PROSPECTUS
Dated November 1, 1999
As Amended June 9, 2000
THE QUAKERTM INVESTMENT TRUST
1288 Valley Forge Road, Suite 76
Valley Forge, PA 19482
1-800-220-8888
The Quaker(TM) Investment Trust (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 FUND
QUAKER MID-CAP VALUE FUND
QUAKER SMALL-CAP VALUE FUND
QUAKER FIXED INCOME FUND
The Trust is offering three Classes of Shares by this Prospectus. Each Class
differs as to sales charges and ongoing expenses. However, each Class represents
an undivided interest in the same portfolio of securities. The Trust also offers
other Classes of shares without sales charges, but with different minimum
investment amounts. To receive a prospectus describing the Trust's other share
Classes, call the Trust.
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.
================================================================================
1
<PAGE>
TABLE OF CONTENTS
THE BASICS ABOUT EACH FUND
QUAKER CORE EQUITY FUND................................................
QUAKER AGGRESSIVE GROWTH FUND..........................................
QUAKER LARGE-CAP VALUE FUND............................................
QUAKER MID-CAP VALUE FUND..............................................
QUAKER SMALL-CAP VALUE FUND............................................
QUAKER FIXED INCOME FUND...............................................
THE FUNDS' ADVISORS & 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........................................................
================================================================================
2
<PAGE>
THE BASICS ABOUT EACH FUND
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 Advisor 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 Advisor employs a "bottom
up" approach to stock selection. This means that the Advisor analyses individual
companies for suitability and then picks those companies that the Advisor
believes will perform best in the overall economic environment. The Advisor
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 Advisor'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.
The Fund will normally invest its remaining assets in cash and cash equivalents,
such as U.S. government debt instruments, other unaffiliated 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
3
<PAGE>
Trust has authorized the Fund's Advisor to adopt a temporary defensive
investment position in the market. When the Advisor 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?
General Risks- All investments are subject to inherent risks, and the Fund is no
exception. Accordingly, you may lose money by investing in the Fund. When you
sell your Fund shares, they may be worth more or less than what you paid for
them because the value of the Fund's investments will vary from day-to-day,
reflecting changes in market conditions, interest rates and numerous other
factors.
Stock Market Risk- The stock market tends to trade in cyclical price patterns,
with prices generally rising or falling over sustained periods of time. The Fund
invests primarily in common stocks, so the Fund will be subject to the risks
associated with common stocks, including price volatility and the
creditworthiness of the issuing company.
Foreign Securities Risk- Investments in foreign securities involve greater risks
compared to domestic investments for the following reasons:
o Foreign companies are not subject to the regulatory requirements of
U.S. companies, so there may be less publicly available information
about foreign issuers than U.S. companies.
o Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards.
o Dividends and interest on foreign securities may be subject to foreign
withholding taxes. Such taxes may reduce the net return to Fund
shareholders.
o Foreign securities are often denominated in a currency other than the
U.S. dollar. Accordingly, the Fund will be 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.
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.
4
<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
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 (1)
[GRAPHIC OMITTED]
Year Ended Year Ended
12/31/97 12/31/98
29.63% 32.51%
Best Quarter: 4th Qtr 1998 35.71%
Worst Quarter: 3rd Qtr 1998 (14.27)%
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%
(1) Because the Fund is offering Class A, B and C shares for the first time in
this prospectus, the returns shown in the Bar Chart and Table above are for
a class of Fund shares not offered by this Prospectus. However, Class A, B
and C shares of the Fund would have substantially similar returns to the
returns shown above because all share classes are invested in the same
portfolio of securities. The returns shown above will differ from the
returns achieved by the Class A, B and C shares only to the extent that the
various classes do not have the same ongoing expenses and sales charges.
** The S&P 500 Index is a widely recognized, unmanaged index of the
approximately 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.
================================================================================
5
<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.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
----------------------------------------------------------------------------------------
SHAREHOLDER FEES:
-----------------
(fees paid directly from your investment)
<S> <C> <C> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES 5.50% NONE NONE
(As a percentage of offering price)
MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE 5.00%(1) NONE
(As a percentage of redemption proceeds)
REDEMPTION FEES NONE NONE 1.00%(2)
ANNUAL FUND OPERATING EXPENSES: CLASS A CLASS B CLASS C
------------------------------- ------- ------- -------
(expenses that are deducted from Fund assets)
MANAGEMENT FEES (3) 1.00% 1.00% 1.00%
DISTRIBUTION & SERVICING (12b-1) FEES (4) 0.25% 1.00% 1.00%
OTHER EXPENSES (5) 0.25% 0.25% 0.25%
----- ----- -----
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.50% 2.25% 2.25%
</TABLE>
1. The maximum deferred sales charge of 4.00% is charged to shares redeemed
within the first year of purchase. These deferred sales charges decline to
0.00% over a period of five years. Please see "How to Buy & Sell Shares" ,
"Variable Pricing System" in this Prospectus.
2. If you redeem your shares within thirteen months of purchase, you will be
charged a fee of 1.00% of the redemption proceeds. Please see "How to Buy &
Sell Shares" , "Variable Pricing System" in this Prospectus.
3. 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.
4. 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.
5. Other Expenses include fees paid to the Fund's transfer agent,
administrator and other service providers. Because the Fund is offering
these share Classes for the first time, these fees are estimated.
EXAMPLE: THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN
THE FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.
THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL YOUR SHARES AT THE END OF THOSE PERIODS. THE
EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND THAT THE
FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL COSTS MAY BE
HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD BE:
6
<PAGE>
1 YEAR 3 YEARS
------ -------
CLASS A $ 694 $ 998
CLASS B $ 785 $ 1024
CLASS C $ 329 $ 703
IF YOU DID NOT REDEEM YOUR SHARES, YOUR EXPENSES WOULD BE:
1 YEAR 3 YEARS
------ -------
CLASS A $ 694 $ 998
CLASS B $ 228 $ 703
CLASS C $ 228 $ 703
Because the Fund has no operating history for these share classes, these expense
figures are based on estimated amounts for the Fund's first fiscal year.
--------------------------------------------------------------------------------
QUAKER AGGRESSIVE GROWTH FUND
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund's investment objective is long-term growth of capital. Current income
is not a significant investment consideration, and any such income realized will
be considered incidental to the Fund's investment objective.
