QUAKER INVESTMENT TRUST, N-30D, 1997-08-28

QUAKER INVESTMENT TRUST
N-30D, 1997-08-28

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QUAKER ENHANCED STOCK MARKET FUND
Performance Update - $25,000 Investment
For the period from November 25, 1996
(commencement of operations) to June 30, 1997

- ------------------------------------------
Quaker Enhanced
Stock Market Fund S&P 500
- ------------------------------------------
11/25/96 25000 25000
11/30/96 25000 24943
12/31/96 25393 24515
1/31/97 26621 26047
2/28/97 26746 26251
3/31/97 25518 25173
4/30/97 26997 26675
5/31/97 28551 28299
6/30/97 29761 29639

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.

Total Return

- -------------------------------
Commencement of operations
through 6/30/97
- -------------------------------

19.04%

- -------------------------------

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

At June 30, 1997, the Fund would have grown to $29,761- total investment return
of 19.04% since November 25, 1996.

At June 30, 1997, a similar investment in the S & P 500 Total Return Index would
have grown to $29,639 - total investment return of 18.56% since November 25,
1996.

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.

<PAGE>
July 31, 1997

Dear Shareholder:

The Quaker Family of Funds reached the end of its first fiscal year on June 30,
1997. Substantial progress was achieved during this initial business period.
Each of the six mutual funds in the Quaker Family opened for business on
November 25, 1996. Since then, many new investors have joined the Quaker Family
and the assets under management are growing steadily.

Our management philosophy remains very straightforward. We have chosen seasoned
investment professionals to manage each of the Quaker Funds. Each manager has a
clearly defined investment strategy unique to a particular mutual fund, and will
stick with that discipline in the future. The fees paid by our investors have
been set at competitive levels, and we will make every effort to reduce them as
assets grow in the future. And most important of all, we are dedicated to
providing each of our shareholders with quality service at all times.

Financial markets have been very favorable during the life of the Quaker Family
of Funds. Domestic equity markets have shown particular strength during the
first half of 1997, while fixed income results have been modestly positive. The
Quaker Enhanced Stock Market Fund, managed by John Dorian of Fiduciary Asset
Management, has outperformed the S&P 500 Index from the inception of the Fund on
November 25, 1996 through June 30, 1997. During that period, the Fund returned
19.0% while the Index grew by 18.6%. For three months ending with June, the Fund
returned 16.6% compared with 17.7% for the Index.

We appreciate your investment in the Quaker Family of Funds and we will work
hard to earn your continued support.

Sincerely,

/s/ Peter F. Waitneight
Peter F. Waitneight
President
<PAGE>
QUAKER ENHANCED STOCK MARKET FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997

- --------------------------------------------------------------------------------
Value
Shares (note 1)
- --------------------------------------------------------------------------------
COMMON STOCKS - 96.87%

Advertising - 0.63%
Gannett Company, Inc. 50 $4,937
-- ------

Aerospace & Defense - 2.81%
The Boeing Company 20 1,061
Lockheed Martin Corporation 50 5,178
United Technologies Corporation 190 15,770
--- ------
22,009
Agriculture - 0.70%
Deere & Company 100 5,488

Auto Parts - Original Equipment - 1.20%
Cummins Engine Company 50 3,528
Federal-Mogul Corporation 50 1,750
Honeywell, Inc. 30 2,276
PACCAR Inc. 40 1,858
-- -----
9,412
Auto & Trucks - 2.73%
Arvin Industries, Inc. 40 1,090
Borg-Warner Automotive, Inc. 30 1,621
Chrysler Corporation 180 5,917
Ford Motor Company 130 4,940
General Motors Corporation 90 5,011
(a)Navistar International Corporation 160 2,760
--- -----
21,339
Beverages - 5.07%
The Coca-Cola Company 380 26,528
PepsiCo, Inc. 350 13,169
--- ------
39,697
Building Materials - 0.19%
Lowe's Companies, Inc. 40 1,490

Chemicals - 3.88%
Air Products and Chemicals, Inc. 30 2,438
Dow Chemical Company 100 8,744
E.I. du Pont de Nemours and Company 220 13,833
Monsanto Company 50 2,153
Rohm & Haas Company 20 1,801
Union Carbide Corporation 30 1,412
-- -----
30,381

(Continued)
<PAGE>

QUAKER ENHANCED STOCK MARKET FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997

Commercial Services - 0.52%
Dun & Bradstreet Corporation 90 $2,363
Ogden Corporation 80 1,740
-- -----
4,103
Computers - 4.37%
(a)Applied Magnetics Corporation 10 226
(a)Compaq Computer Corporation 40 3,970
(a)Data General Corporation 30 780
(a)Dell Computer Corporation 20 2,348
(a)Gateway 2000, Inc. 20 648
International Business Machines Corp 140 12,626
Quantum Corporation 200 4,075
(a)Seagate Technology, Inc. 30 1,057
(a)Stratus Computer, Inc. 60 3,000
(a)Sun Microsystems, Inc. 70 2,605
(a)Tandem Computers, Inc. 140 2,835
--- -----
34,170
Computer Software & Services - 2.77%
Adobe Systems, Inc. 20 701
(a)Microsoft Corporation 150 18,956
(a)Oracle Corporation 40 2,015
-- -----
21,672
Cosmetics & Personal Care - 1.32%
Alberto-Culver Company 180 5,040
Avon Products, Inc. 60 4,253
(a)Blythe Industries, Inc. 30 1,003
-- -----
10,296
Electrical Equipment - 0.87%
GPU, Inc. 20 718
(a)Niagara Mohawk Power Corporation 400 3,425
Public Service Company of New Mexico 150 2,681
--- -----
6,824
Electronics - 3.17%
General Electric Company 300 19,613
Motorola, Inc. 60 4,560
(a)National Semiconductor Corporation 20 613
-- ---
24,786
Electronics - Semiconductor - 2.11%
(a)Applied Materials, Inc. 30 2,124
Intel Corporation 90 12,763
Micron Technology, Inc. 40 1,598
-- -----
16,485

(Continued)
<PAGE>
QUAKER ENHANCED STOCK MARKET FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997

Entertainment - 2.90%
King World Productions, Inc. 40 $1,400
The Walt Disney Company 270 21,296
--- ------
22,696
Financial - Banks, Commercial - 5.39%
AmSouth Bancorporation 315 11,970
BankAmerica Corporation 20 1,290
Citicorp 30 3,617
First of America Bank Corporation 70 3,220
First Union Corporation 50 4,650
NationsBank Corporation 50 3,225
Norwest Corporation 30 1,688
State Street Corporation 20 941
SunTrust Banks, Inc. 20 1,101
Wachovia Corporation 180 10,496
--- ------
42,198
Financial - Banks, Money Center - 0.27%
J.P. Morgan & Company Incorporated 10 1,044
Republic New York Corporation 10 1,075
-- -----
2,119
Financial - Commodities Trading - 0.40%
Countrywide Credit Industries, Inc. 100 3,106

Financial - Savings/Loans/Thrift - 0.99%
H.F. Ahmanson & Company 150 6,450
Student Loan Marketing Association 10 1,270
-- -----
7,720
Financial - Securities Brokers - 3.12%
Bear Stearns Companies, Inc. 150 5,128
Franklin Resources, Inc. 20 1,451
Lehman Brothers Holdings, Inc. 40 1,620
Merrill Lynch & Company, Inc. 160 9,540
Salomon, Inc. 120 6,645
--- -----
24,384
Financial Services - 0.38%
American Express Company 40 2,980

(Continued)
<PAGE>
QUAKER ENHANCED STOCK MARKET FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997

Food - Processing - 1.72%
Campbell Soup Company 50 $2,444
Dean Foods Company 30 1,211
Heinz (H.J.) Company 40 1,845
Philip Morris Companies Inc. 180 7,976
--- -----
13,476
Food - Wholesale - 0.81%
Fleming Companies, Inc. 30 540
Quaker Oats Company 20 888
Ralston-Ralston Purina Group 60 4,931
-- -----
6,359
Foreign Securities - 2.52%
British Telecommunications plc 30 2,227
Canadian Pacific, Ltd. 100 2,843
Northern Telecom Limited 90 8,190
Royal Dutch Petroleum Company 120 6,443
--- -----
19,703
Homebuilders - 0.46%
Centex Corporation 80 3,285
Pulte Corporation 10 346
-- ---
3,631
Household Products & Housewares - 3.40%
Procter & Gamble Company 190 26,624

Insurance - Life & Health - 0.38%
AFLAC, Inc. 30 1,478
SunAmerica, Inc. 30 1,463
-- -----
2,941
Insurance - Multiline - 4.84%
Aetna, Inc. 30 3,071
Allstate Corporation 60 4,380
American International Group, Inc. 110 16,431
Chubb Corporation 20 1,338
CIGNA Corporation 30 5,325
General Re Corporation 30 5,460
Travelers Group, Inc. 30 1,892
-- -----
37,897
Insurance - Property & Casualty - 0.47%
Everest Reinsurance Holdings, Inc. 70 2,774
Progressive Corporation 10 870
-- ---
3,644

(Continued)
<PAGE>
QUAKER ENHANCED STOCK MARKET FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997
- --------------------------------------------------------------------------------
Value
Shares (note 1)
- --------------------------------------------------------------------------------
COMMON STOCKS - (Continued)

Leisure Time - 0.64%
Brunswick Corporation 160 $5,000

Machine - Construction & Mining - 0.83%
Caterpillar Inc. 50 5,381
(a)USG Corporation 30 1,088
-- -----
6,469
Machine - Diversified - 1.15%
Cooper Industries, Inc. 130 6,468
Crane Company 60 2,509
-- -----
8,977
Medical - Biotechnology - 0.37%
(a)Amgen, Inc. 50 2,906

Medical - Hospital Management & Service - 0.99%
(a)Beverly Enterprises, Inc. 200 3,250
Columbia/HCA Healthcare Corporation 50 1,966
Guidant Corporation 30 2,550
-- -----
7,766
Medical Supplies - 3.29%
(a)Acuson Corporation 40 920
American Home Products Corporation 20 1,530
Johnson & Johnson 110 7,013
Pfizer Inc. 80 9,560
Schering-Plough Corporation 140 6,720
--- -----
25,743
Metals - Diversified - 0.44%
Phelps Dodge Corporation 40 3,408

Mining - 0.63%
Asarco, Inc. 160 4,900

Miscellaneous - Distribution & Wholesale - 0.07%
Corning Inc. 10 556

Office & Business Equipment - 1.91%
Xerox Corporation 190 14,986

Oil & Gas - Domestic - 0.48%
Sun Company, Inc. 120 3,720

(Continued)
<PAGE>
QUAKER ENHANCED STOCK MARKET FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997

Oil & Gas - Equipment & Services - 1.66%
Baker Hughes Incorporated 80 $3,095
(a)Global Marine Inc. 30 699
Schlumberger Ltd. 70 8,750
Tidewater, Inc. 10 440
-- ---
12,984
Oil & Gas - Exploration - 1.92%
Burlington Resources, Inc. 50 2,206
Columbia Gas System, Inc. 40 2,610
Kerr-McGee Corporation 40 2,535
Mobil Corporation 80 5,590
Union Texas Petroleum Holdings, Inc. 100 2,087
--- -----
15,028
Oil & Gas - International - 4.62%
Amerada Hess Corporation 110 6,111
Chevron Corporation 40 2,958
Exxon Corporation 320 19,680
Helmerich & Payne, Inc. 20 1,153
Texaco Inc. 10 1,088
USX-Marathon Group 180 5,198
--- -----
36,188
Packaging & Containers - 0.38%
Kimberly-Clark Corporation 60 2,985

Pharmaceuticals - 6.34%
Abbott Laboratories 90 6,008
Bristol-Myers Squibb Company 170 13,770
Merck & Co., Inc. 180 18,630
Warner-Lambert Company 90 11,183
-- ------
49,591
Retail - Apparel - 0.37%
Nike, Inc. 50 2,919

Retail - Department Stores - 2.97%
Dayton Hudson Corporation 100 5,319
(a)Kmart Corporation 90 1,103
Sears, Roebuck and Co. 220 11,825
Wal-Mart Stores, Inc. 90 3,043
(a)Woolworth Corporation 80 1,920
-- -----
23,210

(Continued)
<PAGE>
QUAKER ENHANCED STOCK MARKET FUND

PORTFOLIO OF INVESTMENTS

Retail - General Merchandise - 0.11%
(a)Mac Frugals Bargains Close-Outs, Inc 30 $853

Retail - Grocery - 0.36%
(a)Costco Companies, Inc. 30 986
(a)Safeway, Inc. 40 1,845
-- -----
2,831
Retail - Specialty Line - 0.50%
Home Depot, Inc. 10 691
Jostens, Inc. 20 526
(a)Lands' End, Inc. 20 590
Tiffany & Co. 30 1,386
(a)Toys "R" Us, Inc. 20 700
-- ---
3,893
Telecommunications - 0.31%
Lucent Technologies, Inc. 20 1,441
Time Warner, Inc. 20 965
-- ---
2,406
Textiles - 0.04%
Russell Corporation 10 296

Tire & Rubber - 0.14%
Cooper Tire and Rubber Company 50 1,100

Tobacco - 0.63%
RJR Nabisco Holdings Corp. 150 4,950

Transportation - Air - 0.63%
Delta Air Lines, Inc. 60 4,920

Utilities - Electric - 0.47%
Montana Power Company 160 3,710

Utilities - Telecommunications - 4.23%
Ameritech Corporation 170 11,549
AT & T Corporation 200 7,013
BellSouth Corporation 220 10,203
GTE Corporation 50 2,194
US WEST Communications Group 60 2,261
-- -----
33,220

Total Common Stocks (Cost $661,818) 758,082

(Continued)
<PAGE>
QUAKER ENHANCED STOCK MARKET FUND

PORTFOLIO OF INVESTMENTS

Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares
(Cost $7,492) 7,492 $7,492

Total Value of Investments (Cost $669,310 (b)) 97.83% $765,574
Other Assets Less Liabilities 2.17% 17,000
---- ------
Net Assets 100.00% $782,574
====== ========

(a) Non-income producing investment.

