000 Index. The Mid-Cap Value Fund
may also compare its  performance  with the Russell Mid-Cap Index or the S&P 400
Index.  Comparative  performance may also be expressed by reference to a ranking
prepared  by a mutual  fund  monitoring  service  or by one or more  newspapers,
newsletters  or  financial  periodicals.  Each Fund may also  occasionally  cite
statistics to reflect its  volatility  and risk.  Each Fund may also compare its
performance  to  other  published   reports  of  the  performance  of  unmanaged
portfolios of companies.  The performance of such unmanaged portfolios generally
does not reflect the effects of dividends or dividend  reinvestment.  Of course,
there  can be no  assurance  that any Fund  will  experience  the same  results.
Performance  comparisons may be useful to investors who wish to compare a Fund's
past  performance  to that of other mutual  funds and  investment  products.  Of
course, past performance is not a guarantee of future results.                  

Each Fund's performance fluctuates on a daily basis largely because net earnings
and net asset value per share fluctuate  daily.  Both net earnings and net asset
value per share are  factors in the  computation  of total  return as  described
above.                                                                          

As  indicated,  from  time to time,  each  Fund may  advertise  its  performance
compared  to  similar  funds or  portfolios  using  certain  indices,  reporting
services, and financial publications. These may include the following:          

o    Lipper Analytical Services,  Inc. ranks funds in various fund categories by
     making comparative  calculations  using total return.  Total return assumes
     the  reinvestment of all capital gains  distributions  and income dividends
     and takes into account any change in net asset value over a specific period
of time.                                                              

o    Morningstar,  Inc., an independent rating service,  is the publisher of the
     bi-weekly  Mutual Fund  Values.  Mutual  Fund Values  rates more than 1,000
     NASDAQ-listed  mutual funds of all types,  according to their risk-adjusted
     returns.  The maximum  rating is five stars,  and ratings are effective for
two weeks.                                                            

Investors may use such indices in addition to the Funds'  Prospectus to obtain a
more complete view of each Fund's performance before investing.  Of course, when
comparing a Fund's performance to any index,  factors such as composition of the
index and  prevailing  market  conditions  should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or  total  return,   investors  should  take  into  consideration  any  relevant
differences in funds such as permitted  portfolio  compositions and methods used
to value portfolio  securities and compute  offering price.  Advertisements  and
other sales literature for each Fund may quote total returns that are calculated
on  non-standardized  base  periods.  The total  returns  represent the historic
change in the value of an investment  in the Fund based on monthly  reinvestment
of dividends over a specified period of time.                                   

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From  time  to  time  each  Fund  may  include  in   advertisements   and  other
communications information,  charts, and illustrations relating to inflation and
the reflects of inflation on the dollar,  including the purchasing  power of the
dollar at various rates of  inflation.  Each Fund may also disclose from time to
time  information  about its portfolio  allocation  and holdings at a particular
date (including  ratings of securities  assigned by independent  rating services
such as S&P and Moody's).  Each Fund may also depict the historical  performance
of the securities in which the Fund may invest over periods reflecting a variety
of market or economic  conditions either alone or in comparison with alternative
investments,  performance indices of those investments,  or economic indicators.
Each Fund may also  include in  advertisements  and in  materials  furnished  to
present and prospective shareholders statements or illustrations relating to the
appropriateness  of types of securities and/or mutual funds that may be employed
to meet specific  financial  goals,  such as saving for  retirement,  children's
education, or other future needs.                                               

Comparative  information  about  the yield of the  Fixed  Income  Fund and about
average rates of return on certificates  of deposits,  bank money market deposit
accounts,  money market mutual funds, and other similar types of investments may
be included in Fixed Income Fund communications.  A bank certificate of deposit,
unlike  the Fixed  Income  Fund's  shares,  pays a fixed  rate of  interest  and
entitles  the  depositor  to  receive  the face  amount  of the  certificate  at
maturity. A bank money market deposit account is a form of savings account which
pays a variable rate of interest.  Unlike the Fixed Income Fund's  shares,  bank
certificates  of deposit and bank money market  deposit  accounts are insured by
the  Federal  Deposit  Insurance  Corporation.  A money  market  mutual  fund is
designed  to  maintain a constant  value of $1.00 per share and,  thus,  a money
market fund's shares are subject to less price fluctuation than the Fixed Income
Fund's shares.                                                                  

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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.                                              

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.           

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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.                                        

     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.                                                    

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Bonds  which  are  rated  Ba, B,  Caa,  Ca or C by  Moody's  are not  considered
"Investment-Grade  Debt Securities" by the Advisor. Bonds rated Ba are judged to
have  speculative  elements  because  their future  cannot be considered as well
assured.  Uncertainty of position characterizes bonds in this class, because the
protection of interest and principal payments often may be very moderate and not
well safeguarded.                                                               

Bonds  which  are  rated  B  generally  lack   characteristics  of  a  desirable
investment.  Assurance of interest and principal  payments or of  maintenance of
other terms of the  security  over any long period for time may be small.  Bonds
which are rated Caa are of poor standing.  Such  securities may be in default or
there may be present  elements of danger with  respect to principal or interest.
Bonds which are rated Ca represent  obligations  which are speculative in a high
degree.  Such  issues are often in default  or have other  marked  shortcomings.
Bonds which are rated C are the lowest  rated class of bonds and issues so rated
can be regarded as having  extremely  poor  prospects of ever attaining any real
investment standing.                                                            

The rating Prime-1 is the highest  commercial  paper rating assigned by Moody's.
Issuers rated Prime-1 (or related  supporting  institutions)  are  considered to
have a superior  capacity for  repayment of short-term  promissory  obligations.
Issuers rated Prime-2 (or related  supporting  institutions)  are  considered to
have a strong capacity for repayment of short-term promissory obligations.  This
will  normally be  evidenced  by many of the  characteristics  of issuers  rated
Prime-1 but to a lesser  degree.  Earnings  trends and  coverage  ratios,  while
sound, will be more subject to variation. Capitalization characteristics,  while
still appropriated may be more affected by external conditions.  Ample alternate
liquidity is maintained.                                                        

The following summarizes the highest rating used by Moody's for short-term notes
and variable rate demand obligations:                                           

     MIG-l;  VMIG-l -  Obligations  bearing these  designations  are of the best
     quality,  enjoying strong  protection by established  cash flows,  superior
     liquidity  support  or  demonstrated  broad-based  access to the market for
refinancing.                                                          

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.                                         

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     AA - Bonds that are rated AA are of high credit quality. Protection factors
     are strong.  Risk is modest but may vary slightly from time to time because
of economic conditions.                                               

     A - Bonds rated A have average but adequate  protection  factors.  The risk
factors are more variable and greater in periods of economic stress.  

     BBB - Bonds rated BBB have below average  protection  factors but are still
     considered  sufficient  for  prudent  investment.   There  is  considerable
variability in risk during economic cycles.                           

Bonds  rated  BB,  B and CCC by D&P are not  considered  "Investment-Grade  Debt
Securities" and are regarded,  on balance,  as  predominantly  speculative  with
respect to the issuer's  ability to pay interest and make principal  payments in
accordance with the terms of the obligations.  BB indicates the lowest degree of
speculation and CCC the highest degree of speculation.                          

The rating Duff l is the highest  rating  assigned by D&P for  short-term  debt,
including commercial paper. D&P employs three designations,  Duff l+, Duff 1 and
Duff 1- within the highest rating category.  Duff l+ indicates highest certainty
of timely payment.  Short-term  liquidity,  including internal operating factors
and/or access to alternative sources of funds, is judged to be "outstanding, and
safety is just below risk-free U.S.  Treasury  short-term  obligations."  Duff 1
indicates very high certainty of timely payment. Liquidity factors are excellent
and  supported  by  good  fundamental   protection  factors.  Risk  factors  are
considered  to be minor.  Duff 1- indicates  high  certainty of timely  payment.
Liquidity  factors  are  strong and  supported  by good  fundamental  protection
factors. Risk factors are very small.                                           

Fitch Investors Service,  Inc. The following summarizes the highest four ratings
used by Fitch Investors Service, Inc. ("Fitch") for bonds which are deemed to be
"Investment-Grade Debt Securities" by the Advisor:                              

     AAA - Bonds are considered to be investment grade and of the highest credit
     quality.  The obligor has an  exceptionally  strong ability to pay interest
     and  repay  principal,  which is  unlikely  to be  affected  by  reasonably
foreseeable events.                                                   

     AA - Bonds are  considered to be  investment  grade and of very high credit
     quality.  The obligor's ability to pay interest and repay principal is very
     strong,  although  not quite as strong as bonds  rated AAA.  Because  bonds
     rated in the AAA and AA  categories  are not  significantly  vulnerable  to
     foreseeable  future  developments,  short-term  debt of  these  issuers  is
generally rated F-1+.                                                 

     A - Bonds that are rated A are  considered  to be  investment  grade and of
     high  credit  quality.  The  obligor's  ability to pay  interest  and repay
     principal is considered to be strong, but may be more vulnerable to adverse
     changes in economic  conditions  and  circumstances  than bonds with higher
ratings.                                                              

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     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.                             

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THE QUAKER FAMILY       
OF MUTUAL FUNDS       

                                                           August 1998

Dear Shareholder:                                                               

As of the close of June, 1998, we have completed the first full year of 
investment activity within the Quaker Family of Funds.  And what a year it      
has been!  The assets in the Quaker Funds have increased by more than five      
times during the year to close the period at $26 million.  Equity markets       
rose dramatically over this 12 month period to reward investors with            
substantial gains.  Fixed income markets showed steady growth during this       
period to reward investors with an attractive return with low risk.             

QUAKER ENHANCED STOCK MARKET FUND                                               

An investment in this Fund returned 28.3% over the 12 months ending in  
June 1998.  This is a broadly diversified portfolio of more than 150 stocks     
identified by an eighty factor quantitative model from all industry             
sectors.  The S&P 500, which serves as the Fund's benchmark, rose 30.2%         
over the same period.  While the Fund performed well, it was unable to keep     
pace with the index because of conservative underweighting in a number of       
stocks that were bid up to very high P/E levels during the past 6 months.       

QUAKER CORE EQUITY FUND                                                         

This Fund continued its emphasis on industry leading, investment grade  
stocks during the year.  Industry sectors that were favored included            
consumer staples, health care, financial services and technology.  The Fund     
held positions in 67 companies at the end of June.  Quaker Core Equity          
gained 24.2% during the twelve months, falling somewhat short of the S&P        
500 index.  This result was influenced by very significant new investments      
arriving in January, one of the most ebullient periods for the stock            
market.  Since it took several weeks to bring the assets to a fully             
invested position, performance was negatively affected.                         

QUAKER AGGRESSIVE GROWTH FUND                                                   

The Quaker Aggressive Growth Fund has been pursuing returns with a      
two-pronged portfolio strategy.  At the end of June, the Fund was invested      
in a combination of "special situation" stocks and larger capitalization        
issues.  The special situations in the Fund are spin-offs, corporate            
restructurings and "tracking stocks" (entities holding a potential spin-off     
operation).  Larger cap stocks held by the Fund have strong earnings            
momentum and reasonable valuations given their projected growth rates.          
This Fund returned 26.7% over the past 12 months, in contrast with the S&P      
500's return of 30.2%.                                                          

QUAKER MID-CAP VALUE FUND                                                       

The Quaker Mid-Cap Value Fund began investment activities in January    
1998.  This Fund focuses on companies with market capitalizations up to $6      
billion.  Stocks are selected by using value parameters, emphasizing strong     
cash flow and improving fundamentals.  There were some early successes,         
with Money Store being acquired in short order by First Union, realizing a      
100% return for the Fund.  The best performing stock held by the                

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Fund, Telespectrum Worldwide, is a restructuring/turnaround situation           
which has already doubled in the Fund.  Near term disappointments include       
Ballard Medical and Cooper Tire.  During its first 6 months of operations       
ending in June, Quaker Mid-Cap Value has returned 9.2%.  The relevant           
index, the S&P 400 Mid-Cap, generated 8.0% during the same period.              