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Fund attempts to achieve its investment objective by;
o normally investing at least 65% of the Fund's total assets in US common
stocks;
o investing in common stocks of companies without regard to market
capitalizations;
o investing its assets in a limited number of equity securities of companies
which the Fund's Advisor believes show a high probability for superior
growth;
o investing in "special situation" securities when the Fund's Advisor
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. The Fund limits short sales to not more
than 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 Advisor, the
securities of a company will, within a
7
<PAGE>
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.
In selecting portfolio companies, the Fund's Advisor 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 Advisor 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.
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
Advisor to adopt a temporary defensive investment position in the market. When
the Advisor 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.
8
<PAGE>
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
General Risks- All investments are subject to inherent risks, and the Fund is no
exception. Accordingly, you may lose money by investing in the Fund. When you
sell your Fund shares, they may be worth more or less than what you paid for
them because the value of the Fund's investments will vary from day-to-day,
reflecting changes in market conditions, interest rates and numerous other
factors.
Stock Market Risk- The stock market tends to trade in cyclical price patterns,
with prices generally rising or falling over sustained periods of time. The Fund
invests primarily in common stocks, so the Fund will be subject to the risks
associated with common stocks, including price volatility and the
creditworthiness of the issuing company.
Short Selling Risks- Short selling involves special risks, and the Fund could at
any time suffer both a loss on the purchase or retention of one security, if
that security should decline in value, and a loss on a short sale of another
security, if the security sold short should increase in value. When a short
position is closed out, it may result in a short term capital gain or loss for
federal income tax purposes. To the extent that in a generally rising market the
Fund maintains short positions in securities rising with the market, the net
asset value of the Fund would be expected to increase to a lesser extent than
the net asset value of a fund that does not engage in short sales. 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:
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.
9
<PAGE>
o Although the Fund will only invest in foreign issuers that are
domiciled in nations considered to have stable and friendly
governments, there is the possibility of expropriation, confiscation,
taxation, currency blockage or political or social instability which
could negatively affect the Fund.
Special Situation Risks- Although large and well-known companies may be
involved, special situations often involve much greater risk than is found in
the normal course of investing. These risks result from the subjective nature of
determining what a special situation is. For example, investing in a company
primarily because the Advisor 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 Advisor 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).
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.
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 (1)
[GRAPHIC OMITTED]
Year Ended Year Ended
12/31/97 12/31/98
20.32% 30.16%
Best Quarter: 1st Qtr 1999 19.94%
Worst Quarter: 4th Qtr 1998 (5.34)%
10
<PAGE>
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%
(1) Because the Fund is offering Class A, B and C shares for the first time in
this prospectus, the returns shown in the Bar Chart and table above are for
a class of Fund shares not offered by this Prospectus. However, Class A, B
and C shares of the Fund would have substantially similar returns to the
returns shown above because all share classes are invested in the same
portfolio of securities. The returns shown above will differ from the
returns achieved by the Class A, B and C shares only to the extent that the
various classes do not have the same ongoing expenses and sales charges.
** The S&P 500 Index is a widely recognized, unmanaged index of the
approximately 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.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
----------------------------------------------------------------------------------------
SHAREHOLDER FEES:
-----------------
(fees paid directly from your investment)
<S> <C> <C> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES 5.50% NONE NONE
(As a percentage of offering price)
MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE 5.00%(1) NONE
(As a percentage of redemption proceeds)
REDEMPTION FEES NONE NONE 1.00%(2)
ANNUAL FUND OPERATING EXPENSES: CLASS A CLASS B CLASS C
------------------------------ ------- ------- -------
(expenses that are deducted from Fund assets)
MANAGEMENT FEES (3) 1.00% 1.00% 1.00%
DISTRIBUTION & SERVICING (12b-1) FEES (4) 0.25% 1.00% 1.00%
OTHER EXPENSES (5) 0.25% 0.25% 0.25%
----- ----- -----
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.50% 2.25% 2.25%
</TABLE>
1. The maximum deferred sales charge of 4.00% is charged to shares redeemed
within the first year of purchase. These deferred sales charges decline to
0.00% over a period of five years. Please see "How to Buy & Sell Shares" ,
"Variable Pricing System" in this Prospectus.
2. If you redeem your shares within thirteen months of purchase, you will be
charged a fee of 1.00% of the redemption proceeds. Please see "How to Buy &
Sell Shares" , "Variable Pricing System" in this Prospectus.
3. 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.
11
<PAGE>
4. 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.
5. Other Expenses include fees paid to the Fund's transfer agent,
administrator and other service providers. Because the Fund is offering
these share Classes for the first time, these fees are estimated.
EXAMPLE: THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN
THE FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.
THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL YOUR SHARES AT THE END OF THOSE PERIODS. THE
EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND THAT THE
FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL COSTS MAY BE
HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD BE:
1 YEAR 3 YEARS
------ -------
CLASS A $ 694 $ 998
CLASS B $ 785 $ 1024
CLASS C $ 329 $ 703
IF YOU DID NOT REDEEM YOUR SHARES, YOUR EXPENSES WOULD BE:
1 YEAR 3 YEARS
------ -------
CLASS A $ 694 $ 998
CLASS B $ 228 $ 703
CLASS C $ 228 $ 703
Because the Fund has no operating history for these share classes, these expense
figures are based on estimated amounts for the Fund's first fiscal year.
--------------------------------------------------------------------------------
QUAKER LARGE-CAP VALUE FUND
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund's investment objective is long-term growth of capital. Current income
is not a significant investment consideration, and any such income realized will
be considered incidental to the Fund's investment objective.
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Advisor 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;
12
<PAGE>
o investing the Fund's assets (65%) mostly in large capitalization (greater
than $6 billion) companies;
o investing in companies considered by the Fund's Advisor 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 Advisor 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 Advisor defines long-term as a time horizon of at
least three years. To identify companies that have significant growth potential,
the Advisor employs a value-oriented approach to stock selection. To choose the
securities in which the Fund will invest, the Advisor 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 Advisor employs
its own proprietary cash-flow based, dividend discount analytical model. The
Advisor 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 unaffiliated 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
Advisor to adopt a temporary defensive investment position in the market. When
the Advisor 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.
13
<PAGE>
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.
Value Risk- The Fund's Advisor 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 Advisor'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.
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.
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.