(b) Aggregate cost for financial reporting and federal income tax purposes is t
appreciation (depreciation) of investments for financial reporting and fede
is as follows:

Unrealized appreciation $99,877
Unrealized depreciation (3,613)
------
Net unrealized appreciation $96,264
=======

See accompanying notes to financial statements
<PAGE>
QUAKER ENHANCED STOCK MARKET FUND

STATEMENT OF ASSETS AND LIABILITIES

June 30, 1997

ASSETS
Investments, at value (cost $669,310) ......................... $ 765,574
Cash .......................................................... 3,251
Income receivable ............................................. 1,164
Deferred organization expenses, net (notes 2 and 4) ........... 29,289
---------
Total assets ............................................... 799,278
---------
LIABILITIES
Accrued expenses .............................................. 9,212
Due to fund sponsor (note 3) .................................. 7,492
---------
Total liabilities .......................................... 16,704
---------
NET ASSETS
(applicable to 66,160 shares outstanding; unlimited
shares of $ 0.01 par value beneficial interest authorized) .... $ 782,574
=========
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE PER SHARE
($782,574 / 66,160 shares) .................................... $ 11.83
=========
NET ASSETS CONSIST OF
Paid-in capital ............................................... $ 689,394
Undistributed net investment income ........................... 65
Accumulated net realized loss on investments .................. (3,149)
Net unrealized oappreciation on investments ................... 96,264
---------
$ 782,574
=========

See accompanying notes to financial statements
<PAGE>
QUAKER ENHANCED STOCK MARKET FUND

STATEMENT OF OPERATIONS

Period from November 25, 1996
(commencement of operations) to
June 30, 1997

INVESTMENT INCOME

Income
Interest .................................................... $ 1,408
Dividends ................................................... 5,360
--------
Total income ............................................. 6,768
--------
Expenses
Investment advisory fees (note 2) ........................... 1,596
Fund administration fees (note 2) ........................... 558
Custody fees ................................................ 5,303
Registration and filing administration fees (note 2) ........ 733
Fund accounting fees (note 2) ............................... 14,600
Audit fees .................................................. 4,500
Legal fees .................................................. 2,779
Securities pricing fees ..................................... 6,514
Shareholder servicing fees (note 3) ......................... 638
Shareholder recordkeeping fees (note 2) ..................... 3,604
Shareholder servicing expenses .............................. 1,165
Registration and filing expenses ............................ 300
Printing expenses ........................................... 1,910
Amortization of deferred organization expenses (note 4) ..... 4,035
Trustee fees and meeting expenses ........................... 269
Other operating expenses .................................... 3,944
--------
Total expenses ........................................... 52,448
--------
Less:
Expense reimbursements (note 3) ....................... (39,103)
Investment advisory fees waived (note 2) .............. (1,596)
Fund administration fees waived (note 2) .............. (7,950)
Shareholder servicing fees waived (note 3) ............ (638)
--------
Net expenses ............................................. 3,161
--------
Net investment income ................................. 3,607
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS

Net realized loss from investment transactions ................. (3,149)
Increase in unrealized appreciation on investments ............. 96,264
--------
Net realized and unrealized gain on investments ............. 93,115
--------
Net increase in net assets resulting from operations ..... $ 96,722
========

See accompanying notes to financial statements
<PAGE>

QUAKER ENHANCED STOCK MARKET FUND

STATEMENT OF CHANGES IN NET ASSETS

Period from November 25, 1996
(commencement of operations) to
June 30, 1997

INCREASE IN NET ASSETS

Operations
Net investment income .............................................. $ 3,607
Net realized loss from investment transactions ..................... (3,149)
Increase in unrealized appreciation on investments ................. 96,264
---------
Net increase in net assets resulting from operations ............ 96,722
---------
Distributions to shareholders from
Net investment income .............................................. (3,542)
---------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) 689,394
---------
Total increase in net assets ................................. 782,574
---------
NET ASSETS

Beginning of period ................................................... 0
---------
End of period (including undistributed net investment income .......... $ 782,574
of $65) =========

(a) A summary of capital share activity follows:

----------------------
Shares Value
----------------------
Shares sold ................................................. 67,743 $ 707,083
Shares issued for reinvestment of distributions ............. 301 3,442
------- ---------
68,044 710,525

Shares redeemed ............................................. (1,884) (21,131)
------- ---------
Net increase .............................................. 66,160 $ 689,394
======= =========
</TABLE>

See accompanying notes to financial statements
<PAGE>

QUAKER ENHANCED STOCK MARKET FUND

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout the Period)

Period from November 25, 1996
(Commencement of operations) to
June 30, 1997

Net asset value, beginning of period ........................ $10.00
--------

Income from investment operations
Net investment income ................................... 0.07
Net realized and unrealized gain on investments ......... 1.83
--------
Total from investment operations ..................... 1.90
--------
Distributions to shareholders from
Net investment income ................................... (0.07)
--------
Net asset value, end of period .............................. $11.83
========

Total return ................................................ 19.04 %(c)
========

Ratios/supplemental data

Net assets, end of period ................................. $782,574
========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ........... 16.44 %(a)
After expense reimbursements and waived fees ............ 1.00 %(a)

Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees ........... (14.32)%(a)
After expense reimbursements and waived fees ............ 1.14 %(a)

Portfolio turnover rate ................................... 34.26 %

Average broker commissions per share ...................... $0.0203(b)

(a) Annualized.

(b) Represents total commission paid on portfolio securities divided by total
port commissions were charged.

See accompanying notes to financial statements
<PAGE>

QUAKER ENHANCED STOCK MARKET FUND

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION

The Quaker Enhanced Stock Market Fund (the "Fund") is a diversified series of
shares of beneficial interest of the Quaker Investment Trust (the "Trust"). The
Trust, an open-end investment company, was organized on October 24, 1990 as a
Massachusetts Business Trust and is registered under the Investment Company Act
of 1940, as amended. The investment objective of the Fund is to provide
long-term capital growth by investing primarily in equity securities of domestic
U.S. companies. The Fund began operations on November 25, 1996. The following is
a summary of significant accounting policies followed by the Fund.

A. Security Valuation - The Fund's investments in securities are carried at
value. Securities listed on an exchange or quoted on a national market
system are valued at 4:00 p.m., New York time on the day of valuation.
Other securities traded in the over-the-counter market and listed
securities for which no sale was reported on that date are valued at the
most recent bid price. Securities for which market quotations are not
readily available, if any, are valued by using an independent pricing
service or by following procedures approved by the Board of Trustees.
Short-term investments are valued at cost which approximates value.

B. Federal Income Taxes - No provision has been made for federal income taxes
or personal holding company taxes since it is the policy of the Fund to
comply with the provisions of the Internal Revenue Code applicable to
regulated investment companies and personal holding companies and to make
sufficient distributions of taxable income to relieve it from substantially
all federal income taxes.

Due to a concentration of shareholders at June 30, 1997 the Fund is subject
to the provisions of the Internal Revenue Code applicable to personal
holding companies.

Net investment income (loss) and net realized gains (losses) may differ for
financial statement and income tax purposes primarily because of losses
incurred subsequent of October 31, which are deferred for income tax
purposes. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing
of dividend distributions, the fiscal year in which amounts are distributed
may differ from the year that the income or realized gains were recorded by
the Fund.

D. Distributions to Shareholders - The Fund generally declares dividends
annually, payable in December, on a date selected by the Trust's Trustees.
In addition, distributions may be made annually in December out of net
realized gains through October 31 of that year. Distributions to
shareholders are recorded on ex-dividend date. The Fund may make a
supplemental distribution subsequent to the end of its fiscal year ending
June 30.

E. Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual

<PAGE>

QUAKER ENHANCED STOCK MARKET FUND

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

results could differ from those estimates.

F. Repurchase Agreements - The Fund may acquire U. S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the 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 market interest rate earned by the Fund effective for the
period of time during which the repurchase agreement is in effect. Delivery
pursuant to the resale typically will occur within one to five days of the
purchase. The Fund will not enter into a repurchase agreement which will
cause more than 10% of its net assets to be invested in repurchase
agreements which extend beyond seven days. In the event of bankruptcy of
the other party to a repurchase agreement, the Fund could experience delays
in recovering its cash or the securities lent. To the extent that in the
interim the value of the securities purchased may have declined, the Fund
could experience a loss. In all cases, the creditworthiness of the other
party to a transaction is reviewed and found satisfactory by the Advisor.
Repurchase agreements are, in effect, loans of Fund assets. The Fund will
not engage in reverse repurchase transactions, which are considered to be
borrowings under the Investment Company Act of 1940, as amended.

NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS

Pursuant to an investment advisory agreement, Fiduciary Asset Management Company
(the "Advisor") provides the Fund with a continuous program of supervision of
the Fund's assets, including the composition of its portfolio, and furnishes
advice and recommendations with respect to investments, investment policies and
the purchase and sale of securities. As compensation for its services, the
Advisor receives a fee at the annual rate of 0.50% of the Fund's average daily
net assets.

Currently, the Fund does not offer its shares for sale in states which require
limitations to be placed on its expenses. The Advisor intends to voluntarily
waive all or a portion of its fee. There can be no assurance that the foregoing
voluntary fee waivers will continue. The Advisor has voluntarily waived its fee
amounting to $1,596 ($0.03 per share) for the period ended June 30, 1997.

The Fund's administrator, The Nottingham Company (the "Administrator"), provides
administrative services to and is generally responsible for the overall
management and day-to-day operations of the Fund pursuant to an accounting and
administrative agreement with the Trust. As compensation for its services, the
Administrator receives a fee at the annual rate of 0.175% of the Fund's first
$50 million of average daily net assets, 0.150% of the next $50 million of
average daily net assets, and 0.125% of its average daily net assets in excess
of $100 million. The Administrator also receives a monthly fee of $2,000 for
accounting and recordkeeping services. Additionally, the Administrator charges
the Fund for servicing of shareholder accounts and registration of the Fund's
shares. The administrator also charges the Fund for certain expenses involved
with the daily valuation of portfolio securities. The administrator has
voluntarily waived a portion of its fee amounting to $7,950 ($0.16 per share)
for the period ended June 30, 1997.

Certain organization expenses totaling $23,333 and $833 were paid to a company
controlled by the Administrator and to an officer of the Fund, respectively, for
the period ended June 30, 1997.
<PAGE>

QUAKER ENHANCED STOCK MARKET FUND

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

The Fund's Distributor, Quaker Securities, Inc. (the "Distributor") was paid
commissions of $416 for purchases and sales of investments, other than
short-term investments for the period ended June 30, 1997.

Certain Trustees and officers of the Trust are also officers of the Advisor, the
Distributor or the Administrator.

NOTE 3 - SERVICE FEES

The Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust as defined in the Investment Company Act of
1940 (the "Act"), adopted a Shareholder Servicing Agreement (the "Agreement").
Pursuant to this Agreement, Quaker Funds, Inc. ("the "Sponsor") will provide
oversight with respect to the Fund's investment advisor, arrange for payment of
investment advisory and administrative fees, coordinate payments under the
Fund's Distribution Plan, develop communications with existing Fund
shareholders, assist in responding to shareholder inquiries, and will provide
other shareholder services. As compensation for the services, Quaker Funds, Inc.
receives 0.20% of the Fund's average daily net assets. The Sponsor intends to
voluntarily waive all or a portion of its fee and reimburse expenses of the Fund
to limit total Fund operating expenses to 1.00% of the average daily net assets
of the Fund. There can be no assurance that the foregoing voluntary fee waivers
or reimbursements will continue. The Sponsor has voluntarily waived its fee
amounting to $638 and has reimbursed expenses totaling $39,103 for the period
ended June 30, 1997.

NOTE 4 - DEFERRED ORGANIZATION EXPENSES

Expenses totaling $33,324 incurred in connection with its organization and the
registration of its shares, which were originally paid by the Fund's Sponsor,
have been assumed by the Fund.

The organization expenses are being amortized using the straight-line method
over a period of sixty months. Investors purchasing shares of the Fund bear such
expenses only as they are amortized against the Fund's investment income.

NOTE 5 - PURCHASES AND SALES OF INVESTMENTS

Purchases and sales of investments, other than short-term investments,
aggregated $842,561 and $170,102, respectively, for the period ended June 30,
1997.

<PAGE>

Independent Auditor's Report

July 28, 1997

To the Shareholders and Board of Trustees
Quaker Enhanced Stock Market Fund
Rocky Mount, North Carolina

We have audited the statements of assets and liabilities, including the
schedules of investments, of the QUAKER ENHANCED STOCK MARKET FUND (one of the
portfolios constituting the Quaker Investment Trust series of funds) as of June
30, 1997, and the related statements of operations and of changes in net assets
and the selected per share data and ratios for the period from November 25, 1996
(commencement of operations) to June 30, 1997. These financial statements and
per share data and ratios are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
per share data and ratios based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and per share data and ratios
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of June 30, 1997, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and selected per share data and ratios
referred to above present fairly, in all material respects, the financial
position of the QUAKER ENHANCED STOCK MARKET FUND (one of the portfolios
constituting the Quaker Investment Trust series of funds) as of June 30, 1997,
and the results of its operations and changes in its net assets and the selected
per share data and ratios for the period from November 25, 1996 (commencement of
operations) to June 30, 1997 in conformity with generally accepted accounting
principles.

/s/ Goldenberg Rosenthal Friedlander, LLP

Jenkintown, Pennsylvania

<PAGE>
QUAKER CORE EQUITY FUND
Performance Update - $25,000 Investment
For the period from November 25, 1996
(commencement of operations) to June 30, 1997

- -------------------------------------------
Quaker
Core
Equity S & P 500
- -------------------------------------------
11/25/96 25000 25000
11/30/96 24875 24943
12/31/96 24500 24515
1/31/97 25928 26047
2/28/97 26229 26251
3/31/97 24575 25173
4/30/97 26028 26675
5/31/97 27807 28299
6/30/97 29125 29639

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.

Total Return

- -------------------------------
Commencement of operations
through 6/30/97
- -------------------------------

16.50%

- -------------------------------

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

At June 30, 1997, the Fund would have grown to $29,125- total investment return
of 16.50% since November 25, 1996.

At June 30, 1997, a similar investment in the S & P 500 Total Return Index would
have grown to $29,639 - total investment return of 18.56% since November 25,
1996.

July 31, 1997

Dear Shareholder:

Financial markets have been very favorable during the life of the Quaker Family
of Funds. Domestic equity markets have shown particular strength during the
first half of 1997, while fixed income results have been modestly positive. The
Quaker Core Equity Fund, managed by Bruce Marra of West Chester Capital
Advisors, has performed well from the inception of the Fund on November 25, 1996
through June 30, 1997. During that period, the Fund returned 16.5% while the S&P
500 Index grew by 18.6%. For three months ending with June, the Fund returned
18.5% compared with 17.7% for the Index.

We appreciate your investment in the Quaker Family of Funds and we will work
hard to earn your continued support.