QUAKER SMALL-CAP VALUE FUND                                                     

This Fund has been a particularly strong relative performer.  This has  
been achieved using a conservative value investment approach, while the         
market has been responding very favorably to growth attributes.  This Fund      
is broadly diversified, with more than 180 stocks which are held in the         
portfolio according to the industry weights of the Russell 2000 index.  A       
major contributor to the excess return of this Fund was the momentum of its     
holdings.  While value is the primary discipline, there is a search for         
improving sentiment among security analysts and favorable price action.         
The Fund's slightly larger capitalization size in relation to its benchmark     
was favorable as well.  Quaker Small-Cap Value returned 27.1% for the year      
ending in June, while the Russell 2000 returned 16.6%.  Since inception         
(November 25, 1996) this Fund has generated a total return of 52.9% while       
the Russell 2000 rose by 33.4%.                                                 

QUAKER FIXED INCOME FUND                                                        

In the 12 months ended June 1998, the Quaker Fixed Income Fund          
generated a return of 10% for its investors.  This Fund holds a high            
quality portfolio of fixed income securities, including governments,            
agencies, corporates and asset backed bonds.  The return benefited from a       
decline in bond yields during the period which caused the market value of       
portfolio holdings to rise.  The Salomon Broad Investment Grade Index           
returned 10.6% during the same 12 month period.                                 

WHAT LIES AHEAD?                                                                

Domestic equity markets have moved downward rather abruptly during late 
July and early August.  There is much speculation among analysts about the      
depth and duration of this adjustment.  To what extent will the financial       
turmoil in the rest of the world witnessed during the past year become a        
problem for United States markets?  This immediate concern for the              
direction of the market must be tempered by the proposition that serious        
long term investors have goals measured in years and decades and to             
appreciate that we have been generously rewarded in the recent past.            

This is a good time to review financial strategies to focus on asset    
allocation among investment styles and capitalization sizes and to make         
necessary adjustments.  Also consider utilizing fixed income exposure and       
cash positions to dampen volatility as events unfold.                           

        Sincerely,

              /S/PETER F. WAITNEIGHT
                 Peter F. Waitneight
      Chairman

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QUAKER ENHANCED STOCK MARKET FUND       

PERFORMANCE UPDATE -- $1,000 INVESTMENT       
FOR THE PERIOD FROM NOVEMBER 25, 1996       
(COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1998       

[ID -- PLOT POINTS FOR GRAPH]       

Quaker Enhanced   
---------------   
11/25/96        $1,000       $1,000   
12/31/96         1,016          981   
3/31/97         1,021        1,007  
6/30/97         1,190        1,183  
9/30/97         1,292        1,271  
12/31/97         1,323        1,308   
3/31/98         1,484        1,490  
6/30/98         1,528        1,539  

|----------------------------|      
|        TOTAL RETURN        |      
|----------------------------|      
| Commencement of operations |      
|      through 6/30/98       |      
|----------------------------|      
|           52.76%           |      
|----------------------------|      

This graph depicts the performance of the Quaker Enhanced Stock Market          
Fund versus the S&P 500 Total Return Index.  It is important to note that       
the Quaker Enhanced Stock Market Fund is a professionally managed mutual        
fund while the indexes are not available for investment and are unmanaged.      
The comparison is shown for illustrative purposes only.                         

o The graph assumes an initial $1,000 investment at November 25, 1996.          
All dividends and distributions are reinvested.                             

o At June 30, 1998, the Fund would have grown to $1,528 -- total                
investment return of 52.76% since November 25, 1996.                        

o At June 30, 1998, a similar investment in the S&P 500 Total Return            
Index would have grown to $1,539 -- total investment return of 53.94% since 
November 25, 1996.                                                          

o Past performance is not a guarantee of future performance.  A mutual          
fund's share price and investment return will vary with market conditions,  
and the principal value of shares, when redeemed, may be worth more or less 
than the original cost.                                                     

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QUAKER CORE EQUITY FUND       

PERFORMANCE UPDATE -- $1,000 INVESTMENT       
FOR THE PERIOD FROM NOVEMBER 25, 1996       
(COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1998       

[ID -- PLOT POINTS FOR GRAPH]       

    Quaker Core Equity     S&P 500 Index
    ------------------     -------------
11/25/96          $1,000              $1,000            
12/31/96             980                 981            
3/31/97             983               1,007           
6/30/97           1,165               1,183           
9/30/97           1,262               1,271           
12/31/97           1,270               1,308            
3/31/98           1,412               1,490           
6/30/98           1,447               1,539           

|----------------------------|      
|        TOTAL RETURN        |      
|----------------------------|      
| Commencement of operations |      
|      through 6/30/98       |      
|----------------------------|      
|           44.70%           |      
|----------------------------|      

This graph depicts the performance of the Quaker Core Equity Fund               
versus the S&P 500 Total Return Index.  It is important to note that the        
Quaker Core Equity Fund is a professionally managed mutual fund while the       
indexes are not available for investment and are unmanaged.  The comparison     
is shown for illustrative purposes only.                                        

o The graph assumes an initial $1,000 investment at November 25, 1996.          
All dividends and distributions are reinvested.                             

o At June 30, 1998, the Fund would have grown to $1,447 -- total                
investment return of 44.70% since November 25, 1996.                        

o At June 30, 1998, a similar investment in the S&P 500 Total Return            
Index would have grown to $1,539 -- total investment return of 53.94% since 
November 25, 1996.                                                          

o Past performance is not a guarantee of future performance.  A mutual          
fund's share price and investment return will vary with market conditions,  
and the principal value of shares, when redeemed, may be worth more or less 
than the original cost.                                                     

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QUAKER AGGRESSIVE GROWTH FUND       

PERFORMANCE UPDATE -- $1,000 INVESTMENT       
FOR THE PERIOD FROM NOVEMBER 25, 1996       
(COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1998       

[ID -- PLOT POINTS FOR GRAPH]       

      Quaker Aggressive      S&P 500 Index
      -----------------      -------------
11/25/96          $1,000              $1,000          
12/31/96           1,034                 981          
3/31/97           1,045               1,007         
6/30/97           1,127               1,183         
9/30/97           1,307               1,271         
12/31/97           1,244               1,308          
3/31/98           1,408               1,490         
6/30/98           1,427               1,539         

|----------------------------|      
|        TOTAL RETURN        |      
|----------------------------|      
| Commencement of operations |      
|      through 6/30/98       |      
|----------------------------|      
|           42.73%           |      
|----------------------------|      

This graph depicts the performance of the Quaker Aggressive Growth Fund         
versus the S&P 500 Total Return Index.  It is important to note that the        
Quaker Aggressive Growth Fund is a professionally managed mutual fund while     
the indexes are not available for investment and are unmanaged.  The            
comparison is shown for illustrative purposes only.                             

o The graph assumes an initial $1,000 investment at November 25, 1996.          
All dividends and distributions are reinvested.                             

o At June 30, 1998, the Fund would have grown to $1,427 -- total                
investment return of 42.73% since November 25, 1996.                        

o At June 30, 1998, a similar investment in the S&P 500 Total Return            
Index would have grown to $1,539 -- total investment return of 53.94% since 
November 25, 1996.                                                          

o Past performance is not a guarantee of future performance.  A mutual          
fund's share price and investment return will vary with market conditions,  
and the principal value of shares, when redeemed, may be worth more or less 
than the original cost.                                                     

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QUAKER MID-CAP VALUE FUND       

PERFORMANCE UPDATE -- $1,000 INVESTMENT       
FOR THE PERIOD FROM JANUARY 6, 1998       
(COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1998       

[ID -- PLOT POINTS FOR GRAPH]       

    Quaker Mid-Cap     S&P 400 Mid-Cap Index
    -----------------   ----------------------
1/ 6/98          $1,000              $1,000                 
1/31/98           1,002                 980                 
2/28/98           1,062               1,060                 
3/31/98           1,117               1,107                 
4/30/98           1,141               1,126                 
5/31/98           1,097               1,074                 
6/30/98           1,092               1,080                 

|----------------------------|      
|        TOTAL RETURN        |      
|----------------------------|      
| Commencement of operations |      
|      through 6/30/98       |      
|----------------------------|      
|            9.20%           |      
|----------------------------|      

This graph depicts the performance of the Quaker Mid-Cap Value Fund             
versus the S&P 400 Mid-Cap Index.  It is important to note that the Quaker      
Mid-Cap Value Fund is a professionally managed mutual fund while the            
indexes are not available for investment and are unmanaged.  The comparison     
is shown for illustrative purposes only.                                        

o The graph assumes an initial $1,000 investment at January 6, 1998.            
All dividends and distributions are reinvested.                             

o At June 30, 1998, the Fund would have grown to $1,092 -- total                
investment return of 9.20% since January 6, 1998.                           

o At June 30, 1998, a similar investment in the S&P 400 Mid-Cap Index           
would have grown to $1,080 -- total investment return of 8.01% since        
January 6, 1998.                                                            

o Past performance is not a guarantee of future performance.  A mutual          
fund's share price and investment return will vary with market conditions,  
and the principal value of shares, when redeemed, may be worth more or less 
than the original cost.                                                     

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QUAKER SMALL-CAP VALUE FUND       

PERFORMANCE UPDATE -- $1,000 INVESTMENT       
FOR THE PERIOD FROM NOVEMBER 25, 1996       
(COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1998       

[ID -- PLOT POINTS FOR GRAPH]       

      Quaker Small Cap      Russell 2000 Index
      -----------------     ------------------
11/25/96          $1,000              $1,000              
12/31/96             996               1,038              
3/31/97           1,002                 985             
6/30/97           1,203               1,144             
9/30/97           1,422               1,314             
12/31/97           1,409               1,269              
3/31/98           1,569               1,400             
6/30/98           1,529               1,333             

|----------------------------|      
|        TOTAL RETURN        |      
|----------------------------|      
| Commencement of operations |      
|      through 6/30/98       |      
|----------------------------|      
|           52.89%           |      
|----------------------------|      

This graph depicts the performance of the Quaker Small-Cap Value Fund           
versus the Russell 2000 Index. It is important to note that the Quaker          
Small-Cap Value Fund is a professionally managed mutual fund while the          
indexes are not available for investment and are unmanaged. The                 
comparison is shown for illustrative purposes only.                             

o The graph assumes an initial $1,000 investment at November 25, 1996.          
All dividends and distributions are reinvested.                             

o At June 30, 1998, the Fund would have grown to $1,529 -- total                
investment return of 52.89% since November 25, 1996.                        

o At June 30, 1998, a similar investment in the Russell 2000 Index              
would have grown to $1,333 -- total investment return of 33.34% since       
November 25, 1996.                                                          

o Past performance is not a guarantee of future performance.  A mutual          
fund's share price and investment return will vary with market conditions,  
and the principal value of shares, when redeemed, may be worth more or less 
than the original cost.                                                     

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QUAKER FIXED INCOME FUND      

PERFORMANCE UPDATE -- $1,000 INVESTMENT       
FOR THE PERIOD FROM NOVEMBER 25, 1996       
(COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1998       

[ID -- PLOT POINTS FOR GRAPH]       

       Quaker Fixed        Salomon BIG Index
      -----------------     ------------------
11/25/96          $1,000              $1,000              
12/31/96             996                 995              
3/31/97             985                 990             
6/30/97           1,016               1,026             
9/30/97           1,049               1,061             
12/31/97           1,077               1,091              
3/31/98           1,091               1,109             
6/30/98           1,117               1,135             

|----------------------------|      
|        TOTAL RETURN        |      
|----------------------------|      
| Commencement of operations |      
|      through 6/30/98       |      
|----------------------------|      
|           11.69%           |      
|----------------------------|      

This graph depicts the performance of the Quaker Fixed Income Fund              
versus the Salomon Brothers Broad Investment-Grade Index. It is                 
important to note that the Quaker Fixed Income Fund is a professionally         
managed mutual fund while the indexes are not available for investment          
and are unmanaged. The comparison is shown for illustrative purposes            
only.                                                                           

o The graph assumes an initial $1,000 investment at November 25, 1996.          
All dividends and distributions are reinvested.                             

o At June 30, 1998, the Fund would have grown to $1,117 -- total                
investment return of 11.69% since November 25, 1996.                        

o At June 30, 1998, a similar investment in the Salomon Brothers Broad          
Investment-Grade Index would have grown to $1,135 -- total investment       
return of 13.46% since November 25, 1996.                                   

o Past performance is not a guarantee of future performance.  A mutual          
fund's share price and investment return will vary with market conditions,  
and the principal value of shares, when redeemed, may be worth more or less 
than the original cost.                                                     

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QUAKER ENHANCED STOCK MARKET FUND       
SCHEDULE OF INVESTMENTS       
JUNE 30, 1998       