14
<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
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 (1)
[GRAPHIC OMITTED]
Year Ended Year Ended
12/31/97 12/31/98
30.23% 21.81%
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%
(1) Because the Fund is offering Class A, B and C shares for the first time in
this prospectus, the returns shown in the Bar Chart and table above are for
a class of Fund shares not offered by this Prospectus. However, Class A, B
and C shares of the Fund would have substantially similar returns to the
returns shown above because all share classes are invested in the same
portfolio of securities. The returns shown above will differ from the
returns achieved by the Class A, B and C shares only to the extent that the
various classes do not have the same ongoing expenses and sales charges.
** The S&P 500 Index is a widely recognized, unmanaged index of the
approximately 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.
15
<PAGE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
----------------------------------------------------------------------------------------
SHAREHOLDER FEES:
-----------------
(fees paid directly from your investment)
<S> <C> <C> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES 5.50% NONE NONE
(As a percentage of offering price)
MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE 5.00%(1) NONE
(As a percentage of redemption proceeds)
REDEMPTION FEES NONE NONE 1.00%(2)
ANNUAL FUND OPERATING EXPENSES: CLASS A CLASS B CLASS C
------------------------------ ------- ------- -------
(expenses that are deducted from Fund assets)
MANAGEMENT FEES (3) 1.00% 1.00% 1.00%
DISTRIBUTION & SERVICING (12b-1) FEES (4) 0.25% 1.00% 1.00%
OTHER EXPENSES (5) 0.25% 0.25% 0.25%
----- ----- -----
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.50% 2.25% 2.25%
</TABLE>
1. The maximum deferred sales charge of 4.00% is charged to shares redeemed
within the first year of purchase. These deferred sales charges decline to
0.00% over a period of five years. Please see "How to Buy & Sell Shares" ,
"Variable Pricing System" in this Prospectus.
2. If you redeem your shares within thirteen months of purchase, you will be
charged a fee of 1.00% of the redemption proceeds. Please see "How to Buy &
Sell Shares" , "Variable Pricing System" in this Prospectus.
3. 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.
4. 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.
5. Other Expenses include fees paid to the Fund's transfer agent,
administrator and other service providers. Because the Fund is offering
these share Classes for the first time, these fees are estimated.
EXAMPLE: THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN
THE FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.
THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL YOUR SHARES AT THE END OF THOSE PERIODS. THE
EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND THAT THE
FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL COSTS MAY BE
HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD BE:
1 YEAR 3 YEARS
------ -------
CLASS A $ 694 $ 998
CLASS B $ 785 $ 1024
CLASS C $ 329 $ 703
16
<PAGE>
IF YOU DID NOT REDEEM YOUR SHARES, YOUR EXPENSES WOULD BE:
1 YEAR 3 YEARS
------ -------
CLASS A $ 694 $ 998
CLASS B $ 228 $ 703
CLASS C $ 228 $ 703
Because the Fund has no operating history for these share classes, these expense
figures are based on estimated amounts for the Fund's first fiscal year.
--------------------------------------------------------------------------------
QUAKER MID-CAP VALUE FUND
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund's investment objective is long-term growth of capital. Current income
is not a significant investment consideration, and any such income realized will
be considered incidental to the Fund's investment objective.
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Advisor 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 Advisor 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.
The Fund's Advisor 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 Advisor defines long-term as a time horizon of at
least three years. To identify companies that have significant growth potential,
the Advisor employs a value-oriented approach to stock selection. To choose the
securities in which the Fund will invest, the Advisor 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;
17
<PAGE>
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 Advisor employs
its own proprietary cash-flow based, dividend discount analytical model. The
Advisor 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 unaffiliated 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
Advisor to adopt a temporary defensive investment position in the market. When
the Advisor 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?
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.
Value Risk- The Fund's Advisor 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 Advisor'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.
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.
18
<PAGE>
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.
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.
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.
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.
19
<PAGE>
PERFORMANCE BAR
CHART AND TABLE
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 (1)
[GRAPHIC OMITTED}
Year Ended
12/31/98
7.84%
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%
1. Because the Fund is offering Class A, B and C shares for the first time in
this prospectus, the returns shown in the Bar Chart and table above are for
a class of Fund shares not offered by this Prospectus. However, Class A, B
and C shares of the Fund would have substantially similar returns to the
returns shown above because all share classes are invested in the same
portfolio of securities. The returns shown above will differ from the
returns achieved by the Class A, B and C shares only to the extent that the
various classes do not have the same ongoing expenses and sales charges.
** The S&P 400 Mid-Cap Index is a widely recognized, unmanaged index of
approximately 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.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHAREHOLDER FEES:
-----------------
(fees paid directly from your investment)
<S> <C> <C> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES 5.50% NONE NONE
(As a percentage of offering price)
MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE 5.00%(1) NONE
(As a percentage of redemption proceeds)
REDEMPTION FEES NONE NONE 1.00%(2)
20
<PAGE>
ANNUAL FUND OPERATING EXPENSES: CLASS A CLASS B CLASS C
------------------------------ ------- ------- -------
(expenses that are deducted from Fund assets)
MANAGEMENT FEES (3) 1.00% 1.00% 1.00%
DISTRIBUTION & SERVICING (12b-1) FEES (4) 0.25% 1.00% 1.00%
OTHER EXPENSES (5) 0.25% 0.25% 0.25%
----- ----- -----
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.50% 2.25% 2.25%
</TABLE>
1. The maximum deferred sales charge of 4.00% is charged to shares redeemed
within the first year of purchase. These deferred sales charges decline to
0.00% over a period of five years. Please see "How to Buy & Sell Shares" ,
"Variable Pricing System" in this Prospectus.
2. If you redeem your shares within thirteen months of purchase, you will be
charged a fee of 1.00% of the redemption proceeds. Please see "How to Buy &
Sell Shares" , "Variable Pricing System" in this Prospectus.
3. 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.
4. 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.
5. Other Expenses include fees paid to the Fund's transfer agent,
administrator and other service providers. Because the Fund is offering
these share Classes for the first time, these fees are estimated.
EXAMPLE: THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN
THE FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.
THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL YOUR SHARES AT THE END OF THOSE PERIODS. THE
EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND THAT THE
FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL COSTS MAY BE
HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD BE:
1 YEAR 3 YEARS
------ -------
CLASS A $ 694 $ 998
CLASS B $ 785 $ 1024
CLASS C $ 329 $ 703
IF YOU DID NOT REDEEM YOUR SHARES, YOUR EXPENSES WOULD BE:
1 YEAR 3 YEARS
------ -------
CLASS A $ 694 $ 998
CLASS B $ 228 $ 703
CLASS C $ 228 $ 703
Because the Fund has no operating history for these share classes, these expense
figures are based on estimated amounts for the Fund's first fiscal year.
