QUAKER INVESTMENT TRUST, 497, 1999-11-01

QUAKER INVESTMENT TRUST
497, 1999-11-01

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PROSPECTUS
Dated November 1, 1999

The Quaker Investment Trust
1288 Valley Forge Road, Suite 76
Valley Forge, PA 19482
1-800-220-8888

The Quaker Investment Trust(TM) (the "Trust") is a registered management
investment company currently offering the following portfolios (each a "Fund",
and collectively, the Funds"):

QUAKER CORE EQUITY FUND
QUAKER AGGRESSIVE GROWTH FUND
QUAKER LARGE-CAP VALUE MARKET FUND
QUAKER MID-CAP VALUE FUND
QUAKER SMALL-CAP VALUE FUND
QUAKER FIXED INCOME FUND

The Trust is offering No-Load Shares by this Prospectus. The Trust also offers
other Classes of shares with sales charges, but with lower minimum investment
amounts. To receive a prospectus describing the Trust's other share Classes,
call the Trust.

The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
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TABLE OF CONTENTS
THE FUNDS
QUAKER CORE EQUITY FUND
What is the Fund's Investment Objective?..................
What are the Fund's Primary Investment Strategies?............
What are the Principal Risks of Investing in the Fund?........
How Has the Fund Performed in the Past?.......................
What are the Fund's Fees and Expenses?........................
QUAKER AGGRESSIVE GROWTH FUND
What is the Fund's Investment Objective?......................
What are the Fund's Primary Investment Strategies?............
What are the Principal Risks of Investing in the Fund?........
How Has the Fund Performed in the Past?.......................
What are the Fund's Fees and Expenses?........................
QUAKER LARGE-CAP VALUE FUND
What is the Fund's Investment Objective?......................
What are the Fund's Primary Investment Strategies?............
What are the Principal Risks of Investing in the Fund?........
How Has the Fund Performed in the Past?.......................
What are the Fund's Fees and Expenses?........................
QUAKER MID-CAP VALUE FUND
What is the Fund's Investment Objective?......................
What are the Fund's Primary Investment Strategies?............
What are the Principal Risks of Investing in the Fund?........
How Has the Fund Performed in the Past?.......................
What are the Fund's Fees and Expenses?........................
QUAKER SMALL-CAP VALUE FUND
What is the Fund's Investment Objective?......................
What are the Fund's Primary Investment Strategies?............
What are the Principal Risks of Investing in the Fund?........
How Has the Fund Performed in the Past?.......................
What are the Fund's Fees and Expenses?........................
QUAKER FIXED INCOME FUND
What is the Fund's Investment Objective?......................
What are the Fund's Primary Investment Strategies?............
What are the Principal Risks of Investing in the Fund?........
How Has the Fund Performed in the Past?.......................
What are the Fund's Fees and Expenses?........................
THE FUNDS' ADVISERS & SPONSOR
For the Quaker Core Equity Fund...............................
For the Quaker Aggressive Growth Fund.........................
For the Quaker Large-Cap and Mid-Cap Value Funds..............
For the Quaker Small-Cap Value Fund...........................
For the Quaker Fixed-Income Fund..............................
The Funds' Sponsor............................................
HOW TO BUY AND SELL SHARES
Investing In The Funds........................................
Determining Share Prices......................................
Variable Pricing System.......................................
Distribution (12b-1) Fees.....................................
Minimum Investment Amounts....................................
Opening and Adding To Your Account............................
Purchasing Shares By Mail.....................................
Purchasing Shares By Wire Transfer............................
Purchases through Financial Service Organizations.............
Purchasing Shares By Automatic Investment Plan................
Purchasing Shares By Telephone................................
Miscellaneous Purchase Information............................
How to Sell (Redeem) Your Shares..............................
By Mail.......................................................
Signature Guarantees..........................................
By Telephone..................................................
By Wire.......................................................
Redemption At The Option Of The Trust.........................
DIVIDENDS AND DISTRIBUTIONS............................................
TAX CONSIDERATIONS.....................................................
GENERAL INFORMATION....................................................
FINANCIAL HIGHLIGHTS...................................................
FOR MORE INFORMATION...................................................
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<PAGE>

THE FUNDS

QUAKER CORE EQUITY FUND

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The Fund's investment objective is long-term growth of capital. Current
income is not a significant investment consideration, and any such income
realized will be considered incidental to the Fund's investment objective.

WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?

The Adviser attempts to achieve the Fund's investment objective by:

o normally investing at least 65% of the Fund's total assets in US
common stocks;
o primarily investing in common stocks of companies with large market
capitalizations (over $6 billion); o holding from 60 to 200 stocks in
the Fund's investment portfolio;
o maintaining an investment portfolio that has, on average, a higher
price/earnings ratio and lower yield than the S&P 500 Index;
o investing in companies with strong fundamentals, increasing sales and
earnings, a conservative balance sheet and reasonable expectations of
continuing earnings increases; and
o reducing capital gains taxes by controlling portfolio turnover.

To select portfolio companies for the Fund, the Fund's Adviser employs a
"bottom up" approach to stock selection. This means that the Adviser
analyses individual companies for suitability and then picks those
companies that the Adviser believes will perform best in the overall
economic environment. The Adviser conducts extensive fundamental analysis
of the companies in which the Fund invests. The company's management,
balance sheet, product or service niche, market penetration, and other
fundamental elements of the company's overall worth are all factors that
influence the Adviser's decision concerning whether to invest.

The Fund may invest up to 25% of its total assets in foreign securities
that are traded on a U.S. exchange, in the form of American Depository
Receipts ("ADRs"). The Fund will only invest in ADRs that are issuer
sponsored. This means that the issuer is providing information that would
not be available from ADR issuers that do not sponsor their ADR's.
Sponsored ADRs typically are issued by a U.S. bank or trust company and
evidence ownership of underlying securities issued by a foreign
corporation.

2
<PAGE>

The Fund will normally invest its remaining assets in cash and cash
equivalents, such as U.S. government debt instruments, other money market
mutual funds, and repurchase agreements.

Ordinarily, the Fund's portfolio will be invested primarily in common
stocks. However, the Fund is not required to be fully invested in common
stocks and, in fact, usually maintains a small percentage of its assets in
cash reserves. Under abnormal market or economic conditions, The Trust has
authorized the Fund's Adviser to adopt a temporary defensive investment
position in the market. When the Adviser assumes such a position, cash
reserves may be a significant percentage (up to 100%) of the Fund's total
net assets. When assuming a temporary defensive position, the Fund usually
invests its cash reserves in U.S. Government debt instruments, other
unaffiliated mutual funds (money market funds) and repurchase agreements.

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?

Stock Market Risk- The stock market tends to trade in cyclical price
patterns, with prices generally rising or falling over sustained periods of
time. The Fund invests primarily in common stocks, so the Fund will be
subject to the risks associated with common stocks, including price
volatility and the creditworthiness of the issuing company.

Foreign Securities Risk- Investments in foreign securities involve greater
risks compared to domestic investments for the following reasons:

o Foreign companies are not subject to the regulatory requirements of
U.S. companies, so there may be less publicly available information
about foreign issuers than U.S. companies.
o Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards.
o Dividends and interest on foreign securities may be subject to foreign
withholding taxes. Such taxes may reduce the net return to Fund
shareholders.
o Foreign securities are often denominated in a currency other than the
U.S. dollar. Accordingly, the Fund will be indirectly subject to the
risks associated with fluctuations in currency values, because the
ADR's in which the Fund invests represent interests in foreign
currency denominated securities.
o Although the Fund will only invest in foreign issuers that are
domiciled in nations considered to have stable and friendly
governments, there is the possibility of expropriation, confiscation,
taxation, currency blockage or political or social instability which
could negatively affect the Fund.

3
<PAGE>

Temporary Defensive Positions- During times when the Fund holds a
significant portion of its net assets in cash, it will not be investing
according to its investment objectives, and the Fund's performance may be
negatively affected as a result.

Year 2000 Risks- As with other mutual funds, businesses, financial
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Adviser and the Fund's other
service providers don't properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known
as the "Year 2000" or "Y2K" problem. The Adviser has assured the Trust that
the computer systems it uses have been tested and are Y2K compliant. The
Fund's other major service providers have provided similar assurances to
the Fund.

At the present time, the Fund believes that its exposure to losses
resulting from the Y2K problem are minimal. However, neither the Fund or
the Adviser can insure that the Fund is immune from Y2K problems. The
primary unidentified risk to the Fund at this point in time concerns the
Y2K preparedness of companies in which the Fund invests, and foreign
issuers in particular. Foreign issuers may not be as well prepared for the
Y2K problem as U.S. issuers, and this may pose additional risk to the Fund.
The Fund's Adviser will continue to monitor the companies in which the Fund
invests for evidence of Y2K preparedness, or the lack thereof, and will
adjust the Fund's portfolio as needed to minimize such risks.

HOW HAS THE FUND PERFORMED IN THE PAST?

The bar chart and table below help show the returns and risks of investing in
the Fund. They show changes in the Fund's yearly performance over the lifetime
of the Fund. They also compare the Fund's performance to the performance of the
S&P 500 Index** during each period. You should be aware that the Fund's past
performance may not be an indication of how the Fund will perform in the future.

PERFORMANCE BAR
CHART AND TABLE
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31

35% ------- 32.51%
30% ------- 29.63% -------
25% ------- -------
20% ------- -------
15% ------- -------
10% ------- -------
05% ------- -------
- --------------------------------------------------------------------------------
Year Ended Year Ended
Dec. 31, 1997 Dec. 31, 1998

Best Quarter: 4th Qtr 1998 35.71%
Worst Quarter: 3rd Qtr 1998 (14.27)%

4
<PAGE>

Average Annual Total Returns (For Periods ending on December 31, 1998)
- ----------------------------------------------------------------------

The Fund S&P 500 Index**
-------- ---------------

One Year 32.51% 28.58%
Inception(11/25/96) 28.17% 28.10%

For the Period 1/1/99 through 6/30/99, the Fund's annualized total return
was 21.56%

** The S&P 500 Index is a widely recognized, unmanaged index of the 500
largest companies in the United States as measured by market
capitalization. The Index assumes reinvestment of all dividends and
distributions and does not reflect any asset-based charges for investment
management or other expenses.

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

WHAT ARE THE FUND'S FEES AND EXPENSES?

This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund.

SHAREHOLDER FEES:
- -----------------
(fees paid directly from your investment)

MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES NONE

MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE

REDEMPTION FEES NONE

ANNUAL FUND OPERATING EXPENSES:
- -------------------------------
(expenses that are deducted from Fund assets)
MANAGEMENT FEES (1) 1.00%
DISTRIBUTION & SERVICING (12B-1) FEES (2) 0.25%
OTHER EXPENSES (3) 0.25%
-----
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.50%

1. Management fees include a fee of 0.75% for investment advisory services and
0.25% for administrative services provided to the Fund by the Fund's
Sponsor.
2. Because 12b-1 fees are paid out of the assets of the Fund on an ongoing
basis, over time these fees will increase the cost of your investment and
may cost you more than paying other types of sales charges.
3. Other Expenses included fees paid to the Fund's transfer agent,
administrator and other service providers. Because the Fund is offering
these share Classes for the first time, these fees are estimated.

EXAMPLE: THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN
THE FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

5
<PAGE>

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL YOUR SHARES AT THE END OF THOSE PERIODS. THE
EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND THAT THE
FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL COSTS MAY BE
HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD BE:

1 YEAR 5 YEARS 10 YEARS
------ ------- --------
$ 153 $ 818 $ 1,791

IF YOU DID NOT REDEEM YOUR SHARES, YOUR EXPENSES WOULD BE THE SAME.
- --------------------------------------------------------------------------------

QUAKER AGGRESSIVE GROWTH FUND

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?

The Fund attempts to achieve its investment objective by;

o normally investing at least 65% of the Fund's total assets in US
common stocks;
o investing in common stocks of companies without regard to market
capitalizations;
o investing its assets in a limited number of equity securities of
companies which the Fund's Adviser believes show a high probability
for superior growth;
o investing in "special situation" securities when the Fund's Adviser
believes such investments will benefit the Fund;
o seeking a balance between investments in "special situation"
investments and investments in large to mid-capitalization equities (
in excess of $1 billion in market capitalization) with high or
accelerating profitability; and
o utilizing a strategy of short selling securities to reduce volatility
and enhance potential investment gain, but not to exceed 25% of the
Fund's total assets.

The Fund may invest up to 25% of its total assets in "special situations".
A special situation arises when, in the opinion of the Fund's Adviser, the
securities of a company will, within a reasonably estimated time period, be
accorded market recognition at an appreciated value solely by reason of a
development particularly or uniquely applicable to that company and
regardless of general business conditions or movements of the market as a
whole. Such developments and situations include, but are not limited to:
spin-offs, corporate restructurings, liquidations, reorganizations,
recapitalizations or mergers, material litigation, technological
breakthroughs, and new management or management policies.

6
<PAGE>

In selecting portfolio companies, the Fund's Adviser seeks a balance
between investing in "special situation" companies and investing in the
securities of companies that have high or accelerating profitability, an
element of franchise value, and reasonable valuations. In purchasing
securities for the Fund, the Fund's Adviser looks for two primary
characteristics: 1) superior risk/reward due to inefficient pricing of the
security due to lack of research coverage; and 2) a measure of downside
risk protection due to the company's low correlation to the capital
markets.

The Fund may also employ a strategy of short selling securities to reduce
volatility and enhance potential investment gain. The Fund limits short
selling to 25% of its net assets. You should be aware that the Fund may
engage in two types of short sales. Securities may be sold " against the
box", or outright. A short sale against the box means that securities that
the Fund already owns are sold, but not delivered. Instead, these
securities are segregated and pledged against the short position. When the
short sale is closed out, the securities owned are released.

Outright short selling involves the sale of securities not presently owned
by the Fund. If the Fund does not purchase that security on the same day as
the sale, the security must be borrowed. At the time a short sale is
effected, the Fund incurs an obligation to replace the security borrowed at
whatever its price may be at the time the Fund purchases the security for
delivery to the lender. Any gain or loss on the transaction is taxable as a
short term capital gain or loss.

The Fund may also invest up to 25% of its total assets in foreign
securities that are traded on a U.S. exchange, in the form of American
Depository Receipts ("ADRs"). The Fund will only invest in ADRs that are
issuer sponsored. Sponsored ADRs typically are issued by a U.S. bank or
trust company and evidence ownership of underlying securities issued by a
foreign corporation.

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?

7
<PAGE>

Short Selling Risks- Short selling involves special risks, and the Fund
could at any time suffer both a loss on the purchase or retention of one
security, if that security should decline in value, and a loss on a short
sale of another security, if the security sold short should increase in
value. When a short position is closed out, it may result in a short term
capital gain or loss for federal income tax purposes. To the extent that in
a generally rising market the Fund maintains short positions in securities
rising with the market, the net asset value of the Fund would be expected
to increase to a lesser extent than the net asset value of a fund that does
not engage in short sales. When the Fund engages in short sales, the
securities underlying the transaction are repriced daily, and if the value
of the underlying securities is not sufficient to fully cover the short,
the Fund will have to put up additional cash or securities to make up any
difference. This requirement may result in additional loss to the Fund.

No short sale will be effected if, at the time of making the short sale,
the aggregate market value of all securities sold short will exceed 25% of
the value of the Fund's net assets. Short sales by the Fund are further
limited to 2% of the securities of any class of the issuer. The Fund may
only engage in short sale transactions in securities listed on a national
securities exchange or on the NASDAQ.

Foreign Securities Risk- Investments in foreign securities involve greater
risks compared to domestic investments for the following reasons:

Special Situation Risks- Although large and well-known companies may be
involved, special situations often involve much greater risk than is found
in the normal course of investing.