Sincerely,

/s/ Peter F. Waitneight
Peter F. Waitneight
President

<PAGE>
QUAKER CORE EQUITY FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997

Aerospace & Defense - 5.07%
The Boeing Company 300 $15,919
Lockheed Martin Corporation 100 10,356
--- ------
26,275
Beverages - 2.18%
PepsiCo, Inc. 300 11,287

Computer Software & Services - 13.50%
Automatic Data Processing, Inc. 200 9,325
(a)Ceridian Corporation 300 12,675
(a)Cisco Systems, Inc. 200 13,425
Computer Associates International, I 400 22,275
Electronic Data Systems 300 12,300
--- ------
70,000
Cosmetics & Personal Care - 2.52%
Colgate-Palmolive Company 200 13,050

Electronics - 5.76%
General Electric Company 200 13,075
Hewlett-Packard Company 300 16,800
--- ------
29,875
Electronics - Semiconductor - 4.20%
Intel Corporation 100 14,181
Motorola, Inc. 100 7,600
--- -----
21,781
Engineering & Construction - 2.13%
Fluor Corporation 200 11,025

Financial Services - 9.46%
Fannie Mae 300 13,087
Franklin Resources, Inc. 300 21,769
Morgan Stanley, Dean Witter, Discove 330 14,211
--- ------
49,067
Financial - Banks, Money Center - 8.57%
Citicorp 100 12,056
J. P. Morgan & Company, Incorporated 100 10,437
Mellon Bank Corporation 200 9,025
NationsBank Corporation 200 12,900
--- ------
44,418

(Continued)
<PAGE>

QUAKER CORE EQUITY FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997

Food - Processing - 7.76%
Heinz (H.J) Company 200 $9,225
Hershey Foods Corporation 200 11,062
Philip Morris Companies, Inc. 450 19,941
--- ------
40,228
Household Products & Housewares - 2.70%
Procter & Gamble Company 100 14,013

Insurance - Life & Health - 1.90%
AFLAC, Inc. 200 9,850

Insurance - Multiline - 2.88%
American International Group, Inc. 100 14,937

Medical - Biotechnology - 4.61%
Pfizer, Inc. 200 23,900

Office & Business Equipment - 5.24%
Ikon Office Solutions 300 7,463
Xerox Corporation 250 19,719
--- ------
27,182
Oil & Gas - Equipment & Services - 3.62%
Schlumberger, Ltd. 150 18,750

Oil & Gas - Exploration - 1.06%
El Paso Natural Gas Company 100 5,500

Oil & Gas - International - 3.80%
Chevron Corporation 100 7,394
Exxon Corporation 200 12,300
--- ------
19,694
Pharmaceuticals - 2.00%
Merck & Co., Inc. 100 10,350

Restaurants & Food Service - 0.93%
McDonald's Corporation 100 4,831

Retail- Apparel - 1.12%
Nike, Inc. 100 5,838

(Continued)
<PAGE>
QUAKER CORE EQUITY FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997

Telecommunications Equipment - 4.53%
Lucent Technologies, Inc. 200 $14,413
Northern Telecom Limited 100 9,100
--- -----
23,513
Wholesale - Special Line - 1.23%
Unisource Worldwide, Inc. 400 6,400

TOTAL COMMON STOCKS (Cost $433,404) 501,764
-------
INVESTMENT COMPANY - 1.28%

Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Sh 6,669 6,669
(Cost $6,669)

Total Value of Investments (Cost $440,073 (b)) 98.05% 508,433
Other Assets 1.95% 10,092
---- ------
Net Assets 100.00% $518,525
====== ========

(a) Non-income producing investment.

(b) Aggregate cost for federal income tax purposes is $440,098. Unrealized a
investments for federal income tax purposes is as follows:

Unrealized appreciation $76,310
Unrealized depreciation (7,975)
-------
Net unrealized appreciation $68,335
=======

See accompanying notes to financial statements
<PAGE>
QUAKER CORE EQUITY FUND

STATEMENT OF ASSETS AND LIABILITIES

June 30, 1997

ASSETS
Investments, at value (cost $440,073) .................... $ 508,433
Cash ..................................................... 132
Income receivable ........................................ 594
Deferred organization expenses, net (notes 2 and 4) ...... 29,289
---------
Total assets .......................................... 538,448
---------
LIABILITIES
Accrued expenses ......................................... 8,044
Due to fund sponsor (note 3) ............................. 11,879
---------
Total liabilities ..................................... 19,923
---------
NET ASSETS
(applicable to 44,663 shares outstanding; unlimited
shares of $ 0.01 par value beneficial interest authorized) $ 518,525
=========
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE PER SHARE
($518,525 / 44,663 shares) ............................... $ 11.61
=========

NET ASSETS CONSIST OF
Paid-in capital .......................................... $ 454,167
Accumulated net realized loss on investments ............. (4,002)
Net unrealized appreciation on investments ............... 68,360
---------
$ 518,525
=========

See accompanying notes to financial statements
<PAGE>
QUAKER CORE EQUITY FUND

STATEMENT OF OPERATIONS

Period from November 25, 1996
(commencement of operations) to
June 30, 1997

INVESTMENT INCOME

Income
Dividends ............................................. $ 3,288
Interest .............................................. 597
--------
Total income ....................................... 3,885
--------
Expenses
Investment advisory fees (note 2) ..................... 1,589
Fund administration fees (note 2) ..................... 371
Custody fees .......................................... 2,646
Registration and filing administration fees (note 2 ) . 733
Fund accounting fees (note 2) ......................... 14,600
Audit fees ............................................ 4,500
Legal fees ............................................ 2,779
Securities pricing fees ............................... 2,206
Shareholder servicing fees (note 3) ................... 530
Shareholder recordkeeping fees (note 2) ............... 3,604
Shareholder servicing expenses ........................ 1,143
Registration and filing expenses ...................... 300
Printing expenses ..................................... 1,908
Amortization of deferred organization expenses (note 4) 4,035
Trustee fees and meeting expenses ..................... 269
Other operating expenses .............................. 3,936
--------
Total expenses ..................................... 45,149
--------
Less:
Expense reimbursements (note 3) ................. (32,372)
Investment advisory fees waived (note 2) ........ (1,589)
Fund administration fees waived (note 2) ........ (7,797)
Shareholder servicing fees waived (note 3) ...... (530)
--------
Net expenses ....................................... 2,861
--------
Net investment income ........................... 1,024
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS

Net realized loss from investment transactions ........... (4,002)
Increase in unrealized appreciation on investments ...... 68,360
--------
Net realized and unrealized gain on investments ....... 64,358
--------
Net increase in net assets resulting from operations $ 65,382
========

See accompanying notes to financial statements
<PAGE>
QUAKER CORE EQUITY FUND

STATEMENT OF CHANGES IN NET ASSETS

Period from November 25, 1996
(commencement of operations) to
June 30, 1997

INCREASE IN NET ASSETS

Operations
Net investment income ................................................. $ 1,024
Net realized loss from investment transactions ........................ (4,002)
Increase in unrealized appreciation on investments .................... 68,360
---------
Net increase in net assets resulting from operations ............... 65,382
---------
Distributions to shareholders from
Net investment income ................................................. (1,024)
---------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) .. 454,167
---------
Total increase in net assets .................................... 518,525

NET ASSETS

Beginning of period ...................................................... 0
---------
End of period ............................................................ $ 518,525
=========

(a) A summary of capital share activity follows:

-------------------
Shares Value
-------------------
Shares sold ....................................................... 45,060 $ 458,899

Shares issued for reinvestment of distributions ................... 93 1,024
------ ---------
45,153 459,923

Shares redeemed ................................................... (490) (5,756)
------ ---------
Net increase .................................................... 44,663 $ 454,167
====== =========

</TABLE>

See accompanying notes to financial statements
<PAGE>
QUAKER CORE EQUITY FUND

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout the Period)

Period from November 25, 1996
(commencement of operations) to
June 30, 1997

Net asset value, beginning of period ......................... $10.00
---------
Income from investment operations
Net investment income .................................. 0.04
Net realized and unrealized gain on investments ........ 1.61
---------
Total from investment operations .................... 1.65
---------
Distributions to shareholders from
Net investment income .................................. (0.04)
---------
Net asset value, end of period ............................... $11.61
=========

Total return ................................................. 16.50%(c)
=========

Ratios/supplemental data

Net assets, end of period ................................. $518,525
=========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees .......... 21.30 %(a)
After expense reimbursements and waived fees ........... 1.35 %(a)

Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees .......... (19.47)%(a)
After expense reimbursements and waived fees ........... 0.49 %(a)

Portfolio turnover rate ................................... 11.49 %(a)

Average broker commissions per share ...................... $0.2356(b)

(a) Annualized.

(b) Represents total commission paid on portfolio securities divided by total
portfolio commissions were charged.

See accompanying notes to financial statements
<PAGE>
QUAKER CORE EQUITY FUND

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION

The Quaker Core Equity Fund (the "Fund") is a diversified series of shares of
beneficial interest of the Quaker Investment Trust (the "Trust"). The Trust, an
open-end investment company, was organized on October 24, 1990, as a
Massachusetts Business Trust and is registered under the Investment Company Act
of 1940, as amended. The investment objective of the Fund is to provide
shareholders with long-term capital growth by investing primarily in equity
securities of domestic U.S. companies. The Fund began operations on November 25,
1996. The following is a summary of significant accounting policies followed by
the Fund.

Due to a concentration of shareholders at June 30, 1997 the Fund is subject
to the provisions of the Internal Revenue Code applicable to personal
holding companies.

Net investment income (loss) and net realized gains (losses) may differ for
financial statement and income tax purposes primarily because of losses
incurred subsequent to October 31, which are deferred for income tax
purposes. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing
of dividend distributions, the fiscal year in which amounts are distributed
may differ from the year that the income or realized gains were recorded by
the Fund.

D. Distributions to Shareholders - The Fund generally declares dividends
annually, payable in December, on a date selected by the Trust's Trustees.
In addition, distributions may be made annually in December out of net
realized gains through October 31 of that year. Distributions to
shareholders are recorded on the ex-dividend date. The Fund may make a
supplemental distribution subsequent to the end of its fiscal year ending
June 30.

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS

Pursuant to an investment advisory agreement, West Chester Capital Advisors,
Inc. (the "Advisor") provides the Fund with a continuous program of supervision
of the Fund's assets, including the composition of its portfolio, and furnishes
advice and recommendations with respect to investments, investment policies and
the purchase and sale of securities. As compensation for its services, the
Advisor receives a fee at the annual rate of 0.75% of the Fund's average daily
net assets.

Currently, the Fund does not offer its shares for sale in states which require
limitations to be placed on its expenses. The Advisor intends to voluntarily
waive all or a portion of its fee. There can be no assurance that the foregoing
voluntary fee waivers will continue. The Advisor has voluntarily waived its fee
amounting to $1,589 ($0.05 per share) for the period ended June 30, 1997.

The Fund's administrator, The Nottingham Company (the "Administrator"), provides
administrative services to and is generally responsible for the overall
management and day-to-day operations of the Fund pursuant to an accounting and
administrative agreement with the Trust. As compensation for its services, the
Administrator receives a fee at the annual rate of 0.175% of the Fund's first
$50 million of average daily net assets, 0.150% of the next $50 million of
average daily net assets, and 0.125% of its average daily net assets in excess
of $100 million. The Administrator also receives a monthly fee of $2,000 for
accounting and recordkeeping services. Additionally, the Administrator charges
the Fund for servicing of shareholder accounts and registration of the Fund's
shares. The Administrator also charges the Fund for certain expenses involved
with the daily valuation of portfolio securities. The Administrator has
voluntarily waived a portion of its total fees amounting to $7,797 ($.23 per
share) for the period ended June 30, 1997.

Certain organization expenses totaling $23,333 and $833 were paid to a company
controlled by the Administrator and to an officer of the Fund, respectively, for
the period ended June 30, 1997.

The Fund's Distributor, Quaker Securities, Inc. (the "Distributor") was paid
commissions of $1,979 for purchases and sales of investments, other than
short-term investments for the period ended June 30, 1997.
<PAGE>

QUAKER CORE EQUITY FUND

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

Certain Trustees and officers of the Trust are also officers of the Advisor, the
Distributor or the Administrator.

NOTE 3 - SERVICE FEES

The Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust as defined in the Investment Company Act of
1940 (the "Act"), adopted a Shareholder Servicing Agreement (the "Agreement").
Pursuant to this Agreement, Quaker Funds, Inc. (the "Sponsor") will provide
oversight with respect to the Fund's investment advisor, arrange for payment of
investment advisory and administrative fees, coordinate payments under the
Fund's Distribution Plan, develop communications with existing Fund
shareholders, assist in responding to shareholder inquiries, and will provide
other shareholder services. As compensation for these services, Quaker Funds,
Inc. receives 0.25% of the Fund's average daily net assets. The Sponsor intends
to voluntarily waive all or a portion of its fee and reimburse expenses of the
Fund to limit total Fund operating expenses to 1.35% of the average daily net
assets of the Fund. There can be no assurance that the foregoing voluntary fee
waivers or reimbursements will continue. The Sponsor has voluntarily waived its
fee amounting to $530 and has reimbursed expenses totaling $32,372 for the
period ended June 30, 1997.

NOTE 4 - DEFERRED ORGANIZATION EXPENSES

Expenses totaling $33,324 incurred in connection with its organization and the
registration of its shares, which were originally paid by the Fund's Sponsor,
have been assumed by the Fund.

NOTE 5 - PURCHASES AND SALES OF INVESTMENTS

Purchases and sales of investments, other than short-term investments,
aggregated $475,085 and $37,680 respectively, for the period ended June 30,
1997.
<PAGE>
Independent Auditor's Report

July 28, 1997

To the Shareholders and Board of Trustees
Quaker Core Equity Fund
Rocky Mount, North Carolina

We have audited the statements of assets and liabilities, including the
schedules of investments, of the QUAKER CORE EQUITY FUND (one of the portfolios
constituting the Quaker Investment Trust series of funds) as of June 30, 1997,
and the related statements of operations and of changes in net assets and the
selected per share data and ratios for the period from November 25, 1996
(commencement of operations) to June 30, 1997. These financial statements and
per share data and ratios are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
per share data and ratios based on our audit.

In our opinion, the financial statements and selected per share data and ratios
referred to above present fairly, in all material respects, the financial
position of the QUAKER CORE EQUITY FUND (one of the portfolios constituting the
Quaker Investment Trust series of funds) as of June 30, 1997, and the results of
its operations and changes in its net assets and the selected per share data and
ratios for the period from November 25, 1996 (commencement of operations) to
June 30, 1997 in conformity with generally accepted accounting principles.

/s/ Goldenberg Rosenthal Friedlander, LLP

Jenkintown, Pennsylvania
<PAGE>

QUAKER AGRESSIVE GROWTH FUND
Performance Update - $25,000 Investment
For the period from November 25, 1996
(commencement of operations) to June 30, 1997

- -------------------------------------------
Quaker
Aggressive
Growth
Fund S&P 500
- -------------------------------------------
11/25/96 25000 25000
11/30/96 25000 24943
12/31/96 25858 24515
1/31/97 27660 26047
2/28/97 27560 26251
3/31/97 26133 25173
4/30/97 24581 26675
5/31/97 26383 28299
6/30/97 28169 29639

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
Agressive 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.

Total Return

- -------------------------------
Commencement of operations
through 6/30/97
- -------------------------------

12.68%

- -------------------------------

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

At June 30, 1997, the Fund would have grown to $28,169 - total investment return
of 12.68% since November 25, 1996.

At June 30, 1997, a similar investment in the S & P 500 Total Return Index would
have grown to $29,639 - total investment return of 18.56% since November 25,
1996.

<PAGE>

July 31, 1997

Dear Shareholder:

Financial markets have been very favorable during the life of the Quaker Family
of Funds. Domestic equity markets have shown particular strength during the
first half of 1997, while fixed income results have been modestly positive. The
Quaker Aggressive Growth Fund, managed by Manu Daftary of DG Capital Management,
has not fully participated in the rise of the market from the inception of the
Fund on November 25, 1996 through June 30, 1997. During that period, the Fund
returned 12.7% while the S&P 500 Index grew by 18.6%. For three months ending
with June, the Fund returned 7.8% compared with 17.7% for the Index. The Fund
became defensive and raised cash in April when the market moved downward, and
did not fully participate in the strong recovery later in the quarter.