--------------------------------------------------------------------------------
21
<PAGE>
QUAKER SMALL-CAP VALUE FUND
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund's investment objective is long-term growth of capital. Current income
is not a significant investment consideration, and any such income realized will
be considered incidental to the Fund's investment objective.
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Advisor 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 Advisor believes show a
high probability of superior prospects for above average total return.
Under normal conditions, at least 65% of the Fund's total assets will be
invested in equity securities of small capitalization companies, as measured by
the Russell 2500 Index (current range).
In selecting portfolio companies, the Fund's Advisor 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 Advisor 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 market capitalizations similar to the companies in the Russell 2000
Index. The resulting stocks are divided into 11 peer groups or sectors. Within
each group, the Advisor identifies the most attractive stocks by considering a
number of balance sheet and income statement criteria. The Advisor 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.
22
<PAGE>
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 unaffiliated 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
Advisor to adopt a temporary defensive investment position in the market. When
the Advisor 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?
General Risks- All investments are subject to inherent risks, and the Fund is no
exception. Accordingly, you may lose money by investing in the Fund. When you
sell your Fund shares, they may be worth more or less than what you paid for
them because the value of the Fund's investments will vary from day-to-day,
reflecting changes in market conditions, interest rates and numerous other
factors.
Stock Market Risk- The stock market tends to trade in cyclical price patterns,
with prices generally rising or falling over sustained periods of time. The Fund
invests primarily in common stocks, so the Fund will be subject to the risks
associated with common stocks, including price volatility and the
creditworthiness of the issuing company.
Value Risk- The Fund's Advisor 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 Advisor'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.
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:
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.
23
<PAGE>
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.
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.
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 (1)
[GRAPHIC OMITTED]
Year Ended Year Ended
12/31/97 12/31/98
41.47% 5.15%
Best Quarter: 2nd Qtr 1997 20.14%
Worst Quarter: 3rd Qtr 1998 (18.19)%
24
<PAGE>
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%
1. Because the Fund is offering Class A, B and C shares for the first time in
this prospectus, the returns shown in the Bar Chart and table above are for
a class of Fund shares not offered by this Prospectus. However, Class A, B
and C shares of the Fund would have substantially similar returns to the
returns shown above because all share classes are invested in the same
portfolio of securities. The returns shown above will differ from the
returns achieved by the Class A, B and C shares only to the extent that the
various classes do not have the same ongoing expenses and sales charges.
** The Russell 200 Index is a widely recognized, unmanaged index of
approximately 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.
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.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
----------------------------------------------------------------------------------------
SHAREHOLDER FEES:
-----------------
(fees paid directly from your investment)
<S> <C> <C> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES 5.50% NONE NONE
(As a percentage of offering price)
MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE 5.00%(1) NONE
(As a percentage of redemption proceeds)
REDEMPTION FEES NONE NONE 1.00%(2)
ANNUAL FUND OPERATING EXPENSES: CLASS A CLASS B CLASS C
------------------------------ ------- ------- -------
(expenses that are deducted from Fund assets)
MANAGEMENT FEES (3) 1.15% 1.15% 1.15%
DISTRIBUTION & SERVICING (12b-1) FEES (4) 0.25% 1.00% 1.00%
OTHER EXPENSES (5) 0.25% 0.25% 0.25%
----- ----- -----
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.65% 2.40% 2.40%
</TABLE>
1. The maximum deferred sales charge of 4.00% is charged to shares redeemed
within the first year of purchase. These deferred sales charges decline to
0.00% over a period of five years. Please see "How to Buy & Sell Shares" ,
"Variable Pricing System" in this Prospectus.
2. If you redeem your shares within thirteen months of purchase, you will be
charged a fee of 1.00% of the redemption proceeds. Please see "How to Buy &
Sell Shares" , "Variable Pricing System" in this Prospectus.
3. Management fees include a base fee of 0.90% for investment advisory
services and 0.25% for administrative services provided to the Fund by the
Fund's Sponsor. The Adviser may receive additional compensation based on
investment performance. Please see "The Funds' Investment Advisors and
Sponsor": "For the Quaker Small-Cap Value Fund" in this Prospectus.
25
<PAGE>
4. 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.
5. Other Expenses include fees paid to the Fund's transfer agent,
administrator and other service providers. Because the Fund is offering
these share Classes for the first time, these fees are estimated.
EXAMPLE: THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN
THE FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.
THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL YOUR SHARES AT THE END OF THOSE PERIODS. THE
EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND THAT THE
FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL COSTS MAY BE
HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD BE:
1 YEAR 3 YEARS
------ -------
CLASS A $ 709 $1,042
CLASS B $ 780 $1,068
CLASS C $ 344 $ 748
IF YOU DID NOT REDEEM YOUR SHARES, YOUR EXPENSES WOULD BE:
1 YEAR 3 YEARS
------ -------
CLASS A $ 709 $1,042
CLASS B $ 243 $ 748
CLASS C $ 243 $ 748
Because the Fund has no operating history for these share classes, these expense
figures are based on estimated amounts for the Fund's first fiscal year.
--------------------------------------------------------------------------------
QUAKER FIXED INCOME FUND
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund's investment objective is to generate current income, preserve capital,
and maximize total returns through active management of investment grade fixed
income securities. 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 Advisor 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;
26
<PAGE>
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 Advisor determines the optimal duration target for the Fund and
determines which of the Fund's permissible investments has the highest relative
valuations. The Advisor then constructs and closely monitors a portfolio of the
securities described below that it feels will most likely achieve its
anticipated performance.
U.S. GOVERNMENT SECURITIES. The Fund invests in U.S. Government Securities, such
as U.S. Treasury notes, U.S. Treasury bonds, and U.S. Treasury bills; securities
guaranteed by the U.S. Government such as Government National Mortgage
Association ("GNMA"); and securities issued by U.S. Government agencies and
instrumentalities. Securities of some U.S. Government sponsored entities are
supported by the full faith and credit of the U.S. Government (e.g. GNMA), some
are supported by the right of the issuer to borrow from the U.S. Government
(e.g. FNMA, FHLMC), and some are supported only by the credit of the issuer
itself (e.g. SLMA, FFCB). You should be aware that the U.S. Government is not
obligated to support U.S. Government agencies or instrumentalities in the
future, other than as set forth above.