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  95.99%                                                        

ADVERTISING  --  1.32%                                                        
    Gannett Inc. Company                                200      $    14,213
    Tribune Company                                     100            6,881
                                                                 -----------
                                                                      21,094
                                                                 -----------
AEROSPACE & DEFENSE  --  2.22%                                                
    Allied Signal Inc.                                  400           17,750
    General Dynamics Corp.                              100            4,650
    Parker Hannifin Corp.                               100            3,813
    United Technologies Corp.                           100            9,250
                                                                 -----------
                                                                      35,463
                                                                 -----------
AGRICULTURE  --  1.32%                                                        
    Deere & Company                                     400           21,150
                                                                 -----------
AIRCRAFT PARTS & AUXILIARY EQUIPMENT  --  0.24%                               
    Teleflex Inc.                                       100            3,800
                                                                 -----------
AIR TRANSPORTATION, SCHEDULED  --  1.23%                                      
(a) America West Holdings Corp. CL B                    100            2,856
    Comair Holdings Inc.                                100            3,088
    SouthWest Airlines Company                          200            5,925
    UAL Corp.                                           100            7,800
                                                                 -----------
                                                                      19,669
                                                                 -----------
APPAREL & FABRICS  --  0.35%                                                  
    Burlington Industries Inc. New                      400            5,625
                                                                 -----------
AUTO CONTROLS  --  0.52%                                                      
    Honeywell Inc.                                      100            8,356
                                                                 -----------
AUTO & TRUCKS  --  1.20%                                                      
    Ford Motor Company                                  100            5,900
    General Motors Corp.                                200           13,363
                                                                 -----------
                                                                      19,263
                                                                 -----------
BAKERY PRODUCTS  --  0.41%                                                    
    Interstate Bakeries Corp. New                       200            6,638
                                                                 -----------
BEVERAGES  --  2.39%                                                          
    Coca-Cola Company                                   400           34,200
    Coca-Cola Enterprises Inc.                          100            3,925
                                                                 -----------
                                                                      38,125
                                                                 -----------

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QUAKER ENHANCED STOCK MARKET FUND       
SCHEDULE OF INVESTMENTS       
JUNE 30, 1998       

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

BIOLOGICAL PRODUCTS  --  0.82%                                                
(a) Amgen Inc.                                          200      $    13,075
                                                                 -----------
BUILDING MATERIALS  --  0.67%                                                 
    Vulcan Materials Company                            100           10,669
                                                                 -----------
CABLE & OTHER PAY TELEVISION SERVICES  --  0.24%                              
(a) Tele-Communications, Inc. Ser A TCI Group           100            3,844
                                                                 -----------
COMMERCIAL SERVICES  --  0.17%                                                
    Ogden Corp.                                         100            2,769
                                                                 -----------
COMPUTERS  --  2.56%                                                          
(a) Dell Computer Corp.                                 100            9,281
    International Business Machines Inc.                200           22,963
(a) Storage Technology Corp. Par $.10                   200            8,675
                                                                 -----------
                                                                      40,919
                                                                 -----------
COMPUTER PERIPHERAL EQUIPMENT  --  0.24%                                      
    Symbol Technologies, Inc.                           100            3,775
                                                                 -----------
COMPUTER SOFTWARE & SERVICES  --  2.03%                                       
(a) Microsoft Corp.                                     300           32,513
                                                                 -----------
CONSTRUCTION MACHINERY & EQUIPMENT  -- 0.72%                                  
    Sunstrand Corp.                                     200           11,450
                                                                 -----------
CONVERTED PAPER & PAPERBOARD PRODUCTS  --  0.85%                              
    Avery Dennison Corp.                                100            5,375
    Minnesota Mining and Manufacturing Company          100            8,219
                                                                 -----------
                                                                      13,594
                                                                 -----------
ELECTRIC & OTHER SERVICES COMBINED  --  0.18%                                 
    Nipsco Industries Inc.                              100            2,800
                                                                 -----------
ELECTRIC SERVICES  --  0.81%                                                  
    DTE Energy Company                                  100            4,038
    Ipalco Enterprises Inc.                             200            8,888
                                                                 -----------
                                                                      12,925
                                                                 -----------
ELECTRONICS  --  2.28%                                                        
    General Electric Company                            400           36,400
                                                                 -----------
ELECTRONIC COMPUTERS  --  0.33%                                               
    Tandy Corp.                                         100            5,306
                                                                 -----------

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QUAKER ENHANCED STOCK MARKET FUND       
SCHEDULE OF INVESTMENTS       
JUNE 30, 1998       

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

ELECTRONICS - SEMICONDUCTOR  --  0.46%                                        
    Intel Corp.                                         100      $     7,413
                                                                 -----------
ENTERTAINMENT  --  0.48%                                                      
(a) King World Productions, TNS Inc.                    300            7,650
                                                                 -----------
FABRICATED RUBBER PRODUCTS  --  0.27%                                         
    Carlisle Companies                                  100            4,306
                                                                 -----------
FINANCIAL - BANKS, MONEY CENTER  --  3.35%                                    
    Chase Manhattan Corp. New                           200           15,100
    Comerica, Inc.                                      200           13,250
    First Chicago NBD Corp.                             200           17,725
    Norwest Corp.                                       200            7,475
                                                                 -----------
                                                                      53,550
                                                                 -----------
FINANCIAL - SAVINGS/LOANS/THRIFT  --  1.66%                                   
    First Federal Financial Corp.                       100            5,200
    Golden West Financial Corp.                         200           21,263
                                                                 -----------
                                                                      26,463
                                                                 -----------
FINANCIAL - SECURITIES BROKERS  --  4.01%                                     
    Bear Stearns Companies Inc.                         300           17,063
    Donaldson, Lufkin & Jenrette, Inc. New              300           15,244
    Merrill Lynch & Co. Inc.                            100            9,225
    Morgan Stanley, Dean Witter, Discover and Co. New   200           18,275
    Paine Webber Group Inc.                             100            4,288
                                                                 -----------
                                                                      64,094
                                                                 -----------
FINANCIAL SERVICES  --  2.71%                                                 
    American Express Company                            100           11,400
    Comdisco, Inc.                                      400            7,600
    Federal National Mortgage Assoc.                    400           24,300
                                                                 -----------
                                                                      43,300
                                                                 -----------
FIRE, MARINE & CASUALTY INSURANCE  --  0.40%                                  
    Mercury General Corp. New                           100            6,444
                                                                 -----------
FOOD AND KINDRED PRODUCTS  --  0.28%                                          
    Universal Foods Corp.                               200            4,438
                                                                 -----------
FOOD - WHOLESALE  --  0.83%                                                   
    Supervalu Inc.                                      300           13,313
                                                                 -----------

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QUAKER ENHANCED STOCK MARKET FUND       
SCHEDULE OF INVESTMENTS       
JUNE 30, 1998       

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

GAS - DISTRIBUTION  --  0.25%                                                 
    Nicor Inc.                                          100      $     4,013
                                                                 -----------
GENERAL BUILDING CONTRACTORS  --  0.84%                                       
    Armstrong World Industries Inc.                     200           13,475
                                                                 -----------
GRAIN MILLS PRODUCTS  --  0.47%                                               
    Kellogg Co.                                         200            7,513
                                                                 -----------
GREETING CARDS  --  0.34%                                                     
    Knight-Ridder, Inc.                                 100            5,506
                                                                 -----------
HOMEBUILDERS  --  0.71%                                                       
    Centex Corp.                                        300           11,325
                                                                 -----------
HOUSEHOLD FURNITURE  --  0.18%                                                
(a) Furniture Brands Int'l Inc.                         100            2,806
                                                                 -----------
HOUSEHOLD PRODUCTS & HOUSEWARES  --  0.62%                                    
    Maytag Corp.                                        200            9,875
                                                                 -----------
INDUSTRIAL INORGANIC CHEMICALS  --  0.79%                                     
    Air Products & Chem Inc.                            200            8,000
    Georgia Gulf Corp. New                              200            4,563
                                                                 -----------
                                                                      12,563
                                                                 -----------
INSURANCE AGENTS, BROKERS & SERVICES  --  0.37%                               
    Ambac Financial Group, Inc.                         100            5,850
                                                                 -----------
INSURANCE CARRIERS  --  0.22%                                                 
    Horace Mann Educators Corp. New                     100            3,450
                                                                 -----------
INSURANCE - LIFE & HEALTH  --  1.08%                                          
    Jefferson-Pilot                                     200           11,588
    SunAmerica, Inc.                                    100            5,744
                                                                 -----------
                                                                      17,331
                                                                 -----------
INSURANCE - MULTILINE  --  3.47%                                              
    Allstate Corp.                                      300           27,469
    American International Group, Inc.                  100           14,600
    Old Republic International Corp.                    300            8,794
    Torchmark Corp.                                     100            4,575
                                                                 -----------
                                                                      55,438
                                                                 -----------

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QUAKER ENHANCED STOCK MARKET FUND       
SCHEDULE OF INVESTMENTS       
JUNE 30, 1998       

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

LIFE INSURANCE  --  1.13%                                                     
    Equitable Cos. Inc.                                 100      $     7,494
    Protective Life Corp.                               100            3,669
    Provident Cos. Inc.                                 200            6,900
                                                                 -----------
                                                                      18,063
                                                                 -----------
MACHINE - CONSTRUCTION & MINING  --  0.99%                                    
    Caterpillar Inc.                                    300           15,863
                                                                 -----------
MACHINE - DIVERSIFIED  --  1.85%                                              
    Aeroquip-Vickers Inc.                               200           11,675
    Cooper Industries, Inc.                             200           10,988
    Dover Corp.                                         200            6,850
                                                                 -----------
                                                                      29,513
                                                                 -----------
MALT BEVERAGES  --  1.18%                                                     
    Anheuser-Busch Co. Inc.                             400           18,875
                                                                 -----------
MISCELLANEOUS - DISTRIBUTION & WHOLESALE  --  0.49%                           
    Unilever NV New York SHS ADR                        100            7,894
                                                                 -----------
MISCELLANEOUS - MANUFACTURING  --  0.32%                                      
    National Service Industries, Inc.                   100            5,088
                                                                 -----------
MORTGAGE BANKERS & CORRESPONDENTS  --  0.29%                                  
    Federal Home Loan Mtg. Corp.                        100            4,706
                                                                 -----------
MOTORCYCLES, BICYCLES, & PARTS  --  0.24%                                     
    Harley Davidson Inc.                                100            3,875
                                                                 -----------
MOTOR HOMES  --  0.25%                                                        
    Fleetwood Enterprises Inc.                          100            4,000
                                                                 -----------
MOTOR VEHICLES & CARS BODIES  --  0.33%                                       
    Paccar Inc.                                         100            5,225
                                                                 -----------
NATIONAL COMMERCIAL BANKS  --  3.35%                                          
    Bank America Corp.                                  100            8,644
    First Tennessee Natl. Corp.                         100            3,156
    Mellon Bank Corp.                                   100            6,963
    PNC Bank Corp.                                      100            5,381
    Regions Financial Corp.                             100            4,106
    Republic New York Corp.                             200           12,588
    Star Banc Corp.                                     200           12,775
                                                                 -----------
                                                                      53,613
                                                                 -----------

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QUAKER ENHANCED STOCK MARKET FUND       
SCHEDULE OF INVESTMENTS       
JUNE 30, 1998       

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

NATURAL GAS TRANSMISSION  --  0.68%                                           
    Costal Corp.                                        100      $     6,981
    El Paso Natural Gas Company New                     100            3,825
                                                                 -----------
                                                                      10,806
                                                                 -----------
NEWSPAPER: PUBLISHING OR PRINTING  --  3.62%                                  
    Washington Post Co. Cl B                            100           57,900
                                                                 -----------
OFFICE & BUSINESS EQUIPMENT  --  0.90%                                        
    Pitney-Bowes, Inc.                                  300           14,438
                                                                 -----------
OIL & GAS - EXPLORATION  --  0.96%                                            
    Mobil Corp.                                         200           15,325
                                                                 -----------
OIL & GAS - INTERNATIONAL  --  0.89%                                          
    Exxon Corp.                                         200           14,263
                                                                 -----------
OPERATIVE BUILDERS  --  0.37%                                                 
    Pulte Corp.                                         200            5,975
                                                                 -----------
PAINTS, VARNISHES, LACQUERS, ENAMELS  --  0.87%                               
    PPG Industries, Inc.                                200           13,913
                                                                 -----------
PAPER MILLS  --  0.24%                                                        
    Chesapeake Corp. of Virginia                        100            3,894
                                                                 -----------
PHARMACEUTICALS  --  4.36%                                                    
    Bristol-Myers Squibb Company                        200           22,988
    Merck & Co., Inc.                                   200           26,750
    Pfizer Inc.                                         100           10,869
    Schering-Plough Corp.                               100            9,163
                                                                 -----------
                                                                      69,769
                                                                 -----------
PHARMACEUTICAL PREPARATION  --  0.95%                                         
    Abbott Labs                                         200            8,175
    Warner Lambert Company                              100            6,938
                                                                 -----------
                                                                      15,113
                                                                 -----------
PLASTICS, MATERIALS, SYNTHETIC RESINS  --  1.30%                              
    Rohm & Haas Company                                 200           20,788
                                                                 -----------
PLASTICS PRODUCTS  --  0.42%                                                  
    Illinois Tool Works Inc.                            100            6,669
                                                                 -----------