We appreciate your investment in the Quaker Family of Funds and we will work
hard to earn your continued support.

Sincerely,

/s/ Peter F. Waitneight
Peter F. Waitneight
President

<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
QUAKER AGGRESSIVE GROWTH FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997
- ---------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ---------------------------------------------------------------------------------------------
COMMON STOCKS - 83.68%

Auto Parts - Replacement Equipment - 3.12%
Federal Mogul Corporation 1,000 $35,000

Chemicals - Specialty - 2.34%
Great Lakes Chemical Corporation 500 26,187

Computers - 1.75%
(a)Zitel Corporation 1,000 19,625

Computer Software & Services - 7.27%
Autodesk, Inc. 400 15,325
(a)BMC Software, Inc. 300 16,612
(a)Cisco Systems, Inc. 400 26,850
(a)Netscape Communications Corporation 200 6,413
(a)Summit Design, Inc. 2,000 16,250
----- ------
81,450
Diversified Operations - 3.86%
Corning Inc. 300 16,687
Textron, Inc. 400 26,550
--- ------
43,237
Electronics - 1.41%
(a)Lo-Jack Corporation 1,100 15,812

Electronics - Semiconductor - 8.15%
(a)Asyst Technologies, Inc. 600 26,400
(a)Dupont Photomasks, Inc. 500 27,000
(a)PRI Automation, Inc. 1,000 37,938
----- ------
91,338
Financial - Banks, Commercial - 4.57%
MBNA Corporation 1,000 36,625
Northern Trust Corporation 300 14,513
--- ------
51,138
Financial - Savings/Loans/Thrifts - 1.60%
Washington Mutual, Inc. 300 17,925

Financial Services - 4.31%
Federal Home Loan Mortgage 700 24,544
Stifel Financial Corporation 2,000 23,750
----- ------
48,294
Food Processing - 1.20%
Wrigley (WM) Jr. Company 200 13,450

Food - Wholesale - 1.97%
(a)Ralcorp Holdings, Inc. 1,500 22,125

(Continued)
<PAGE>

QUAKER AGGRESSIVE GROWTH FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997

- ---------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ---------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)

Furniture & Home Appliances - 2.19%
Windmere-Durable Holdings Inc. 1,500 $24,562

Insurance - Multiline - 2.61%
The Hartford Financial Services Group Inc. 200 16,625
Travelers Group, Inc. 200 12,612
--- ------
29,237
Insurance - Property & Casualty - 2.84%
Reliance Group Holdings, Inc. 1,000 11,875
Travelers Property Casualty Corporation 500 19,938
--- ------
31,813
Imaging - 1.37%
Eastman Kodak Company 200 15,350

Lodging - 1.33%
(a)Extended Stay America, Inc. 1,000 14,875

Machine - Diversified - 5.61%
AGCO Corporation 500 17,937
Deere & Company 300 16,463
(a)ITEQ, Inc. 3,000 28,500
----- ------
62,900
Medical - Biotechnology - 1.56%
(a)Molecular Devices Corporation 1,000 17,500

Medical Supplies - 2.74%
(a)Boston Scientific Corporation 500 30,719

Oil & Gas - Equipment & Services - 1.19%
(a)Reading & Bates Corporation 500 13,375

Oil & Gas - Exploration - 1.67%
(a)Frontier Natural Gas Corporation 10,000 18,750

Packaging & Containers - 1.38%
(a)Owens-Illinois, Inc. 500 15,500

Pharmaceuticals - 6.07%
American Home Products Corporation 300 22,950
(a)Astra AB 1,067 20,267
Warner-Lambert Company 200 24,850
--- ------
68,067

(Continued)
<PAGE>

QUAKER AGGRESSIVE GROWTH FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997

Retail - Apparel - 0.94%
TJX Companies, Inc. 400 $10,550

Retail - Department Stores - 1.42%
Dayton Hudson Corporation 300 15,956

Telecommunications - 3.14%
(a)SmarTalk Teleservices Inc. 1,000 15,500
Telefonaktiebolaget LM Ericsson 500 19,688
--- ------
35,188
Telecommunications Equipment - 1.29%
Lucent Technologies, Inc. 200 14,413

Tobacco - 1.98%
Philip Morris Companies, Inc. 500 22,156

Transportation - Rail - 1.60%
Burlington Northern Santa Fe 200 17,975

Trucking & Leasing - 1.20%
CNF Transportation Inc. 400 13,475

Total Common Stocks (Cost $884,905) 937,942
-------

INVESTMENT COMPANY - 11.92%

Evergreen Money Market Treasury Institutional Money 66,825 66,825
Market Fund Institutional Service Shares
Evergreen Money Market Treasury Instititutional Treasury 66,825 66,825
Money Market Fund Institutional Service Shares ------ -------

Total Investment Company (Cost $133,650) 133,650
-------

Total Value of Investments (Cost $1,018,555 (b)) 95.60 % 1,071,592
Other Assets less Liabilities 4.40 % 49,364
------ ---------
Net Assets 100.00 % $1,120,956
====== ==========
</TABLE>

(a) Non-income producing investment.

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

Unrealized appreciation $71,985
Unrealized depreciation (18,948)
---------
Net unrealized appreciation $53,037
=========

<PAGE>
QUAKER AGGRESSIVE GROWTH FUND

STATEMENT OF ASSETS AND LIABILITIES

June 30, 1997

ASSETS
Investments, at value (cost $1,018,555) .................. $1,071,592
Cash ..................................................... 45,863
Income receivable ........................................ 1,077
Receivable for investments sold .......................... 137,762
Prepaid expenses ......................................... 379
Deferred organization expenses, net (notes 2 and 4) ...... 29,289
----------
Total assets .......................................... 1,285,962
----------
LIABILITIES
Accrued expenses ......................................... 7,660
Payable for investment purchases ......................... 145,614
Due to fund sponsor (note 3) ............................. 632
Accrued income taxes (notes 1 and 3) ..................... 1,800
Deferred income taxes (note 6) ........................... 9,300
----------
Total liabilities ..................................... 165,006
----------
NET ASSETS
(applicable to 100,487 shares outstanding; unlimited
shares of $ 0.01 par value beneficial interest authorized) $1,120,956
==========
NET ASSET VALUE AND REPURCHASE PRICE PER SHARE
($1,120,956 / 100,487 shares) ............................ $ 11.16
==========
NET ASSETS CONSIST OF
Paid-in capital .......................................... $1,067,907
Undistributed net investment income ...................... 12
Net unrealized appreciation on investments ............... 53,037
----------
$1,120,956
==========

See accompanying notes to financial statements
<PAGE>
QUAKER AGGRESSIVE GROWTH FUND

STATEMENT OF OPERATIONS

Period from November 25, 1996
(commencement of operations) to
June 30, 1997

INVESTMENT INCOME

Income
Interest .............................................. $ 6,241
Dividends ............................................. 2,879
--------
Total income ....................................... 9,120
--------
Expenses
Investment advisory fees (note 2) ..................... 3,457
Fund administration fees (note 2) ..................... 807
Custody fees .......................................... 4,587
Registration and filing administration fees (note 2) .. 782
Fund accounting fees (note 2) ......................... 14,600
Audit fees ............................................ 4,500
Legal fees ............................................ 2,779
Securities pricing fees ............................... 2,208
Shareholder servicing fees (note 3) ................... 1,153
Shareholder recordkeeping fees (note 2) ............... 3,604
Shareholder servicing expenses ........................ 1,201
Registration and filing expenses ...................... 1,017
Printing expenses ..................................... 1,923
Amortization of deferred organization expenses (note 4) 4,035
Trustee fees and meeting expenses ..................... 269
Other operating expenses .............................. 3,955
--------
Total expenses ..................................... 50,877
--------
Less:
Expense reimbursements (note 3) ................. (31,935)
Investment advisory fees waived (note 2) ........ (3,457)
Fund administration and other fees waived (note 2 (8,151)
Shareholder service fees waived (note 3) ........ (1,153)
--------
Net expenses ....................................... 6,181
--------
Net investment income before income taxes ....... 2,939
--------
Income taxes (note 1) ........................... 550
Less reimbursement (note 1 and 3) ............... (550)
--------
Net income taxes ............................. 0

Net investment income ........................... 2,939
--------

(Continued)
<PAGE>

QUAKER AGGRESSIVE GROWTH FUND

STATEMENT OF OPERATIONS

Period from November 25, 1996
(commencement of operations) to
June 30, 1997

REALIZED AND UNREALIZED GAIN ON INVESTMENTS

Net realized gain from investment transactions
before income taxes ..................................... $ 6,734
--------
Income taxes (note 1) .................................... 1,250
Less reimbursement (note 1 and 3) ........................ (1,250)
--------
Net income taxes ...................................... 0
--------
Net realized gain from investment transactions ........... 6,734
--------
Increase in unrealized appreciation on investments
before deferred income taxes 53,037
--------
Deferred income taxes (note 1 and 6) ..................... 9,300
Less reimbursement (note 1 and 3) ........................ (9,300)
--------
Net deferred income taxes ............................. 0
--------
Increase in unrealized appreciation on investments ....... 53,037
--------
Net realized and unrealized gain on investments ....... 59,771
--------
Net increase in net assets resulting from operations $ 62,710
========

See accompanying notes to financial statements
<PAGE>

QUAKER AGGRESSIVE GROWTH FUND

STATEMENT OF CHANGES IN NET ASSETS

Period from November 25, 1996
(commencement of operations) to
June 30, 1997

INCREASE IN NET ASSETS

Operations
Net investment income .............................................. $2,939
Net realized gain from investment transactions ..................... 6,734
Increase in unrealized appreciation on investments ................. 53,037
----------
Net increase in net assets resulting from operations ............ 62,710
----------
Distributions to shareholders from
Net investment income .............................................. (2,927)
Net realized gain from investment transactions ..................... (6,734)
----------
Decrease in net assets resulting from distributions ............. (9,661)
----------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) 1,067,907
----------
Total increase in net assets ................................. 1,120,956

NET ASSETS

Beginning of period ................................................... 0
----------
End of period (including undistributed net investment income .......... $1,120,956
of $12) ==========

</TABLE>

(a) A summary of capital share activity follows:
-------------------------
Shares Value
-------------------------
Shares sold ........................................... 101,462 $ 1,078,209
Shares issued for reinvestment of distributions ....... 868 9,661
------- -----------
102,330 1,087,870

Shares redeemed ....................................... (1,843) (19,963)
------- -----------
Net increase ........................................ 100,487 $ 1,067,907
======= ===========

See accompanying notes to financial statements
<PAGE>
QUAKER AGGRESSIVE GROWTH FUND

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout the Period)

Period from November 25, 1996
(commencement of operations) to
June 30, 1997

Net asset value, beginning of period ......................... $10.00
--------
Income from investment operations
Net investment income .................................. 0.04
Net realized and unrealized gain on investments ........ 1.23
--------
Total from investment operations .................... 1.27
--------
Distributions to shareholders from
Net investment income .................................. (0.04)
Net realized gain from investment transactions ......... (0.07)
--------
Total distributions ................................. (0.11)
--------
Net asset value, end of period ............................... $11.16
========

Total return ................................................. 12.68%(c)
========

Ratios/supplemental data

Net assets, end of period ................................. $1,120,956
==========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees .......... 13.44 % (a)
After expense reimbursements and waived fees ........... 1.34 % (a)

Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees .......... (9.18)% (a)
After expense reimbursements and waived fees ........... 0.64 % (a)

Portfolio turnover rate ................................... 778.01 %

Average broker commissions per share ...................... $0.06 (b)

(a) Annualized.

(b) Represents total commission paid on portfolio securities divided by total
portfolio commissions were charged.

See accompanying notes to financial statements
<PAGE>
QUAKER AGGRESSIVE GROWTH FUND

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION

The Quaker Aggressive Growth Fund (the "Fund") is a diversified series of shares
of beneficial interest of the Quaker Investment Trust (the "Trust"). The Trust,
an open-end investment company, was organized on October 24, 1990, as a
Massachusetts Business Trust and is registered under the Investment Company Act
of 1940, as amended. The investment objective of the Fund is to provide
shareholders with long-term capital growth by investing primarily in equity
securities of domestic U.S. companies. The Fund began operations on November 25,
1996. The following is a summary of significant accounting policies followed by
the Fund.

B. Federal Income Taxes - The Fund did not comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies for the
period ended June 30, 1997. Consequently, a provision for federal and state
income taxes on net investment income and net realized gains has been
included in the financial statements. Deferred income taxes have been
provided on the unrealized appreciation on investments for the period from
November 25, 1996 (commencement of operations) to June 30, 1997. It is the
intent on the Fund to comply with the provisions of the Internal Revenue
Service Code applicable to regulated investment companies in the future.

Quaker Funds, Inc. (the "Sponsor") has agreed to pay all taxes associated
with the Fund's current year tax status.

Due to a concentration of shareholders at June 30, 1997, the Fund is
subject to the provisions of Internal Revenue Code applicable to personal
holding companies. No provision has been made for personal holding company
taxes since it is the policy of the Fund to make sufficient distributions
of income to relieve it from substantially all personal holding company
taxes.

<PAGE>
QUAKER AGGRESSIVE GROWTH FUND

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

D. Distributions to Shareholders - The Fund generally declares dividends
annually, payable in December, on a date selected by the Trust's Trustees.
In addition, distributions may be made annually in December out of net
realized gains through October 31 of that year. Distributions to
shareholders are recorded on the ex-dividend date. The Fund may make a
supplemental distribution subsequent to its fiscal year ending June 30.

NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS

Pursuant to an investment advisory agreement, DG Capital Management, Inc. (the
"Advisor") provides the Fund with a continuous program of supervision of the
Fund's assets, including the composition of its portfolio, and furnishes advice
and recommendations with respect to investments, investment policies and the
purchase and sale of securities. As compensation for its services, the Advisor
receives a fee at the annual rate of 0.75% of the Fund's average daily net
assets.

Currently, the Fund does not offer its shares for sale in states which require
limitations to be placed on its expenses. The Advisor intends to voluntarily
waive all or a portion of its fee. There can be no assurance that the foregoing
voluntary fee waivers will continue. The Advisor has voluntarily waived its fee
amounting to $3,457 ($0.05 per share) for the period ended June 30, 1997.

<PAGE>
QUAKER AGGRESSIVE GROWTH FUND

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

shareholder accounts and registration of the Fund's shares. The Administrator
also charges the Fund for certain expenses involved with the daily valuation of
portfolio securities. The Administrator has voluntarily waived a portion of its
total fees amounting to $8,151 ($.11 per share) for the period ended June 30,
1997.

Certain organization expenses totaling $23,333 and $833 were paid to a company
controlled by the Administrator and to an officer of the Fund, respectively, for
the period ended June 30, 1997.