MORTGAGE PASS-THROUGH CERTIFICATES. 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.
27
<PAGE>
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 Advisor 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' Advisor.
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.
28
<PAGE>
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
Advisor, 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.
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.
29
<PAGE>
PERFORMANCE BAR
CHART AND TABLE
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 (1)
[GRAPHIC OMITTED]
Year Ended Year Ended
12/31/97 12/31/98
8.11% 8.52%
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)%
1. Because the Fund is offering Class A, B and C shares for the first time in
this prospectus, the returns shown in the Bar Chart and table above are for
a class of Fund shares not offered by this Prospectus. However, Class A, B
and C shares of the Fund would have substantially similar returns to the
returns shown above because all share classes are invested in the same
portfolio of securities. The returns shown above will differ from the
returns achieved by the Class A, B and C shares only to the extent that the
various classes do not have the same ongoing expenses and sales charges.
** 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.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
----------------------------------------------------------------------------------------
SHAREHOLDER FEES:
-----------------
(fees paid directly from your investment)
<S> <C> <C> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES 4.25% NONE NONE
(As a percentage of offering price)
MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE 4.00%(1) NONE
(As a percentage of redemption proceeds)
REDEMPTION FEES NONE NONE 1.00%(2)
30
<PAGE>
ANNUAL FUND OPERATING EXPENSES: CLASS A CLASS B CLASS C
------------------------------ ------- ------- -------
(expenses that are deducted from Fund assets)
MANAGEMENT FEES (3) 0.75% 0.75% 0.75%
DISTRIBUTION & SERVICE (12b-1) FEES (4) 0.25% 1.00% 1.00%
OTHER EXPENSES (5) 0.25% 0.25% 0.25%
----- ----- -----
TOTAL ANNUAL FUND
OPERATING EXPENSES 1.25% 2.00% 2.00%
</TABLE>
1. The maximum deferred sales charge of 3.00% is charged to shares redeemed
within the first year of purchase. These deferred sales charges decline to
0.00% over a period of four years. Please see "How to Buy & Sell Shares" ,
"Variable Pricing System" in this Prospectus.
2. If you redeem your shares within thirteen months of purchase, you will be
charged a fee of 1.00% of the redemption proceeds. Please see "How to Buy &
Sell Shares" , "Variable Pricing System" in this Prospectus.
3. Management fees include a fee of 0.50% for investment advisory services and
0.25% for administrative services provided to the Fund by the Fund's
Sponsor.
4. 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.
5. Other Expenses include fees paid to the Fund's transfer agent,
administrator and other service providers. Because the Fund is offering
these share Classes for the first time, these fees are estimated.
EXAMPLE: THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN
THE FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.
THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL YOUR SHARES AT THE END OF THOSE PERIODS. THE
EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND THAT THE
FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL COSTS MAY BE
HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD BE:
1 YEAR 3 YEARS
------ -------
CLASS A $ 503 $ 721
CLASS B $ 589 $ 891
CLASS C $ 284 $ 566
IF YOU DID NOT REDEEM YOUR SHARES, YOUR EXPENSES WOULD BE:
1 YEAR 3 YEARS
------ -------
CLASS A $ 503 $ 721
CLASS B $ 183 $ 566
CLASS C $ 183 $ 566
Because the Fund has no operating history for these share classes, these expense
figures are based on estimated amounts for the Fund's first fiscal year.
--------------------------------------------------------------------------------
31
<PAGE>
THE FUNDS' INVESTMENT ADVISORS & SPONSOR
FOR THE QUAKER CORE EQUITY FUND:
Geewax, Terker & Co. ("GTC") provides the Core Equity Fund with a continuous
program of investment management, including the composition of its portfolio,
and furnishes advice and recommendations with respect to investments, investment
policies and the purchase and sale of securities.
GTC was established as a Pennsylvania partnership in 1982, and is registered as
an investment Advisor 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 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.
32
<PAGE>
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 QUAKER LARGE-CAP VALUE AND MID-CAP VALUE FUNDS:
Compu-Val Investments, Inc. ("CVI") provides the Large-Cap Value Fund and the
Mid-Cap Value Fund with a continuous program of investment management, including
the composition of its portfolio, and furnishes advice and recommendations with
respect to investments, investment policies and the purchase and sale of
securities, pursuant to an Investment Advisory Agreement ("Advisory Agreement")
with the Trust.
CVI was established as a Delaware corporation in 1974 and is registered under
the Investment Advisors Act of 1940, as amended. CVI currently serves as
investment advisor to over $170 million in assets. CVI has been rendering
investment counsel, utilizing investment strategies substantially similar to
that of the 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 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 Advisor 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
33
<PAGE>
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 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 Advisor 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
34
<PAGE>
portfolio since its inception. Mr. Angell has been with FAM since its inception
in June 1994. Previously Mr. Angell was Corporate Director, Fixed Income
Portfolio Manager with General Dynamics Corporation.
Under the Advisory Agreement with the Trust, FAM receives a monthly management
fee equal to an annual rate of 0.45% of the average daily net asset value of the
Fixed Income Fund.
THE FUNDS' SPONSOR:
Pursuant to a 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.
HOW TO BUY AND SELL SHARES OF THE FUND
INVESTING IN THE FUND
Determining Share Prices
------------------------
Shares of each Share Class of the Fund are offered at the public offering price
for each share Class. The public offering price is each share's next calculated
net asset value ("NAV"), plus the applicable sales charge, if any. NAV per share
is calculated by adding the value of Fund investments, cash and other assets,
subtracting Fund liabilities, and then dividing the result by the number of
shares outstanding. The Fund generally determines the total value of its shares
by using market prices for the securities comprising its portfolio. Securities
for which quotations are not available and any other assets are valued at fair
market value as determined in good faith by each Fund's Advisor, subject to the
review and supervision of the Board of Trustee. Each Fund's per share NAV and
public offering price is computed on all days on which the New York Stock
Exchange ("NYSE") is open for business, at the close of regular trading hours on
the Exchange, currently 4:00 p.m. Eastern time. In the event that the NYSE
closes early, the share price will be determined as of the time of closing.
Variable Pricing System
-----------------------
Each Fund in the Quaker Family of Funds offers three classes of shares by this
prospectus. The main differences between each class are sales charges and
ongoing fees. In choosing which class of shares to purchase, you should consider
which will be most beneficial to you, given the amount of your purchase and the
length of time you expect to hold the shares. Each share class in any Fund
represent interests in the same portfolio of investments in that Fund. The Trust
also offers other classes of shares without sales loads.