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QUAKER ENHANCED STOCK MARKET FUND       
SCHEDULE OF INVESTMENTS       
JUNE 30, 1998       

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

PUMPS & PUMPING EQUIPMENT  --  0.23%                                          
    General Signal Corp.                                100      $     3,600
                                                                 -----------
RADIO & TV BROADCASTING EQUIPMENT  --  0.84%                                  
    Harris Corp.                                        300           13,406
                                                                 -----------
RAILROADS, LINE - HAUL OPERATING  --  1.02%                                   
    Canadian Pacific Ltd. New                           400           11,350
    Kansas City Southern Industries Company             100            4,963
                                                                 -----------
                                                                      16,313
                                                                 -----------
REFUSE SYSTEMS  --  0.31%                                                     
    USA Waste Services Inc.                             100            4,938
                                                                 -----------
RETAIL - APPAREL  --  0.95%                                                   
    TJX Companies, Inc. New                             200            4,825
    VF Corp.                                            200           10,300
                                                                 -----------
                                                                      15,125
                                                                 -----------
RETAIL - DEPARTMENT STORES  --  2.46%                                         
    Dayton Hudson Corp.                                 200            9,700
    Wal-Mart Stores, Inc.                               400           24,300
    Federated Department Stores, Inc.                   100            5,381
                                                                 -----------
                                                                      39,381
                                                                 -----------
RETAIL - DRUG STORES & PROPRIETARY  --  0.26%                                 
    Walgreen Company                                    100            4,131
                                                                 -----------
RETAIL - FAMILY CLOTHING STORES  --  0.77%                                    
    Gap Inc.                                            200           12,325
                                                                 -----------
RETAIL - LUMBER & BUILDING MATERIALS DEALERS  --  0.51%                       
    Lowe's Companies Inc.                               200            8,113
                                                                 -----------
RETAIL - WOMEN'S CLOTHING STORES  --  0.41%                                   
    Limited, Inc.                                       200            6,625
                                                                 -----------
SAVINGS INSTITUTION, FEDERALLY CHARTERED  --  0.47%                           
    Greenpoint Financial Corp.                          200            7,525
                                                                 -----------
SECURITY BROKERS, DEALERS & FLOTATION COS.  --  0.27%                         
    Edwards (A.G.) Inc.                                 100            4,269
                                                                 -----------

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SCHEDULE OF INVESTMENTS       
JUNE 30, 1998       

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

SEMICONDUCTORS & RELATED DEVICES  --  0.60%                                   
    Rockwell Int'l Corp. New                            200      $     9,613
                                                                 -----------
SERVICES - HEALTH SERVICES  --  0.59%                                         
    Cardinal Health Inc.                                100            9,375
                                                                 -----------
SERVICES - MISCELLANEOUS BUSINESS SERVICES  --  0.48%                         
    Servicemaster Company                               200            7,613
                                                                 -----------
SOAP DETERGENT, CLEANING                                                      
PREPARATIONS, PERFUMES  --  2.08%                                             
    Colgate Palmolive Co.                               100            8,800
    Ecolab Inc.                                         200            6,200
    Procter & Gamble Co.                                200           18,213
                                                                 -----------
                                                                      33,213
                                                                 -----------
STATE COMMERCIAL BANKS  --  2.92%                                             
    Amsouth Bancorp                                     200            7,863
    Bank of New York Co. Inc.                           300           18,206
    Southtrust Corp.                                    100            4,350
    Suntrust Banks, Inc.                                200           16,263
                                                                 -----------
                                                                      46,681
                                                                 -----------
STEEL WORKS, BLAST FURNACES & ROLLING MILLS  --  0.33%                        
    Texas Industries, Inc. New                          100            5,300
                                                                 -----------
SUGAR & CONFECTIONERY PRODUCTS  --  0.86%                                     
    Hershey Foods Corp.                                 200           13,800
                                                                 -----------
SURETY INSURANCE  --  0.36%                                                   
    MGIC Investment Corp. Wis                           100            5,706
                                                                 -----------
TELECOMMUNICATIONS  --  0.29%                                                 
    Alltel Corporation                                  100            4,650
                                                                 -----------
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)  --  0.54%                       
    Century Telephone Enterprises Inc.                  100            4,588
    SBC Communications Inc.                             100            4,000
                                                                 -----------
                                                                       8,588
                                                                 -----------
TELEPHONE - LONG DISTANCE  --  0.36%                                          
    AT&T Corporation                                    100            5,713
                                                                 -----------
TRANSPORTATION - RAIL  --  0.61%                                              
    Burlington Northern Santa Fe Corporation            100            9,819
                                                                 -----------

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SCHEDULE OF INVESTMENTS       
JUNE 30, 1998       

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

UTILITIES - TELECOMMUNICATIONS  --  3.78%                                     
    Ameritech Corporation                               400      $    17,950
    BellSouth Corporation                               300           20,138
    GTE Corporation                                     400           22,250
                                                                 -----------
                                                                      60,338
                                                                 -----------
WATER SUPPLY  --  0.19%                                                       
    American Water Works Co. Inc.                       100            3,100
                                                                 -----------
WHOLESALE - DURABLE GOODS - 0.31%                                             
    Grainger, W.W. Inc.                                 100            4,981
                                                                 -----------
WHOLESALE - GROCERIES & RELATED PRODUCTS  --  0.32%                           
    Sysco Corporation                                   200            5,125
                                                                 -----------
    TOTAL COMMON STOCKS (COST $1,413,526)                          1,534,256
                                                                 -----------
INVESTMENT COMPANIES  --  2.42%                                                 
Evergreen Money Market Treasury                                     
     Institutional Money                                              38,666
                                                                 -----------
    TOTAL INVESTMENT COMPANIES (COST $38,666)                         38,666
                                                                 -----------
TOTAL VALUE OF INVESTMENTS (COST $1,452,192 (b))       98.41%      $ 1,572,922  
Other Assets Less Liabilities                           1.59%           25,612  
                                                    -------      -----------
    NET ASSETS                                      100.00%      $ 1,598,534
                                                    =======      ===========

(a) Non-income producing investment.                                            
(b) Aggregate cost for financial reporting and federal income tax purposes is   
 the same.  Unrealized appreciation of investments for financial reporting
and federal income tax purposes is as follows:                          

  Unrealized appreciation                                        $   141,847
   Unrealized depreciation                                            (21,117)
                                                                 -----------
    NET UNREALIZED APPRECIATION                                  $   120,730
                                                                 ===========

See notes to financial statements.    

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QUAKER CORE EQUITY FUND       
SCHEDULE OF INVESTMENTS       
JUNE 30, 1998       

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  98.71%                                                        

AEROSPACE & DEFENSE  --  4.25%                                                
    Allied Signal, Inc.                               1,500      $    66,563
    The Boeing Company                                1,400           62,388
    Lockheed Martin Corporation                         700           74,113
                                                                 -----------
                                                                     203,064
                                                                 -----------
BEVERAGES  --  1.29%                                                          
    PepsiCo, Inc.                                     1,500           61,781
                                                                 -----------
BUSINESS SERVICES  --  2.56%                                                  
    Electronic Data Systems Corporation               1,000           40,000
    Reuters Group PLC                                 1,200           82,200
                                                                 -----------
                                                                     122,200
                                                                 -----------
COMPUTERS  --  5.62%                                                          
    Compaq Computer Corporation                       2,000           56,750
    Hewlett-Packard Company                           2,000          119,750
    International Business Machines, Inc.               800           91,850
                                                                 -----------
                                                                     268,350
                                                                 -----------
COMPUTER SOFTWARE & HARDWARE  --  8.10%                                       
    Automatic Data Processing, Inc.                   1,000           72,875
    Ceridian Corporation                                900           52,875
(a) Cisco Systems, Inc.                                 800           73,650
    Computer Associates International, Inc.           1,500           83,344
(a) Safeguard Scientifics, Inc.                       2,500          104,219
                                                                 -----------
                                                                     386,963
                                                                 -----------
CONSUMER STAPLES  --  0.42%                                                   
(a) Vlasic Foods International, Inc.                  1,000           20,125
                                                                 -----------
CONTROLLED ENVIRONMENTS  --  0.35%                                            
    Honeywell Inc.                                      200           16,713
                                                                 -----------
COSMETICS & PERSONAL CARE  --  6.72%                                          
    Colgate-Palmolive Company                         1,300          114,400
    Gillette Corporation                              2,200          124,713
    Procter & Gamble Company                            900           81,956
                                                                 -----------
                                                                     321,069
                                                                 -----------
ELECTRONICS  --  1.33%                                                        
    General Electric Company                            700           63,700
                                                                 -----------

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QUAKER CORE EQUITY FUND       
SCHEDULE OF INVESTMENTS       
JUNE 30, 1998       

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

ELECTRONICS - SEMICONDUCTORS  --  1.79%                                       
    Intel Corporation                                   800      $    59,300
    Motorola, Inc.                                      500           26,281
                                                                 -----------
                                                                      85,581
                                                                 -----------
ENERGY  --  1.15%                                                             
    Royal Dutch Petroleum Company                     1,000           54,813
                                                                 -----------
ENTERTAINMENT  --  3.07%                                                      
    Time Warner Inc.                                  1,100           93,981
    The Walt Disney Company                             500           52,530
                                                                 -----------
                                                                     146,511
                                                                 -----------
FINANCIAL SERVICES  --  5.37%                                                 
    Franklin Resources, Inc.                          1,200           64,800
    Federal National Mortgage Association             1,200           72,900
    Morgan Stanley, Dean Witter, Discover & Company   1,300          118,788
                                                                 -----------
                                                                     256,488
                                                                 -----------
FINANCIAL - BANKS, MONEY CENTER  --  7.60%                                    
    J.P. Morgan & Company Inc.                          500           58,563
    Mellon Bank Corporation                           2,500          174,063
    Nations Bank Corporation                          1,000           76,500
    PNC Bank Corporation                              1,000           53,813
                                                                 -----------
                                                                     362,939
                                                                 -----------
FINANCIAL - SECURITY BROKERS  --  2.05%                                       
    SLM Holdings Corporation                          2,000           98,000
                                                                 -----------
FOOD - PROCESSING  --  4.88%                                                  
    Campbell Soup Company                               500           26,563
    Heinz (H.J.) Company                              1,500           84,188
    Hershey Foods Corporation                         1,200           82,800
    Phillip Morris Companies Inc.                     1,000           39,375
                                                                 -----------
                                                                     232,926
                                                                 -----------
INSURANCE - LIFE & HEALTH  --  1.27%                                          
    AFLAC, Inc.                                       2,000           60,625
                                                                 -----------
INSURANCE - MULTILINE  --  3.70%                                              
    American International Group, Inc.                  500           73,000
    Cigna Corporation                                 1,500          103,500
                                                                 -----------
                                                                     176,500
                                                                 -----------

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QUAKER CORE EQUITY FUND       
SCHEDULE OF INVESTMENTS       
JUNE 30, 1998       

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

MEDICAL SUPPLIES  --  2.32%                                                   
    Johnson & Johnson                                 1,500      $   110,625
                                                                 -----------
MEDICAL - BIOTECHNOLOGY  --  6.26%                                            
    Merck & Company, Inc.                               900          120,375
    Pfizer Inc.                                         800           86,950
    Schering-Plough Corporation                       1,000           91,625
                                                                 -----------
                                                                     298,950
                                                                 -----------
METALWORKING - MACHINERY & EQUIPMENT  --  0.79%                               
    Kennametal Inc.                                     900           37,575
                                                                 -----------
MINING  --  3.65%                                                             
    Potash Corporation of Saskatachewan Inc.          1,600          120,900
    Vulcan Materials Company                            500           53,344
                                                                 -----------
                                                                     174,244
                                                                 -----------
OFFICE & BUSINESS EQUIPMENT  --  2.10%                                        
    Xerox Corporation                                   700           71,138
(a) Staples, Inc.                                     1,000           28,938
                                                                 -----------
                                                                     100,076
                                                                 -----------
OIL & GAS - EQUIPMENT & SERVICES  --  1.43%                                   
    Schlumberger Limited                              1,000           68,312
                                                                 -----------
OIL & GAS - EXPLORATION  --  1.12%                                            
    El Paso Natural Gas Company                       1,400           53,550
                                                                 -----------
OIL & GAS - INTERNATIONAL  --  1.19%                                          
    Exxon Corporation                                   800           57,050
                                                                 -----------
PAPERBOARD PRODUCTS  --  1.20%                                                
    Minnesota Mining & Manufacturing                    700           57,530
                                                                 -----------
PAINTS, VARNISHES, LACQUERS,                                                  
ENAMELS & PRODUCTS  --  0.55%                                                 
    Sherwin Williams Company                            800           26,500
                                                                 -----------
PLASTICS - SYNTHETICS  --  1.56%                                              
    DuPont De Nemours & Company                       1,000           74,625
                                                                 -----------
PHARMACEUTICAL PREPARATIONS  --  3.75%                                        
    Bristol-Myers Squibb Company                      1,000          114,938
(a) Elan Corporation PLC                              1,000           64,312
                                                                 -----------
                                                                     179,250
                                                                 -----------