The Fund's distributor, Quaker Securities, Inc. (the "Distributor") was paid
commissions of $17,165 for purchases and sales of investments other than
short-term investments for the period ended June 30, 1997.

Certain Trustees and officers of the Trust are also officers of the Advisor, the
Distributor or the Administrator.

NOTE 3 - SERVICE FEES

The Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust as defined in the Investment Company Act of
1940 (the "Act"), adopted a Shareholder Servicing Agreement (the "Agreement").
Pursuant to this Agreement, the Sponsor will provide oversight with respect to
the Fund's investment advisor, arrange for payment of investment advisory and
administrative fees, coordinate payments under the Fund's Distribution Plan,
develop communications with existing Fund shareholders, assist in responding to
shareholder inquiries, and will provide other shareholder services. As
compensation for these services, Quaker Funds, Inc. receives 0.25% of the Fund's
average daily net assets. The Sponsor intends to voluntarily waive all or a
portion of its fee and reimburse expenses of the Fund to limit total Fund
operating expenses to 1.35% of the average daily net assets of the Fund. There
can be no assurance that the foregoing voluntary fee waivers or reimbursements
will continue. The Sponsor has voluntarily waived its fee amounting to $1,153
and has reimbursed expenses and income taxes totaling $43,035 for the period
ended June 30, 1997.

NOTE 4 - DEFERRED ORGANIZATION EXPENSES

Expenses totaling $33,324 incurred in connection with its organization and the
registration of its shares, which were originally paid by the Fund's Sponsor,
have been assumed by the Fund.

NOTE 5 - PURCHASES AND SALES OF INVESTMENTS

Purchases and sales of investments, other than short-term investments,
aggregated $5,784,011 and $4,905,840, respectively, for the period ended June
30, 1997.
<PAGE>
QUAKER AGGRESSIVE GROWTH FUND

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

NOTE 6 - DEFERRED INCOME TAXES

As discussed in note 1, the Fund did not comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies for the
period ended June 30, 1997. Deferred income taxes have been provided on the net
unrealized appreciation on investments for the period from November 25, 1996
(commencement of operations) to June 30, 1997.

The Fund's total deferred tax assets, deferred tax liabilities and deferred tax
valuation allowances as of June 30, 1997 are as follows:

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Deferred tax asset arising from unrealized depreciation on investments $ 3,300
Less valuation allowance 0
----------
3,300

Deferred tax liability arising from unrealized appreciation on investments (12,600)

Net deferred tax liability $(9,300)
</TABLE>

The valuation allowance of $0 did not change for the period ended June 30, 1997.

The Fund Sponsor has agreed to pay all taxes associated with the Fund's current
year tax status.

<PAGE>
Independent Auditor's Report

July 28, 1997

To the Shareholders and Board of Trustees
Quaker Aggressive Growth Fund
Rocky Mount, North Carolina

We have audited the statements of assets and liabilities, including the
schedules of investments, of the QUAKER AGGRESSIVE GROWTH FUND (one of the
portfolios constituting the Quaker Investment Trust series of funds) as of June
30, 1997, and the related statements of operations and of changes in net assets
and the selected per share data and ratios for the period from November 25, 1996
(commencement of operations) to June 30, 1997. These financial statements and
per share data and ratios are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
per share data and ratios based on our audit.

In our opinion, the financial statements and selected per share data and ratios
referred to above present fairly, in all material respects, the financial
position of the QUAKER AGGRESSIVE GROWTH FUND (one of the portfolios
constituting the Quaker Investment Trust series of funds) as of June 30, 1997,
and the results of its operations and changes in its net assets and the selected
per share data and ratios for the period from November 25, 1996 (commencement of
operations) to June 30, 1997 in conformity with generally accepted accounting
principles.

/s/ Goldenberg Rosenthal Friedlander, LLP

Jenkintown, Pennsylvania
<PAGE>
QUAKER SMALL-CAP VALUE FUND
Performance Update - $25,000 Investment
For the period from November 25, 1996
(commencement of operations) to June 30, 1997

- ------------------------------------------
Quaker
Small-Cap
Value
Fund Russell 2000
- ------------------------------------------
11/25/96 25000 25000
11/30/96 24925 25308
12/31/96 24893 25958
1/31/97 25818 26472
2/28/97 26018 25831
3/31/97 25043 24620
4/30/97 25593 24681
5/31/97 28270 27433
6/30/97 30087 28598

Total Return

- -------------------------------
Commencement of operations
through 6/30/97
- -------------------------------

20.35%

- -------------------------------

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

At June 30, 1997, the Fund would have grown to $30,087 - total investment return
of 20.35% since November 25, 1996.

At June 30, 1997, a similar investment in the Russell 2000 Index would have
grown to $28,598 - total investment return of 14.39% since November 25, 1996.

<PAGE>

July 31, 1997

Dear Shareholder:

Financial markets have been very favorable during the life of the Quaker Family
of Funds. Domestic equity markets have shown particular strength during the
first half of 1997, while fixed income results have been modestly positive. The
Quaker Small-Cap Value Fund, managed by Ted Aronson of Aronson + Partners, has
outperformed the Russell 2000 Index from the inception of the Fund on November
25, 1996 through June 30, 1997. During that period, the Fund returned 20.4%
while the Index grew by 14.4%. For three months ending with June, the Fund
returned 20.2% compared with 16.2% for the Index.

We appreciate your investment in the Quaker Family of Funds and we will work
hard to earn your continued support.

Sincerely,

/s/ Peter F. Waitneight
Peter F. Waitneight
President

<PAGE>

THE QUAKER SMALL-CAP VALUE FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997

Aerospace & Defense - 0.77%
AAR Corporation 100 $3,231
Thiokol Corporation 100 7,000
--- -----
10,231
Auto Parts - Original Equipment - 1.69%
Arvin Industries, Inc. 300 8,175
Borg-Warner Automotive, Inc. 100 5,406
Excel Industries, Inc. 200 3,925
Mark IV Industries, Inc. 210 5,040
--- -----
22,546
Auto Parts - Replacement Equipment - 1.35%
Exide Corporation 500 10,969
Timken Company 200 7,050
--- -----
18,019
Auto & Trucks - 1.47%
(a)Navistar International Corporation 600 10,350
PACCAR Inc. 200 9,287
--- -----
19,637
Brewery - 0.79%
Adolph Coors Company 400 10,650

Building Materials - 1.98%
Lone Star Industries, Inc. 100 4,531
Southdown, Inc. 200 8,725
Texas Industries, Inc. 200 5,312
Vulcan Materials Company 100 7,850
--- -----
26,418
Chemicals - 1.64%
Lyondell Petrochemical Company 300 6,544
The Geon Company 500 10,125
Wellman, Inc. 300 5,212
--- -----
21,881
Computers - 4.16%
(a)Applied Magnetics Corporation 100 2,262
(a)Data General Corporation 200 5,200
(a)Exabyte Corporation 600 7,687
(a)Hutchinson Technology, Inc. 300 7,312
(a)Quantum Corporation 400 8,150
(a)Read-Rite Corporation 300 6,262
(a)Tandem Computers, Inc. 300 6,075
(a)Western Digital Corporation 400 12,650
--- ------
55,598

(Continued)
<PAGE>
THE QUAKER SMALL-CAP VALUE FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997

Computer Software & Services - 1.33%
Comdisco, Inc. 300 $7,800
(a)Stratus Computer, Inc. 200 10,000
--- ------
17,800
Cosmetics & Personal Care - 0.91%
Herbalife International, Inc. 400 6,500
(a)NBTY, Inc. 200 5,600
--- -----
12,100
Electronics - 0.65%
(a)SCI Systems, Inc. 100 6,100
(a)Tracor, Inc. 100 2,512
--- -----
8,612
Electronics - Semiconductor - 1.31%
(a)Fusion Systems Corporation 100 3,956
(a)Novellus Systems, Inc. 100 8,650
(a)Oak Technology, Inc. 500 4,875
--- -----
17,481
Engineering & Construction - 0.69%
(a)Grupo Tribasa, S.A. de C.V. 1,700 9,138

Entertainment - 0.73%
(a)Carmike Cinemas, Inc. 200 6,525
(a)GTECH Holdings Corporation 100 3,225
--- -----
9,750
Financial - Banks, Commercial - 0.92%
AmSouth Bancorporation 200 7,600
Pacific Century Financial Corporation 100 4,625
--- -----
12,225
Financial - Savings/Loans/Thrift - 3.51%
Astoria Financial Corporation 200 9,500
Commercial Federal Corporation 150 5,587
Countrywide Credit Industries, Inc. 200 6,212
(a)Imperial Credit Industries, Inc. 300 6,169
ONBANCorp, Inc. 200 10,200
Webster Financial Corporation 200 9,100
--- -----
46,768
Financial - Securities Brokers - 2.65%
Donaldson, Lufkin & Jenrette, Inc. 200 11,950
Edwards (A.G.), Inc. 200 8,625
Interra Financial, Inc. 100 4,244
Paine Webber Group Inc. 300 10,500
--- ------
35,319

(Continued)
<PAGE>
THE QUAKER SMALL-CAP VALUE FUND

PORTFOLIO OF INVESTMENTS

Financial Services - 3.37%
Aames Financial Corporation 500 $9,250
AMBAC, Inc. 100 7,787
(a)AMRESCO, Inc. 500 10,750
(a)First Merchants Acceptance Corporation 300 1,462
North American Mortgage Company 300 7,125
The Money Store, Inc. 300 8,606
--- -----
44,980
Food - Processing - 1.34%
Interstate Bakeries Corporation 200 11,850
(a)Smithfield Foods, Inc. 100 6,150
--- -----
18,000
Food - Wholesale - 1.66%
Dean Foods Company 200 8,075
Fleming Companies, Inc. 400 7,200
SUPERVALU, INC. 200 6,900
--- -----
22,175
Forest Products & Paper - 0.25%
Chesapeake Corporation 100 3,375

Holding Companies - Diversified - 0.98%
(a)Anixter International Inc. 400 6,950
Old Republic International Corporation 200 6,063
--- -----
13,013
Homebuilders - 2.74%
Centex Corporation 200 8,212
(a)Champion Enterprises, Inc. 100 1,475
Continental Homes Holding Corporation 300 5,287
Del Webb Corporation 200 3,250
Pulte Corporation 300 10,369
(a)U.S. Home Corporation 300 7,969
--- -----
36,562
Household Products & Housewares - 1.70%
(a)Furniture Brands International, Inc. 400 7,750
Haverty Furniture Company, Inc. 200 2,500
(a)Mohawk Industries, Inc. 400 9,100
Stanhome, Inc. 100 3,287
--- -----
22,637
Insurance - Life & Health - 0.64%
Washington National Corporation 300 8,550

(Continued)
<PAGE>
THE QUAKER SMALL-CAP VALUE FUND

PORTFOLIO OF INVESTMENTS

Insurance - Multiline - 3.04%
Allmerica Financial Corporation 300 $11,925
American Bankers Insurance Group, In 100 6,325
American Financial Group, Inc. 200 8,488
American National Insurance Company 100 8,925
Horace Mann Educators Corporation 100 4,900
--- -----
40,563

Insurance - Property & Casualty - 7.24%
Everest Reinsurance Holdings, Inc. 300 11,888
Fremont General Corporation 200 8,050
NAC Re Corp. 200 9,675
Ohio Casualty Corporation 200 8,800
Orion Capital Corporation 100 7,375
PartnerRe Ltd. 300 11,438
PXRE Corporation 100 3,100
Reliance Group Holdings, Inc. 800 9,500
TIG Holdings, Inc. 200 6,250
Vesta Insurance Group, Inc. 200 8,650
W. R. Berkley Corporation 200 11,775
--- ------
96,501
Iron & Steel - 2.84%
(a)Bethlehem Steel Corporation 800 8,350
Inland Steel Industries, Inc. 400 10,450
LTV Corporation 600 8,550
USX-US Steel Group, Inc. 300 10,519
--- ------
37,869
Lodging - 0.43%
(a)Primadonna Resorts, Inc. 300 5,794

Machine - Construction & Mining - 1.06%
Cummins Engine Company, Inc. 200 14,113

Machine - Diversified - 0.68%
Gleason Corporation 200 9,100

Medical - Hospital Management & Service - 6.66%
(a)Beverly Enterprises, Inc. 600 9,750
(a)Foundation Health Systems, Inc. 200 6,063
(a)GranCare, Inc. 1,100 11,825
(a)Horizon/CMS Healthcare Corporation 500 10,031
--- ------
Integrated Health Services, Inc. 300 11,550

(Continued)
<PAGE>
THE QUAKER SMALL-CAP VALUE FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997

Medical - Hospital Management & Service - (Continued)
(a)Living Centers of America, Inc. 300 $11,850
(a)NovaCare, Inc. 300 4,163
(a)PacifiCare Health Systems, Inc. 35 2,236
(a)RoTech Medical Coporation 400 8,025
(a)Sun Healthcare Group, Inc. 200 4,163
(a)Wellpoint Health Networks, Inc. 200 9,175
--- -----
88,831
Medical Supplies - 1.37%
Bergen Brunswig Corporation 375 10,500
McKesson Corporation 100 7,750
--- -----
18,250
Metals - Diversified - 2.08%
AK Steel Holding Corporation 200 8,812
Asarco, Inc. 300 9,187
Cyprus Amax Minerals Company 400 9,800
--- -----
27,799
Metal Fabrication & Hardware - 1.08%
Amcast Industrial Corporation 200 5,000
Commercial Metals Company 100 3,225
Quanex Corporation 200 6,113
--- -----
14,338
Miscellaneous - Manufacturing - 2.65%
Aeroquip-Vickers Inc. 200 9,725
Dexter Corporation 200 6,400
NACCO Industries, Inc. 200 11,288
(a)Vitro SA 700 7,875
--- -----
35,288
Office & Business Equipment - 0.54%
Herman Miller, Inc. 200 7,200

Oil & Gas - Domestic - 1.84%
Sun Company, Inc. 200 6,200
(a)Tesoro Petroleum Corporation 500 7,406
Valero Energy Corporation 300 10,875
--- ------
24,481
Oil & Gas - Equipment & Services - 1.60%
ONEOK Inc. 200 6,438
(a)SEACOR SMIT Inc. 200 10,462
Tidewater, Inc. 100 4,400
--- -----
21,300

(Continued)
<PAGE>
THE QUAKER SMALL-CAP VALUE FUND

PORTFOLIO OF INVESTMENTS

Oil & Gas - Exploration - 2.84%
(a)Oryx Energy Company 200 $4,225
Parker & Parsley Petroleum Company 200 7,075
Pennzoil Company 200 15,475
(a)Santa Fe Energy Resources, Inc. 200 2,938
Snyder Oil Corporation 100 1,838
Union Texas Petroleum Holdings, Inc. 300 6,263
--- -----
37,814
Packaging & Containers - 0.70%
(a)Owens-Illinois, Inc. 300 9,300