35
<PAGE>
CLASS A SHARES.
Class A shares are offered at their public offering price, which is net asset
value per share plus the applicable sales charge. The sales charge varies,
depending on how much you invest. There are no sales charges on reinvested
distributions. The following sales charges apply to your purchases of Class A
shares of each Fund except the Quaker Fixed-Income Fund:
SALES CHARGE SALES CHARGE
AS A % OF AS A % OF DEALER
AMOUNT INVESTED OFFERING PRICE NET AMOUNT INVESTED REALLOWANCE
--------------- -------------- ------------------- -----------
Less than $ 49,999 5.50% 5.82% 5.00%
$50,000 to $ 99,999 4.75% 4.99% 4.25%
$100,000 to $249,999 3.75% 3.76% 3.25%
$250,000 to $499,999 2.75% 2.76% 2.50%
$500,000 to $999,999 2.00% 2.00% 1.75%
$1,000,000 or more* 0.00% 0.00% 0.00%
The following sales charges apply to your purchases of Class A shares of the
Quaker Fixed-Income Fund:
SALES CHARGE SALES CHARGE
AS A % OF AS A % OF DEALER
AMOUNT INVESTED OFFERING PRICE NET AMOUNT INVESTED REALLOWANCE
--------------- -------------- ------------------- -----------
Less than $ 99,999 4.25% 4.44% 4.00%
$100,000 to $249,999 3.75% 3.89% 3.50%
$250,000 to $499,999 2.75% 2.83% 2.50%
$500,000 to $999,999 2.00% 2.04% 1.75%
$1,000,000 or more* 0.00% 0.00% 0.00%
*Brokers who sell shares in single lots of $1 million or more will receive a
commission of 1% of the total purchase amount from the Sponsor. However, if the
purchasing shareholder redeems shares within thirteen months of purchase, the
shareholder will be charged a 1% contingent deferred sales charge on the
redemption proceeds. This charge will be paid to the Sponsor to offset the
expense of the commission previously paid.
If you are a participant in a qualified employee retirement benefit plan with at
least 100 eligible employees, you may purchase Class A shares without any sales
charges. However, if you redeem your shares within one year of purchase, you
will be charged a fee of 1.00% of the redemption proceeds.
Declaration Distributors, Inc, ("DDI") the Trust's principal underwriter, will
pay the appropriate dealer concession to those selected dealers who have entered
into an agreement with DDI to sell shares of the Funds. The dealer's concession
may be changed from time to time. DDI may from time to time offer incentive
compensation to dealers who sell shares of the Funds subject to sales charges,
allowing such dealers to retain an additional portion of the sales load. A
dealer who
36
<PAGE>
receives all of the sales load may be deemed to be an "underwriter" under the
Securities Act of 1933, as amended.
Exemptions from sales charges
-----------------------------
The Trust will waive sales charges for purchases by fee-based registered
investment Advisors for their clients, broker/dealers with wrap fee accounts,
registered investment Advisors or brokers for their own accounts, employees and
employee related accounts of the Advisor, and for an organization's retirement
plan that places either (i) 200 or more participants or (ii) $300,000 or more of
combined participant initial assets into the Funds, in the aggregate. For
purchasers that qualify for fee waiver, shares will be purchased at net asset
value.
Reduced sales charges
---------------------
You may qualify for a reduced sales charge by aggregating the net asset value of
all your load shares previously purchased in all Funds with the dollar amount of
shares to be purchased. For example, if you already owned Class A shares in the
Fund with a combined aggregate net asset value of $450,000, and you decided to
purchase an additional $60,000 of Class A shares of any Fund except the
Fixed-Income Fund, there would be a sales charge of 2.00% on your $60,000
purchase instead of the normal 4.75% on that purchase, because you had
accumulated more than $500,000 total in the Funds.
Letter of intent
----------------
You can immediately qualify for a reduced or eliminated sales charge by signing
a non-binding letter of intent stating your intention to buy an amount of shares
in the Fund(s) during the next thirteen (13) months sufficient to qualify for
the reduction. Your letter will not apply to purchases made more than 90 days
prior to the letter. During the term of your letter of intent, the transfer
agent will hold in escrow shares representing the highest applicable sales load
for the Fund(s) each time you make a purchase. Any shares you redeem during that
period will count against your commitment. If, by the end of your commitment
term, you have purchased all the shares you committed to purchase, the escrowed
shares will be released to you. If you have not purchased the full amount of
your commitment, your escrowed shares will be redeemed in an amount equal to the
sales charge that would apply if you had purchased the actual amount in your
account all at once. Any escrowed shares not needed to satisfy that charge would
be released to you.
CLASS B SHARES
Unlike Class A shares, Class B shares are sold at net asset value without an
initial sales charge. Instead, a Contingent Deferred Sales Charge ("CDSC") is
imposed on certain redemptions of Class B shares. This means that all of your
initial investment is invested in the Fund(s) of your choice, and you will only
incur a sales charge if you redeem shares within five years. In that case, a
CDSC may be imposed on your redemption. If a CDSC is imposed, it will be
calculated on an amount equal to the lesser of the current market value or the
original cost of the shares redeemed. What this means is that no sales charge is
imposed on increases in the net asset value of your shares above their original
purchase price. Also, no charge is assessed on shares derived from reinvestment
of dividend or capital gains distributions.
37
<PAGE>
The amount of the CDSC, if any, varies depending on the number of years you have
held your shares. To determine that time period, all purchases made in any month
are aggregated together and deemed to have been made on the last day of the
month. For Class B shares of all Funds except the Fixed-Income Fund, the
following CDSC charges apply:
Redemption Within CDSC as a Percentage
Of Redemption Proceeds
--------------------------------------------------------
1st Year.................................5.00%
2nd Year..................................4.00%
3rd Year.................................3.00%
4th Year.................................3.00%
5th Year.................................2.00%
6th Year.................................1.00%
7th Year and Thereafter....................None
For Class B shares of the Fixed-Income Fund and the High Yield Fund, the
following CDSC charges apply:
Redemption Within CDSC as a Percentage
Of Redemption Proceeds
--------------------------------------------------------
1st Year.................................4.00%
2nd Year..................................3.00%
3rd Year.................................2.00%
4th Year.................................2.00%
5th Year.................................2.00%
6th Year.................................1.00%
7th Year and Thereafter....................None
When you send a redemption request to the Trust, unless you specify otherwise,
shares not subject to the CDSC are redeemed first, then shares that have been
held the longest, and so on. That way, you will be subject to the smallest
charge possible.