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QUAKER CORE EQUITY FUND       
SCHEDULE OF INVESTMENTS       
JUNE 30, 1998       

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

PUBLISHING  --  0.57%                                                         
    E.W. Scripps Company Class (A)                      500      $    27,405
                                                                 -----------
RAILROADS - LINE HAULING  --  0.52%                                           
    Kansas City Southern Industries Company             500           24,812
                                                                 -----------
RESTAURANTS FOOD & SERVICE  --  3.16%                                         
    McDonald's Corporation                            1,500          103,500
(a) Tricon Global Restaurants, Inc.                   1,500           47,530
                                                                 -----------
                                                                     151,030
                                                                 -----------
SUGAR & CONFECTIONERY PRODUCTS  --  2.05%                                     
    W.M. Wrigley Jr. Company                          1,000           98,000
                                                                 -----------
TECHNOLOGY  --  0.07%                                                         
    Docucorp International, Inc.                        500            3,281
                                                                 -----------
TELECOMMUNICATIONS EQUIPMENT  --  4.58%                                       
    Bell Atlantic Corporation                         1,000           45,625
    Lucent Technologies, Inc.                         1,400          116,462
    Northern Telecom Limited                          1,000           56,750
                                                                 -----------
                                                                     218,837
                                                                 -----------
WATER SUPPLY  --  0.33%                                                       
    American Water Works Company, Inc.                  500           15,500
                                                                 -----------
TOTAL COMMON STOCKS (Cost $3,984,653)                               4,715,500 
                                                                 -----------
TOTAL VALUE OF INVESTMENTS (COST $3,984,653 (b))      98.71%      $ 4,715,500 
Other Assets Less Liabilities                          1.29%           61,600 
                                                    -------      -----------
    NET ASSETS                                      100.00%      $ 4,777,100
                                                    =======      ===========

(a) Non-income producing investment.                                            
(b) Aggregate cost for financial reporting and                                  
federal income tax purposes is the same.                                
Unrealized appreciation of investments for                              
financial reporting and federal income                                  
tax purposes is as follows:                                             

  Unrealized appreciation                                        $   785,737
   Unrealized depreciation                                            (54,890)
                                                                 -----------
    NET UNREALIZED APPRECIATION                                  $   730,847
                                                                 ===========

See notes to the financial statements.    

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QUAKER AGGRESSIVE GROWTH FUND   
SCHEDULE OF INVESTMENTS       
JUNE 30, 1998       

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  71.65%                                                        

BANKING  --  2.23%                                                            
    Nations Bank Corp                                   500      $    38,250
                                                                 -----------
BEVERAGES  --  2.64%                                                          
    The Coca-Cola Company                               300           25,650
    Coca-Cola Enterprises                               500           19,625
                                                                 -----------
                                                                      45,275
                                                                 -----------
BOTTLED & CANNED SOFTDRINKS  --  0.67%                                        
    Whitman Corporation                                 500           11,469
                                                                 -----------
BUSINESS SERVICES  --  1.69%                                                  
    Sodexho Marriot Services Inc.                     1,000           29,000
                                                                 -----------
CHEMICAL & ALLIED PRODUCTS  --  0.23%                                         
    Great Lakes Chemical Corporation                    100            3,944
                                                                 -----------
CIGARETTES  --  1.15%                                                         
    Phillip Morris Company                              500           19,688
                                                                 -----------
CONSTRUCTION & MACHINERY EQUIPMENT  --  0.93%                                 
    Caterpillar, Inc.                                   300           15,862
                                                                 -----------
CONTROLLED ENVIRONMENTS  --  1.03%                                            
    Oak Industries                                      500           17,688
                                                                 -----------
CONSUMER SERVICES  --  1.33%                                                  
    ServiceMaster Co.                                   600           22,838
                                                                 -----------
DEPARTMENT STORES  --  1.15%                                                  
    May Department Store                                300           19,650
                                                                 -----------
FAMILY CLOTHING STORES  --  0.02%                                             
(a) Abercrombie & Fitch                                   8              352
                                                                 -----------
FINANCIAL SERVICES  --  4.82%                                                 
    Federal Home Loan Management Corp.                  400           18,825
    Providian Financial Corp.                           300           23,569
(a) Tele-Communications TCI Ventures Group            2,000           40,125
                                                                 -----------
                                                                      82,519
                                                                 -----------
FINANCIAL - BANKS, MONEY CENTER  --  1.63%                                    
    Banc One Corporation                                500           27,906
                                                                 -----------

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QUAKER AGGRESSIVE GROWTH FUND   
SCHEDULE OF INVESTMENTS       
JUNE 30, 1998       

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

FOOD - PROCESSING  --  5.49%                                                  
    Agibrands International, Inc.                       650      $    19,662
    Campbell Soup Company                               300           15,938
    Ralstin-Ralston Purina Group                        500           58,406
                                                                 -----------
                                                                      94,006
                                                                 -----------
FOOD - WHOLESALE  --  1.10%                                                   
    Ralcorp Holdings, Inc.                            1,000           18,875
                                                                 -----------
GROCERY STORES  --  0.71%                                                     
    American Stores                                     500           12,094
                                                                 -----------
HEALTHCARE  --  6.41%                                                         
    Cardinal Health Inc.                                200           18,750
(a) Neurex Corporation                                3,000           91,125
                                                                 -----------
                                                                     109,875
                                                                 -----------
INDUSTRIAL  --  2.71%                                                         
    Hussman International, Inc.                       2,500           46,406
                                                                 -----------
INSURANCE AGENTS, BROKERS & SERVICES  --  2.60%                               
    Hartford Financial Services Group Inc.              200           22,875
    Mutual Risk Management Ltd.                         600           21,750
                                                                 -----------
                                                                      44,625
                                                                 -----------
INSURANCE - LIFE & HEALTH  --  0.85%                                          
    Old Republic International Corporation              500           14,656
                                                                 -----------
INSURANCE - MULTILINE  --  2.42%                                              
    CIGNA Corporation                                   600           41,400
                                                                 -----------
INSURANCE - PROPERTY & CASUALTY  --  3.01%                                    
    Mercury General Corporation                         800           51,550
                                                                 -----------
MEDICAL - BIOTECHNOLOGY  --  1.98%                                            
    Millennium Chemicals, Inc.                        1,000           33,875
                                                                 -----------
MEDICINAL - CHEMICALS & BOTANICAL PRODUCTS  --  0.85%                         
    Martek Biosciences Corporation                    1,000           14,563
                                                                 -----------
MOTOR VEHICLES & CAR BODIES  --  1.72%                                        
    Ford Motor Company                                  500           29,500
                                                                 -----------
PERSONAL CREDIT INSTITUTION  --  1.77%                                        
    Travelers Group, Inc.                               500           30,312
                                                                 -----------

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QUAKER AGGRESSIVE GROWTH FUND   
SCHEDULE OF INVESTMENTS       
JUNE 30, 1998       

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

PHARAMACEUTICALS  --  1.32%                                                   
(a) Vion Pharamaceuticals Inc.                        2,000      $     9,500
    Zeneca Group PLC                                    300           13,162
                                                                 -----------
                                                                      22,662
                                                                 -----------
PLASTIC PRODUCTS  --  1.17%                                                   
    Illinois Tool Works, Inc.                           300           20,006
                                                                 -----------
RETAIL - APPAREL  --  0.56%                                                   
    The TJX Corporation                                 400            9,650
                                                                 -----------
RETAIL - GENERAL MERCHANDISE  --  1.18%                                       
    BJ's Wholesale Club, Inc.                           500           20,312
                                                                 -----------
SECURITY BROKERS, DEALERS, FLOTATION COS.  --  4.33%                          
    Donaldson, Lufkin, & Jenrette, Inc.                 500           25,406
    Morgan Stanley Dean Witter Discover & Company       300           27,412
    Paine Webber Group Inc.                             500           21,438
                                                                 -----------
                                                                      74,256
                                                                 -----------
STATE COMMERCIAL BANKS  --  3.45%                                             
    Allegiance Corporation                              800           41,000
    Bank of New York, Inc.                              300           18,206
                                                                 -----------
                                                                      59,206
                                                                 -----------
TECHNOLOGY  --  0.71%                                                         
(a) New Era of Networks                                 400           12,200
                                                                 -----------
TELEPHONE APPARATUS  --  1.66%                                                
    Northern Telecom Ltd.                               500           28,375
                                                                 -----------
UTILITIES - TELECOMMUNICATIONS  --  4.36%                                     
    AT&T Corporation                                    300           17,138
    GTE Corporation                                     400           22,250
    Sprint Corporation                                  500           35,250
                                                                 -----------
                                                                      74,638
                                                                 -----------
VARIETY STORES  --  1.77%                                                     
    Wal-Mart Stores Inc.                                500           30,375
                                                                 -----------
    TOTAL COMMON STOCKS (COST $1,154,829)            31,158      $ 1,227,858
                                                                 -----------

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QUAKER AGGRESSIVE GROWTH FUND   
SCHEDULE OF INVESTMENTS       
JUNE 30, 1998       

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
INVESTMENT COMPANIES  --  13.50%                                              
    Evergreen Money Market Treasury Institutional                $   231,255
                                                                 -----------
Treasury Money Market Fund Institutional                        
Service Shares                                                  

   TOTAL INVESTMENT COMPANIES (COST $231,255)                    $   231,255
                                                                 -----------
TOTAL VALUE OF INVESTMENTS (COST $1,386,084)                       $ 1,459,113  
                                                                 ===========

OPEN SHORT POSITIONS  --  (5.74%)                                               
(a) Elan Corporation PLC                               1,530          (98,398)
                                                                 -----------
    TOTAL OPEN SHORT POSITIONS (PROCEEDS $94,302)                     (98,398)
                                                                 ===========
TOTAL VALUE OF INVESTMENTS AND                                                  
OPEN SHORT POSITIONS (b)                               79.41%      $ 1,360,715  
    Other Assets Less Liabilities                    20.59%          352,870
                                                    -------      -----------
    NET ASSETS                                      100.00%      $ 1,713,585
                                                    =======      ===========

(a) Non-income producing investment.                                            
(b) Aggregate cost for financial reporting and                                  
federal income tax purposes is the same.                                
Unrealized appreciation of investments for                              
financial reporting and federal income                                  
tax purposes is as follows:                                             

  Unrealized appreciation                                        $    92,308
   Unrealized depreciation                                            (23,375)
                                                                 -----------
    NET UNREALIZED APPRECIATION                                  $    68,933
                                                                 ===========

See notes to financial statements.    