Publishing - Printing - 0.27%
(a)Devon Group, Inc. 100 3,575

Restaurants & Food Service - 1.31%
(a)Foodmaker, Inc. 600 9,825
(a)Ryan's Family Steak Houses, Inc. 900 7,706
--- -----
17,531
Retail - Apparel - 2.27%
Brown Group, Inc. 300 5,606
(a)Genesco Inc. 400 5,650
Lands' End, Inc. 200 5,900
Ross Stores, Inc. 400 13,075
--- ------
30,231
Retail - Department Stores - 2.75%
(a)Carson Pirie Scott & Company 200 6,350
(a)Fred Meyer, Inc. 200 10,338
(a)Proffitt's, Inc. 200 8,775
(a)Woolworth Corporation 300 7,200
(a)Zale Corporation 200 3,963
--- -----
36,626
Retail - General Merchandise - 1.04%
(a)Best Buy Company, Inc. 700 10,412
Fingerhut Companies, Inc. 200 3,488
--- -----
13,900
Retail - Grocery - 1.21%
(a)Smith's Food & Drug Centers, Inc. 200 10,725
The Great Atlantic & Pacific Tea Com 200 5,438
--- -----
16,163

(Continued)

<PAGE>
THE QUAKER SMALL-CAP VALUE FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997

Retail - Specialty Line - 0.36%
Fisher Scientific International 100 $4,750

Telecommunications - 1.56%
Century Telephone Enterprises, Inc. 100 3,369
Koor Industries Limited 400 7,050
(a)U.S. Long Distance Corporation 600 10,350
--- ------
20,769
Technology - 0.69%
(a)MicroAge, Inc. 500 9,188

Tobacco - 1.51%
DIMON, Inc. 400 10,600
Universal Corporation 300 9,525
--- -----
20,125
Transportation - Air - 1.27%
Airborne Freight Corporation 100 4,186
(a)America West Holdings Corporation 400 5,800
(a)Continental Airlines, Inc. 200 6,987
--- -----
16,973
Transportation - Miscellaneous - 0.34%
Sea Containers, Ltd. 200 4,525

Trucking & Leasing - 0.50%
(a)Yellow Corporation 300 6,713

Utilities - Electric - 4.98%
Centerior Energy Corporation 700 7,831
Central Maine Power Company 600 7,425
Commonwealth Energy System 200 4,837
Illinova Corporation 200 4,400
Long Island Lighting Company 200 4,600
New York State Electric & Gas Corpor 500 10,438
Pinnacel West Capital Corporation 100 3,006
Public Service Company of New Mexico 500 8,938
United Illuminating Company 200 6,175
UtiliCorp United, Inc. 300 8,719
--- -----
66,369
Utilities - Gas - 0.41%
Westcoast Energy, Inc. 300 5,456

(Continued)

<PAGE>
THE QUAKER SMALL-CAP VALUE FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997

Wholesale - Special Line - 1.25%
Bindley Western Industries, Inc. 100 $2,294
(a)InaCom Corp. 300 9,338
(a)Perrigo Company 400 5,000
--- -----
16,632

Total Common Stocks (Cost $1,136,658) 1,301,532
---------
INVESTMENT COMPANY - 2.18%

Evergreen Money Market Treasury
Institutional Money Market Fund
Institutional Service Shares 17,828 17,828

S & P Mid-Cap 400 Depositary Receipts 200 11,228
--- --- ------

Total Investment Company (Cost $28,957) 29,056
------

Total Value of Investments (Cost $ 1,165,615 (b)) 99.78% 1,330,588
Other Assets Less Liabilities 0.22% 2,885
---- -----
Net Assets 100.00% $1,333,473
====== ==========

(a) Non-income producing investment.

(b) Aggregate cost for financial reporting and federal income tax purposes is
appreciation (depreciation) of investments for financial reporting and fed
is as follows:

Unrealized appreciation $180,749
Unrealized depreciation (15,776)
-------
Net unrealized appreciation $164,973
========

See accompanying notes to financial statements
<PAGE>
QUAKER SMALL-CAP VALUE FUND

STATEMENT OF ASSETS AND LIABILITIES

JUNE 30, 1997

ASSETS
Investments, at value (cost $1,165,615) ....................... $1,330,588
Income receivable ............................................. 1,154
Receivable for investments sold ............................... 9,360
Prepaid expenses .............................................. 231
Deferred organization expenses, net (notes 2 and 4) ........... 29,289
----------
Total assets ............................................... 1,370,622
----------
LIABILITIES
Accrued expenses .............................................. 9,585
Payable for investment purchases .............................. 11,129
Due to fund sponsor (note 3) .................................. 9,006
Disbursements in excess of cash on demand deposit ............. 7,429
----------
Total liabilities .......................................... 37,149
----------
NET ASSETS
(applicable to 115,660 shares outstanding; unlimited
shares of $ 0.01 par value beneficial interest authorized) .... $1,333,473
==========
NET ASSET VALUE AND REPURCHASE PRICE PER SHARE
($1,333,473 /115,660 shares) ................................. $11.53
==========

NET ASSETS CONSIST OF
Paid-in capital ............................................... $1,168,351
Undistributed net investment income ........................... 149
Net unrealized appreciation on investments .................... 164,973
----------
$1,333,473
==========

See accompanying notes to financial statements
<PAGE>
QUAKER SMALL-CAP VALUE FUND

STATEMENT OF OPERATIONS

Period from November 25, 1996
(commencement of operations) to
June 30, 1997

INVESTMENT INCOME
Income
Interest ................................................... $ 1,046
Dividends .................................................. 7,511
----------
Total income ............................................ 8,557
----------
Expenses
Investment advisory fees (note 2) .......................... 4,183
Fund administration fees (note 2) .......................... 976
Custody fees ............................................... 6,030
Registration and filing administration fees (note 2) ....... 758
Fund accounting fees (note 2) .............................. 14,600
Audit fees ................................................. 4,500
Legal fees ................................................. 2,778
Securities pricing fees .................................... 7,283
Shareholder servicing fees (note 3) ........................ 1,394
Shareholder recordkeeping fees (note 2) .................... 3,604
Shareholder servicing expenses ............................. 1,244
Registration and filing expenses ........................... 1,017
Printing expenses .......................................... 1,924
Amortization of deferred organization expenses (note 4) .... 4,035
Trustee fees and meeting expenses .......................... 269
Other operating expenses ................................... 3,958
----------
Total expenses .......................................... 58,553
----------
Less:
Expense reimbursements (note 3) ...................... (37,354)
Investment advisory fees waived (note 2) ............. (4,183)
Fund administration fees waived (note 2) ............. (8,295)
Shareholder servicing fees waived (note 3) ........... (1,394)
----------
Net expenses ............................................ 7,327
----------
Net investment income ................................ 1,230
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS

Net realized gain from investment transactions ................ 54,417
Increase in unrealized appreciation on investments ............ 164,973
----------
Net realized and unrealized gain on investments ............ 219,390
----------
Net increase in net assets resulting from operations .... $ 220,620
==========

See accompanying notes to financial statements
<PAGE>
QUAKER SMALL-CAP VALUE FUND

STATEMENT OF CHANGES IN NET ASSETS

Period from November 25, 1996
(commencement of operations) to
June 30, 1997

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations
Net investment income ................................................ $1,230
Net realized gain from investment transactions ....................... 54,417
Increase in unrealized appreciation on investments ................... 164,973
---------
Net increase in net assets resulting from operations .............. 220,620
---------
Distributions to shareholders from
Net investment income ................................................ (1,081)
Net realized gain from investment transactions ....................... (54,417)
---------
Decrease in net assets resulting from distributions ............... (55,498)
---------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) . 1,168,351
---------
Total increase in net assets ................................... 1,333,473

NET ASSETS

Beginning of period ..................................................... 0
---------
End of period (including undistributed net investment income ............ $1,333,473
of $149) =========

(a) A summary of capital share activity follows:

-----------------------
Shares Value
-----------------------
Shares sold ............................................. 110,840 $1,112,853
Shares issued for reinvestment of distributions ......... 4,820 55,498
------- -----------
Net increase .......................................... 115,660 $1,168,351
======= ===========
</TABLE>

See accompanying notes to financial statements
<PAGE>
QUAKER SMALL-CAP VALUE FUND

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout the Period)

Period from November 25, 1996
(commencement of operations) to
June 30, 1997

Net asset value, beginning of period ......................... $10.00
------
Income from investment operations
Net investment income .................................. 0.01
Net realized and unrealized gain on investments ........ 2.02
------
Total from investment operations .................... 2.03
------
Distributions to shareholders from
Net investment income .................................. (0.01)
Net realized gain from investment transactions ......... (0.49)
------
Total distributions ................................. (0.50)
------
Net asset value, end of period ............................... $11.53
======

Total return ................................................. 20.35 % (c)
======

Ratios/supplemental data

Net assets, end of period ................................$1,333,473
==========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees .......... 10.50 % (a)
After expense reimbursements and waived fees ........... 1.31 % (a)

Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees .......... (8.96)% (a)
After expense reimbursements and waived fees ........... 0.22 % (a)

Portfolio turnover rate ................................... 90.63 %

Average broker commissions per share ...................... $0.0453 (b)

(a) Annualized.

(b) Represents total commission paid on portfolio securities divided by total
portfolio commissions were charged.

(c)Aggregate total return, not annualized.

See accompanying notes to financial statements
<PAGE>
QUAKER SMALL-CAP VALUE FUND

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION

The Quaker Small-Cap Value Fund (the "Fund") is a diversified series of shares
of beneficial interest of the Quaker Investment Trust (the "Trust"). The Trust,
an open-end investment company, was organized on October 24, 1990, as a
Massachusetts Business Trust and is registered under the Investment Company Act
of 1940, as amended. The investment objective of the Fund is to provide
shareholders with long-term capital growth by investing primarily in equity
securities of domestic U.S. companies. The Fund began operations on November 25,
1996. The following is a summary of significant accounting policies followed by
the Fund.

Due to a concentration of shareholders at June 30, 1997 the Fund is subject
to the provisions of the Internal Revenue Code applicable to personal
holding companies.

Net investment income (loss) and net realized gains (losses) may differ for
financial statements and tax purposes primarily because of losses incurred
subsequent to October 31, which are deferred for tax purposes. The
character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. Also, due to the timing of dividend
distributions, the fiscal year in which amounts are distributed may differ
from the year that the income or realized gains were recorded by the Fund.

D. Distributions to Shareholders - The Fund generally declares dividends
annually, payable in December, on a date selected by the Trust's Trustees.
In addition, distributions may be made annually in December out of net
realized gains through October 31 of that year. Distributions to
shareholders are recorded on the ex-dividend date. The Fund may make a
supplemental distribution subsequent to its fiscal year ending June 30.

<PAGE>
QUAKER SMALL-CAP VALUE FUND

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS

Pursuant to an investment advisory agreement, Aronson + Partners (the "Advisor")
provides the Fund with a continuous program of supervision of the Fund's assets,
including the composition of its portfolio, and furnishes advice and
recommendations with respect to investments, investment policies and the
purchase and sale of securities. As compensation for its services, the Advisor
receives a fee at the annual rate of 0.75% of the Fund's average daily net
assets.

The Fund's administrator, The Nottingham Company (the "Administrator"), provides
administrative services to and is generally responsible for the overall
management and day-to-day operations of the Fund pursuant to an accounting and
administrative agreement with the Trust. As compensation for its services, the
Administrator receives a fee at the annual rate of 0.175% of the Fund's first
$50 million of average daily net assets, 0.150% of the next $50 million of
average daily net assets, and 0.125% of its average daily net assets in excess
of $100 million. The Administrator also receives a monthly fee of $2,000 for
accounting and recordkeeping services. Additionally, the Administrator charges
the Fund for servicing of shareholder accounts and registration of the Fund's
shares. The Administrator also charges the Fund for certain expenses involved
with the daily valuation of portfolio securities. The Administrator has
voluntarily waived a portion of its total fees amounting to $8,295 ($ 0.09 per
share) for the period ended June 30, 1997.

Certain organization expenses totaling $23,333 and $833 were paid to a company
controlled by the Administrator and to an officer of the Fund, respectively, for
the period ended June 30, 1997.

Certain Trustees and officers of the Trust are also officers of the Advisor,
Quaker Securities, Inc. (the "Distributor") or the Administrator.
<PAGE>

QUAKER SMALL-CAP VALUE FUND

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

NOTE 3 - SERVICE FEES

The Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust as defined in the Investment Company Act of
1940 (the "Act"), adopted a Shareholder Servicing Agreement (the "Agreement").
Pursuant to this Agreement, Quaker Funds, Inc., (the "Sponsor") will provide
oversight with respect to the Fund's investment advisor, arrange for payment of
investment advisory and administrative fees, coordinate payments under the
Fund's Distribution Plan, develop communications with existing Fund
shareholders, assist in responding to shareholder inquiries, and will provide
other shareholder services. As compensation for these services, Quaker Funds,
Inc. receives 0.25% of the Fund's average daily net assets. The Sponsor intends
to voluntarily waive all or a portion of its fee and reimburse expenses of the
Fund to limit total Fund operating expenses to 1.35% of the average daily net
assets of the Fund. There can be no assurance that the foregoing voluntary fee
waivers or reimbursements will continue. The Sponsor has voluntarily waived its
fee amounting to $1,394 and has reimbursed expenses totaling $37,354 for the
period ended June 30, 1997.

NOTE 4 - DEFERRED ORGANIZATION EXPENSES

Expenses totaling $33,324 incurred in connection with its organization and the
registration of its shares, which were originally paid by the Fund's Sponsor,
have been assumed by the Fund.

NOTE 5 - PURCHASES AND SALES OF INVESTMENTS

Purchases and sales of investments, other than short-term investments,
aggregated $1,916,760 and $819,890 respectively, for the period ended June 30,
1997.

<PAGE>
Independent Auditor's Report

July 28, 1997

To the Shareholders and Board of Trustees
Quaker Small-Cap Value Fund
Rocky Mount, North Carolina

We have audited the statements of assets and liabilities, including the
schedules of investments, of the QUAKER SMALL-CAP VALUE FUND (one of the
portfolios constituting the Quaker Investment Trust series of funds) as of June
30, 1997, and the related statements of operations and of changes in net assets
and the selected per share data and ratios for the period from November 25, 1996
(commencement of operations) to June 30, 1997. These financial statements and
per share data and ratios are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
per share data and ratios based on our audit.

In our opinion, the financial statements and selected per share data and ratios
referred to above present fairly, in all material respects, the financial
position of the QUAKER SMALL-CAP VALUE FUND (one of the portfolios constituting
the Quaker Investment Trust series of funds) as of June 30, 1997, and the
results of its operations and changes in its net assets and the selected per
share data and ratios for the period from November 25, 1996 (commencement of
operations) to June 30, 1997 in conformity with generally accepted accounting
principles.