8
<PAGE>

These risks result from the subjective nature of determining what a special
situation is. For example, investing in a company primarily because the
Adviser believes that a merger is imminent or that an announced merger will
have exaggerated positive effects on the company is inherently speculative
Furthermore, liquidations, reorganizations, recapitalizations, material
litigation, technological breakthroughs, and new management or management
policies may not have the effect on a company's price that the Adviser
expects, which could negatively impact the Fund. To minimize these risks,
the Fund will not invest in special situations unless the target company
has at least three years of continuous operations (including predecessors),
or unless the aggregate value of such investments is not greater than 25%
of the Fund's total net assets (valued at the time of investment).

HOW HAS THE FUND PERFORMED IN THE PAST?

9
<PAGE>

PERFORMANCE BAR
CHART AND TABLE
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31

35%
30% ------- 30.16%
25% -------
20% ------- 20.32% -------
15% ------- -------
10% ------- -------
05% ------- -------
- --------------------------------------------------------------------------------
Year Ended Year Ended
Dec. 31, 1997 Dec. 31, 1998

Best Quarter: 1st Qtr 1999 19.94%
Worst Quarter: 4th Qtr 1998 ( 5.34)%

Average Annual Total Returns (For Periods ending on December 31, 1998)
- ----------------------------------------------------------------------

The Fund S&P 500 Index**
-------- ---------------

One Year 30.16% 28.58%
Inception 25.84% 28.10%

For the Period 1/1/99 through 6/30/99, the Fund's annualized total return was
74.20%

WHAT ARE THE FUND'S FEES AND EXPENSES?

This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund.

SHAREHOLDER FEES:
- -----------------
(fees paid directly from your investment)

MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES NONE

MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE

REDEMPTION FEES NONE

10
<PAGE>

EXAMPLE: THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN
THE FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

1 YEAR 5 YEARS 10 YEARS
----------- ---------- ----------
$ 153 $ 818 $ 1,791

IF YOU DID NOT REDEEM YOUR SHARES, YOUR EXPENSES WOULD BE THE SAME.
- ------------------------------------------------------------------------------

QUAKER LARGE-CAP VALUE FUND

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?

The Adviser attempts to achieve the Fund's investment goals by:

o normally investing at least 65% of the Fund's total assets in US
common stocks;

o investing the Fund's assets (65%) mostly in large capitalization
(greater than $6 billion) companies;

11
<PAGE>

o investing in companies considered by the Fund's Adviser to have
substantial core assets and consistently above-average earnings over
time, selling at relatively low market valuations, with attractive
growth and momentum characteristics; and
o minimizing portfolio turnover so as to avoid realizing capital gains;
such a policy tends to minimize adverse tax consequences to Fund
shareholders.

The Fund's Adviser believes that the Fund's investment objective is best
achieved by investing in companies that exhibit the potential for
significant growth over the long term. The Adviser defines long-term as a
time horizon of at least three years. To identify companies that have
significant growth potential, the Adviser employs a value-oriented approach
to stock selection. To choose the securities in which the Fund will invest,
the Adviser seeks to identify companies which exhibit some or all of the
following criteria:

o low price-to-earnings ratio ("P/E");
o low price-to-book value or tangible asset value;
o excellent prospects for growth;
o strong franchise;
o highly qualified management;
o consistent free cash flow; and
o high returns on invested capital.

In order to choose the securities in which the Fund invests, the Adviser
employs its own proprietary cash-flow based, dividend discount analytical
model. The Adviser selects 50-100 securities which it believes to be
undervalued relative to comparable alternate investments, then focuses on
the fundamentals of these companies to choose which companies will
ultimately be included in the Fund.

The Fund may invest up to 25% of its total assets in foreign securities
that are traded on a U.S. exchange, in the form of American Depository
Receipts ("ADRs"). The Fund will only invest in ADRs that are issuer
sponsored. Sponsored ADRs typically are issued by a U.S. bank or trust
company and evidence ownership of underlying securities issued by a foreign
corporation.

The Fund will normally invest its remaining assets in cash and cash
equivalents, such as U.S. government debt instruments, other money market
mutual funds, and repurchase agreements.

12
<PAGE>

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?

Value Risk- The Fund's Adviser seeks to invest in companies that appear to
be "undervalued" in the marketplace (i.e. trading at prices below the
company's true worth). The risk in such an investment strategy is that the
Adviser's analysis of a company's true value may be incorrect, and the
securities purchased may not perform as expected, reducing the Fund's
return.

Foreign Securities Risk- Investments in foreign securities involve greater
risks compared to domestic investments for the following reasons:

13
<PAGE>

date-related information and data from and after January 1, 2000. This is
commonly known as the "Year 2000" or "Y2K" problem. The Adviser has assured
the Trust that the computer systems it uses have been tested and are Y2K
compliant. The Fund's other major service providers have provided similar
assurances to the Fund.

HOW HAS THE FUND PERFORMED IN THE PAST?

PERFORMANCE BAR
CHART AND TABLE
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31

35%
30% ------- 30.23%
25% -------
20% ------- ------- 21.81%
15% ------- -------
10% ------- -------
05% ------- -------
- --------------------------------------------------------------------------------
Year Ended Year Ended
Dec. 31, 1997 Dec. 31, 1998

Best Quarter: 4th Qtr 1998 20.11%
Worst Quarter: 3rd Qtr 1998 (12.18)%

Average Annual Total Returns (For Periods ending on December 31, 1998)
- ----------------------------------------------------------------------

The Fund S&P 500 Index**
-------- ---------------

One Year 21.81% 28.58%
Inception 25.52% 28.10%

For the Period 1/1/99 through 6/30/99, the Fund's annualized total return was
27.64%

14
<PAGE>

WHAT ARE THE FUND'S FEES AND EXPENSES?

This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund.

SHAREHOLDER FEES:
- -----------------
(fees paid directly from your investment)
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES NONE

MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE

REDEMPTION FEES NONE

EXAMPLE: THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN
THE FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

1 YEAR 5 YEARS 10 YEARS
------ ------- --------
$ 153 $ 818 $ 1,791

IF YOU DID NOT REDEEM YOUR SHARES, YOUR EXPENSES WOULD BE THE SAME.
- --------------------------------------------------------------------------------

15
<PAGE>

QUAKER MID-CAP VALUE FUND

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?

The Adviser attempts to achieve the Fund's investment goals by:

o normally investing at least 65% of the Fund's total assets in US
common stocks;
o investing primarily in equity securities with market capitalizations
similar to the market capitalizations of the companies included in the
S&P 400 Mid-Cap Index;
o Generally maintaining an ultimate selection of 25-75 stocks for
investment by the Fund;
o investing in companies considered by the Fund's Adviser to have
consistent earnings and above-average core assets, selling at
relatively low market valuations, with attractive growth and momentum
characteristics; and
o minimizing portfolio turnover so as to avoid realizing capital gains;
such a policy tends to minimize adverse tax consequences to Fund
shareholders.

o low price-to-earnings ratio ("P/E");
o low price-to-book value or tangible asset value;
o excellent prospects for growth; o strong franchise;
o highly qualified management;
o consistent free cash flow; and
o high returns on invested capital.

16
<PAGE>

The Fund may invest up to 25% of its total assets in foreign securities
that are traded on a U.S. exchange, in the form of American Depository
Receipts ("ADRs"). The Fund will only invest in ADRs that are issuer
sponsored. Sponsored ADRs typically are issued by a U.S. bank or trust
company and evidence ownership of underlying securities issued by a foreign
corporation.

The Fund will normally invest its remaining assets in cash and cash
equivalents, such as U.S. government debt instruments, other money market
mutual funds, and repurchase agreements.

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?

Medium-Cap Stock Risks- The Fund invests in companies with medium market
capitalizations (from $1.5 to $6 billion). Because these companies are
relatively small compared to large-cap companies, may be engaged in
business mostly within their own geographic region, and may be less
well-known to the investment community, they can have more volatile share
prices. Also, these companies often have less liquidity, less management
depth, narrower market penetrations, less diverse product lines, and fewer
resources than larger companies. As a result, their stock prices often
react more strongly to changes in the marketplace.

17
<PAGE>

Foreign Securities Risk- Investments in foreign securities involve greater
risks compared to domestic investments for the following reasons:

HOW HAS THE FUND PERFORMED IN THE PAST?

The bar chart and table below help show the returns and risks of investing in
the Fund. They show changes in the Fund's yearly performance over the lifetime
of the Fund. They also compare the Fund's performance to the performance of the
S&P 400 Mid-Cap Index** during each period. You should be aware that the Fund's
past performance may not be an indication of how the Fund will perform in the
future.

18
<PAGE>

PERFORMANCE BAR
CHART AND TABLE
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31

10% ------- 7.84%
05% -------
- --------------------------------------------------------------------------------
Year Ended
Dec. 31, 1998

Best Quarter: 2nd Qtr 1999 15.91%
Worst Quarter: 4th Qtr 1998 (13.18)%

Average Annual Total Returns (For Periods ending on December 31, 1998)
- ----------------------------------------------------------------------

The Fund S&P 400 Mid-Cap Index**
-------- -----------------------

One Year 7.84% 17.68%
Inception (12/31/97) 7.84% 17.68%

For the Period 1/1/99 through 6/30/99, the Fund's annualized total return was
8.19%

** The S&P 400 Mid-Cap Index is a widely recognized, unmanaged index of 400
companies in the United States with market capitalizations between $1.5
billion and $6 billion. The Index assumes reinvestment of all dividends and
distributions and does not reflect any asset-based charges for investment
management or other expenses.

WHAT ARE THE FUND'S FEES AND EXPENSES?

This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund.

SHAREHOLDER FEES:
- -----------------
(fees paid directly from your investment)

MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES NONE

MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE

REDEMPTION FEES NONE

19
<PAGE>

EXAMPLE: THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN
THE FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

1 YEAR 5 YEARS 10 YEARS
------ ------- --------
$ 153 $ 818 $ 1,791

IF YOU DID NOT REDEEM YOUR SHARES, YOUR EXPENSES WOULD BE THE SAME.
- --------------------------------------------------------------------------------

QUAKER SMALL-CAP VALUE FUND

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?

The Adviser attempts to achieve the Fund's investment goals by:

o normally investing at least 65% of the Fund's total assets in US
common stocks;
o primarily investing in equity securities with market capitalizations
similar to the market capitalizations of companies included in the
Russell 2500 Index, with an ultimate selection of 140-160 stocks;
o investing in a portfolio of securities which includes a broadly
diversified number of U.S. equity securities which the Fund's Adviser
believes show a high probability of superior prospects for above
average total return.

20
<PAGE>

Under normal conditions, at least 65% of the Fund's total assets will be
invested in equity securities of small capitalization companies, as
measured by the Russell 2500 Index (current range).

In selecting portfolio companies, the Fund's Adviser focuses on companies
with consistently high earnings and above-average core assets, selling at
relatively low market valuations, with attractive growth and momentum
characteristics. The Fund will normally remain fully invested in these
securities at all times, subject to a minimum cash balance maintained for
operational purposes.

The Fund's Adviser screens a broad universe of U.S. securities to identify
a subset of issuers with ample trading volume, a number of years of
operating history, and capitalizations no larger than the companies in the
Russell 2000 Index. The resulting stocks are divided into 11 peer groups or
sectors. Within each group, the Adviser identifies the most attractive
stocks by considering a number of balance sheet and income statement
criteria. The Adviser then chooses securities so as to approximate the
overall industry and risk factor characteristics of the Russell 2000 Index.

The Fund may invest up to 25% of its total assets in foreign securities
that are traded on a U.S. exchange, in the form of American Depository
Receipts ("ADRs"). The Fund will only invest in ADRs that are issuer
sponsored. Sponsored ADRs typically are issued by a U.S. bank or trust
company and evidence ownership of underlying securities issued by a foreign
corporation.

The Fund may invest its remaining assets, if any, in equity securities of
medium and large capitalization companies, cash and cash equivalents, such
as U.S. government debt instruments, other money market mutual funds, and
repurchase agreements.

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?

21
<PAGE>

Small-Cap Stock Risks- The Fund will invest in companies with small market
capitalizations (generally less than $1.5 billion). Because these companies
are relatively small compared to large-cap companies, may be engaged in
business mostly within their own geographic region, and may be less
well-known to the investment community, they can have more volatile share
prices. Also, small companies often have less liquidity, less management
depth, narrower market penetrations, less diverse product lines, and fewer
resources than larger companies. As a result, their stock prices often
react more strongly to changes in the marketplace.

Foreign Securities Risk- Investments in foreign securities involve greater
risks compared to domestic investments for the following reasons:

22
<PAGE>

HOW HAS THE FUND PERFORMED IN THE PAST?

The bar chart and table below help show the returns and risks of investing in
the Fund. They show changes in the Fund's yearly performance over the lifetime
of the Fund. They also compare the Fund's performance to the performance of the
Russell 2000 Index** during each period. You should be aware that the Fund's
past performance may not be an indication of how the Fund will perform in the
future.

PERFORMANCE BAR
CHART AND TABLE
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31

40% ------- 41.47%
35% -------
30% -------
25% -------
20% -------
15% -------
10% -------
05% ------- ------- 5.15%
- --------------------------------------------------------------------------------
Year Ended Year Ended
Dec. 31, 1997 Dec. 31, 1998

Best Quarter: 2nd Qtr 1997 20.14%
Worst Quarter: 3rd Qtr 1998 (18.19)%

Average Annual Total Returns (For Periods ending on December 31, 1998)
- ----------------------------------------------------------------------

The Fund Russell 2000 Index**
-------- --------------------

One Year 5.15% (3.08)%
Inception (11/25/96) 20.59% 10.37%

For the Period 1/1/99 through 6/30/99, the Fund's annualized total return was
0.32%

** The Russell 200 Index is a widely recognized, unmanaged index of the 2000
companies in the United States. The Index is generally considered to
represent approximately 90% of the publicly traded companies in the United
States as measured by market capitalization. The Index assumes reinvestment
of all dividends and distributions and does not reflect any asset-based
charges for investment management or other expenses.

23
<PAGE>

WHAT ARE THE FUND'S FEES AND EXPENSES?

This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund.

SHAREHOLDER FEES:
- -----------------
(fees paid directly from your investment)

MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES NONE

MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE

REDEMPTION FEES NONE

ANNUAL FUND OPERATING EXPENSES:
- -------------------------------
(expenses that are deducted from Fund assets)
MANAGEMENT FEES (1) 1.15%
DISTRIBUTION & SERVICING (12B-1) FEES (2) 0.25%
OTHER EXPENSES (3) 0.25%
-----
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.65%

1. Management fees include a fee of 0.90% for investment advisory services and
0.25% for administrative services provided to the Fund by the Fund's
Sponsor.
2. Because 12b-1 fees are paid out of the assets of the Fund on an ongoing
basis, over time these fees will increase the cost of your investment and
may cost you more than paying other types of sales charges.
3. Other Expenses included fees paid to the Fund's transfer agent,
administrator and other service providers. Because the Fund is offering
these share Classes for the first time, these fees are estimated.

EXAMPLE: THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN
THE FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

1 YEAR 5 YEARS 10 YEARS
------ ------- --------

$ 168 $ 897 $ 1,955

IF YOU DID NOT REDEEM YOUR SHARES, YOUR EXPENSES WOULD BE THE SAME.
- --------------------------------------------------------------------------------

24
<PAGE>

QUAKER FIXED INCOME FUND

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The Fund's investment objective is to generate current income, preserve
capital, and maximize total returns through active management of investment
grade fixed income securities. Total Return is derived by combining the
total changes in the principal value of all the Fund's investments with the
total dividends and interest paid to the Fund.

WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?