CDSC waivers
------------
The CDSC is waived on redemptions of Class B shares (i) following the death or
disability (as defined in the Code) of a shareholder (ii) in connection with
certain distributions from an IRA or other retirement plan (iii) for annual
withdrawals up to 10% of the value of the account, (iv) pursuant to the right of
the Fund to liquidate a shareholder's account.
Conversion feature
------------------
Class B shares automatically convert to Class A shares once the economic
equivalent of a 4.00% (3.00% for Fixed-Income Fund Class B Shares) sales charge
is recovered by the Fund(s) for each investment account, normally after 5 years
(4 years for the Fixed Income Fund). The sales charge is recoverable by the
Fund(s) through the distribution fees paid under each Fund's Plan of
Distribution for its Class B shares. Class B shares converting to Class A shares
are not subject to additional sales charges.
38
<PAGE>
CLASS C SHARES
Class C Shares are sold at net asset value without an initial sales charge. This
means that 100% of your initial investment is placed into shares of the Fund(s)
of your choice. However, Class C shares pay an annual 12b-1 shareholder
servicing fee of 0.25% of average daily net assets and an additional
distribution fee of 0.75% per annum of average daily net assets.
In order to recover commissions paid to dealers on investments in Class C
Shares, you will be charged a contingent deferred sales charge ("CDSC") of 1.00%
of the value of your redemption if you redeem your shares within thirteen months
from the date of purchase. You will not be charged a CDSC on reinvested
dividends or capital gains, amounts purchased more than one year prior to the
redemption, and increases in the value of your shares.
FACTORS TO CONSIDER WHEN CHOOSING A SHARE CLASS
When deciding which class of shares to purchase, you should consider your
investment goals, present and future amounts you may invest in the Fund(s), and
the length of time you intend to hold your shares. You should consider, given
the length of time you may hold your shares, whether the ongoing expenses of
Class C or Class B shares will be greater than the front-end sales charge of
Class A shares, and to what extent such differences may be offset by the lower
ongoing expenses on Class A shares. To help you make a determination as to which
class of shares to buy, please refer back to the examples of each Fund's
expenses over time in the "FUNDS" Section of this Prospectus.
Distribution Fees
-----------------
Quaker Investment Trust (the "Trust") has adopted distribution 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 Class A Plan, the Class A shares of each Fund compensate the Sponsor
and others for distribution expenses at a maximum annual rate of 0.25% (of
which, the full amount may be service fees), payable on a monthly basis, of each
Fund's average daily net assets attributable to Class A shares.
Under the Class B Plan, the Class B Shares of the Fund compensate the Sponsor
and others for distribution and service fees at an annual rate of 1.00% (0.25%
of which is a service fee) payable on a monthly basis, of each Fund's average
daily net assets attributable to Class B shares. Amounts paid under the Class B
Plan are paid to the Sponsor and others to compensate them for services provided
and expenses incurred in the distribution of Class B shares, including the
paying of commissions for sales of Class B shares. The Class B Plan is designed
to allow investors to purchase Class B shares without incurring a front-end
sales load and to permit the distributor to compensate authorized dealers for
selling such shares. Accordingly, the Class B Plan combined with the CDSC for
Class B shares is to provide for the financing of the distribution of Class B
shares. 12b-1 fees payable on Class B shares will be paid to the Sponsor for the
first thirteen months after the shares are purchased.
39
<PAGE>
Under the Class C Plan, Class C Shares of each Fund compensate the Sponsor and
others for distribution and service fees at an annual rate of 1.00% (0.75% of
which is a distribution fee) payable on a monthly basis, of each Fund's average
daily net assets attributable to Class C shares. Amounts paid under the Class C
Plan are paid to the Sponsor and others to compensate it for services provided
and expenses incurred in the distribution of Class C shares, including the
paying of ongoing shareholder servicing fees to persons who have sold Class C
shares. The Class C Plan is designed to allow investors to purchase Class C
shares without incurring a front-end sales load or a CDSC charge, and to permit
the distributor to compensate authorized dealers for selling such shares.
Accordingly, the Class C Plan's purpose is to provide for the financing of the
distribution of Class C shares. 12b-1 fees payable on Class C shares will be
paid to the Sponsor for the first thirteen months after the shares are
purchased.
The Distribution Plans provide that the Funds may finance activities which are
primarily intended to result in the sale of the Funds' shares, including but not
limited to, advertising, printing of prospectuses and reports for other than
existing shareholders, preparation and distribution of advertising materials and
sales literature, and payments to dealers and shareholder servicing agents.
The Distribution Plans are reviewed annually by the Trust's Board of Trustees,
and may be renewed only by majority vote of the shareholders of the Funds'
Classes, or by majority vote of the Board, and in both cases also a majority
vote of the "disinterested" Trustees of the Trust, as that term is defined in
the 1940 Act.
Minimum Investment Amounts
--------------------------
Payments for Fund shares should be in U.S. dollars, and in order to avoid fees
and delays, should be drawn on a U.S. bank. Fund management may reject any
purchase order for Fund shares and may waive the minimum investment amounts in
its sole discretion.
Your purchase of Fund shares is subject to the following minimum investment
amounts:
MINIMUM MINIMUM
TYPE OF INVESTMENT SUBSEQUENT
ACCOUNT TO OPEN ACCOUNT INVESTMENTS
--------------------------------------------------------------------------------
REGULAR $2,000 $1000
IRAs $1,000 $ 100
================================================================================
AUTOMATIC INVESTMENT PLAN MEMBERS
MINIMUM MINIMUM
TYPE OF INVESTMENT SUBSEQUENT
ACCOUNT TO OPEN ACCOUNT INVESTMENTS
--------------------------------------------------------------------------------
REGULAR $2,000 $100 per month minimum
IRAs $2,000 $100 per month minimum
================================================================================
40
<PAGE>
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 (# 610-832-1067) 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:
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.
41
<PAGE>
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 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.
42
<PAGE>
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.
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, less any
applicable CDSC. 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
43
<PAGE>
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."
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.