/s/ Goldenberg Rosenthal Friedlander, LLP

Jenkintown, Pennsylvania

<PAGE>
QUAKER SECTOR ALLOCATION EQUITY FUND
Performance Update - $25,000 Investment
For the period from November 25, 1996
(commencement of operations) to June 30, 1997

- ----------------------------------------------------------------
Quaker
Sector
Allocation S&P 500
- ----------------------------------------------------------------
11/25/96 25000 25000
11/30/96 25025 24943
12/31/96 24650 24515
1/31/97 25402 26047
2/28/97 24048 26251
3/31/97 23446 25173
4/30/97 24450 26675
5/31/97 26004 28299
6/30/97 26628 29639

This graph depicts the performance of the Quaker Sector Allocation Equity Fund
versus the S & P 500 Total Return Index. It is important to note that the Quaker
Sector Allocation 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.

Total Return

- -------------------------------
Commencement of operations
through 6/30/97
- -------------------------------

6.51%

- -------------------------------

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

At June 30, 1997, the Fund would have grown to $26,628 - total investment return
of 6.51% since November 25, 1996.

At June 30, 1997, a similar investment in the S & P 500 Total Return Index would
have grown to $29,639 - total investment return of 18.56% since November 25,
1996.

<PAGE>

July 31, 1997

Dear Shareholder:

Financial markets have been very favorable during the life of the Quaker Family
of Funds. Domestic equity markets have shown particular strength during the
first half of 1997, while fixed income results have been modestly positive. The
Quaker Sector Allocation Equity Fund, managed by Charlie Knott, of Logan Capital
Management, has not fully participated in the rise of the market from the
inception of the Fund on November 25, 1996 through June 30, 1997. During that
period, the Fund returned 6.5% while the S&P 500 Index grew by 18.6%. For three
months ending with June, the Fund returned 13.6% compared with 17.7% for the
Index. But during the first quarter of 1997, a commitment to oil and gas stocks
and real estate investment trusts did not produce positive results.

We appreciate your investment in the Quaker Family of Funds and we will work
hard to earn your continued support.

Sincerely,

/s/ Peter F. Waitneight
Peter F. Waitneight
President
<PAGE>

QUAKER SECTOR ALLOCATION EQUITY FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997

Aerospace & Defense - 2.07%
The Boeing Company 415 $22,021

Agriculture - 2.27%
Deere & Company 440 24,145

Building Materials - 2.57%
(a)NCI Building Systems, Inc. 845 27,357

Chemicals - 4.38%
E .I. du Pont de Nemours and Company 740 46,528

Computers - 2.63%
(a)Sun Microsystems, Inc. 750 27,914

Computer Software & Services - 13.27%
Computer Associates International, Inc. 724 40,318
(a)Microsoft Corporation 558 70,517
(a)Oracle Corporation 600 30,225
--- ------
141,060
Electronics - Semiconductor - 2.60%
Intel Corporation 195 27,653

Financial - Banks, Commercial - 6.13%
Barnett Banks, Inc. 500 26,250
The Money Store, Inc. 1,355 38,872
----- ------
65,122
Financial - Banks, Money Center - 3.23%
Citicorp 285 34,360

Financial Services - 6.17%
Fannie Mae 520 22,685
SunAmerica, Inc. 880 42,900
--- ------
65,585
Foreign Securities - 4.08%
SmithKline Beecham Plc - ADR 473 43,339

Insurance - Property & Casualty - 2.23%
Reliance Group Holdings, Inc. 2,000 23,750

(Continued)
<PAGE>
QUAKER SECTOR ALLOCATION EQUITY FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997

Medical - Biotechnology - 3.42%
(a)Amgen, Inc. 625 $36,328

Oil & Gas - Domestic - 0.47%
Pennzoil Company 65 4,956

Oil & Gas - Exploration - 12.36%
Anadarko Petroleum Corporation 461 27,660
Apache Corporation 845 27,463
Chesapeake Energy Corporation 1,950 19,134
(a)Oryx Energy Company 1,474 31,138
Union Pacific Resources Group Inc. 1,042 25,920
----- ------
131,315
Pharmaceuticals - 9.78%
American Home Products Corporation 390 29,835
Schering-Plough Corporation 833 39,984
Warner-Lambert Company 275 34,169
--- ------
103,988
Real Estate Investment Trust - 13.03%
Arden Realty Group, Inc. 1,287 33,462
Boykin Lodging Company 1,710 40,933
Simon DeBartolo Group, Inc. 997 31,904
Sun Communities, Inc. 955 32,052
--- ------
138,351
Retail - Apparel - 1.92%
Nike, Inc. 350 20,431

Retail - Department Stores - 2.35%
Wal-Mart Stores, Inc. 740 25,021

Total Common Stocks (Cost $974,002) 1,009,224
---------

INVESTMENT COMPANY - 3.97%

Evergreen Money Market Treasury
Institutional Money Market Fund
Institutional Service Shares 42,213 42,213
(Cost $42,213) ------ ------

(Continued)
<PAGE>
QUAKER SECTOR ALLOCATION EQUITY FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997

Total Value of Investments (Cost $1,016,215 (b)) 98.93% $1,051,437
Other Assets Less Liabilities 1.07% 11,396
------ ----------
Net Assets 100.00% $1,062,833
====== ==========

(a) Non-income producing investment.

Unrealized appreciation $65,830
Unrealized depreciation (30,608)
--------
Net unrealized appreciation $35,222
========

The following acronym is used throughout this portfolio:
ADR - American Depositary Receipt

See accompanying notes to financial statements
<PAGE>
QUAKER SECTOR ALLOCATION EQUITY FUND

STATEMENT OF ASSETS AND LIABILITIES

June 30, 1997

ASSETS
Investments, at value (cost $1,016,215) ................... $1,051,437
Income receivable ......................................... 2,003
Prepaid expenses .......................................... 231
Deferred organization expenses, net (notes 2 and 4) ....... 29,289
-----------
Total assets ........................................... 1,082,960
-----------
LIABILITIES
Accrued expenses .......................................... 7,911
Due to fund sponsor (note 3) .............................. 12,129
Disbursements in excess of cash on demand deposit ......... 87
-----------
Total liabilities ...................................... 20,127
-----------
NET ASSETS
(applicable to 103,384 shares outstanding; unlimited
shares of $ 0.01 par value beneficial interest authorized) $1,062,833
===========
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE PER SHARE
($1,062,833 / 103,384 shares) ............................. $10.28
===========
NET ASSETS CONSIST OF
Paid-in capital ........................................... $1,027,610
Undistributed net investment income ....................... 1
Net unrealized appreciation on investments ................ 35,222
-----------
$1,062,833
===========

See accompanying notes to financial statements
<PAGE>
QUAKER SECTOR ALLOCATION EQUITY FUND

STATEMENT OF OPERATIONS

Period from November 25, 1996
(commencement of operations) to
June 30, 1997

INVESTMENT INCOME

Income
Interest .............................................. $ 1,943
Dividends ............................................. 5,057
--------
Total income ....................................... 7,000
--------
Expenses
Investment advisory fees (note 2) ..................... 2,387
Fund administration fees (note 2) ..................... 557
Custody fees .......................................... 2,698
Registration and filing administration fees (note 2) .. 757
Fund accounting fees (note 2) ......................... 14,600
Audit fees ............................................ 4,500
Legal fees ............................................ 2,778
Securities pricing fees ............................... 2,092
Shareholder servicing fees (note 3) ................... 796
Shareholder recordkeeping fees (note 2) ............... 3,604
Shareholder servicing expenses ........................ 1,170
Registration and filing expenses ...................... 1,017
Printing expenses ..................................... 1,894
Amortization of deferred organization expenses (note 4) 4,035
Trustee fees and meeting expenses ..................... 269
Other operating expenses .............................. 3,948
--------
Total expenses ..................................... 47,102
--------
Less:
Expense reimbursements (note 3) ................. (31,733)
Investment advisory fees waived (note 2) ........ (2,387)
Fund administration fees waived (note 2) ........ (7,915)
Shareholder servicing fees waived (note 3) ...... (796)
--------
Net expenses ....................................... 4,271
--------
Net investment income ........................... 2,729
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS

Net realized gain from investment transactions ........... 31,441
Increase in unrealized appreciation on investments ....... 35,222
--------
Net realized and unrealized gain on investments ....... 66,663
--------
Net increase in net assets resulting from operations $ 69,392
========

See accompanying notes to financial statements
<PAGE>
QUAKER SECTOR ALLOCATION EQUITY FUND

STATEMENT OF CHANGES IN NET ASSETS

Period from November 25, 1996
(commencement of operations) to
June 30, 1997

INCREASE IN NET ASSETS

Operations
Net investment income .............................................. $2,729
Net realized gain from investment transactions ..................... 31,441
Increase in unrealized appreciation on investments ................. 35,222
---------
Net increase in net assets resulting from operations ............ 69,392
---------
Distributions to shareholders from
Net investment income .............................................. (2,728)
Net realized gain from investment transactions ..................... (31,441)
---------
Decrease in net assets resulting from distributions ............. (34,169)
---------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) 1,027,610
---------
Total increase in net assets ................................. 1,062,833

NET ASSETS

Beginning of period ................................................... 0
----------
End of pe(including undistributed net investment income ............... $1,062,833
of $1) ==========

(a) A summary of capital share activity follows:

----------------------
Shares Value
----------------------
Shares sold ................................................. 100,067 $993,528
Shares issued for reinvestment of distributions ............. 3,317 34,082
------- ----------
Net increase .............................................. 103,384 $1,027,610
======= ==========
</TABLE>

See accompanying notes to financial statements
<PAGE>
QUAKER SECTOR ALLOCATION EQUITY FUND

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout the Period)

Period from November 25, 1996
(commencement of operations) to
June 30, 1997

Net asset value, beginning of period .......................... $10.00

Income from investment operations
Net investment income ................................... 0.05
Net realized and unrealized gain on investments ......... 0.59

Total from investment operations ..................... 0.64

Distributions to shareholders from
Net investment income ................................... (0.05)
Net realized gain from investment transactions .......... (0.31)

Total distributions .................................. (0.36)

Net asset value, end of period ................................ $10.28

Total return .................................................. 6.51 % (c)

Ratios/supplemental data

Net assets, end of period .................................. $1,062,833

Ratio of expenses to average net assets
Before expense reimbursements and waived fees ........... 14.80 % (a)
After expense reimbursements and waived fees ............ 1.34 % (a)

Ratio of net investment oincome (loss) to average net assets
Before expense reimbursements and waived fees ........... (12.61)% (a)
After expense reimbursements and waived fees ............ 0.85 % (a)

Portfolio turnover rate .................................... 54.52 %

Average broker commissions per share ....................... $0.1215 (b)

(a) Annualized.

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

See accompanying notes to financial statements
<PAGE>
QUAKER SECTOR ALLOCATION EQUITY FUND

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION

The Quaker Sector Allocation Equity Fund (the "Fund") is a diversified series of
shares of beneficial interest of the Quaker Investment Trust (the "Trust"). The
Trust, an open-end investment company, was organized on October 24, 1990, as a
Massachusetts Business Trust and is registered under the Investment Company Act
of 1940, as amended. The investment objective of the Fund is to provide
shareholders with long-term capital growth by investing primarily in equity
securities of domestic U. S. companies. The Fund began operations on November
25, 1996. The following is a summary of significant accounting policies followed
by the Fund.

Due to a concentration of shareholders at June 30, 1997 the Fund is subject
to the provisions of the Internal Revenue Code applicable to personal
holding companies.

D. Distributions to Shareholders - The Fund generally declares dividends
annually, payable in December, on a date selected by the Trust's Trustees.
In addition, distributions may be made annually in December out of net
realized gains through October 31 of that year. Distributions to
shareholders are recorded on the ex-dividend date. The Fund may make a
supplemental distribution subsequent to the end of its fiscal year ending
June 30.

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS

Pursuant to an investment advisory agreement, Logan Capital Management, Inc.
(the "Advisor") provides the Fund with a continuous program of supervision of
the Fund's assets, including the composition of its portfolio, and furnishes
advice and recommendations with respect to investments, investment policies and
the purchase and sale of securities. As compensation for its services, the
Advisor receives a fee at the annual rate of 0.75% of the Fund's average daily
net assets.

Currently, the Fund does not offer its shares for sale in states which require
limitations to be placed on its expenses. The Advisor intends to voluntarily
waive all or a portion of its fee. There can be no assurance that the foregoing
voluntary fee waivers will continue. The Advisor has voluntarily waived its fee
amounting to $2,387 ($0.04 per share) for the period ended June 30, 1997.

The Fund's administrator, The Nottingham Company (the "Administrator"), provides
administrative services to and is generally responsible for the overall
management and day-to-day operations of the Fund pursuant to an accounting and
administrative agreement with the Trust. As compensation for its services, the
Administrator receives a fee at the annual rate of 0.175% of the Fund's first
$50 million of average daily net assets, 0.150% of the next $50 million of
average daily net assets, and 0.125% of its average daily net assets in excess
of $100 million. The Administrator also receives a monthly fee of $2,000 for
accounting and recordkeeping services. Additionally, the Administrator charges
the Fund for servicing of shareholder accounts and registration of the Fund's
shares. The Administrator also charges the Fund for certain expenses involved
with the daily valuation of portfolio securities. The Administrator has
voluntarily waived a portion of its total fees amounting to $7,915 ($.15 per
share) for the period ended June 30, 1997.

Certain organization expenses totaling $23,333 and $833 were paid to a company
controlled by the Administrator and to an officer of the Fund, respectively, for
the period ended June 30, 1997.

The Fund's Distributor, Quaker Securities, Inc. (the "Distributor") was paid
commissions of $2,789 for purchases and sales of investments, other than
short-term investments for the period ended June 30, 1997.

Certain Trustees and officers of the Trust are also officers of the Advisor, the
Distributor or the Administrator.

<PAGE>
QUAKER SECTOR ALLOCATION EQUITY FUND

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

NOTE 3 - SERVICE FEES

The Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust as defined in the Investment Company Act of
1940 (the "Act"), adopted a Shareholder Servicing Agreement (the "Agreement").
Pursuant to this Agreement, Quaker Funds Inc. (the "Sponsor") will provide
oversight with respect to the Fund's investment advisor, arrange for payment of
investment advisory and administrative fees, coordinate payments under the
Fund's Distribution Plan, develop communications with existing Fund
shareholders, assist in responding to shareholder inquiries, and will provide
other shareholder services. As compensation for these services, Quaker Funds,
Inc. receives 0.25% of the Fund's average daily net assets. The Sponsor intends
to voluntarily waive all or a portion of its fee and reimburse expenses of the
Fund to limit total Fund operating expenses to 1.35% of the average daily net
assets of the Fund. There can be no assurance that the foregoing voluntary fee
waivers or reimbursements will continue. The Sponsor has voluntarily waived its
fee amounting to $796 and has reimbursed expenses totaling $31,733 for the
period ended June 30, 1997.

NOTE 4 - DEFERRED ORGANIZATION EXPENSES

Expenses totaling $33,324 incurred in connection with its organization and the
registration of its shares, which were originally paid by the Fund's Sponsor,
have been assumed by the Fund.