The Fund's Adviser seeks to achieve the Fund's investment objective by:

o normally investing at least 65% of the Fund's total assets in a
variety of debt securities;
o normally establishing a duration target for the Fund's portfolio
similar to the duration of the Salomon Brother's Broad Investment
Grade Index.
o lengthening the duration of the Fund's portfolio when yields appear
abnormally high, and shortening duration when yields appear abnormally
low.
o Changing the average maturity structure of the Fund to take advantage
of shifts in the general interest rate environment.
o Structuring the Fund's portfolio to take advantage of differences in
the relative valuation of U.S. Treasury securities versus mortgage
backed securities, asset backed securities, corporate bonds and U.S.
agency securities.

DURATION. Duration is an important concept in the Fund's fixed income
management philosophy. "Duration" is not the same thing as "maturity". The
risks of investing in debt securities generally rise as the maturity of
that security lengthens. However, measuring risk solely by a security's
maturity is not an entirely accurate method of gauging risk. Maturity takes
into account only the final principal payments to determine the price risk
of a particular fixed income security.

Duration, on the other hand, weighs all potential cash flows - principal,
interest and reinvestment income on an expected present value basis, to
determine the "effective maturity" of the security as opposed to the stated
maturity. Using such an analysis, a security with a maturity of ten years
may only have a duration of six years. Accordingly, that security has less
actual time risk than its maturity would lead you to believe.

Using a proprietary analytical model for predicting interest rate
movements, the Fund's Adviser determines the optimal duration target for
the Fund and determines which of the Fund's permissible investments has the
highest relative valuations. The Adviser then constructs and closely
monitors a portfolio of the securities described below that it feels will
most likely achieve its anticipated performance.

25
<PAGE>

U.S. GOVERNMENT SECURITIES. The Fund invests in U.S. Government Securities,
such as U.S. Treasury notes, U.S. Treasury bonds, and U.S. Treasury bills;
securities guaranteed by the U.S. Government such as Government National
Mortgage Association ("GNMA"); and securities issued by U.S. Government
agencies and instrumentalities. Securities of some U.S. Government
sponsored entities are supported by the full faith and credit of the U.S.
Government (e.g. GNMA), some are supported by the right of the issuer to
borrow from the U.S. Government (e.g. FNMA, FHLMC), and some are supported
only by the credit of the issuer itself (e.g. SLMA, FFCB). You should be
aware that the U.S. Government is not obligated to support U.S. Government
agencies or instrumentalities in the future, other than as set forth above.

MORTGAGE PASS-THROUGH CERTIFICATES. These securities represent undivided
ownership interests in pools of mortgages. Such certificates are guaranteed
as to payment of principal by the issuer. For securities issued by GNMA,
the payment of principal is also backed by the full faith and credit of the
U.S. Government. Mortgage pass-through certificates issued by FNMA or FHLMC
are guaranteed as to payment of principal by the credit of the issuing U.S.
Government agency. Securities issued by other non-governmental entities
(such as commercial banks or mortgage bankers) may offer credit enhancement
such as guarantees, insurance, or letters of credit. Mortgage pass-through
certificates are subject to more rapid prepayment than their stated
maturity date would indicate; their rate of prepayment tends to accelerate
during periods of declining interest rates or increased property transfers
and, as a result, the proceeds from such prepayments may be reinvested in
instruments which have lower yields.

COLLATERALIZED MORTGAGE OBLIGATIONS. The Fund may invest in collateralized
mortgage obligations ("CMOs"), which are generally securities backed by
mortgage pass-through certificates or whole mortgage loans (actual
mortgages with similar interest rate and credit characteristics bundled and
sold as a package). CMOs are usually structured into classes of varying
maturities and principal payment priorities. CMOs pay interest and
principal (including prepayments) monthly, quarterly or semi-annually. The
Fund's Adviser will invest in CMOs when it determines that such securities
fit the investment objective and policies of the Fund.

ASSET-BACKED SECURITIES. In addition to CMOs, the Fund may also invest in
other asset-backed securities, such as securities backed by automobile
loans, credit card receivables, marine loans, recreational vehicle loans
and manufactured housing loans. Typically, asset-backed securities
represent undivided fractional interests in a trust whose assets consist of
a pool of loans and security interests in the collateral securing the
loans. Payments of principal and interest on asset-backed securities are
passed through monthly to certificate holders and are usually guaranteed up
to a certain amount and time period by a letter of credit issued by a
financial institution. You should be aware that if the letter of credit is
exhausted and the full amounts due on underlying loans are not received
because of unanticipated costs, depreciation, damage or loss of the
collateral securing the contracts, or other factors, certificate holders
may experience delays in payment or losses on asset-backed securities. In
some cases, asset-backed securities are divided into senior and
subordinated classes so as to enhance the quality of the senior class.
Underlying loans are subject to prepayment, which may reduce the overall
return to certificate holders. Fixed Income will invest only in
asset-backed securities rated A or better by Moody's, S&P, Fitch, or D&P,
or if not rated, of equivalent quality as determined by the Funds' Adviser.

26
<PAGE>

FLOATING RATE SECURITIES. The Fund may invest in variable or floating rate
securities that adjust the interest rate paid at periodic intervals based
on an interest rate index. Typically, floating rate securities use as their
benchmark an index such as the 1, 3 or 6 month London Inter Bank Offering
Rate (LIBOR), 3, 6 or 12 month Treasury bills, or the Federal Funds rate.
Resets of the rates can occur at predetermined intervals or whenever
changes in the benchmark index occur.

CORPORATE BONDS. Fixed Income may invest in notes and bonds issued by U.S.
Corporations and foreign corporations rated by a U.S. rating service and
traded on a U.S. exchange. All corporate securities will be of investment
grade quality as determined by Moody's, S&P, Fitch, and D&P, or if no
rating exists, of equivalent quality as determined by FAM. See, "Investment
Limitations - Investment Grade Securities". FAM will monitor continuously
the ratings of securities held by the Fund and the creditworthiness of
their issuers.

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?

General Risks- All investments are subject to inherent risks, and the Fund
is no exception. Accordingly, you may lose money by investing in the Fund.
When you sell your Fund shares, they may be worth more or less than what
you paid for them because the value of the Fund's investments will vary
from day-to-day, reflecting changes in market conditions, interest rates
and numerous other factors. Anyone may invest in the Fund, but the Fund is
primarily designed for tax-exempt institutional investors such as pension
and profit-sharing plans, endowments, foundations, employee benefit trusts,
and certain individuals. The Fund invests without regard to federal tax
considerations other than those that apply to Fixed Income's status as a
tax-exempt entity.

Debt Securities. The Fund normally invests in debt securities. All of the
securities described above are considered to be debt securities. The
primary risks of investing in debt securities are interest rate risk and
credit risk.

As interest rates generally rise, the value of debt securities generally
fall. The longer a debt security has until it matures, the more severely
its price will change when interest rates change.

The value of a debt security can change due to a change in the
creditworthiness of the issuer. The less creditworthy the issuer, the less
desirable the security and the lower its value. Debt securities guaranteed
as to principal and interest by the full faith and credit of the U.S.
Government are essentially credit-risk free. The creditworthiness of other
securities largely depends upon the creditworthiness of the issuer. The
issuer's credit rating can change over time, and when this happens it can
have a negative affect on the value of such issuer's securities.

All securities purchased for the Fund will be of investment grade quality
as determined by Moody's Investors Service, Inc. ("Moodys"), Standard &
Poor's Ratings Group ("S&P"), Fitch Investors Service, Inc. ("Fitch"), or
Duff & Phelps ("D&P"), or if no rating exists, of equivalent quality as
determined by the Adviser, under the Supervision of the Board of Trustees.
For a more complete description of the various bond ratings for Moody's,
S&P, Fitch and D&P, see Appendix A to the Statement of Additional
Information.

27
<PAGE>

HOW HAS THE FUND PERFORMED IN THE PAST?

The bar chart and table below help show the returns and risks of investing in
the Fund. They show changes in the Fund's yearly performance over the lifetime
of the Fund. They also compare the Fund's performance to the performance of the
Solomon Broad Investment Grade Index** during each period. You should be aware
that the Fund's past performance may not be an indication of how the Fund will
perform in the future.

PERFORMANCE BAR
CHART AND TABLE
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31

10% ------- 8.11 ------- 8.52
05% ------- -------
- --------------------------------------------------------------------------------
Year Ended Year Ended
Dec. 31, 1997 Dec. 31, 1998

Best Quarter: 3rd Qtr 1998 4.91%
Worst Quarter: 1st Qtr 1997 (1.12)%

Average Annual Total Returns (For Periods ending on December 31, 1998)
- ----------------------------------------------------------------------

The Fund Solomon Broad Investment Grade Index**

One Year 8.11% 9.64%
Inception(11/25/96) 6.99% 8.27%

For the Period 1/1/99 through 6/30/99, the Fund's annualized total return was
(5.33)%

28
<PAGE>

** The Solomon Broad Investment Grade Index is an unmanaged index composed of
a broad variety of investment grade bonds. The Index assumes reinvestment
of all dividends and distributions and does not reflect any asset-based
charges for investment management or other expenses.

WHAT ARE THE FUND'S FEES AND EXPENSES?

This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund.

SHAREHOLDER FEES:
- -----------------
(fees paid directly from your investment)

MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES NONE

MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE

REDEMPTION FEES NONE

ANNUAL FUND OPERATING EXPENSES:
(expenses that are deducted from Fund assets)
MANAGEMENT FEES (1) 0.65%
DISTRIBUTION & SERVICE (12B-1) FEES (2) 0.25%
OTHER EXPENSES (3) 0.25%
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.05%

1. Management fees include a fee of 0.40% for investment advisory services and
0.25% for administrative services provided to the Fund by the Fund's
Sponsor.
2. Because 12b-1 fees are paid out of the assets of the Fund on an ongoing
basis, over time these fees will increase the cost of your investment and
may cost you more than paying other types of sales charges.
3. Other Expenses included fees paid to the Fund's transfer agent,
administrator and other service providers. Because the Fund is offering
these share Classes for the first time, these fees are estimated.

EXAMPLE: THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN
THE FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

1 YEAR 5 YEARS 10 YEARS
------ ------- --------

$ 107 $ 579 $ 1,283

IF YOU DID NOT REDEEM YOUR SHARES, YOUR EXPENSES WOULD BE THE SAME.

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

29
<PAGE>

THE FUNDS' INVESTMENT ADVISERS & SPONSOR

FOR THE QUAKER CORE EQUITY FUND:
Geewax, Terker & Co. ("GTC") provides the Core Equity Fund with a continuous
program of investment management, including the composition of its portfolio,
and furnishes advice and recommendations with respect to investments, investment
policies and the purchase and sale of securities.

GTC was established as a Pennsylvania partnership in 1982, and is registered as
an investment adviser under the Investment Advisors Act of 1940, as amended. GTC
currently serves as investment advisor to over $3.5 billion in assets. GTC
operates as an investment advisory firm, and has been rendering investment
counsel, utilizing investment strategies substantially similar to that of the
Core Equity Fund, to individuals, pension and profit sharing plans, trusts,
estates, charitable organizations and corporations since 1987. GTC's address is
99 Starr Street, Phoenixville, Pennsylvania 19460. GTC is controlled by John J.
Geewax and Bruce E. Terker.

John J. Geewax, general partner of GTC, has responsibility for the day-to-day
management of the Fund's portfolio. Prior to establishing Geewax, Terker & Co.
in 1982, Mr. Geewax served as a portfolio manager with Pennsylvania Asset
Services beginning in 1980. He was also an instructor at the Wharton School of
the University of Pennsylvania from 1980 to 1982.

Messrs. Geewax and Terker, under the aegis Geewax, Terker & Co., have provided
investment management services and counseling to a significant number of
individual clients, large institutional clients and other registered investment
companies, including the Noah Fund and Vanguard Trustees Equity Fund since
founding the company.

Under the Advisory Agreement with the Trust, GTC receives a monthly management
fee equal to an annual rate of 0.75% of the average daily net asset value of the
Fund. For the fiscal year ending June 30, 1999, the Fund paid the Adviser a
total of $109,971, and the Adviser waived $16,165 of such fees.

FOR THE QUAKER AGGRESSIVE GROWTH FUND:
DG Capital Management, Inc. ("DGCM") provides the Quaker Aggressive Growth Fund
with a continuous program of investment management, including the composition of
its portfolio, and furnishes advice and recommendations with respect to
investments, investment policies and the purchase and sale of securities,
pursuant to an Investment Advisory Agreement ("Advisory Agreement") with the
Trust.

DGCM was established as a sole proprietorship in 1985 and converted to a
Massachusetts corporation in 1996, and is registered under the Investment
Advisors Act of 1940, as amended. DGCM currently serves as investment advisor to
over $10 million in assets. DGCM has been rendering investment counsel,
utilizing investment strategies substantially similar to that of the Aggressive
Growth Fund, to individuals, banks and thrift institutions, pension and profit
sharing plans, trusts, estates, charitable organizations and corporations since
1985. DGCM's address is 121 High Street, Boston, Massachusetts 02110. DGCM is
controlled by Manu Daftary. Mr. Daftary is the President of DGCM and the firm's
sole shareholder.

Manu Daftary is the Fund's portfolio manager and has been responsible for
day-to-day management of the Fund's portfolio since its inception. He has been
with DGCM since July 1996. Previously Mr. Daftary was a portfolio manager with
Greenville Capital Management during 1995 and early 1996; was Senior Vice
President/Portfolio Manager with Hellman, Jordan Management Company from
1993-1995; was co-manager of the institutional growth stock portfolio with
Geewax, Terker & Co. from 1988-1993. Investment advisory services are the sole
business of both DGCM and Mr. Daftary.

Under the Advisory Agreement with the Trust, DGCM receives a monthly management
fee equal to an annual rate of 0.75% of the average daily net asset value of the
Fund. For the fiscal year ending June 30, 1999, the Fund paid the Adviser a
total of $18,600, and the Adviser waived $16,878 of such fees.

FOR THE QUAKER LARGE-CAP VALUE AND MID-CAP VALUE FUNDS:
Compu-Val Investments, Inc. ("CVI") provides the Large-Cap Value Fund and the
Mid-Cap Value Fund with a continuous program of investment management, including
the composition of its portfolio, and furnishes advice and recommendations with
respect to investments, investment policies and the purchase and sale of
securities, pursuant to an Investment Advisory Agreement ("Advisory Agreement")
with the Trust.

CVI was established as a Delaware corporation in 1974 and is registered under
the Investment Advisors Act of 1940, as amended.

30
<PAGE>

CVI currently serves as investment advisor to over $170 million in assets. CVI
has been rendering investment counsel, utilizing investment strategies
substantially similar to that of the Large-Cap Value And Mid-Cap Value Funds, to
individuals, banks and thrift institutions, pension and profit sharing plans,
trusts, estates, charitable organizations and corporations since 1974. CVI's
address is 1702 Lovering Avenue, Wilmington, Delaware, 19806. CVI is controlled
by James Kalil, Ph.D. and Donald J. Kalil.

Christopher O'Keefe, Director of Equity Research for the Advisor since 1995, is
the Funds' portfolio manager. Previously, Mr. O'Keefe was an investment analyst
with CoreStates Investment Advisors, Philadelphia, PA , since 1989.

Under the Advisory Agreement with the Trust, CVI receives a monthly management
fee equal to an annual rate of 0.75% of the average daily net asset value of
each Fund. For the fiscal year ending June 30, 1999, the Funds paid the Adviser
a total of $16,846 and $70,885, respectively, and the Adviser waived $7,883 and
16,746, respectively of such fees.

31
<PAGE>

FOR THE QUAKER SMALL-CAP VALUE FUND:
Aronson + Partners ("Aronson") provides the Quaker Small-Cap Value Fund with a
continuous program of investment management, including the composition of its
portfolio, and furnishes advice and recommendations with respect to investments,
investment policies and the purchase and sale of securities, pursuant to an
amended Investment Advisory Agreement ("Advisory Agreement") with the Trust,
dated October 19, 1998.