44
<PAGE>
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 $2000, the Trust
may notify you that, unless your account is increased to $2000 in value, it will
redeem all your shares and close the account by paying you the redemption
proceeds and any dividends and distributions declared and unpaid at the date of
redemption. You will have thirty days after notice to bring the account up to
$2000 before any action is taken. This right of redemption shall not apply if
the value of your account drops below $2000 as the result of market action. The
Trust reserves this right because of the expense to the Fund of maintaining
relatively small accounts.
Exchange Feature.
-----------------
You may exchange your shares of any Fund for the same share class of any other
Fund of the Trust without incurring any additional sales charges. An exchange
involves the simultaneous redemption of shares of one Fund and purchase of
shares of another Fund at the respective closing net asset value next determined
after a request for redemption has been received, and is a taxable transaction.
Shares of each Fund may be exchanged for shares of any other Fund of the Trust
at the net asset value. You may direct the Trust to exchange your shares by
contacting the Transfer Agent. The request must be signed exactly as the
investor's name appears on the account, and it must also provide the account
number, number of shares to be exchanged, the name of the series to which the
exchange will take place and a statement as to whether the exchange is a full or
partial redemption of existing shares.
A pattern of frequent exchange transactions may be deemed by the Distributor to
be an abusive practice that is not in the best interests of the shareholders of
the Funds. Such a pattern may, at the discretion of the Distributor, be limited
by that Fund's refusal to accept further purchase and/or exchange orders, after
providing the investor with 60 days prior notice. The Distributor will consider
all factors it deems relevant in determining whether a pattern of frequent
purchases, redemptions and/or exchanges by a particular investor is abusive and
not in the best interests of the Funds or its other shareholders. The Board of
Trustees of the Trust reserves the right to suspend or terminate, or amend the
terms of, the exchange privilege upon 60 days written notice to the
shareholders.
45
<PAGE>
Systematic Withdrawal Plan.
---------------------------
Shareholders owning shares with a value of $10,000 or more may establish a
Systematic Withdrawal Plan. A shareholder may receive monthly or quarterly
payments, in amounts of not less than $100 per payment, by authorizing the Funds
to redeem the necessary number of shares periodically (each month, or quarterly
in the months of March, June, September and December) in order to make the
payments requested. Each Fund has the capacity of electronically depositing the
proceeds of the systematic withdrawal directly to the shareholder's personal
bank account ($5,000 minimum per bank wire). Instructions for establishing this
service are included in the Fund Shares Application, enclosed in the Prospectus,
or available by calling the Trust. If you prefer to receive systematic
withdrawal proceeds in cash, or if such proceeds are less than the $5,000
minimum for a bank wire, checks will be made payable to the designated recipient
and mailed within 7 days of the valuation date. If the designated recipient is
other than the registered shareholder, the signature of each shareholder must be
guaranteed on the application (see "Signature Guarantees"). A corporation (or
partnership) must also submit a "Corporate Resolution" (or "Certification of
Partnership") indicating the names, titles and required number of signatures
authorized to act on its behalf. The application must be signed by a duly
authorized officer(s) and the corporate seal affixed. No redemption fees are
charged to shareholders under this plan. Costs in conjunction with the
administration of the plan are borne by the Funds. Shareholders should be aware
that such systematic withdrawals may deplete or use up entirely their initial
investment and may result in realized long-term or short-term capital gains or
losses. The Systematic Withdrawal Plan may be terminated at any time by the
Funds upon sixty days written notice or by a shareholder upon written notice to
the Funds. Applications and further details may be obtained by calling the Funds
at 800-220-8888, or by writing to the Transfer Agent.
DIVIDENDS AND DISTRIBUTIONS
Dividends paid by the Funds are derived from their net investment income. Net
investment income will be distributed at least annually. The Funds' net
investment income is made up of dividends received from the stocks and other
securities they hold, as well as interest accrued and paid on any other
obligations that might be held in their portfolios.
The Funds realize capital gains when they sell a security for more than they
paid for it. The Funds may make distributions of their net realized capital
gains (after any reductions for capital loss carry forwards), generally, once a
year.
Unless you elect to have your 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.
46
<PAGE>
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 Advisor 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 Funds. The
information contained below is for a class of shares not offered by this
prospectus. However, since all share classes of each Fund are invested in the
same portfolio of securities, the returns shown below will vary only to the
extent that the various share classes have different sales charges and ongoing
expenses.
47
<PAGE>
THE CORE EQUITY FUND
FOR THE PERIOD
YEAR YEAR FROM NOVEMBER
ENDED ENDED 25, 1996 (START OF
JUNE 30, JUNE 30, OPERATIONS) TO
1999 1998 JUNE 30, 1997
---------------------------------------
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%
(a) annualized
(b) Aggregate Total Return, not annualized
--------------------------------------------------------------------------------
THE AGGRESSIVE GROWTH FUND
FOR THE PERIOD
YEAR YEAR FROM NOVEMBER
ENDED ENDED 25, 1996 (START OF
JUNE 30, JUNE 30, OPERATIONS) TO
1999 1998 JUNE 30, 1997
----------------------------------------
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
---------- ---------- ----------
48
<PAGE>
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%
(a) annualized
(b) Aggregate Total Return, not annualized
--------------------------------------------------------------------------------
THE LARGE-CAP VALUE FUND
FOR THE PERIOD
YEAR YEAR FROM NOVEMBER
ENDED ENDED 25, 1996 (START OF
JUNE 30, JUNE 30, OPERATIONS) TO
1999 1998 JUNE 30, 1997
----------------------------------------
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)
49
<PAGE>
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%
(a) annualized
(b) Aggregate Total Return, not annualized
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
50
<PAGE>
THE SMALL-CAP VALUE FUND
FOR THE PERIOD
YEAR YEAR FROM NOVEMBER
ENDED ENDED 25, 1996 (START OF
JUNE 30, JUNE 30, OPERATIONS) TO
1999 1998 JUNE 30, 1997
----------------------------------------
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%
(a) annualized
(b) Aggregate Total Return, not annualized
--------------------------------------------------------------------------------
THE FIXED INCOME FUND
FOR THE PERIOD
YEAR YEAR FROM NOVEMBER
ENDED ENDED 25, 1996 (START OF
JUNE 30, JUNE 30, OPERATIONS) TO
1999 1998 JUNE 30, 1997
----------------------------------------
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
-------- -------- ---------
51
<PAGE>
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%
(a) annualized
(b) Aggregate Total Return, not annualized
52
<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, as Amended May 2, 2000 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
53