NOTE 5 - PURCHASES AND SALES OF INVESTMENTS

Purchases and sales of investments, other than short-term investments,
aggregated $1,253,091 and $310,530 respectively, for the period ended June 30,
1997.
<PAGE>
Independent Auditor's Report

July 28, 1997

To the Shareholders and Board of Trustees
Quaker Sector Allocation Equity Fund
Rocky Mount, North Carolina

We have audited the statements of assets and liabilities, including the
schedules of investments, of the QUAKER SECTOR ALLOCATION EQUITY FUND (one of
the portfolios constituting the Quaker Investment Trust series of funds) as of
June 30, 1997, and the related statements of operations and of changes in net
assets and the selected per share data and ratios for the period from November
25, 1996 (commencement of operations) to June 30, 1997. These financial
statements and per share data and ratios are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and per share data and ratios based on our audit.

In our opinion, the financial statements and selected per share data and ratios
referred to above present fairly, in all material respects, the financial
position of the QUAKER SECTOR ALLOCATION EQUITY FUND (one of the portfolios
constituting the Quaker Investment Trust series of funds) as of June 30, 1997,
and the results of its operations and changes in its net assets and the selected
per share data and ratios for the period from November 25, 1996 (commencement of
operations) to June 30, 1997 in conformity with generally accepted accounting
principles.

/s/ Goldenberg Rosenthal Friedlander, LLP

Jenkintown, Pennsylvania
<PAGE>

QUAKER FIXED INCOME FUND
Performance Update - $25,000 Investment
For the period from November 25, 1996
(commencement of operations) to June 30, 1997

- ------------------------------------------------------
Quaker
Fixed
Income Salomon BIG
- ------------------------------------------------------

11/25/96 25000 25000
11/30/96 25025 25103
12/31/96 24908 24882
1/31/97 24933 24977
2/28/97 24907 25005
3/31/97 24630 24753
4/30/97 24934 25106
5/31/97 25138 25248
6/30/97 25392 25646

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.

Total Return

- -------------------------------
Commencement of operations
through 6/30/97
- -------------------------------

1.57%

- -------------------------------

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

At June 30, 1997, the Fund would have grown to $25,392 - total investment return
of 1.57% since November 25, 1996.

At June 30, 1997, a similar investment in the Salomon Brothers Broad
Investment-Grade Index would have grown to $25,646 - total investment return of
2.58% since November 25, 1996.

July 31, 1997

Dear Shareholder:

Financial markets have been very favorable during the life of the Quaker Family
of Funds. Domestic equity markets have shown particular strength during the
first half of 1997, while fixed income results have been modestly positive. The
Quaker Fixed Income Fund, managed by Wiley Angell of Fiduciary Asset Management,
remained somewhat behind the Salomon Broad Investment Grade Index from the
inception of the Fund on November 25, 1996 through June 30, 1997. During that
period, the Fund returned 1.6% while the Index grew by 2.6%. For three months
ending with June, the Fund returned 3.1% compared with 3.6% for the Index.

We appreciate your investment in the Quaker Family of Funds and we will work
hard to earn your continued support.

Sincerely,

/s/ Peter F. Waitneight
Peter F. Waitneight
President
<PAGE>

QUAKER FIXED INCOME FUND

PORTFOLIO OF INVESTMENTS

June 30, 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Interest Maturity Value
Principal Rate Date (note 1)
- ----------------------------------------------------------------------------------------------------
U. S. GOVERNMENT OBLIGATIONS - 87.65%

U. S. Treasury Bond $150,000 10.375% 11/15/12 $190,359
U. S. Treasury Note 255,000 11.125% 08/15/03 314,447
------- -------

Total U. S. Government Obligations (Cost $506,814) 504,806
-------
Shares
INVESTMENT COMPANIES - 8.59%

Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares 20,192 20,192
Evergreen Money Market Treasury Instititutional Treasury
Money Market Fund Institutional Service Shares 29,273 29,273
------
Total Investment Company (Cost $49,465) 49,465

Total Value of Investments (Cost $556,279 (a)) 96.24% $554,271
Other Assets Less Liabilities 3.76% 21,659
---- ------
Net Assets 100.00% $575,930
====== ========

</TABLE>
(a) Aggregate cost for financial reporting and federal income tax purposes is
the same. Unrealize appreciation (depreciation) of investments for
financial reporting and federal income tax purp is as follows:

Unrealized appreciation $0
Unrealized depreciation (2,008)
-------
Net unrealized depreciation $(2,008)
=======

See accompanying notes to financial statements
<PAGE>
QUAKER FIXED INCOME FUND

STATEMENT OF ASSETS AND LIABILITIES

June 30, 1997

ASSETS
Investments, at value (cost $556,279) ......................... $554,271
Cash .......................................................... 50
Interest receivable ........................................... 12,820
Deferred organization expenses, net (notes 2 and 4) ........... 29,289
---------
Total assets ............................................... 596,430
---------
LIABILITIES
Accrued expenses .............................................. 7,626
Due to fund sponsor (note 3) .................................. 12,874
---------
Total liabilities .......................................... 20,500
---------
NET ASSETS
(applicable to 58,205 shares outstanding; unlimited
shares of $ 0.01 par value beneficial interest authorized) .... $575,930
=========
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE PER SHARE
($575,930 / 58,205 shares) .................................... $9.89
=========
NET ASSETS CONSIST OF
Paid-in capital ............................................... $577,929
Undistributed net investment income ........................... 9
Net unrealized depreciation on investments .................... (2,008)
---------
$575,930
=========

See accompanying notes to financial statements
<PAGE>
QUAKER FIXED INCOME FUND

STATEMENT OF OPERATIONS

Period from November 25, 1996
(commencement of operations) to
June 30, 1997

INVESTMENT INCOME

Income
Interest .................................................... $14,582
---------
Expenses
Investment advisory fees (note 2) ........................... 1,153
Fund administration fees (note 2) ........................... 448
Custody fees ................................................ 1,770
Registration and filing administration fees (note 2) ........ 733
Fund accounting fees (note 2) ............................... 14,600
Audit fees .................................................. 4,500
Legal fees .................................................. 2,779
Securities pricing fees ..................................... 993
Shareholder servicing fees (note 3) ......................... 384
Shareholder recordkeeping fees (note 2) ..................... 3,604
Shareholder servicing expenses .............................. 1,024
Registration and filing expenses ............................ 300
Printing expenses ........................................... 1,906
Amortization of deferred organization expenses (note 4) ..... 4,035
Trustee fees and meeting expenses ........................... 269
Other operating expenses .................................... 3,939
---------
Total expenses ........................................... 42,437
---------
Less:
Expense reimbursements (note 3) ....................... (30,723)
Investment advisory fees waived (note 2) .............. (1,153)
Fund administration fees waived (note 2) .............. (7,872)
Shareholder servicing fees waived (note 3) ............ (384)
---------
Net expenses ............................................. 2,305
---------
Net investment income ................................. 12,277
---------
UNREALIZED LOSS ON INVESTMENTS

Decrease in unrealized appreciation on investments ............. (2,008)
---------
Net increase in net assets resulting from operations ..... $10,269
=========

See accompanying notes to financial statements
<PAGE>
QUAKER FIXED INCOME FUND

STATEMENT OF CHANGES IN NET ASSETS

Period from November 25, 1996
(commencement of operations) to
June 30, 1997

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS

Operations
Net investment income ................................................ $12,277
Decrease in unrealized appreciation on investments ................... (2,008)
-------
Net increase in net assets resulting from operations .............. 10,269
-------
Distributions to shareholders from
Net investment income ................................................ (12,268)
-------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) . 577,929
-------
Total increase in net assets ................................... 575,930

NET ASSETS

Beginning of period ..................................................... 0
-------
End of period (including undistributed net investment income ............ $575,930
of $9) =======

(a) A summary of capital share activity follows:

--------------------
Shares Value
--------------------
Shares sold ..................................................... 56,957 $565,661
Shares issued for reinvestment of distributions ................. 1,248 12,268
------ --------
Net increase .................................................. 58,205 $577,929
====== ========

</TABLE>
See accompanying notes to financial statements
<PAGE>
QUAKER FIXED INCOME FUND

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout the Period)

Period from November 25, 1996
(commencement of operations) to
June 30, 1997

Net asset value, beginning of period ............................ $10.00

Income from investment operations
Net investment income ..................................... 0.26
Net realized and unrealized gain on investments ........... (0.11)

Total from investment operations ....................... 0.15

Distributions to shareholders from
Net investment income ..................................... (0.26)

Net asset value, end of period .................................. $9.89

Total return .................................................... 1.57 %(b)

Ratios/supplemental data

Net assets, end of period .................................... $575,930

Ratio of expenses to average net assets
Before expense reimbursements and waived fees ............. 16.56 % (a)
After expense reimbursements and waived fees .............. 0.90 % (a)

Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees ............. (10.87)% (a)
After expense reimbursements and waived fees .............. 4.79 % (a)

Portfolio turnover rate ...................................... 0.00 %

(a) Annualized.

(b) Aggregate total return, not annualized.

See accompanying notes to financial statements
<PAGE>
QUAKER FIXED INCOME FUND

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION

The Quaker Fixed Income Fund (the "Fund") is a diversified series of shares of
beneficial interest of the Quaker Investment Trust (the "Trust"). The Trust, an
open-end investment company, was organized on October 24, 1990, as a
Massachusetts Business Trust and is registered under the Investment Company Act
of 1940, as amended. The investment objective of the Fund is to generate current
income, preserve capital and maximize total returns through active management of
investment grade fixed income securities. The Fund began operations on November
25, 1996. The following is a summary of significant accounting policies followed
by the Fund.

A. Security Valuation - The Fund's investments in securities are carried at
value. Securities listed on an exchange or quoted on a national market
system are valued at 3:00 p.m., New York time on the day of valuation.
Other securities traded in the over-the-counter market and listed
securities for which no sale was reported on that date are valued at the
most recent bid price. Securities for which market quotations are not
readily available, if any, are valued by using an independent pricing
service or by following procedures approved by the Board of Trustees.
Short-term investments are valued at cost which approximates value.

Due to a concentration of shareholders at June 30, 1997 the Fund is subject
to the provisions of the Internal Revenue Code applicable to personal
holding companies.

C. Investment Transactions - Investment transactions are recorded on the trade
date. Realized gains and losses are determined using the specific
identification cost method. Interest income is recorded daily on an accrual
basis. Bond discounts and premiums are amortized using the straight-line
method on a daily basis, which does not materially vary from the
yield-to-maturity method, from the date acquired through scheduled
maturity. Dividend income and distributions to shareholders are recorded on
the ex-dividend date.

D. Distributions to Shareholders - The Fund generally declares dividends
monthly, on a date selected by the Trust's Trustees. In addition,
distributions may be made annually in December out of net realized gains
through October 31 of that year. The Fund may make a supplemental
distribution subsequent to the end of its fiscal year ending June 30.

<PAGE>
QUAKER FIXED INCOME FUND

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS

Pursuant to an investment advisory agreement, Fiduciary Asset Management Co.
(the "Advisor") provides the Fund with a continuous program of supervision of
the Fund's assets, including the composition of its portfolio, and furnishes
advice and recommendations with respect to investments, investment policies and
the purchase and sale of securities. As compensation for its services, the
Advisor receives a fee at the annual rate of 0.45% of the Fund's average daily
net assets.

Currently, the Fund does not offer its shares for sale in states which require
limitations to be placed on its expenses. The Advisor intends to voluntarily
waive all or a portion of its fee. There can be no assurance that the foregoing
voluntary fee waivers will continue. The Advisor has voluntarily waived its fee
amounting to $1,153 ($0.03 per share) for the period ended June 30, 1997.

The Fund's administrator, The Nottingham Company (the "Administrator"), provides
administrative services to and is generally responsible for the overall
management and day-to-day operations of the Fund pursuant to an accounting and
administrative agreement with the Trust. As compensation for its services, the
Administrator receives a fee at the annual rate of 0.175% of the Fund's first
$50 million of average daily net assets, 0.150% of the next $50 million of
average daily net assets, and 0.125% of its average daily net assets in excess
of $100 million. The Administrator also receives a monthly fee of $2,000 for
accounting and recordkeeping services. Additionally, the Administrator charges
the Fund for servicing of shareholder accounts and registration of the Fund's
shares. The Administrator also charges the Fund for certain expenses involved
with the daily valuation of portfolio securities. The Administrator has
voluntarily waived a portion of its total fees amounting to $7,872 ($.18 per
share) for the period ended June 30, 1997.

Certain organization expenses totaling $23,333 and $833 were paid to a company
controlled by the Administrator and to an officer of the Fund, respectively, for
the period ended June 30, 1997.
<PAGE>
QUAKER FIXED INCOME FUND

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

Certain Trustees and officers of the Trust are also officers of the Advisor, the
Distributor or the Administrator.

NOTE 3 - SERVICE FEES

The Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust as defined in the Investment Company Act of
1940 (the "Act"), adopted a Shareholder Servicing Agreement (the "Agreement").
Pursuant to this Agreement, Quaker Funds, Inc. (the "Sponsor") will provide
oversight with respect to the Fund's investment advisor, arrange for payment of
investment advisory and administrative fees, coordinate payments under the
Fund's Distribution Plan, develop communications with existing Fund
shareholders, assist in responding to shareholder inquiries, and will provide
other shareholder services. As compensation for these services, Quaker Funds,
Inc. receives 0.15% of the Fund's average daily net assets. The Sponsor intends
to voluntarily waive all or a portion of its fee and reimburse expenses of the
Fund to limit total Fund operating expenses to 0.90% of the average daily net
assets of the Fund. There can be no assurance that the foregoing voluntary fee
waivers or reimbursements will continue. The Sponsor has voluntarily waived its
fee amounting to $384 and has reimbursed expenses totaling $30,723 for the
period ended June 30, 1997.

NOTE 4 - DEFERRED ORGANIZATION EXPENSES

Expenses totaling $33,324 incurred in connection with its organization and the
registration of its shares, which were originally paid by the Fund's Sponsor,
have been assumed by the Fund.

NOTE 5 - PURCHASES AND SALES OF INVESTMENTS

Purchases and sales of investments, other than short-term investments,
aggregated $512,020 and $0, respectively, for the period ended June 30, 1997.
<PAGE>
Independent Auditor's Report

July 28, 1997

To the Shareholders and Board of Trustees
Quaker Fixed Income Fund
Rocky Mount, North Carolina

We have audited the statements of assets and liabilities, including the
schedules of investments, of the QUAKER FIXED INCOME FUND (one of the portfolios
constituting the Quaker Investment Trust series of funds) as of June 30, 1997,
and the related statements of operations and of changes in net assets and the
selected per share data and ratios for the period from November 25, 1996
(commencement of operations) to June 30, 1997. These financial statements and
per share data and ratios are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
per share data and ratios based on our audit.

In our opinion, the financial statements and selected per share data and ratios
referred to above present fairly, in all material respects, the financial
position of the QUAKER FIXED INCOME FUND (one of the portfolios constituting the
Quaker Investment Trust series of funds) as of June 30, 1997, and the results of
its operations and changes in its net assets and the selected per share data and
ratios for the period from November 25, 1996 (commencement of operations) to
June 30, 1997 in conformity with generally accepted accounting principles.

/s/ Goldenberg Rosenthal Friedlander, LLP

Jenkintown, Pennsylvania