Aronson was established as a Pennsylvania partnership in 1984 and is registered
as an investment adviser under the Investment Advisors Act of 1940, as amended.
Aronson currently serves as investment advisor to over $1.4 billion in assets.
Aronson has been rendering investment counsel, utilizing investment strategies
substantially similar to that of the Small-Cap Value Fund, to individuals, banks
and thrift institutions, pension and profit sharing plans, trusts, estates,
charitable organizations and corporations since its inception in 1984. Aronson's
address is 230 South Broad Street, 20th Floor, Philadelphia, Pennsylvania 19012.
Aronson is controlled by Theodore R. Aronson.

Mr. Aronson has been responsible for day-to-day management of the Fund's
portfolio since its inception. He has been with Aronson since August 1984.
Previously Mr. Aronson was a partner with Addison Capital Management.

Under the Advisory Agreement with the Trust, Aronson is paid a base fee (Base
Fee) at an annual rate of 0.90% of the daily net assets of the Fund to be
computed and paid quarterly when the cumulative investment results for the Fund
over the prior running twelve (12) months exceed the return for the Russell 2000
Index for the same period by at least 3.0%. Adjustment factors will be applied
to the investment advisory fee according to the following formula.:

Cumulative 12 months Performance Fee
Return versus the Index Adjustment

Less than + 1.0% 0.3333 X Base Fee
Between +1.0 and +1.5% 0.4664 X Base Fee
Between +1.5 and +2.0% 0.5998 X Base Fee
Between +2.0 and +2.5% 0.7332 X Base Fee
Between +2.5 and + 3.0% 0.8666 X Base Fee
At +3.0% 1.0000 X Base Fee
Between +3.0 and + 3.5% 1.1334 X Base Fee
Between +3.5 and + 4.0% 1.2668 X Base Fee
Between +4.0 and + 4.5% 1.4002 X Base Fee
Between +4.5 and + 5.0% 1.5336 X Base Fee
More than +5.0% 1.6667 X Base Fee

For the fiscal year ending June 30, 1999, the Fund paid the Adviser a total of
$85,980, and the Adviser waived $29,827 of such fees.

32
<PAGE>

FOR THE QUAKER FIXED-INCOME FUND
Fiduciary Asset Management Co. ("FAM") provides the Quaker Fixed Income Fund
with a continuous program of investment management, including the composition of
the Fund's portfolio, and furnishes advice and recommendations with respect to
investments, investment policies and the purchase and sale of securities,
pursuant to an Investment Advisory Agreement ("Advisory Agreement") with the
Trust.

FAM was established as a Missouri corporation in 1994 and is registered as an
investment adviser under the Investment Advisors Act of 1940, as amended. FAM
currently serves as investment advisor to over $3.7 billion in assets, rendering
investment counsel and utilizing investment strategies substantially similar to
that of the Fund, to individuals, banks and thrift institutions, pension and
profit sharing plans, trusts, estates, charitable organizations and corporations
since its inception in 1994. FAM's address is 8112 Maryland Avenue, Suite 310,
Clayton, Missouri 63105. FAM is controlled by Charles D. Walbrandt.

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

Under the Advisory Agreement with the Trust, FAM receives a monthly management
fee equal to an annual rate of 0.45% of the average daily net asset value of the
Fixed Income Fund. For the fiscal year ending June 30, 1999, the Fund paid the
Adviser a total of $30,773, and the Adviser waived $25,611 of such fees.

THE FUNDS' SPONSOR
Pursuant to a Sponsorship Agreement adopted by the Trust for each Fund, Quaker
Funds, Inc., provides shareholder servicing activities for each Fund not
otherwise provided by each Fund's Administrator or Custodian, for which it will
receive a fee at an annual rate of 0.25% of the average daily net assets of each
Fund. Quaker Funds, Inc. also provides oversight with respect to each Advisor,
arranges for payment of investment advisory and administrative fees, coordinates
payments under each Fund's Distribution Plan, develops communications with
existing Fund shareholders, assists in responding to shareholder inquiries, and
provides other shareholder servicing tasks. For the fiscal year ending June 30,
1999, the Sponsor waived receipt of such fees.

HOW TO BUY AND SELL SHARES OF THE FUND

INVESTING IN THE FUND

Determining Share Prices
- ------------------------
Shares of each Fund are offered at each share's next calculated net asset value
("NAV"). NAV per share is calculated by adding the value of Fund investments,
cash and other assets, subtracting Fund liabilities, and then dividing the
result by the number of shares outstanding. The Fund generally determines the
total value of its shares by using market prices for the securities comprising
its portfolio. Securities for which quotations are not available and any other
assets are valued at fair market value as determined in good faith by each
Fund's Advisor, subject to the review and supervision of the Board of Trustee.
Each Fund's per share NAV is computed on all days on which the New York Stock
Exchange ("NYSE") is open for business, at the close of regular trading hours on
the Exchange, currently 4:00 p.m. Eastern time. In the event that the NYSE
closes early, the share price will be determined as of the time of closing.

33
<PAGE>

Each Fund in the Quaker Family of Funds offers No-load shares by this
prospectus. The Trust also offers other classes of shares with sales loads, but
lower minimum investment amounts. Each share class in any Fund represent
interests in the same portfolio of investments in that Fund.

Distribution Fees
- -----------------
Quaker Investment Trust (the "Trust") has adopted distribution and shareholder
servicing plans (the "Distribution Plans"), pursuant to Rule 12b-1 under The
Investment Company Act of 1940, as amended (the "1940 Act"), by Class of Shares,
for each Fund. The Distribution Plans provide for fees to be deducted from the
average net assets of the Funds in order to compensate the Sponsor or others for
expenses relating to the promotion and sale of shares of each Fund.

Under the No-Load Plan, each Fund compensates the Sponsor and others for
distribution expenses at a maximum annual rate of 0.25% (of which, the full
amount may be service fees), payable on a monthly basis, of each Fund's average
daily net assets attributable to No-Load shares.

The Distribution Plans provide that the Funds may finance activities which are
primarily intended to result in the sale of the Funds' shares, including but not
limited to, advertising, printing of prospectuses and reports for other than
existing shareholders, preparation and distribution of advertising materials and
sales literature, and payments to dealers and shareholder servicing agents.

The Distribution Plans are reviewed annually by the Trust's Board of Trustees,
and may be renewed only by majority vote of the shareholders of the Funds'
Classes, or by majority vote of the Board, and in both cases also a majority
vote of the "disinterested" Trustees of the Trust, as that term is defined in
the 1940 Act.

Minimum Investment Amounts
- --------------------------
Payments for Fund shares should be in U.S. dollars, and in order to avoid fees
and delays, should be drawn on a U.S. bank. Fund management may reject any
purchase order for Fund shares and may waive the minimum investment amounts in
its sole discretion.

Your purchase of Fund shares is subject to the following minimum investment
amounts:

34
<PAGE>

MINIMUM MINIMUM
TYPE OF INVESTMENT SUBSEQUENT
ACCOUNT TO OPEN ACCOUNT INVESTMENTS
- --------------------------------------------------------------------------------
REGULAR $10,000 $250

AUTOMATIC INVESTMENT PLAN MEMBERS

MINIMUM MINIMUM
TYPE OF INVESTMENT SUBSEQUENT
ACCOUNT TO OPEN ACCOUNT INVESTMENTS
- --------------------------------------------------------------------------------
REGULAR $10,000 $100 per month minimum

Opening and Adding To Your Account
- ----------------------------------
You can invest in the Funds by mail, wire transfer and through participating
financial service professionals. After you have established your account and
made your first purchase, you may also make subsequent purchases by telephone.
You may also invest in the Funds through an automatic payment plan. Any
questions you may have can be answered by calling 1-800-220-8888.

Purchasing Shares By Mail
- -------------------------
To make your initial investment in the Funds, simply complete the Account
Registration Form included with this Prospectus, make a check payable to the
Fund of your choice, and mail the Form and check to:

Quaker Investment Trust
c/o Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19460

To make subsequent purchases, simply make a check payable to the Fund of your
choice and mail the check to the above-mentioned address. Be sure to note your
Fund account number on the check.

Your purchase order, if accompanied by payment, will be processed upon receipt
by Declaration Service Company, the Fund's Transfer Agent. If the Transfer Agent
receives your order and payment by the close of regular trading on the NYSE
(currently 4:00 p.m. Eastern time), your shares will be purchased at the Fund's
NAV calculated at the close of regular trading on that day. Otherwise, your
shares will be purchased at the NAV determined as of the close of regular
trading on the next business day.

Purchasing Shares by Wire Transfer
- ----------------------------------
To make an initial purchase of shares by wire transfer, you need to take the
following steps:

1. Fill out and mail or fax an Account Application to the Transfer Agent
2. Call 1-800-220-8888 to inform us that a wire is being sent.
3. Obtain an account number from the Transfer Agent.
4. Ask your bank to wire funds to the account of:

35
<PAGE>

First Union National Bank
Charlotte, North Carolina, ABA # 031201467
Credit Acct #2014217164231
For further credit to (Your Name and Account #)

Include your name(s), address and taxpayer identification number or Social
Security number on the wire transfer instructions. The wire should state that
you are opening a new Fund account.

To make subsequent purchases by wire, ask your bank to wire funds using the
instructions listed above, and be sure to include your account number on the
wire transfer instructions.

If you purchase Fund shares by wire, you must complete and file an Account
Registration Form with the Transfer Agent before any of the shares purchased can
be redeemed. Either fill out and mail the Application Form included with this
prospectus, or call the transfer agent and they will send you an application.
You should contact your bank (which will need to be a commercial bank that is a
member of the Federal Reserve System) for information on sending funds by wire,
including any charges that your bank may make for these services.

Purchases through Financial Service Organizations
- -------------------------------------------------
You may purchase shares of the Funds through participating brokers, dealers, and
other financial professionals. Simply call your investment professional to make
your purchase. If you are a client of a securities broker or other financial
organization, such organizations may charge a separate fee for administrative
services in connection with investments in Fund shares and may impose account
minimums and other requirements. These fees and requirements would be in
addition to those imposed by the Fund. If you are investing through a securities
broker or other financial organization, please refer to its program materials
for any additional special provisions or conditions that may be different from
those described in this Prospectus (for example, some or all of the services and
privileges described may not be available to you). Securities brokers and other
financial organizations have the responsibility of transmitting purchase orders
and funds, and of crediting their customers' accounts following redemptions, in
a timely manner in accordance with their customer agreements and this
Prospectus.

Purchasing Shares by Automatic Investment Plan
- ----------------------------------------------
You may purchase shares of the Funds through an Automatic Investment Plan
("Plan"). The Plan provides a convenient way for you to have money deducted
directly from your checking, savings, or other accounts for investment in shares
of the Funds. You can take advantage of the Plan by filling out the Automatic
Investment Plan application, included with this Prospectus. You may only select
this option if you have an account maintained at a domestic financial
institution which is an Automated Clearing House member for automatic
withdrawals under the Plan. The Trust may alter, modify, amend or terminate the
Plan at any time, and will notify you at least 30 days in advance if it does so.
For more information, call the Transfer Agent at 1-800-220-8888.

Purchasing Shares by Telephone
- ------------------------------
In order to be able to purchase shares by telephone, your account authorizing
such purchases must have been established prior to your call. Your initial
purchase of shares may not be made by

36
<PAGE>

telephone. Shares purchased by telephone will be purchased at their per share
public offering price determined at the close of business on the day that the
Transfer Agent receives payment through the Automated Clearing House, which
could be as many as two days after you place your order for shares. Call the
Transfer Agent for details.

You may make purchases by telephone only if you have an account at a bank that
is a member of the Automated Clearing House. Most transfers are completed within
three business days of your call. To preserve flexibility, the Trust may revise
or eliminate the ability to purchase Fund shares by phone, or may charge a fee
for such service, although the Trust does not currently expect to charge such a
fee.

The Funds' Transfer Agent employs certain procedures designed to confirm that
instructions communicated by telephone are genuine. Such procedures may include,
but are not limited to, requiring some form of personal identification prior to
acting upon telephonic instructions, providing written confirmations of all such
transactions, and/or tape recording all telephonic instructions. Assuming
procedures such as the above have been followed, neither the Transfer Agent nor
the applicable Fund will be liable for any loss, cost, or expense for acting
upon telephone instructions that are believed to be genuine. The Trust shall
have authority, as your agent, to redeem shares in your account to cover any
such loss. As a result of this policy, you will bear the risk of any loss unless
the Trust and/or Transfer Agent has failed to follow procedures such as the
above. However, if the Trust and/or Transfer Agent fails to follow procedures
reasonably designed to prevent fraud, it may be liable for such losses.

Miscellaneous Purchase Information
- ----------------------------------
All applications to purchase shares of the Fund are subject to acceptance or
rejection by authorized officers of the Company and are not binding until
accepted. Applications will not be accepted unless they are accompanied by
payment in U.S. funds. Payment must be made by check or money order drawn on a
U.S. bank, savings and loan association or credit union. The Fund's custodian
may charge a fee against your account, in addition to any loss sustained by the
Fund, for any payment check returned to the custodian for insufficient funds.
The Fund reserves the right to refuse to accept applications under circumstances
or in amounts considered disadvantageous to shareholders. If you place an order
for Fund shares through a securities broker, and you place your order in proper
form before 4:00 p.m. Eastern time on any business day in accordance with their
procedures, your purchase will be processed at the NAV calculated at 4:00 p.m.
on that day, provided the securities broker transmits your order to the Transfer
Agent before 5:00 p.m. Eastern time. The securities broker must send to the
Transfer Agent immediately available funds in the amount of the purchase price
within three business days for the order.

HOW TO SELL (REDEEM) YOUR SHARES

You may sell your shares at any time. You may request the sale of your shares
either by mail, by telephone or by wire.

37
<PAGE>

By Mail
- -------
Sale requests should be mailed via U.S. mail or overnight courier service to:

Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19460

The redemption price you receive will be your Fund's per share NAV next
calculated after receipt of all required documents in good order. Payment of
redemption proceeds will be made no later than the third business day after the
valuation date unless otherwise expressly agreed by the parties at the time of
the transaction. If you purchase your shares by check and then redeem your
shares before your check has cleared, the Trust may hold your redemption
proceeds until your check clears, or for 15 days, whichever comes first. The
Trust has reserved the right to redeem shares of the Fund for securities instead
of cash under certain circumstances.

"Good order" means that your redemption request must include:

1. Your account number;
2. The Fund from which you are redeeming shares;
3. The number of shares to be sold (redeemed) or the dollar value of the
amount to be redeemed;
4. The signatures of all account owners exactly as they are registered on the
account;
5. Any required signature guarantees; and
6. Any supporting legal documentation that is required in the case of estates,
trusts, corporations or partnerships and certain other types of accounts.

Signature Guarantees --
- -----------------------
A signature guarantee of each owner is required to redeem shares in the
following situations, for all size transactions:

o if you change the ownership on your account;
o when you want the redemption proceeds sent to a different address than is
registered on the account;
o if the proceeds are to be made payable to someone other than the account's
owner(s);
o any redemption transmitted by federal wire transfer to your bank; and
o if a change of address request has been received by the Trust or the
Transfer Agent within 15 days previous to the request for redemption.

In addition, signature guarantees are required for all redemptions of $25,000 or
more from any Fund shareholder account. A redemption will not be processed until
the signature guarantee, if required, is received by the Transfer Agent.

Signature guarantees are designed to protect both you and the Trust from fraud.
To obtain a signature guarantee, you should visit a bank, trust company, member
of a national securities exchange, other broker-dealer, or other eligible
guarantor institution. (Notaries public cannot provide signature guarantees.)
Guarantees must be signed by an authorized person at one of these institutions
and be accompanied by the words, "Signature Guarantee."