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QUAKER MID CAP VALUE FUND   
SCHEDULE OF INVESTMENTS   
JUNE 30, 1998   

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------

COMMON STOCK  --  88.49%                                                        

CHEMICALS  --  4.54%                                                          
    International Specialty Products                 22,000      $   409,750
                                                                 -----------
COMMERCIAL SERVICES  --  5.58%                                                
(a) Telespectrum Worldwide Inc.                      25,400          222,250
    The Reynolds & Reynolds Company                  15,500          281,906
                                                                 -----------
                                                                     504,156
                                                                 -----------
COMPUTER SOFTWARE & SERVICES  --  9.89%                                       
    Ceridian Corporation                              7,100          417,125
(a) Daisytek International Corporation               10,500          267,094
(a) Symantec Corporation                              8,000          209,000
                                                                 -----------
                                                                     893,219
                                                                 -----------
CONSTRUCTION - HEAVY  --  1.93%                                               
    Granite Construction, Inc.                        5,700          174,563
                                                                 -----------
ELECTRONICS  --  2.78%                                                        
    Tektronix, Inc                                    7,100          251,163
                                                                 -----------
ENGINEERING & CONSTRUCTION  --  3.87%                                         
    Crane Company                                     7,200          349,650
                                                                 -----------
ENERGY  --  3.19%                                                             
    Ocean Energy, Inc.                               14,744          288,430
                                                                 -----------
FINANCIAL - THRIFT, SAVINGS & LOAN  --  14.29%                                
    Roslyn Bancorp, Inc.                             12,000          267,750
    S&P Mid-Cap 400 Depository Receipts              14,700        1,023,487
                                                                 -----------
                                                                   1,291,237
                                                                 -----------
HOLDING COMPANIES DIVERSIFIED  --  9.26%                                      
    The Coastal Corporation                           5,300          370,006
    Questar Corporation                              14,800          290,450
    Bergen Brunswig Corporation                       3,800          176,225
                                                                 -----------
                                                                     836,681
                                                                 -----------
MEDICAL SUPPLIES  --  5.49%                                                   
    Ballard Medical Products                         12,900          232,200
    Becton, Dickinson & Company                       3,400          263,925
                                                                 -----------
                                                                     496,125
                                                                 -----------
MISCELLANEOUS - MANUFACTURING  --  6.55%                                      
(a) Griffon Corporation                              18,000          230,625
    Kellwood Company                                 10,100          361,075
                                                                 -----------
                                                                     591,700
                                                                 -----------

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SCHEDULE OF INVESTMENTS   
JUNE 30, 1998   

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------

COMMON STOCK  --  (continued)                                                   

OFFICE & BUSINESS EQUIPMENT  --  2.38%                                        
    Harris Corporation                                4,800      $   214,500
                                                                 -----------
OIL & GAS - EXPLORATION  --  4.08%                                            
(a) Newfield Exploration                             14,800          368,150
                                                                 -----------
OIL & GAS - DOMESTIC  --  1.99%                                               
    Amerada Hess Corporation                          3,300          179,231
                                                                 -----------
PERSONAL CREDIT INSTITUTIONS  --  2.88%                                       
(a) Americredit Corporation                           7,300          260,518
                                                                 -----------
RETAIL - DEPARTMENT STORES  --  4.20%                                         
(a) Profitt's, Inc                                    9,400          379,525
                                                                 -----------
RETAIL - GROCERY  --  2.58%                                                   
    Hannaford Brothers                                5,300          233,200
                                                                 -----------
TIRE & RUBBER  --  3.01%                                                      
    Cooper Tire & Rubber Company                     13,200          272,251
                                                                 -----------
    TOTAL COMMON STOCKS (COST $7,492,825)                          7,994,049
                                                                 -----------
INVESTMENT COMPANIES  --  2.81%                                                 
Evergreen Money Market Treasury Institutional                       
Treasury Money Market Fund Institutional                          
Service Shares                                                  
     (COST $253,534)                                253,534          253,534
                                                                 -----------
TOTAL VALUE OF INVESTMENTS (COST $7,746,359)           91.30%      $ 8,247,583  
Other Assets Less Liabilities                           8.70%          785,597  
                                                    -------      -----------
    NET ASSETS                                      100.00%      $ 9,033,180
                                                    =======      ===========

(a) Non-income producing investment.                                            

(b) Aggregate cost for financial reporting and                                  
federal income tax purposes is the same.                                
Unrealized appreciation of investments for                              
financial reporting and federal income                                  
tax purposes is as follows:                                             

  Unrealized appreciation                                        $   804,039
   Unrealized depreciation                                           (302,816)
                                                                 -----------
    NET UNREALIZED APPRECIATION                                  $   501,223
                                                                 ===========

See notes to financial statements.    

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SCHEDULE OF INVESTMENTS   
JUNE 30, 1998   

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  80.80%                                                        

AEROSPACE & DEFENSE  --  1.16%                                                
    Litton Industries, Inc.                             300      $    17,700
    Sunstrand Corporation                               500           28,625
                                                                 -----------
                                                                      46,325
                                                                 -----------
ADVERTISING AGENCIES  --  0.39%                                               
(a) Catalina Marketing Corporation                      300           15,580
                                                                 -----------
AIR COURIER SERVICES  --  0.53%                                               
    Airborne Freight Corporation                        600           20,963
                                                                 -----------
AIR TRANSPORTATION  --  0.58%                                                 
(a) Midwest Express Holdings, Inc.                      300           10,856
(a) Continental Airlines, Inc.                          200           12,175
                                                                 -----------
                                                                      23,031
                                                                 -----------
AUTO PARTS - ORIGINAL EQUIPMENT  --  0.45%                                    
    Arvin Industries, Inc.                              500           18,156
                                                                 -----------
AUTOS & TRUCKS  --  0.72%                                                     
    Navistar International Corporation                1,000           28,875
                                                                 -----------
BUILDING MATERIALS  --  1.71%                                                 
    Lone Star Industries                                400           30,825
    Texas Industries, Inc.                              300           15,900
    Vulcan Materials Company                            200           21,337
                                                                 -----------
                                                                      68,062
                                                                 -----------
BUSINESS MACHINES  --  0.30%                                                  
    Splash Technology Holdings, Inc.                    700           12,030
                                                                 -----------
BUSINESS SERVICES  --  2.60%                                                  
    Complete Business Solutions, Inc.                   900           32,344
(a) Integrated Circuit Systems, Inc.                  1,000           16,625
(a) Mastech Corporation                               1,000           28,125
(a) Personnel Group America, Inc.                       600           12,000
    Trigon Healthcare, Inc.                             400           14,475
                                                                 -----------
                                                                     103,569
                                                                 -----------
CATALOG & MAIL ORDER HOUSES  --  0.63%                                        
(a) CDW Computer Center, Inc.                           500           25,000
                                                                 -----------

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SCHEDULE OF INVESTMENTS   
JUNE 30, 1998   

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

CHEMICALS  --  1.68%                                                          
    The Geon Company                                    500      $    11,469
    Georgia Gulf Corporation                            500           11,406
    Millenium Chemicals, Inc.                           700           23,713
    Wellman, Inc.                                       900           20,419
                                                                 -----------
                                                                      67,007
                                                                 -----------
CHEMICAL SERVICES  --  0.68%                                                  
   Leasing Solutions, Inc.                              600           17,250
(a) Veritas DGC Inc.                                     200            9,988 
                                                                 -----------
                                                                      27,238
                                                                 -----------
COMMERCIAL PRINTING  --  0.53%                                                
   World Color Press, Inc.                              600           21,000
                                                                 -----------
COMPUTERS  --  0.15%                                                          
(a) SMART Modular Technologies, Inc.                    400            5,850
                                                                 -----------
COMPUTER SOFTWARE & SERVICES  --  3.31%                                       
(a) Cambridge Technology Partners, Inc.                 200           10,925
    Comdisco, Inc.                                      600           11,400
(a) Computer Horizon Corporation                        600           22,238
(a) InterVoice, Inc.                                  1,200           21,300
    Keane Inc.                                          500           28,000
    Madge Networks NV                                 4,700           22,325
(a) Pomeroy Computer Resources, Inc.                    600           15,638
                                                                 -----------
                                                                     131,826
                                                                 -----------
CONSUMER DURABLES  --  0.58%                                                  
    C & D Technologies, Inc.                            400           23,200
                                                                 -----------
CONSTRUCTION  --  1.41%                                                       
    Centex Construction Products                        600           23,100
    D.R. Horton, Inc.                                   675           14,090
(a) Walter Industries, Inc.                           1,000           18,938
                                                                 -----------
                                                                      56,128
                                                                 -----------
DRUGS & MEDICINE  --  2.46%                                                   
(a) Arterial Vascular Engineering, Inc.               1,000           35,750
(a) ESC Medical Systems Ltd.                            700           23,625
(a) NBTY, Inc.                                        1,100           20,213
    Bergen Brunswig Corporation Class (A)               400           18,550
                                                                 -----------
                                                                      98,138
                                                                 -----------

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SCHEDULE OF INVESTMENTS   
JUNE 30, 1998   

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

ELECTRICAL - MACHINERY, EQUIPMENT & SUPPLIES -- 0.51%                         
    Exide Corporation                                 1,200      $    20,175
                                                                 -----------
ELECTRIC SERVICES  --  0.37%                                                  
    El Paso Electric Company                          1,600           14,700
                                                                 -----------
ELECTRONICS  --  2.79%                                                        
    Arrow Electronics, Inc.                             500           10,875
(a) Berg Electronics Corporation                      1,100           21,519
(a) CHS Electronics, Inc.                             1,500           26,813
    General Cable Corporation                         1,000           28,875
(a) SCI Systems, Inc.                                   400           15,050
    Technitrol, Inc.                                    200            7,988
                                                                 -----------
                                                                     111,120
                                                                 -----------
ENERGY - RAW MATERIALS  --  0.30%                                             
    Cleco Corporation                                   400           11,900
                                                                 -----------
ENTERTAINMENT  --  0.92%                                                      
    Anchor Gaming                                       300           23,288
    GTECH Holdings Corporation                          400           13,475
                                                                 -----------
                                                                      36,763
                                                                 -----------
FABRICATED RUBBER PRODUCTS  --  0.43%                                         
    Carlisle Companies, Inc.                            400           17,225
                                                                 -----------
FINANCIAL - BANKS, COMMERCIAL  --  1.87%                                      
    Commerce Bancshares, Inc.                           157            7,664
    Greenpoint Financial Corporation                    400           15,050
    Popular, Inc.                                       400           26,600
    TR Financial Corporation                            600           25,125
                                                                 -----------
                                                                      74,439
                                                                 -----------
FINANCIAL - MISCELLANEOUS  --  3.01%                                          
    CMAC Investments Corporation                        400           24,600
(a) Consumer Portfolio Services, Inc.                 1,400           14,700
    Dain Rauscher Corporation                           300           16,425
    Financial Security Assurance Holdings               300           17,625
    SEI Corporation                                     400           24,800
(a) Southern Pacific Fund Corporation                 1,400           21,963
                                                                 -----------
                                                                     120,113
                                                                 -----------

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SCHEDULE OF INVESTMENTS   
JUNE 30, 1998   

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

FINANCIAL - SAVINGS/LOAN/THRIFT  --  1.32%                                    
    AMRESCO, Inc.                                       400      $    11,650
(a) ContiFinancial Corporation                          300            6,938
    Dime Bancorp, Inc.                                  411           12,304
(a) FIRSTPLUS Financial Group, Inc.                     600           21,600
                                                                 -----------
                                                                      52,492
                                                                 -----------
FINANCIAL - SECURITIES BROKERS  --  2.04%                                     
    Edwards (A.G.), Inc.                                450           19,209
    Donaldson, Lufkin & Jenrette, Inc.                  400           20,325
    Paine Webber Group Inc.                             450           19,294
    Raymond James Financial, Inc.                       750           22,452
                                                                 -----------
                                                                      81,280
                                                                 -----------
FINANCIAL SERVICES  --  1.84%                                                 
    Acceptance Insurance Companies                      600           14,738
(a) AmeriCredit Corporation                             600           21,413
    Capital One Financial Corporation                   300           37,256
                                                                 -----------
                                                                      73,407
                                                                 -----------
FOOD - PROCESSING  --  0.74%                                                  
    Interstate Bakeries Corporation                     700           23,231
(a) Smithfield Foods, Inc.                              200            6,100
                                                                 -----------
                                                                      29,331
                                                                 -----------
FOOD - WHOLESALE  --  0.60%                                                   
    Fleming Companies, Inc.                             600           10,538
    Supervalu Inc.                                      300           13,313
                                                                 -----------
                                                                      23,851
                                                                 -----------
GENERAL INDUSTRIAL MACHINERY & EQUIPMENT  --  0.21%                           
    Regal-Beloit Corporation                            300            8,550
                                                                 -----------
HELP SUPPLY SERVICES  --  1.18%                                               
(a) CDI Corporation                                     200            5,350
(a) Interim Services, Inc.                              700           22,488
(a) Volt Info Services, Inc                             700           18,988
                                                                 -----------
                                                                      46,826
                                                                 -----------
HOLDING COMPANIES - DIVERSIFIED  --  0.53%                                      
(a) Anixter International Inc.                         1,100           20,968 
                                                                 -----------

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SCHEDULE OF INVESTMENTS   
JUNE 30, 1998   