38
<PAGE>

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

1) Shareholder name, name of applicable Fund, and account number;
2) Number of shares or dollar amount to be redeemed;
3) Instructions for transmittal of redemption funds to the shareholder; and
4) Shareholder signature as it appears on the application then on file with
the Trust.

By Telephone
- ------------
You may redeem your shares by calling the Transfer Agent at 1-800-220-8888 if
you elected to use telephone redemption on your account application when you
initially purchased shares. Redemption proceeds must be transmitted directly to
you or to your pre-designated account at a domestic bank. You may not redeem by
telephone if a change of address request has been received by the Trust or the
Transfer Agent within 15 days prior to the request for redemption. During
periods of substantial economic or market changes, telephone redemptions may be
difficult to implement. If you are unable to contact the Transfer Agent by
telephone, shares may be redeemed by delivering your redemption request in
person or by mail. In addition, interruptions in telephone service may mean that
you will be unable to effect a redemption by telephone exactly when desired.

By Wire
- -------
You may request the redemption proceeds be wired to your designated bank if it
is a member bank or a correspondent of a member bank of the Federal Reserve
System. The Fund's Custodian may charge a fee for outgoing wires.

Redemption At The Option Of The Trust
- -------------------------------------
If the value of the shares in your account falls to less than $10,000, the Trust
may notify you that, unless your account is increased to $10,000 in value, it
will redeem all your shares and close the account by paying you the redemption
proceeds and any dividends and distributions declared and unpaid at the date of
redemption. You will have thirty days after notice to bring the account up to
$10,000 before any action is taken. This right of redemption shall not apply if
the value of your account drops below $10,000 as the result of market action.
The Trust reserves this right because of the expense to the Fund of maintaining
relatively small accounts.

Exchange Feature.
- -----------------
You may exchange your shares of any Fund for the same share class of any other
Fund of the Trust without incurring any additional sales charges. An exchange
involves the simultaneous redemption of shares of one Fund and purchase of
shares of another Fund at the respective closing net asset value next determined
after a request for redemption has been received, and is a taxable transaction.
Shares of each Fund may be exchanged for shares of any other Fund of the Trust
at the net asset value. You may direct the Trust to exchange your shares by
contacting the Transfer Agent. The request must be signed exactly as the
investor's name appears on the account, and it must also provide the account
number, number of shares to be exchanged, the name of the series to which the
exchange will take place and a statement as to whether the exchange is a full or
partial redemption of existing shares.

39
<PAGE>

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

Systematic Withdrawal Plan.
- ---------- ----------------
Shareholders owning shares with a value of $10,000 or more may establish a
Systematic Withdrawal Plan. A shareholder may receive monthly or quarterly
payments, in amounts of not less than $100 per payment, by authorizing the Funds
to redeem the necessary number of shares periodically (each month, or quarterly
in the months of March, June, September and December) in order to make the
payments requested. Each Fund has the capacity of electronically depositing the
proceeds of the systematic withdrawal directly to the shareholder's personal
bank account ($5,000 minimum per bank wire). Instructions for establishing this
service are included in the Fund Shares Application, enclosed in the Prospectus,
or available by calling the Trust. If you prefer to receive systematic
withdrawal proceeds in cash, or if such proceeds are less than the $5,000
minimum for a bank wire, checks will be made payable to the designated recipient
and mailed within 7 days of the valuation date. If the designated recipient is
other than the registered shareholder, the signature of each shareholder must be
guaranteed on the application (see "Signature Guarantees"). A corporation (or
partnership) must also submit a "Corporate Resolution" (or "Certification of
Partnership") indicating the names, titles and required number of signatures
authorized to act on its behalf. The application must be signed by a duly
authorized officer(s) and the corporate seal affixed. No redemption fees are
charged to shareholders under this plan. Costs in conjunction with the
administration of the plan are borne by the Funds. Shareholders should be aware
that such systematic withdrawals may deplete or use up entirely their initial
investment and may result in realized long-term or short-term capital gains or
losses. The Systematic Withdrawal Plan may be terminated at any time by the
Funds upon sixty days written notice or by a shareholder upon written notice to
the Funds. Applications and further details may be obtained by calling the Funds
at 800-220-8888, or by writing to the Transfer Agent.

DIVIDENDS AND DISTRIBUTIONS

Dividends paid by the Funds are derived from their net investment income. Net
investment income will be distributed at least annually. The Funds' net
investment income is made up of dividends received from the stocks and other
securities they hold, as well as interest accrued and paid on any other
obligations that might be held in their portfolios.

40
<PAGE>

The Funds realize capital gains when they sell a security for more than they
paid for it. The Funds may make distributions of their net realized capital
gains (after any reductions for capital loss carry forwards), generally, once a
year.

Unless you elect to have your dividends and/or distributions paid in cash, your
distributions will be reinvested in additional shares of the Fund(s). You may
change the manner in which your dividends are paid at any time by writing to the
Transfer Agent.

TAX CONSIDERATIONS

Each Fund intends to qualify as a regulated investment company under Subchapter
M of the Internal Revenue Code of 1986, as amended, so as to be relieved of
federal income tax on its capital gains and net investment income currently
distributed to its shareholders.

Dividends from investment income and net short-term capital gains are generally
taxable to you as ordinary income. Distributions of long-term capital gains are
taxable as long-term capital gains regardless of the length of time shares in a
Fund have been held. Distributions are taxable, whether received in cash or
reinvested in shares of a Fund.

You will be advised annually of the source of distributions for federal income
tax purposes.

A redemption of shares is a taxable event and, accordingly, a capital gain or
loss may be recognized. You should consult a tax adviser regarding the effect of
federal, state, local, and foreign taxes on an investment in the Fund(s).

GENERAL INFORMATION

The Funds will not issue stock certificates evidencing shares. Instead, your
account will be credited with the number of shares purchased, relieving you of
responsibility for safekeeping of certificates and the need to deliver them upon
redemption. Written confirmations are issued for all purchases of shares.

In reports or other communications to investors, or in advertising material, the
Funds may describe general economic and market conditions affecting them and may
compare their performance with other mutual funds as listed in the rankings
prepared by Lipper Analytical Services, Inc. or similar nationally recognized
rating services and financial publications that monitor mutual fund performance.
The Funds may also, from time to time, compare their performance to the one or
more appropriate indices.

FINANCIAL HIGHLIGHTS

The financial data included in the tables below for the fiscal year ended June
30 of each time period have been audited by Goldenberg Rosenthal Friedlander,
LLP, independent auditors. The information in the tables below should be read in
conjunction with each Fund's latest audited financial statements and notes
thereto, which may be obtained without charge by contacting the Trust.

41
<PAGE>

THE CORE EQUITY FUND

<TABLE>
<CAPTION>
FOR THE PERIOD
FROM NOVEMBER
YEAR YEAR 25, 1996 (START OF
ENDED ENDED OPERATIONS) TO
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1997
--------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.42 $ 11.61 $ 10.00
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.06) 0.00 0.04
Net realized and unrealized gain
(loss) on investments 4.10 2.81 1.61
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 4.04 2.81 1.65
---------- ---------- ----------

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income 0.00 0.00 (0.04)
Net realized capital gains (0.68) 0.00 0.00
Distributions in excess of
Net realized gain 0.00 0.00 0.00
---------- ---------- ----------
TOTAL DISTRIBUTIONS (0.68) 0.00 (0.04)
---------- ---------- ----------

NET ASSET VALUE, END OF PERIOD $ 17.78 $ 14.42 $ 11.61

TOTAL RETURN 28.16% 24.20% 16.50%(B)

RATIOS/ SUPPLEMENTAL DATA

NET ASSETS, END OF PERIOD
(000'S OMITTED) $ 25,407 $ 4,777 $ 519

RATIO OF EXPENSES TO AVERAGE NET ASSETS
Before expense waivers and fee
Reimbursements 1.44% 3.48% 21.30%(a)
After expense waivers and fee
Reimbursements 1.29% 1.35% 1.35%(a)

RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS:
Before expense waivers and fee
Reimbursements (0.73)% (2.10)% (19.47)%(a)
After expense waivers and fee
Reimbursements (0.58)% 0.03% 0.49%(a)

PORTFOLIO TURNOVER RATE 78.38% 64.36% 11.49%
</TABLE>

(a) annualized
(b) Aggregate Total Return, not annualized
- --------------------------------------------------------------------------------

42
<PAGE>

THE AGGRESSIVE GROWTH FUND

<TABLE>
<CAPTION>
FOR THE PERIOD
FROM NOVEMBER
YEAR YEAR 25, 1996 (START OF
ENDED ENDED OPERATIONS) TO
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1997
--------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.01 $ 11.16 $ 10.00
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.12 0.00 0.04
Net realized and unrealized gain
(loss) on investments 5.54 2.69 1.23
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 5.66 2.69 1.27
---------- ---------- ----------

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.12) 0.00 (0.04)
Net realized capital gains (3.45) (1.38) (0.07)
Distributions in excess of
Net realized gain 0.00 (0.46) 0.00
---------- ---------- ----------
TOTAL DISTRIBUTIONS (3.57) (1.84) (0.11)
---------- ---------- ----------

NET ASSET VALUE, END OF PERIOD $ 14.10 $ 12.01 $ 11.16

TOTAL RETURN 49.44% 26.57% 12.68%(B)

RATIOS/ SUPPLEMENTAL DATA

NET ASSETS, END OF PERIOD
(000'S OMITTED) $ 3,865 $ 1,714 $ 1,121

RATIO OF EXPENSES TO AVERAGE NET ASSETS
Before expense waivers and fee
Reimbursements 2.84% 8.09% 13.44%(a)
After expense waivers and fee
Reimbursements 1.35% 1.35% 1.34%(a)

RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS:
Before expense waivers and fee
Reimbursements (0.45)% (6.72)% (9.18)(a)
After expense waivers and fee
Reimbursements 1.04% (0.04)% 0.64%(a)

PORTFOLIO TURNOVER RATE 1,675.49% 876.64% 778.01%
</TABLE>

(a) annualized
(b) Aggregate Total Return, not annualized
- --------------------------------------------------------------------------------

43
<PAGE>

THE LARGE-CAP VALUE FUND

<TABLE>
<CAPTION>
FOR THE PERIOD
FROM NOVEMBER
YEAR YEAR 25, 1996 (START OF
ENDED ENDED OPERATIONS) TO
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1997
------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.02 $ 11.83 $ 10.00
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.04 0.07 0.07
Net realized and unrealized gain
(loss) on investments 1.69 3.10 1.83
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 1.73 3.17 1.90
---------- ---------- ----------

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.07) (0.04) (0.07)
Net realized capital gains (2.40) (0.94) 0.00
Distributions in excess of
Net realized gain (2.47) (0.98) (0.07)
---------- ---------- ----------
TOTAL DISTRIBUTIONS (0.68) 0.00 (0.04)
---------- ---------- ----------

NET ASSET VALUE, END OF PERIOD $ 13.28 $ 14.02 $ 11.83

TOTAL RETURN 19.05% 28.32% 19.04%(B)

RATIOS/ SUPPLEMENTAL DATA

NET ASSETS, END OF PERIOD
(000'S OMITTED) $ 9,742 $ 1,599 $ 783

RATIO OF EXPENSES TO AVERAGE NET ASSETS
Before expense waivers and fee
Reimbursements 2.02% 5.58% 16.44%(a)
After expense waivers and fee
Reimbursements 0.81% 1.00% 1.00%(a)

RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS:
Before expense waivers and fee
Reimbursements (0.47)% (3.99)% (14.32)(a)
After expense waivers and fee
Reimbursements 0.74% 0.59% 1.14%(a)

PORTFOLIO TURNOVER RATE 136.81% 274.63% 34.26%
</TABLE>

(a) annualized
(b) Aggregate Total Return, not annualized
- --------------------------------------------------------------------------------

44
<PAGE>

THE MID-CAP VALUE FUND

FOR THE PERIOD
FROM JANUARY
YEAR 6, 1998 (START OF
ENDED OPERATIONS) TO
JUNE 30, 1999 JUNE 30, 1998
---------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.93 $ 10.00
---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.00 (0.02)
Net realized and unrealized gain
(loss) on investments 0.23 0.95
---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.23 0.93
---------- ----------

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income 0.00 0.00
Net realized capital gains (0.16) 0.00
Distributions in excess of
Net realized gain 0.00 0.00
---------- ----------
TOTAL DISTRIBUTIONS (0.16) 0.00)
---------- ----------

NET ASSET VALUE, END OF PERIOD $ 11.00 $ 10.93

TOTAL RETURN 2.68% 9.30%(B)

RATIOS/ SUPPLEMENTAL DATA

NET ASSETS, END OF PERIOD
(000'S OMITTED) $ 12,155 $ 9,033

RATIO OF EXPENSES TO AVERAGE NET ASSETS
Before expense waivers and fee
Reimbursements 1.63% 1.97%(a)
After expense waivers and fee
Reimbursements 1.35% 1.35%(a)

RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS:
Before expense waivers and fee
Reimbursements (0.33)% (0.93)%(a)
After expense waivers and fee
Reimbursements (0.05)% (0.31)%(a)

PORTFOLIO TURNOVER RATE 69.36% 13.86%

(a) annualized
(c) Aggregate Total Return, not annualized
- --------------------------------------------------------------------------------

45
<PAGE>

THE SMALL-CAP VALUE FUND

<TABLE>
<CAPTION>
FOR THE PERIOD
FROM NOVEMBER
YEAR YEAR 25, 1996 (START OF
ENDED ENDED OPERATIONS) TO
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1997
--------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.47 $ 11.53 $ 10.00
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.04) (0.01) 0.01
Net realized and unrealized gain
(loss) on investments (0.04) 2.99 2.02
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS (0.44) 2.98 2.03
---------- ---------- ----------

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income 0.00 0.00 (0.01)
Net realized capital gains (0.22) (1.04) (0.49)
Distributions in excess of
Net realized gain 0.00 0.00 0.00
---------- ---------- ----------
TOTAL DISTRIBUTIONS (0.22) (1.04) (0.50)
---------- ---------- ----------

NET ASSET VALUE, END OF PERIOD $ 12.81 $ 13.47 $ 11.53

TOTAL RETURN (2.96)% 27.04% 20.35%(B)

RATIOS/ SUPPLEMENTAL DATA

NET ASSETS, END OF PERIOD
(000'S OMITTED) $ 13,020 $ 3,792 $ 1,333

RATIO OF EXPENSES TO AVERAGE NET ASSETS
Before expense waivers and fee
Reimbursements 1.78% 4.20% 10.50%(a)
After expense waivers and fee
Reimbursements 1.35% 1.35% 1.31%(a)

RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS:
Before expense waivers and fee
Reimbursements (0.82)% (3.03)% (8.96)%(a)
After expense waivers and fee
Reimbursements (0.40)% (0.18)% 0.22%(a)

PORTFOLIO TURNOVER RATE 113.81% 129.58% 90.63%
</TABLE>

(a) annualized
(b) Aggregate Total Return, not annualized
- --------------------------------------------------------------------------------

46
<PAGE>

THE FIXED INCOME FUND

<TABLE>
<CAPTION>
FOR THE PERIOD
FROM NOVEMBER
YEAR YEAR 25, 1996 (START OF
ENDED ENDED OPERATIONS) TO
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1997
-------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.41 $ 09.98 $ 10.00
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.48 0.47 0.26
Net realized and unrealized gain
(loss) on investments (0.27) 0.50 (0.11)
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.21 0.97 0.15
---------- ---------- ----------

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.48) (0.45) (0.26)
Net realized capital gains (0.01) 0.00 0.00
Distributions in excess of
Net realized gain 0.00 0.00 0.00
---------- ---------- ----------
TOTAL DISTRIBUTIONS (0.49) (0.45) (0.26)
---------- ---------- ----------

NET ASSET VALUE, END OF PERIOD $ 10.13 $ 10.41 $ 9.89

TOTAL RETURN 1.84% 9.97% 1.57%(B)

RATIOS/ SUPPLEMENTAL DATA

NET ASSETS, END OF PERIOD
(000'S OMITTED) $ 7,675 $ 5,682 $ 576

RATIO OF EXPENSES TO AVERAGE NET ASSETS
Before expense waivers and fee
Reimbursements 1.41% 2.53% 16.56%(a)
After expense waivers and fee
Reimbursements 0.90% 0.90% 0.90%(a)

RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS:
Before expense waivers and fee
Reimbursements 4.03% 2.96% (10.87)%(a)
After expense waivers and fee
Reimbursements 4.45% 4.59% 4.79%(a)

PORTFOLIO TURNOVER RATE 276.94% 81.55% 0.00%
</TABLE>

(a) annualized
(b) Aggregate Total Return, not annualized

47
<PAGE>

FOR MORE INFORMATION

Additional information about the Funds is available in the Trust's latest Annual
Report, Semi-annual Report and Statement of Additional Information (SAI). The
SAI contains more detailed information on all aspects of the Funds. A current
SAI, dated November 1, 1999, has been filed with the SEC and is incorporated by
reference into this prospectus. The Trust's Annual Report contains audited
financial information concerning the Funds and discussion relating to the
factors that affected each Fund's performance during each Fund's last fiscal
year.