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

HOMEBUILDERS  --  0.75%                                                         
   Centex Corporation                                   400      $    15,100
(a) Champion Enterprises, Inc.                           500           14,625 
                                                                 -----------
                                                                      29,725
                                                                 -----------
HOUSEHOLD PRODUCTS & HOUSEWARES  --  0.74%                                      
(a) Furniture Brands International, Inc.                 900           25,256 
   Harvety Furniture Company, Inc.                      200            4,425
                                                                 -----------
                                                                      29,681
                                                                 -----------
INSURANCE - LIFE & HEALTH  --  0.95%                                          
    Partnerre, Ltd.                                     300           15,300
    PennCorp Financial Group, Inc.                      900           18,450
    Vesta Insurance Group, Inc.                         200            4,262
                                                                 -----------
                                                                      38,012
                                                                 -----------
INSURANCE - MULTILINE  --  0.80%                                              
    Americian National Insurance Company                100           10,525
    Capital Re Corp                                     300           21,488
                                                                 -----------
                                                                      32,013
                                                                 -----------
INSURANCE - PROPERTY & CASUALTY  --  3.52%                                    
    Everest Reinsurance Holdings, Inc.                  500           19,219
    Fremont General Corporation                         200           10,838
    LaSalle Re Holdings Ltd.                            400           15,150
    NAC Re Corp.                                        200           10,675
    Orion Capital Corporation                           300           16,762
    PXRE Corporation                                    100            3,000
    Reliance Group Holdings, Inc.                       800           14,000
    The First American Financial Corporation            300           27,000
    The PMI Group, Inc.                                 200           14,675
    TIG Holdings, Inc.                                  400            9,200
                                                                 -----------
                                                                     140,519
                                                                 -----------
INSURANCE - TITLE  --  0.70%                                                  
    Fidelity National Financial, Inc.                   700           27,868
                                                                 -----------
IRON & STEEL  --  1.30%                                                       
    Bethlehem Steel Corporation                       1,700           21,144
    National Steel Corporation Class (B)              1,200           14,250
    USX-U.S. Steel Group, Inc.                          500           16,500
                                                                 -----------
                                                                      51,894
                                                                 -----------

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SCHEDULE OF INVESTMENTS   
JUNE 30, 1998   

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

LIQUOR  --  0.62%                                                             
(a) Canadaigua Brands Class (A)                         500      $    24,594
                                                                 -----------
MEASURING & CONTROLLING DEVICES  --  0.36%                                    
(a) Input/Output, Inc.                                  800           14,250
                                                                 -----------
MEDIA  --  0.64%                                                              
    Hollinger International, Inc. Class (A)           1,500           25,500
                                                                 -----------
MEDICAL - HOSPITAL MANAGEMENT & SERVICES  --  1.74%                           
(a) American Home Patient, Inc.                         500            9,562
    Integrated Health Services, Inc.                    406           15,225
    Mariner Health Group, Inc.                        1,000           16,625
(a) NovaCare, Inc.                                    1,500           17,625
    Sun Healthcare Group, Inc.                          700           10,238
                                                                 -----------
                                                                      69,275
                                                                 -----------
MEDICAL SUPPLIES  --  0.30%                                                   
    Owens & Minor, Inc.                               1,200           12,000
                                                                 -----------
METAL FABRICATION & HARDWARE  --  0.62%                                       
    The Timken Company                                  800           24,650
                                                                 -----------
MISCELLANEOUS - MANUFACTURING  --  2.08%                                      
(a) Lexmark International Group, Inc. Class (A)         400           24,400
    NACCO Industries, Inc. Class (A)                    200           25,850
    Trinity Industries, Inc.                            600           24,900
    Vitro Sociedad Anonima ADR                        1,200            7,650
                                                                 -----------
                                                                      82,800
                                                                 -----------
NON-DURABLE & ENTERTAINMENT  --  1.21%                                        
    Department 56, Inc.                                 600           21,300
(a) Sonic Corporation                                 1,200           26,850
                                                                 -----------
                                                                      48,150
                                                                 -----------
NON-FERROUS METALS  --  0.36%                                                 
(a) Encore Wire Corporation                             900           14,513
                                                                 -----------
OFFICE & CLININCS OF DOCTORS OF MEDICINE  --  0.22%                           
(a) Coventry Healthcare, Inc.                           600            8,925
                                                                 -----------

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SCHEDULE OF INVESTMENTS   
JUNE 30, 1998   

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

OIL & GAS - DOMESTIC  --  1.84%                                               
    McDermott (J Ray) SA                                300      $    12,450
    Sun Company, Inc.                                   500           19,406
    Teekay Shipping, Corporation                        900           22,556
    Tesoro Petroleum Corporation                      1,200           19,050
                                                                 -----------
                                                                      73,462
                                                                 -----------
OIL & GAS - DRILLING  --  0.83%                                               
(a) Cliffs Drilling Company                             300            9,844
    Helmerich & Payne, Inc.                             400            8,900
(a) Key Energy Group, Inc.                            1,100           14,439
                                                                 -----------
                                                                      33,183
                                                                 -----------
OIL & GAS - FIELD SERVICES  --  0.33%                                         
    Pool Energy Services Company                        900           13,275
                                                                 -----------
OIL & GAS - OTHER SERVICES  --  1.06%                                         
    Rochester Gas & Electric Corporation                700           22,356
    UGI Corporation                                     800           19,900
                                                                 -----------
                                                                      42,256
                                                                 -----------
OPERATIVE BUILDERS  --  0.70%                                                 
(a) Fairfield Communities, Inc.                         800           15,350
    Kaufman & Broad Home Corporation                    400           12,700
                                                                 -----------
                                                                      28,050
                                                                 -----------
PACKAGING & CONTAINERS  --  0.30%                                             
    Ball Corporation                                    300           12,056
                                                                 -----------
PAPER & FOREST PRODUCTS  --  0.44%                                            
(a) Mail-Weil, Inc.                                     800           17,350
                                                                 -----------
PHARMACEUTICALS  --  1.47%                                                    
    Herbalife International, Inc. Class (A)           1,133           27,900
    ICN Pharmaceuticals, Inc.                           600           27,413
(a) PharMercia, Inc.                                    273            3,293
                                                                 -----------
                                                                      58,606
                                                                 -----------
PREPACKAGED SOFTWARE  --  0.93%                                               
(a) Intersolv, Inc.                                   1,000           16,062
(a) Symantec Corporation                                800           20,900
                                                                 -----------
                                                                      36,962
                                                                 -----------

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JUNE 30, 1998   

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

PRODUCER GOODS  --  1.16%                                                     
    Aeroquip-Vickers, Inc.                              200      $    11,675
    Chart Industries                                    600           14,325
    The Maitowoc Company, Inc.                          500           20,156
                                                                 -----------
                                                                      46,156
                                                                 -----------
PUMPS & PUMPING EQUIPMENT  --  0.35%                                          
    Graco, Inc.                                         400           13,950
                                                                 -----------
PUBLISHING - PRINTING  --  0.45%                                              
    Bowne & Company, Inc.                               400           18,000
                                                                 -----------
REAL PROPERTY  --  0.42%                                                      
    CB Commercial Real Estate Service Group             500           16,718
                                                                 -----------
RESTAURANTS & FOOD SERVICE  --  2.79%                                         
(a) Brinker International, Inc.                       1,000           19,250
    CKE Restaurants, Inc.                               700           28,875
    Daren Restaurants, Inc.                           1,200           19,050
    Foodmaker, Inc.                                     600           10,125
(a) Ryan's Family Steak Houses, Inc.                    900            9,225
    Ruby Tuesday, Inc.                                1,600           24,800
                                                                 -----------
                                                                     111,325
                                                                 -----------
RETAIL - APPAREL  --  1.60%                                                   
    Ross Stores, Inc.                                   400           17,200
(a) The Dress Barn, Inc.                                300            7,462
    Paul Harris Stores, Inc.                          1,300           17,225
(a) Payless Shoesource, Inc.                            300           22,106
                                                                 -----------
                                                                      63,993
                                                                 -----------
RETAIL - GENERAL MERCHANDISE  --  1.06%                                       
(a) Best Buy Co., Inc.                                  800           28,900
    Fingerhut Companies, Inc.                           400           13,200
                                                                 -----------
                                                                      42,100
                                                                 -----------
RETAIL - SPECIALTY LINE  --  0.54%                                            
(a) Micro Warehouse, Inc.                             1,400           21,700
                                                                 -----------
STATE COMMERCIAL BANKS  --  1.37%                                             
    Allegiance Corporation                              500           25,625
(a) First Republic Bank                                 800           28,900
                                                                 -----------
                                                                      54,525
                                                                 -----------

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JUNE 30, 1998   

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

TELECOMMUNICATIONS  --  1.08%                                                 
    360 Communications Company                          800      $    25,600
(a) Brightpoint, Inc.                                   900           13,050
    Cidco, Inc.                                       1,000            4,625
                                                                 -----------
                                                                      43,275
                                                                 -----------
TELECOMMUNICATIONS EQUIPMENT  --  0.38%                                       
(a) Paging Network, Inc.                                600            8,400
    Tadiran Ltd.                                        200            6,625
                                                                 -----------
                                                                      15,025
                                                                 -----------
TEXTILES  --  0.60%                                                           
    Burlington Industries, Inc.                       1,700           23,906
                                                                 -----------
TOBACCO  --  0.47%                                                            
    Universal Corporation                               500           18,688
                                                                 -----------
TRANSPORTATION - AIR  --  1.12%                                               
    Alaska Air Group, Inc.                              400           21,825
(a) America West Holdings, Company Class (B)            800           22,850
                                                                 -----------
                                                                      44,675
                                                                 -----------
TRANSPORTATION - MISCELLANEOUS  --  0.48%                                     
    Sea Containers, Ltd.                                500           19,125
                                                                 -----------
UTILITIES - ELECTRIC  --  2.10%                                               
    Commonwealth Energy System                          200            7,550
    Marketspan Corporation                              176            5,268
    New York State Electric & Gas Corporation           500           20,812
    Public Service Company of New Mexico              1,100           24,956
    The United Illuminating Company                     500           25,312
                                                                 -----------
                                                                      83,898
                                                                 -----------
UTILITIES - GAS  --  0.17%                                                    
    Westcoast Energy Inc.                               300            6,694
                                                                 -----------
VARIETY STORES  --  1.00%                                                     
    AMES Department Stores, Inc.                      1,000           26,312
    Shopko Stores, Inc.                                 400           13,600
                                                                 -----------
                                                                      39,912
                                                                 -----------

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SCHEDULE OF INVESTMENTS   
JUNE 30, 1998   

                                                  NUMBER          MARKET
                                                 OF SHARES       VALUE
                                                    ---------    -----------
COMMON STOCK  --  (continued)                                                   

WHOLESALE - SPECIAL LINE  --  0.32%                                           
(a) CellStar Corporation                              1,000      $    12,938
                                                                 -----------
    TOTAL COMMON STOCKS (COST $2,914,935)                          3,221,290
                                                                 -----------
INVESTMENT COMPANIES  --  0.86%                                                 
Evergreen Money Market Treasury Institutional                       
Treasury Money Market Fund Institutional                            
Service Shares                                                    
    (COST $34,101)                                   34,101           34,101
                                                                 -----------
TOTAL VALUE OF INVESTMENTS (COST $2,949,036 (b))       81.66%      $ 3,255,391  
Other Assets Less Liabilities                          18.34%          731,335  
                                                    -------      -----------
    NET ASSETS                                      100.00%      $ 3,986,726
                                                    =======      ===========

(a) Non-income producing investment.                                            

(b) Aggregate cost for financial reporting and                                  
federal income tax purposes is the same.                                
Unrealized appreciation of investments for                              
financial reporting and federal income                                  
tax purposes is as follows:                                             

  Unrealized appreciation                                        $   464,679
   Unrealized depreciation                                           (158,324)
                                                                 -----------
    NET UNREALIZED APPRECIATION                                  $   306,355
                                                                 ===========

See notes to financial statements.    

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QUAKER FIXED INCOME FUND    
SCHEDULE OF INVESTMENTS   
JUNE 30, 1998   

                                  INTEREST  MATURITY
                                 PRINCIPAL   RATE      DATE      VALUE
                                   --------- --------  --------  ---------
MORTGAGE BACKED SECURITIES -- 34.26%                                            
 FHLMC                                450,000   5.75%  15-Apr-08  $  449,260
 FNMA                                 500,000   5.75%  15-Jun-05     501,761
 FNMA                               1,000,000   6.50%  01-May-28     995,700

 TOTAL MORTGAGE BACKED SECURITIES                                  ---------
 (COST $1,933,721)                                                 1,946,721
                                                                   ---------
U.S. GOVERNMENT OBLIGATIONS -- 56.29%                                           
 U.S. Treasury Bond                   530,000   0.00%  15-Nov-21     139,607
 U.S. Treasury Bond                   270,000  10.375% 15-Nov-12     361,631
 U.S. Treasury Bond                   100,000   8.00%  15-Nov-21     128,906
 U.S. Treasury Note                   420,000  11.125% 15-Aug-03     522,900
 U.S. Treasury Note                   935,000   7.00%  15-Jul-06   1,021,487
 U.S. Treasury Note                   101,000   5.375% 15-Feb-01     100,653
 U.S. Treasury Note                   900,000   6.25%  31-Aug-02     923,344

 TOTAL U.S. GOVERNMENT OBLIGATIONS                                 ---------
 (COST $3,156,921)                                                 3,198,529
                                                                   ---------

                                            SHARES
                                            --------
INVESTMENT COMPANIES -- 6.02%                                                   
Evergreen Money Market Treasury                                           
 Institutional Money                                    341,823      341,823
                                                                   ---------
TOTAL INVESTMENT COMPANIES                                                
   (COST $341,823)                                                   341,823
                                                                   ---------
TOTAL VALUE OF INVESTMENTS                                                      
(COST $5,432,465 (a))                                    96.57%   $5,487,073
Other Assets Less Liabilities                               3.43%      195,079  
                                                        -------   ----------
     NET ASSETS                                         100.00%   $5,682,152
                                                        =======   ==========

(a) Aggregate cost for financial reporting                                      
and federal income tax purposes is the same.                            
Unrealized appreciation of investments for                              
financial reporting and federal income                                  
tax purposes is as follows:                                             

  Unrealized appreciation                                         $   58,450
   Unrealized depreciation                                             (3,842)
                                                                  ----------
     NET UNREALIZED APPRECIATION                                  $   54,608
                                                                  ==========

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QUAKER INVESTMENT TRUST   
STATEMENTS OF ASSETS AND LIABILITIES    
JUNE 30, 1998   

                                                        · Enlarge/Download Table


                                    Enhanced Stock   Core Equity    Aggressive       Mid-Cap     Small Cap  Fixed Income   
                                       Market Fund          Fund   Growth Fund    Value Fund    Value Fund          Fund   
                                    ------------------------------------------------------------------------------------   
                                                                                                                           
ASSETS                                                                                                                     
Investments, at value (cost $1,452,192,                                                                                    
 $3,984,653, $1,386,084, $7,746,359,                                                                                       
 $2,949,036 and $5,432,465) (note 2)    $1,572,922    $4,715,500    $1,459,113    $8,247,583    $3,255,391    $5,487,073   
Cash                                        14,118         5,450        25,363       667,291       117,439        71,450   
Deposits with brokers for                                                                                                  
 securities sold short                           0             0        47,468             0             0             0   
Receivables:                                                                                                               
 Dividends and interest                      1,707         4,613         2,799         8,013         2,563        86,978   
 Fund shares sold                                0        55,870       102,837       144,751       606,440        35,182   
 Investment securities sold                      0             0       169,514       125,033             0             0   
Deferred organization expenses, net                                                                                        
 (notes 2 and 4)                            22,533        22,533        22,515         9,002        22,533        22,533   
                                        ----------    ----------    ----------    ----------    ----------    ----------   
 TOTAL ASSETS                            1,611,280     4,803,966     1,829,609     9,201,673     4,004,366     5,703,216   
                                        ----------    ----------    ----------    ----------    ----------    ----------   
LIABILITIES                                                                                                                
Securities sold short, at value                                                                                            
 (proceeds $94,302)                              0             0        98,398             0             0             0   
Payables:                                                                                                                  
 Fund shares purchased                         135             0             0        35,455             0             0   
 Investment securities purchased                 0             0         1,269       112,145             0             0   
Accrued expenses                            10,878        11,147        12,020         8,923        11,311         8,411   
Due to fund sponsor (notes 2 and 3)          1,733        15,719         4,337        11,970         6,329        12,653   
                                        ----------    ----------    ----------    ----------    ----------    ----------   
 TOTAL LIABILITIES                          12,746        26,866       116,024       168,493        17,640        21,064   
                                        ----------    ----------    ----------    ----------    ----------    ----------   
NET ASSETS                                                                                                                 
(Applicable to 114,051, 331,256,                                                                                           
 142,735, 826,469, 296,051 and 546,029                                                                                     
 shares outstanding, respectively;                                                                                         
 unlimited shares of $0.01 par value,                                                                                      
 beneficial interest authorized)        $1,598,534    $4,777,100    $1,713,585    $9,033,180    $3,986,726    $5,682,152   
                                        ==========    ==========    ==========    ==========    ==========    ==========   
NET ASSET VALUE, REDEMPTION AND                                                                                            
OFFERING PRICE PER SHARE                    $14.02(1)     $14.42(2)     $12.01(3)     $10.93(4)     $13.47(5)     $10.41(6)
                                        ==========    ==========    ==========    ==========    ==========    ==========   
NET ASSETS CONSIST OF                                                                                                      
Paid-in capital                         $1,278,620    $4,032,994    $1,553,060    $8,412,859    $3,563,093    $5,640,544   
Undistributed net investment                                                                                               
 income (loss)                               3,528           677          (540)      (10,859)       (4,147)          784   
Accumulated net realized gain (loss)                                                                                       
 on investments                            195,656        12,582        92,132       129,957       121,425       (13,784)  
Net unrealized appreciation                                                                                                
 on investments                            120,730       730,847        68,933       501,223       306,355        54,608   
                                        ----------    ----------    ----------    ----------    ----------    ----------   
                                        $1,598,534    $4,777,100    $1,713,585    $9,033,180    $3,986,726    $5,682,152   
                                        ==========    ==========    ==========    ==========    ==========    ==========   

(1) $1,598,534 / 114,051 shares      (4) $9,033,180 / 826,469 shares            
(2) $4,777,100 / 331,256 shares      (5) $3,986,726 / 296,051 shares            
(3) $1,713,585 / 142,735 shares      (6) $5,682,152 / 546,029 shares            

See notes to the financial statements.    

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QUAKER INVESTMENT TRUST   
STATEMENTS OF OPERATIONS    
YEAR ENDED JUNE 30, 1998    

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                                    Enhanced Stock   Core Equity    Aggressive    Mid-Cap(1)     Small Cap  Fixed Income 
                                       Market Fund          Fund   Growth Fund    Value Fund    Value Fund          Fund 
                                    ------------------------------------------------------------------------------------ 
                                                                                                                         
INVESTMENT INCOME                                                                                                        
INCOME:                                                                                                                  
 Dividends                                $ 17,908      $ 29,985      $  7,924      $ 23,712      $ 21,252      $      0 
 Interest                                    2,476         3,049        10,399        12,734         4,501       157,991 
                                          --------      --------      --------      --------      --------      -------- 
  TOTAL INCOME                              20,384        33,034        18,323        36,446        25,753       157,991 
                                          --------      --------      --------      --------      --------      -------- 
EXPENSES:                                                                                                                
 Investment advisory fees (note 2)           6,433        17,770        10,415        26,346        16,356        12,948 
 Fund administration fees (note 2)           2,353         3,377         2,525         4,186         3,406         3,981 
 Fund accounting fees (note 2)              22,829        22,829        22,876        10,731        22,829        22,829 
 Security pricing fees                       7,920         2,245         3,142         4,098        10,242           119 
 Custody fees                                  617           578         2,149           319           683           595 
 Shareholder servicing fees                  3,938         3,941         4,277         3,165         4,175         3,598 
 Shareholder recordkeeping fees              5,009         4,998         4,998         1,973         4,998         4,998 
 Shareholder servicing distribution                                                                                      
  fees (note 3)                              2,573         5,982         3,462         8,785         5,451         4,317 
 Registration and filing                                                                                                 
  administration fees                        1,626         1,718         2,081         1,341         2,165         1,711 
 Trustee fees and meeting expenses             156           156           157            78           156           153 
 Audit fees                                  4,001         4,001         4,012         1,984         4,001         4,001 
 Legal fees                                  2,785         2,785         2,793         1,381         2,785         2,785 
 Registration and filing expenses              634         1,366         4,187         1,647         3,321           598 
 Printing expenses                           1,482         1,579         1,702           820         1,653         1,307 
 Amortization of deferred organizational                                                                                 
  expenses (note 4)                          6,756         6,756         6,775           997         6,756         6,756 
 Other operating expenses                    2,630         3,154         2,634         1,373         2,833         1,968 
                                          --------      --------      --------      --------      --------      -------- 
  TOTAL EXPENSES                            71,742        83,235        78,185        69,224        91,810        72,664 
   Less:                                                                                                                 
     Expense reimbursements (note 3)       (49,880)      (27,126)      (45,445)       (3,206)      (40,418)      (29,618)
     Investment advisory fees                                                                                            
      waived (note 2)                       (6,433)      (17,770)      (10,415)       (9,928)      (16,356)      (12,948)
     Shareholder service fees                                                                                            
      waived (note 3)                       (2,573)       (5,982)       (3,462)       (8,785)       (5,451)       (4,317)
                                          --------      --------      --------      --------      --------      -------- 
  NET EXPENSES                              12,856        32,357        18,863        47,305        29,585        25,781 
                                          --------      --------      --------      --------      --------      -------- 
   NET INVESTMENT INCOME (LOSS)              7,528           677          (540)      (10,859)       (3,832)      132,210 
                                          --------      --------      --------      --------      --------      -------- 
REALIZED AND UNREALIZED GAIN                                                                                             
 (LOSS) ON INVESTMENTS                                                                                                   
 Net realized gain (loss) from                                                                                           
 investment transactions                                                                                                 
 before income taxes                       290,761        16,584       297,196       129,957       259,589       (13,784)
  Income taxes (note 1)                          0             0        39,743             0             0             0 
  Less reimbursement (notes 1 and 3)             0             0       (39,743)            0             0             0 
                                          --------      --------      --------      --------      --------      -------- 
   NET INCOME TAXES                              0             0             0             0             0             0 
                                          --------      --------      --------      --------      --------      -------- 
 NET REALIZED GAIN (LOSS) FROM                                                                                           
  INVESTMENT TRANSACTIONS                  290,761        16,584       297,196       129,957       259,589       (13,784)
                                          --------      --------      --------      --------      --------      -------- 
 INCREASE IN UNREALIZED APPRECIATION                                                                                     
  ON INVESTMENTS                            24,466       662,487        15,896       501,223       141,382        56,616 
                                          --------      --------      --------      --------      --------      -------- 
 NET REALIZED AND UNREALIZED GAIN                                                                                        
  ON INVESTMENTS                           315,227       679,071       313,092       631,180       400,971        42,832 
                                          --------      --------      --------      --------      --------      -------- 
  NET INCREASE IN NET ASSETS RESULTING                                                                                   
   FROM OPERATIONS                        $322,755      $679,748      $312,552      $620,321      $397,139      $175,042 
                                          ========      ========      ========      ========      ========      ======== 

(1) The Quaker Mid-Cap Value Fund commenced operations on January 6, 1998.      

See notes to the financial statements.    

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QUAKER INVESTMENT TRUST   
STATEMENTS OF CHANGES IN NET ASSETS   

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                                    Enhanced Stock   Core Equity    Aggressive       Mid-Cap     Small Cap  Fixed Income 
FOR THE YEAR ENDED JUNE 30, 1998       Market Fund          Fund   Growth Fund Value Fund(1)    Value Fund          Fund 
                                    ------------------------------------------------------------------------------------ 
                                                                                                                         
INCREASE IN NET ASSETS                                                                                                   
OPERATIONS                                                                                                               
 Net investment income (loss)           $    7,528    $      677    $     (540)   $  (10,859)   $   (3,832)   $  132,210 
 Net realized gain (loss) from                                                                                           
  investment transactions                  290,761        16,584       297,196       129,957       259,589       (13,784)
 Increase in unrealized appreciation                                                                                     
  on investments                            24,466       662,487        15,896       501,223       141,382        56,616 
                                        ----------    ----------    ----------    ----------    ----------    ---------- 
  NET INCREASE IN NET ASSETS RESULTING                                                                                   
   FROM OPERATIONS                         322,755       679,748       312,552       620,321       397,139       175,042 
                                        ----------    ----------    ----------    ----------    ----------    ---------- 
DISTRIBUTIONS TO SHAREHOLDERS FROM                                                                                       
 Net investment income                      (4,067)            0           (12)            0          (464)     (131,435)
 Net realized gain from investment                                                                                       
  transactions                             (91,954)            0      (153,326)            0             0             0 
 Distribution in excess of net                                                                                           
  realized gain                                  0             0       (51,738)            0      (138,164)            0 
                                        ----------    ----------    ----------    ----------    ----------    ---------- 
  TOTAL DISTRIBUTIONS                      (96,021)            0      (205,076)            0      (138,628)     (131,435)
                                        ----------    ----------    ----------    ----------    -