To receive information without charge concerning the Funds, or to request a copy
of the SAI or annual or semi-annual reports relating to the Funds, please
contact the Trust at:

Quaker Investment Trust
c/o Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19460
1-800-220-8888

A copy of your requested document(s) will be sent to you within three days of
your request.

You may also receive information concerning the Funds, or request a copy of the
SAI or other documents relating to the Funds, by contacting the Securities and
Exchange Commission:

IN PERSON: at the SEC's Public Reference Room in Washington, D.C.

BY PHONE: 1-800-SEC-0330

BY MAIL: Public Reference Section, Securities and Exchange Commission,
Washington, D.C. 20549-6009 (duplicating fee required)

ON THE INTERNET: www.sec.gov

Investment Company Act No.
811-06260

48
<PAGE>

PART B
STATEMENT OF ADDITIONAL INFORMATION
QUAKER INVESTMENT TRUST
555 North Lane, Suite 6160
Conshohocken, PA 19428-0844
Telephone 800-220-8888

This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus of the Quaker Core Equity Fund, Quaker
Aggressive Growth Fund, Quaker Large-Cap Value Fund, Quaker Mid-Cap Value Fund,
Quaker Small-Cap Value Fund, and Quaker Fixed-Income Fund (each a "Fund" and
together the "Funds"), dated November 1, 1999. You may obtain a copy of the
Prospectus, free of charge, by writing to Quaker Investment Trust ("Trust") c/o
Declaration Service Company, 555 North Lane, Suite 6160, Conshohocken, PA 19460
or by calling 1-800-220-8888.

TABLE OF CONTENTS

Investment Policies and Restrictions
Investment Restrictions
Investment Advisor
Directors and Officers
Performance Information
Purchasing and Redeeming Shares
Tax Information
Portfolio Transactions
Custodian
Transfer Agent
Administration
Distributor
Independent Accountants
Legal Counsel
Distribution Plan
General Information
Financial Statements

<PAGE>

INVESTMENT POLICIES AND RESTRICTIONS

The Fund's investment objectives and the manner in which the Fund pursues its
investment objectives are generally discussed in the prospectus. This section
provides additional information concerning the Fund's investments and its
investment restrictions.

INVESTMENT GRADE SECURITIES. Quaker Fixed Income Fund limits its investment
purchases to high quality investment grade securities. The securities industry
defines investment grade securities as obligations which have the
characteristics described by S&P, Fitch, Moody's, D&P or other recognized rating
services in their four highest rating grades. For S&P, Fitch and D&P those
ratings are AAA, AA, A and BBB. For Moody's those ratings are Aaa, Aa, A and
Baa. Although considered to be of "investment grade" quality, securities rated
BBB by S&P, Fitch, and D&P or Baa by Moody's, while normally exhibiting adequate
protection parameters, have speculative characteristics. For a description of
each rating grade, see Appendix A to the Statement of Additional Information.
Fixed Income limits portfolio investments to those securities in the three
highest ratings, rated at least A by Moody's, S&P, Fitch or D&P, or if not
rated, of equivalent quality as determined by the Adviser. There may also be
instances in which the Fixed-Income Fund purchases bonds that are rated A by one
rating agency and not rated or rated lower than A by other rating agencies.

OTHER INVESTMENT LIMITATIONS. The investment objective of each Fund is
fundamental, and may only be changed upon approval of a "majority" of that
Fund's outstanding shares, as defined in the Investment Company Act of 1940. For
a complete listing of the Funds' limitations, both fundamental and those which
may be changed by vote of the Board of Trustees, See "Investment Limitations" in
the Statement of Additional Information.

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

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

1
<PAGE>

INVESTMENT SECURITIES COMMON TO ALL EQUITY FUNDS

EQUITY SECURITIES. The Equity Funds may invest in common stock, convertible
preferred stock, straight preferred stock, and investment grade convertible
bonds. Each Equity Fund may also invest up to 5% of its net assets in warrants
or rights to acquire equity securities (other than those acquired in units or
attached to other securities). Stocks held in the portfolios of the Equity Funds
will generally be traded on either the New York Stock Exchange, American Stock
Exchange or the NASDAQ over-the-counter market. Under normal conditions, at
least 90% of the Equity Funds' total assets will be invested in equity
securities. Warrants and rights are excluded for purposes of this calculation.

FOREIGN SECURITIES. Because of the inherent risk of foreign securities over
domestic issues, the Equity Funds will only purchase foreign securities traded
domestically as American Depository Receipts (ADRs). ADRs are receipts issued by
a U.S. bank or trust company evidencing ownership of securities of a foreign
issuer. ADRs may be listed on a national securities exchange or may trade on the
over the counter markets. The prices of ADRs are denominated in U.S. dollars,
while the underlying security may be denominated in a foreign currency. . See
"Investment Limitations."

SHORT-TERM INVESTMENTS. The Equity Funds also will normally hold money market or
repurchase agreement instruments for funds awaiting investment, to accumulate
cash for anticipated purchases of portfolio securities, to allow for shareholder
redemptions and to provide for Fund operating expenses. As a temporary defensive
measure, the Equity Funds may invest up to 100% of their respective total assets
in investment grade bonds, U.S. Government Securities, repurchase agreements, or
money market instruments. When the Equity Funds invest their assets in such
securities as a temporary defensive measure, they will not be not pursuing their
stated investment objective. See, "Quaker Fixed Income Fund" below.

OPTIONS. Each Equity Fund may invest in options on equity securities and
securities indices, and options on futures contacts. The primary risks
associated with these investments are; (1) the risk that a position cannot be
easily closed out due to the lack of a liquid secondary market, and (2) the risk
that changes in the value of the investment will not correlate to changes in the
value of the underlying security. Further. over-the-counter options can be less
liquid than exchange-traded options. Accordingly, an Equity Fund will treat
over-the-counter options as illiquid securities. Investing in options involves
specialized skills and techniques different from those associated with ordinary
portfolio transactions. Each Equity Fund may invest not more than 10% of its
total assets in options transactions. Options may be purchased for hedging
purposes, or to provide a viable substitute for direct investment in, and/or
short sales of, specific equity securities. The Equity Funds will write (sell)
stock or stock index options only for hedging purposes or to close out positions
in stock or stock index options that an Equity Fund has purchased. The Equity
Funds may only write (sell) "covered" options.

2
<PAGE>

FUTURES CONTRACTS AND RELATED OPTIONS. To hedge against changes in securities
prices or interest rates, each Equity Fund may purchase and sell various kinds
of futures contracts, and purchase and write call and put options on such
futures contracts. Permissible futures contracts investments are limited to
futures on various equity securities and other financial instruments and
indices. An Equity Fund will engage in futures and related options transactions
for bona-fide hedging or other non-hedging purposes as permitted by regulations
of the Commodity Futures Trading Commission.

An Equity Fund may only purchase or sell non-hedging futures contracts, or
purchase or sell related non-hedging options, except for closing purchase or
sale transactions, if immediately thereafter the sum of the amount of initial
margin deposits on the Equity Fund's existing non-hedging futures and related
non-hedging options positions, and the amount of premiums paid for existing
non-hedging options on futures (net of the amount the positions are "in the
money") does not exceed 5% of the market value of the Fund's total assets.
Otherwise, each Equity Fund may invest up to 10% of its total assets in initial
margins and premiums on futures and related options. Additional information on
permitted futures transactions of the Equity Funds and their associated risks is
contained in the Statement of Additional Information.

PERMISSIBLE INVESTMENTS COMMON TO ALL QUAKER FUNDS

MONEY MARKET INSTRUMENTS. Money market instruments mature in thirteen months or
less from the date of purchase and include U.S. Government Securities, corporate
debt securities, bankers acceptances and certificates of deposit of domestic
branches of U.S. banks, and commercial paper rated in one of the two highest
rating categories by any of the nationally recognized statistical rating
organizations or if not rated, of equivalent quality in the Adviser's opinion.
Money market instruments may be purchased for temporary defensive purposes, to
accumulate cash for anticipated purchases of portfolio securities and to provide
for shareholder redemptions and operating expenses of a Fund. For temporary
defensive purposes, an Adviser may, when it believes that unusually volatile or
unstable economic and market conditions exists, depart from a Fund's normal
investment approach and invest up to 100% of the net assets of a Fund in these
instruments.

U.S. GOVERNMENT SECURITIES. Each Fund may invest a portion of its portfolio in
U.S. Government Securities, as defined under "Quaker Fixed Income Fund-U.S.
Government Securities" above.

REPURCHASE AGREEMENTS. The Funds may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when a Fund acquires a security and simultaneously
resells it to the vendor (normally a member bank of the Federal Reserve or a
registered Government Securities dealer) for delivery on an agreed upon future
date. The repurchase price exceeds the purchase price by an amount which
reflects an agreed upon market interest rate earned by the Fund effective for
the period of time during which the repurchase agreement is in effect. Delivery
pursuant to the resale typically will occur within one to seven days of the
purchase. A Fund will not enter into any repurchase agreement which will cause
more than 10% of its net assets to be invested seven days. In the event of the
bankruptcy of the other party to a repurchase agreement, a Fund could experience
delays in recovering its cash, or a loss in value due to a decline in the value
of the securities held.

3
<PAGE>

INVESTMENT COMPANIES. In order to achieve its investment objective, a Fund may
invest up to 10% of the value of its total assets in securities of other
investment companies. Each Fund may invest in any type of investment company
consistent with the Fund's investment objective and policies. A Fund will not
acquire securities of any one investment company if, immediately thereafter, the
Fund would own more than 3% of such company's total outstanding voting
securities, securities issued by such company would have an aggregate value in
excess of 5% of the Fund's total assets, or securities issued by such company
and securities held by the Fund issued by other investment companies would have
an aggregate value in excess of 10% of the Fund's total assets. To the extent a
Fund invests in other investment companies, the shareholders of that Fund would
indirectly pay a portion of the operating costs of the investment companies.

REAL ESTATE SECURITIES. The Funds may invest in readily marketable interests in
real estate investment trusts ("REITs"). REITs are pooled investment vehicles
which invest primarily in income-producing real estate or real estate related
loans or interests. REITs are generally classified as equity REITs, mortgage
REITs or a combination of equity and mortgage REITs. Equity REITs invest the
majority of their assets directly in real property and derive income primarily
from the collection of rents. Equity REITs can also realize capital gains by
selling properties that have appreciated in value. Mortgage REITs invest the
majority of their assets in real estate mortgages and derive income from the
collection of interest payments. REITs are generally publicly traded on the
national stock exchanges and in the over-the-counter market and have varying
degrees of liquidity. Although the Funds are not limited in the amount of these
types of securities they may acquire, it is not presently expected that within
the next 12 months a Fund will have in excess of 5% of its total assets in real
estate securities.

You should be aware that Equity REITs may be affected by changes in the value of
the underlying property owned by the REITs, while mortgage REITs may be affected
by the quality of any credit extended (which may also be affected by changes in
the value of the underlying property) and by changes in interest rates. REITs
are dependent upon management skills, often have limited diversification, and
are subject to the risks of financing projects. REITs are subject to heavy cash
flow dependency, default by borrowers, self-liquidation, and the possibilities
of failing to qualify for exemption from tax for distributed income under the
Internal Revenue Code and failing to maintain their exemptions from the
Investment Company Act. Certain REITs have relatively small market
capitalizations, which may result in less market liquidity and greater price
volatility of their securities.

ILLIQUID INVESTMENTS. Each Fund may invest up to 10% of its net assets in
illiquid securities. Illiquid securities are those that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price at which they are valued. Under the supervision of the
Board of Trustees, each Advisor determines the liquidity of its Fund's
investments. Included within the category of illiquid securities are restricted
securities, which cannot be sold to the public without registration under the
federal securities laws. Unless registered for sale, these securities can only
be sold in privately negotiated transactions or pursuant to an exemption from
registration.

SPECIAL SITUATIONS. The Aggressive Growth Fund intends to invest in special
situations from time to time. A special situation arises when, in the opinion of
Fund management, the securities of a

4
<PAGE>

company will, within a reasonably estimated time period, be accorded market
recognition at an appreciated value solely by reason of a development
particularly or uniquely applicable to that company and regardless of general
business conditions or movements of the market as a whole. Such developments and
situations include, but are not limited to: liquidations, reorganizations,
recapitalizations or mergers, material litigation, technological breakthroughs,
and new management or management policies. Although large and well-known
companies may be involved, special situations often involve much greater risk
than is found in the normal course of investing. To minimize these risks, the
Fund will not invest in special situations unless the target company has at
least three years of continuous operations (including predecessors), or unless
the aggregate value of such investments is not greater than 25% of the Fund's
total net assets (valued at the time of investment).

WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS. The Fund may purchase
securities on a when-issued basis, and it may purchase or sell securities for
delayed-delivery. These transactions occur when securities are purchased or sold
by the Fund with payment and delivery taking place at some future date. The Fund
may enter into such transactions when, in the Advisor's opinion, doing so may
secure an advantageous yield and/or price to the Fund that might otherwise be
unavailable. The Fund has not established any limit on the percentage of assets
it may commit to such transactions, but to minimize the risks of entering into
these transactions, the Fund will maintain a segregated account with its
custodian consisting of cash, or other high-grade liquid debt securities,
denominated in U.S. dollars or non-U.S. currencies, in an amount equal to the
aggregate fair market value of its commitments to such transactions.

MASTER-FEEDER OPTION. Notwithstanding its other investment policies, the Funds
may seek to achieve their investment objective by investing all of their
investable net assets in another investment company having the same investment
objective and substantially the same investment policies and restrictions as
those of the Fund. Although such an investment may be made in the sole
discretion of the Trustees, the Fund's shareholders will be given 30 days prior
notice of any such investment. There is no current intent to make such an
investment.

PORTFOLIO TURNOVER. The Funds will generally purchase and sell securities
without regard to the length of time the security has been held. Accordingly, it
can be expected that the rate of portfolio turnover may be substantial. For each
Fund's latest fiscal year ending on June 30, 1999, portfolio turnover rates
were:

Core Equity Fund: 78.38%
Aggressive Growth Fund: 1,675.49%
Large-Cap Value Fund: 136.81%
Mid-Cap Value Fund: 34.26%
Small-Cap Value Fund 113.81%
Fixed Income Fund: 276.94%

High portfolio turnover in any year will result in the payment by the Fund of
above-average transaction costs and could result in the payment by shareholders
of above-average amounts of taxes on realized investment gains. Distributions to
shareholders of such investment gains, to the extent they consist of short-term
capital gains, will be considered ordinary income for federal income tax
purposes.

5
<PAGE>

Portfolio turnover rate is calculated by dividing (1) the lesser of purchases or
sales of portfolio securities for the for the fiscal year by (2) the monthly
average of the value of portfolio securities owned during the fiscal year. A
100% turnover rate would occur if all the securities in the Fund's portfolio,
with the exception of securities whose maturities at the time of acquisition
were one year or less, were sold and either repurchased or replaced within one
year.

INVESTMENT RESTRICTIONS

Each Fund has adopted the following fundamental investment limitations, which
cannot be changed without approval by holders of a majority of the outstanding
voting securities" of the Fund as defined in the Investment Company Act of 1940
(the "1940 Act"). As provided in the 1940 Act, a vote of a "majority of the
outstanding voting securities" of the Fund means the affirmative vote of the
lesser of (1) more than 50% of the outstanding shares of the Fund, or (2) 67% or
more of the shares of the Fund present at a meeting, if more than 50% of the
shares are represented at the meeting in person or by proxy. Except with respect
to borrowing, changes in values of the Fund's assets as a whole will not cause a
violation of the following investment restrictions so long as percentage
restrictions are observed by the Fund at the time it purchases any security.

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

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

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

(3) Invest 25% or more of the value of its total assets in any one industry or
group of industries (except that securities of the U.S. Government, its agencies
and instrumentalities are not subject to this limitation);

(4) Invest for the purpose of exercising control or management of another
issuer;

(5) Purchase or sell commodities or commodities contracts, real estate
(including limited partnership interests, but excluding readily marketable
securities secured by real estate or interests therein, readily marketable
interests in real estate investment trusts, readily marketable securities

6
<PAGE>

issued by companies that invest in real estate or interests therein, or
mortgage-backed securities for the Fixed Income Fund as described in the
Prospectus) or interests in oil, gas, or other mineral exploration or
development programs or leases (although it may invest in readily marketable
securities of issuers that invest in or sponsor such programs or leases);

(6) Underwrite securities issued by others, except to the extent that the
disposition of portfolio securities, either directly from an issuer or from an
underwriter for an issuer, may be deemed to be an underwriting under the federal
securities laws;

(7) Make short sales of securities or maintain a short position, except short
sales "against the box", and except that the Aggressive Growth Fund may engage
in short sales of securities to the extent described in the Prospectus; (a short
sale is made by selling a security the Fund does not own; a short sale is
"against the box" to the extent that the Fund contemporaneously owns or has the
right to obtain at no additional cost securities identical to those sold short)
(while each Fund has reserved the right to make short sales "against the box",
the Advisor to each Fund (other than the Aggressive Growth Fund) has no present
intention of engaging in such transactions);

(8) Participate on a joint or joint and several basis in any trading account in
securities; or

(9) Make loans of money or securities, except that the Fund may (i) invest in
repurchase agreements and commercial paper; (ii) purchase a portion of an issue
of publicly distributed bonds, debentures or other debt securities; and (iii)
acquire private issues of debt securities subject to the limitations on
investments in illiquid securities.

The following investment limitations are not fundamental, and may be changed
without shareholder approval. As a matter of non-fundamental policy, each Fund
may not:

(1) Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of bonds,
guarantors) if more than 5% of its total assets would be invested in such
securities;

(2) Invest more than 10% of its net assets in illiquid securities; for this
purpose, illiquid securities include, among others (a) securities for which no
readily available market exists or which have legal or contractual restrictions
on resale, (b) fixed time deposits that are subject to withdrawal penalties and
have maturities of more than seven days, and (c) repurchase agreements not
terminable within seven days;

(3) Invest in the securities of any issuer if those officers or Trustees of the
Trust and those officers and directors of the Advisor who individually own more
than 1/2 of 1% of the outstanding securities of such issuer together own more
than 5% of such issuer's securities;

(4) Write, purchase, or sell puts, calls, straddles, spreads, or combinations
thereof or futures contracts or related options (except that the Equity Funds
may engage in certain transactions in options to the extent described in the
Prospectus);

7
<PAGE>

(5) Invest in warrants, valued at the lower of cost or market, exceeding more
than 5% of the value of the Fund's net assets; included within this amount, but
not to exceed 2% of the value of the Fund's net assets, may be warrants which
are not listed on the New York or American Stock Exchange; warrants acquired by
the Fund in units or attached to securities may be deemed to be without value;
or

(6) Purchase any securities on margin except in connection with such short-term
credits as may be necessary for the clearance of transactions.

INVESTMENT ADVISERS

Information on each Fund's Investment Advisor is set forth in the Prospectus.
This section contains additional information concerning the Advisors and their
obligations to the Funds.

General Adviser Duties.
- ------- ---------------
Each Adviser supervises and implements the investment activities of their
respective Fund, including the making of specific decisions as to the purchase
and sale of portfolio investments. Among the responsibilities of each Advisor
under the Advisory Agreement is the selection of brokers and dealers through
whom transactions in the Funds' portfolio investments will be effected.

The Advisory Agreements provide that each Advisor shall not be liable for any
loss suffered by the Fund or its shareholders as a consequence of any act or
omission in connection with services under the Advisory Agreement, except by
reason of the Advisor's willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties.

Each Advisory Agreement has an initial term of two years, but may be continued
thereafter from year to year so long as its continuance is approved at least
annually (a) by the vote of a majority of the Directors of the Fund who are not
"interested persons" of the Fund or the Advisor cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Board of
Directors as a whole or by the vote of a majority (as defined in the 1940 Act)
of the outstanding shares of the Fund.

Each Advisory Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act).

For the fiscal year ended June 30, 1999, each Fund paid Advisory fees, and the
Advisers each waived their fees, as follows:

Advisory Fee Paid Amount Voluntarily Waived
----------------- -------------------------

Core Equity $109,971 $16,165
Aggressive Growth $ 18,600 $16,878
Large-Cap Value $ 16,846 $ 7,883
Mid-Cap Value $ 70,885 $16,746
Small-Cap Value $ 85,980 $29,827
Fixed Income $ 30,773 $25,611

8
<PAGE>

DIRECTORS AND OFFICERS

The Board Of Trustees ("Board" or "Trustees") has overall responsibility for
conduct of the Trust's affairs. The day-to-day operations of each Fund are
managed by the Fund's Advisor, subject to the Bylaws of the Trust and review by
the Board. The Trustees of the Trust, including those Trustees who are also
officers, are listed below. The Business Address of each Trustee is:

1288 Valley Forge Road, Suite 76
Valley Forge, PA 19482

<TABLE>
<CAPTION>
Position Principal Occupation for
Name, Age with Fund The Last Five Years
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Howard L. Gleit, 59 Trustee Of Counsel, Connolly Epstein Chicco
1515 Market Street, Philadelphia,
Pennsylvania since 1997;. Previously of
counsel to Foxman Engelmeyer & Ewing
Philadelphia, Pennsylvania & Zapruder &
Odell, Bala Cynwyd, Pennsylvania since
1994; Previously a partner with Pepper,
Hamilton & Scheetz Philadelphia,
Pennsylvania.

Everett T. Keech, 59 Trustee Chairman and CEO, Pico Products,
Inc., a manufacturing firm, One Tower
Bridge, Suite 501 West Conshohocken,
Pennsylvania

Laurie Keyes, 49* Trustee Chief Operating Officer, Quaker
Secretary Securities, Inc., 1288 Valley Forge
Road, Suite 75, Valley Forge, Pennsylvania

Jeffry H. King, 55* Trustee Chairman and CEO, Quaker
Chairman Securities, Inc. 1288 Valley Forge Road
Suite 75 Valley Forge, Pennsylvania

9
<PAGE>

Louis P. Pektor III, 48 Trustee President, Ashley Development Company
961 Marcon Boulevard, Suite 300,
Allentown, Pennsylvania since 1993;
President, Greystone Capital, Allentown,
Pennsylvania since 1993; previously,
Executive Vice President, Wall Street
Mergers & Acquisitions, Allentown,
Pennsylvania

Peter F. Waitneight, 57* Trustee President Quaker Funds, Inc. 1288
President Valley Forge Road, Suite 76, Valley
Forge, Pennsylvania since 1996 (Sponsor to
the Quaker Family of Funds); previously,
President, Paragon Financial Consulting
Malvern, Pennsylvania 1995-96; previously,
Marketing Director Turner Investment
Partners Berwyn, Pennsylvania 1993-95;
</TABLE>
- ----------------------------
* Indicates that Trustee is an "interested person" of the Trust for purposes of
the 1940 Act because of his or her position with one of the Advisors, the
Distributor, or the Sponsor to the Trust.

There are no family relationships between the Trustees and executive officers of
the Trust, except between Ms. Keyes and Mr. King, who are married.

Compensation
The officers of the Trust will not receive compensation from the Trust for
performing the duties of their offices. Each Trustee who is not an "interested
person" of the Trust receives a fee of $2,000 each year plus $250 per meeting
attended in person and $100 per meeting attended by telephone. All Trustees are
reimbursed for any out-of-pocket expenses incurred in connection with attendance
at meetings.

Name of Director Compensation Pension Annual Total Compensation
from Company Benefits Benefits Paid to Director
- --------------------------------------------------------------------------------
Howard L. Gleit $2,500 None None $2,500
Trustee

Everett T. Keech $2,500 None None $2,500
Trustee

Laurie Keyes None None None None
Trustee

Jeffry H. King None None None None
Trustee

Louis P. Pektor III $2,500 None None $2,500
Trustee

Peter F. Waitneight None None None None
Trustee

10
<PAGE>

Control Persons and Shareholders Owning in Excess of 5% of Fund Shares
- ----------------------------------------------------------------------

As of June 30, 1999, the following persons own more than 5% of No-Load Share
Classes in each Fund.

Core Equity
-----------
% of Total Outstanding
Shareholder Total Shares Owned Fund Shares
- --------------------------------------------------------------------------------
Geewax, Terker 510,246 35.72%

St Mary's University 267,595 18.73%
Charles Schwab
FBO Customer Accts 186,092 13.03%

Geewax, Terker
FBO Customer Acct 107,611 7.53%

Geewax, Terker
FBO Customer Acct 83,518 5.85%

E. Boynton 78,993 5.53%

Aggressive Growth
-----------------
% of Total Outstanding
Shareholder Total Shares Owned Fund Shares
- --------------------------------------------------------------------------------
M. Dafarty 42,724 15.59%

J. King, Jr. 20,607 7.52%

Rabalam 18,303 6.68%

P. Schofield 13,738 5.01%

Large-Cap Value
---------------
% of Total Outstanding
Shareholder Total Shares Owned Fund Shares
- --------------------------------------------------------------------------------
Trust Company
FBO Customer Acct 399,949 54.50%

National Trust 183,671 25.03%

11
<PAGE>

Mid-Cap-Cap Value
-----------------
% of Total Outstanding
Shareholder Total Shares Owned Fund Shares
- --------------------------------------------------------------------------------
Trust Company
FBO Customer Acct 631,584 57.16%

National Trust 348,434 31.53%

Small-Cap-Cap Value
-------------------
% of Total Outstanding
Shareholder Total Shares Owned Fund Shares
- --------------------------------------------------------------------------------
OPUBCO
FBO Customer Acct 382,482 37.63%

National Trust 188,715 18.56%

Fixed Income Value
------------------
% of Total Outstanding
Shareholder Total Shares Owned Fund Shares
- --------------------------------------------------------------------------------
St. Mary's 464,014 61.26%

J. King, Jr. 92,033 12.15%

Charles Schwab
FBO Customer Accts 80,882 10.68%

Waitneight, P. 46,212 6.10%

PERFORMANCE INFORMATION

From time to time a Fund may quote total return figures. "Total Return" for a
period is the percentage change in value during the period of an investment in
Fund shares, including the value of shares acquired through reinvestment of all
dividends and capital gains distributions. "Average Annual Total Return" is the
average annual compounded rate of change in value represented by the Total
Return Percentage for the period.

Average Annual Total Return is computed as follows: P(1+T)[n] = ERV

Where: P = a hypothetical initial investment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of shares at the end of the period

12
<PAGE>

The Fund's performance is a function of conditions in the securities markets,
portfolio management, and operating expenses. Although information such as that
shown above is useful in reviewing the Fund's performance and in providing some
basis for comparison with other investment alternatives, it should not be used
for comparison with other investments using different reinvestment assumptions
or time periods.

The yield of the Fixed Income Fund is computed by dividing the net investment
income per share earned during the period stated in the advertisement by the
maximum offering price per share on the last day of the period. For the purpose
of determining net investment income, the calculation includes, among expenses
of the Fund, all recurring fees that are charged to all shareholder accounts and
any nonrecurring charges for the period stated. In particular, yield is
determined according to the following formula:

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

Where: A equals dividends and interest earned during the period; B equals
expenses accrued for the period (net of reimbursements); C equals average daily
number of shares outstanding during the period that were entitled to receive
dividends; D equals the maximum offering price per share on the last day of the
period.

In sales literature, each Fund's performance may be compared with that of market
indices and other mutual funds. In addition to the above computations, each Fund
might use comparative performance as computed in a ranking determined by Lipper
Analytical Services, Morningstar, Inc., or that of another service.

PURCHASING AND REDEEMING SHARES

Redemptions of each Fund's shares will be made at net asset value ("NAV")less
any applicable CDSC. Each Fund's NAV is determined on days on which the New York
Stock Exchange ("NYSE") is open for trading. For purposes of computing the NAV
of a share of a Fund, securities traded on security exchanges, or in the
over-the-counter market in which transaction prices are reported, are valued at
the last sales price at the time of valuation or, lacking any reported sales on
that day, at the most recent bid quotations. Securities for which quotations are
not available and any other assets are valued at a fair market value as
determined in good faith by the Advisor, subject to the review and supervision
of the Board. The price per share for a purchase order or redemption request is
the NAV next determined after receipt of the order.

The Funds are open for business on each day that the NYSE is open. Each Fund's
share price or NAV is normally determined as of 4:00 p.m., Eastern time. Each
Fund's share price is calculated by subtracting its liabilities from the closing
fair market value of its total assets and dividing the result by the total
number of shares outstanding on that day. Fund liabilities include accrued
expenses and dividends payable, and its total assets include the market value of
the portfolio securities as well as income accrued but not yet received.

13
<PAGE>

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

TAX INFORMATION

The Funds intend to qualify as a regulated investment company ("RIC") under
Subchapter M of the Internal Revenue Code of 1986, as amended, so as to be
relieved of federal income tax on its capital gains and net investment income
currently distributed to its shareholders. To qualify as a RIC, the Funds must,
among other things, derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, gains from the sale or
other disposition of stock, securities, or other income derived with respect to
its business of investing in such stock or securities.

If the Funds qualifies as a RIC and distributes at least 90% of its net
investment income, the Funds will not be subject to Federal income tax on the
income so distributed. However, the Funds would be subject to corporate income
tax on any undistributed income other than tax-exempt income from municipal
securities.

The Funds intends to distribute to shareholders, at least annually,
substantially all net investment income and any net capital gains realized from
sales of the Fund's portfolio securities. Dividends from net investment income
and distributions from any net realized capital gains are reinvested in
additional shares of the Funds unless the shareholder has requested in writing
to have them paid by check.

If shares are purchased shortly before a record date for a distribution, the
shareholder will, in effect, receive a return of a portion of his investment,
but the distribution will be taxable to him even if the net asset value of the
shares is reduced below the shareholder's cost. However, for federal income tax
purposes the original cost would continue as the tax basis.

If a shareholder fails to furnish his social security or other tax
identification number or to certify properly that it is correct, the Funds may
be required to withhold federal income tax at the rate of 31% (backup
withholding) from dividend, capital gain and redemption payments to him.
Dividend and capital gain payments may also be subject to backup withholding if
the shareholder fails to certify properly that he is not subject to backup
withholding due to the under-reporting of certain income.

14
<PAGE>

Taxation of the Shareholder. Taxable distributions generally are included in a
shareholder's gross income for the taxable year in which they are received.
However, dividends declared in October, November and December and made payable
to shareholders of record in such month will be deemed to have been received on
December 31st if paid by the Funds during the following January.

Distributions by the Funds will result in a reduction in the fair market value
of the Fund's shares. Should a distribution reduce the fair market value below a
shareholder's cost basis, such distribution would be taxable to the shareholder
as ordinary income or as a long-term capital gain, even though, from an
investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares of the Fund just prior to a distribution. The price of such shares
include the amount of any forthcoming distribution so that those investors may
receive a return of investment upon distribution which will, nevertheless, be
taxable to them.

Dividends. A portion of the Fund's income may qualify for the dividends-received
deduction available to corporate shareholders to the extent that the Fund's
income is derived from qualifying dividends. Because the Fund may earn other
types of income, such as interest, income from securities loans, non-qualifying
dividends, and short-term capital gains, the percentage of dividends from the
Fund that qualifies for the deduction generally will be less than 100%. The Fund
will notify corporate shareholders annually of the percentage of Fund dividends
that qualifies for the dividend received deductions.

A portion of the Fund's dividends derived from certain U.S. Government
obligations may be exempt from state and local taxation. Short-term capital
gains are distributed as dividend income. The Fund will send each shareholder a
notice in January describing the tax status of dividends and capital gain
distributions for the prior year.

PORTFOLIO TRANSACTIONS

Decisions to buy and sell securities for each Fund are made by the Advisor. In
placing purchase and sale orders for portfolio securities for a Fund, it is the
policy of the Advisor to seek the best execution of orders at the most favorable
price. In selecting brokers to effect portfolio transactions, the determination
of what is expected to result in the best execution at the most favorable price
involves a number of largely judgmental considerations. Among these are the
Advisor's evaluation of the broker's efficiency in executing and clearing
transactions, the rate of commission or the size of the broker-dealer's
"spread", the size and difficulty of the order, the nature of the market for the
security, operational capabilities of the broker-dealer, and the research and
other services provided. A Fund may pay more than the lowest available
commission in return for brokerage and research services. Research and other
services may include information as to the availability of securities for
purchase or sale, statistical or factual information or opinions pertaining to
securities and reports and analysis concerning issuers and their
creditworthiness. The Advisor may use research and other services to service all
of its clients, rather than the particular clients whose commissions may pay for
research or other services. In other words, the Fund's brokerage may be used to
pay for a research service that is used in managing another client of the
Advisor.

15
<PAGE>

The Advisor may purchase or sell portfolio securities on behalf of a Fund in
agency or principal transactions. In agency transactions, the Fund generally
pays brokerage commissions. In principal transactions, the Fund generally does
not pay commissions. However, the price paid for the security may include an
undisclosed commission or "mark-up" or selling concessions. The Advisor normally
purchases fixed-income securities on a net basis from primary market makers
acting as principals for the securities. The Advisor may purchase certain money
market instruments directly from an issuer without paying commissions or
discounts. Over-the-counter securities are generally purchased and sold directly
with principal market makers who retain the difference in their cost in the
security and its selling price. In some instances, the Advisor feels that better
prices are available from non-principal market makers who are paid commissions
directly.

The Advisor may combine transaction orders placed on behalf of the Fund with
orders placed on behalf of any other fund or private account managed by the
Advisor for the purpose of negotiating brokerage commissions or obtaining a more
favorable transaction price. In these cases, transaction costs are shared
proportionately by the fund or account, as applicable, which are part of the
block. If an aggregated trade is not completely filled, then the Advisor
typically allocates the trade among the funds or accounts, as applicable, on a
pro rata basis based upon account size. Exemptions are permitted on a
case-by-case basis when judged by the Advisor to be fair and reasonable to the
funds or accounts involved.

Trading by the Portfolio Manager
- --------------------------------
Pursuant to Section 17(j) of the 1940 Act and Rule 17j-1 thereunder, the Funds,
the Advisor, and the Distributor have adopted Codes of Ethics restricting
personal securities trading by the Fund's Advisors. These Codes are on public
file, and are available from the Securities and Exchange Commission. While the
Codes permit personal transactions by the Advisors in securities held or to be
acquired by each Fund, the Codes prohibit and are designed to prevent fraudulent
activity in connection with such personal transactions.

For the Trust's fiscal year ending on June 30, 1999 the Funds of the Trust paid
aggregate brokerage commissions of $98,031 to affiliated broker/dealers.

CUSTODIAN

First Union National Bank (the "Custodian"), 123 South Broad Street,
Philadelphia, PA 19109, serves as custodian for each Fund's assets. The
Custodian acts as the depository for each Fund, holds in safekeeping its
portfolio securities, collects all income and other payments with respect to
portfolio securities, disburses monies at the Fund's request and maintains
records in connection with its duties as Custodian. For its services as
Custodian, the Custodian is entitled to receive from each Fund an annual fee
based on the average net assets of the Fund held by the Custodian.

For the fiscal year ended June 30, 1999, each Fund paid custodial fees as
follows:

16
<PAGE>

Fee Paid
--------

Core Equity $4,017
Aggressive Growth $5,253
Large-Cap Value $4,500
Mid-Cap Value $2,059
Small-Cap Value $4,683
Fixed Income $1,267

TRANSFER AGENT

Declaration Service Company (the "DSC") 555 North Lane, Suite 6160,
Conshohocken, PA 19428 serves as the Funds' transfer, dividend paying, and
shareholder servicing agent. The Transfer Agent, subject to the authority of the
Board of Trustees, provides transfer agency services pursuant to an agreement
with the Administrator, which has been approved by the Trust. The Transfer Agent
maintains the records of each shareholder's account, answers shareholder
inquiries concerning accounts, processes purchases and redemptions of Fund
shares, acts as dividend and distribution disbursing agent, and performs other
shareholder servicing functions. The Transfer Agent is compensated for its
services by the Administrator and not directly by the Funds.

For the fiscal year ended June 30, 1999, each Fund paid transfer agent fees as
follows:

Fee Paid
--------

Core Equity $ 12,931
Aggressive Growth $ 2,444
Large-Cap Value $ 2,678
Mid-Cap Value $ 9,358
Small-Cap Value $ 9,144
Fixed Income $ 6,849

ADMINISTRATION

DSC also acts as administrator to the Trust pursuant to a written agreement with
the Trust. DSC supervises all aspects of the operations of the Funds except
those performed by the Fund's Advisors under the Fund's investment advisory
agreements. DSC is responsible for:

(a) calculating each Fund's net asset value;
(b) preparing and maintaining the books and accounts specified in Rule 31a-1;
and 31a-2 of the Investment Company Act of 1940;
(c) preparing financial statements contained in reports to stockholders of the;
Fund
(d) preparing each Fund's federal and state tax returns;
(e) preparing reports and filings with the Securities and Exchange Commission;
(f) preparing filings with state Blue Sky authorities; and
(g) maintaining each Fund's financial accounts and records.

17
<PAGE>

For the services to be rendered as administrator, the Trust pays DSC an annual
fee, paid monthly, based on the average net assets of each Fund, as determined
by valuations made as of the close of each business day of the month.

For the fiscal year ended June 30, 1999, each Fund paid administration fees as
follows:

Fee Paid
--------

Core Equity $ 12,931
Aggressive Growth $ 2,444
Large-Cap Value $ 2,678
Mid-Cap Value $ 9,358
Small-Cap Value $ 9,144
Fixed Income $ 6,849

DISTRIBUTOR

Declaration Distributors, Inc. (DDI), 555 North Lane, Suite 6160, Conshohocken,
PA 19460, acts as the principal underwriter of each Fund's shares pursuant to a
written agreement with the Trust ("Distribution Agreement"). DDI and DSC are
both wholly-owned subsidiaries of Declaration Holdings, Inc., a Delaware
corporation.

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

Pursuant to the Distribution Agreement, DDI facilitates the registration of each
Funds' shares under state securities laws and assists in the sale of shares. For
providing underwriting services to the Funds, DDI is paid an annual fixed fee by
the Trust . For the fiscal year ended June 30, 1999, the Trust paid aggregate
distribution fees of $ 0.00 to DDI.

SPONSOR

Quaker Funds, Inc. (the "Sponsor"), 1288 Valley Forge Road, Post Office Box 987,
Valley Forge, Pennsylvania 19482, acts as sponsor for each Fund and provides
certain shareholder services (more thoroughly described in the Prospectus)
pursuant to a Sponsorship Agreement between the Trust and the Sponsor for each
Fund approved by the Board of Trustees of the Trust. The Shareholder Sponsorship
Agreement may be terminated at any time, without penalty, by each party upon 60
days prior written notice to the other party.

Laurie Keyes, Jeffrey H. King and Peter F. Waitneight, each of whom is a Trustee
of the Trust, control Quaker Funds, Inc. Quaker Funds, Inc. was formed as a
Pennsylvania corporation in 1996 and is located at 1288 Valley Forge Road, Suite
76, Valley Forge, Pennsylvania 19482. For the fiscal year ended June 30, 1999,
the Sponsor waived receipt of all fees.

18
<PAGE>

INDEPENDENT ACCOUNTANTS

The firm of Goldenberg Rosenthal Friedlander, LLP, 101 West Avenue, P.O. Box
458, Jenkintown, Pennsylvania 19046-0468, serves as independent accountants for
the Funds, and will audit the annual financial statements of the Funds, prepare
each Fund's federal and state tax returns, and consult with the Funds on matters
of accounting and federal and state income taxation.

LEGAL COUNSEL

David Jones & Assoc., P.C., 799 State Street, Pottstown PA 19464, has passed on
certain matters relating to this registration statement and acts as counsel to
the Trust.

DISTRIBUTION PLAN

As noted in the Fund's Prospectus, the Trust has adopted plans pursuant to Rule
12b-1 under the 1940 Act (the "Plan") whereby each share class of the Funds is
authorized to pay a fee per annum of the Fund's average daily net assets to the
Sponsor and others to compensate them for certain expenses incurred in the
distribution of the Fund's shares and the servicing or maintaining of existing
Fund shareholder accounts. The fees may be paid on a monthly basis, in arrears.

GENERAL INFORMATION

The Trust is an unincorporated business trust organized under Massachusetts law
on October 24, 1990 and operating as a diversified, open-end management
investment company. The Trust's Declaration of Trust authorizes the Board of
Trustees to divide shares into series, each series relating to a separate
portfolio of investments, and to classify and reclassify any unissued shares
into one or more classes of shares of each such series. The Declaration of Trust
currently provides for the shares of six series and the number of shares of each
series shall be unlimited. The Trust does not intend to issue share
certificates.

In the event of a liquidation or dissolution of the Trust or an individual
series, such as each Fund, shareholders of a particular series would be entitled
to receive the assets available for distribution belonging to such series.
Shareholders of a series are entitled to participate equally in the net
distributable assets of the particular series involved on liquidation, based on
the number of shares of the series that are held by each shareholder. If there
are any assets, income, earnings, proceeds, funds or payments, that are not
readily identifiable as belonging to any particular series, the Trustees shall
allocate them among any one or more of the series as they, in their sole
discretion, deem fair and equitable.

Shareholders of all of the series of the Trust, including the Funds, will vote
together and not separately on a series-by-series or class-by-class basis,
except as otherwise required by law or when the Board of Trustees determines
that the matter to be voted upon affects only the interests of the

19
<PAGE>

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

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

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

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

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

20
<PAGE>

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

Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
trust. The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability.

Reporting to Shareholders. Each Fund will send to its shareholders annual and
semi-annual reports; the financial statements appearing in annual reports for
each Fund will be audited by independent accountants. In addition, the Funds
will send to each shareholder having an account directly with the Fund, a
quarterly statement showing transactions in the account, the total number of
shares owned and any dividends or distributions paid. Inquiries regarding any
Fund may be directed in writing to 555 North Lane, Suite 6160, Conshohocken, PA
19428 or by calling 800-220-8888.

FINANCIAL STATEMENTS

The financial statements of each Fund are incorporated by reference to the
Trust's latest audited annual report, dated June 30, 1999. The Trust's annual
report has been audited by Goldenberg Rosenthal Friedlander, LLP, independent
auditors. You may receive a copy of the report, free of charge, by contacting
the Trust.

21
<PAGE>

APPENDIX A

DESCRIPTION OF RATINGS

The Funds may generally acquire from time to time fixed income securities that
meet the following minimum rating criteria ("Investment Grade Debt Securities")
or, if unrated, are in the Advisor's opinion comparable in quality to Investment
Grade Debt Securities. The Fixed Income Fund, however, intends to limit its
portfolio to a more restrictive quality criteria, limiting portfolio investment
to those securities in the three highest ratings, as described below, or if not
rated, of equivalent quality as determined by the Advisor to the Fixed Income
Fund. The various ratings used by the nationally recognized securities rating
services are described below.

A rating by a rating service represents the service's opinion as to the credit
quality of the security being rated. However, the ratings are general and are
not absolute standards of quality or guarantees as to the creditworthiness of an
issuer. Consequently, the Advisor believes that the quality of fixed income
securities in which the Funds may invest should be continuously reviewed and
that individual analysts give different weightings to the various factors
involved in credit analysis. A rating is not a recommendation to purchase, sell
or hold a security, because it does not take into account market value or
suitability for a particular investor. When a security has received a rating
from more than one service, each rating is evaluated independently. Ratings are
based on current information furnished by the issuer or obtained by the rating
services from other sources that they consider reliable. Ratings may be changed,
suspended or withdrawn as a result of changes in or unavailability of such
information, or for other reasons.

Standard & Poor's Ratings Group. The following summarizes the highest four
ratings used by Standard & Poor's Ratings Group ("S&P") for bonds which are
deemed to be "Investment-Grade Debt Securities" by the Advisor:

AAA - This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay interest and repay principal.

AA - Debt rated AA is considered to have a very strong capacity to pay
interest and repay principal and differs from AAA issues only in a small
degree.

A - Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.

BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for debt in
higher rated categories.

22
<PAGE>

To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.

Bonds rated BB, B, CCC, CC and C are not considered by the Advisor to be
"Investment-Grade Debt Securities" and are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
bonds may have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions.

Commercial paper rated A-1 by S&P indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted A-1+. Capacity for timely payment on
commercial paper rated A-2 is satisfactory, but the relative degree of safety is
not as high as for issues designated A-1.

The rating SP-1 is the highest rating assigned by S&P to municipal notes and
indicates very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics are given a
plus (+) designation.

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

Aaa - Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.

Aa - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.

A - Debt which is rated A possesses many favorable investment attributes
and is to be considered as an upper medium grade obligation. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.

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Baa - Debt which is rated Baa is considered as a medium grade obligation,
i.e., it is neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such debt lacks outstanding investment
characteristics and in fact has speculative characteristics as well.

Moody's applies numerical modifiers (l, 2 and 3) with respect to bonds rated Aa,
A and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the bond ranks in the lower end of
its generic rating category.

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

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

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

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

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

Duff & Phelps Credit Rating Co. The following summarizes the highest four
ratings used by Duff & Phelps Credit Rating Co. ("D&P") for bonds which are
deemed to be "Investment-Grade Debt Securities" by the Advisor:

AAA - Bonds that are rated AAA are of the highest credit quality. The risk
factors are considered to be negligible, being only slightly more than for
risk-free U.S. Treasury debt.

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

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

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

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

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

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

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

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

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

BBB - Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have adverse
impact on these bonds, and therefore impair timely payment. The likelihood
that the ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.

To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within a rating category.

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

The following summarizes the three highest ratings used by Fitch for short-term
notes, municipal notes, variable rate demand instruments and commercial paper:

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F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.

F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+

F-2 - Instruments assigned this rating have satisfactory degree of
assurance for timely payment, but the margin of safety is not as great as
for issues assigned F-1+ and F-1 ratings.