Combined annual
report for
Marketvest Equity Fund
Marketvest Pennsylvania
Intermediate Municipal Bond Fund
Marketvest Short-Term Bond Fund
Marketvest Intermediate U.S.
Government Bond Fund
February 1997
Table of Contents
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PRESIDENT'S MESSAGE........................................................ 1
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INVESTMENT REVIEWS......................................................... 3
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SHAREHOLDER MEETING RESULTS............................................... 15
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PORTFOLIOS OF INVESTMENTS................................................. 16
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES....................................... 31
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STATEMENTS OF OPERATIONS................................................... 32
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS........................................ 33
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FINANCIAL HIGHLIGHTS....................................................... 34
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS.............................................. 36
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS.......................... 41
- --------------------------------------------------------------------------------
DIRECTORS/TRUSTEES AND OFFICERS............................................ 42
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President's Message
Dear Shareholder:
I am pleased to present the first Annual Report of the Marketvest Group of
Funds, which covers the eleven-month period from April 1, 1996--the date of
initial public investment in the funds--through February 28, 1997.
Inside, you will find complete financial information for your Marketvest fund
investment, including a discussion with the portfolio manager, a listing of fund
holdings, and the financial statements. I suggest that you take time to review
this report and familiarize yourself with your fund's strategy and holdings.
Please note the following highlights for each fund over the eleven-month
reporting period:
Consistent with a highly favorable stock market climate, MARKETVEST EQUITY FUND
achieved a strong total return of 22.77%, or 16.92% adjusted for the fund's
sales charge.* The fund paid capital gains totaling $0.19 per share and income
totaling $0.14 per share. Its net asset value rose 19% from the first day of
the reporting period to the last day. By the end of the reporting period,
shareholders entrusted the fund with more than $540 million in net assets.
MARKETVEST PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND rewarded tax-sensitive
Pennsylvania investors with double tax-free dividends totaling $0.40 per
share.** Its net asset value increased by $0.09 from the first day of the
reporting period to the last day of the reporting period. The fund's total
return was 5.03%, or 1.38% adjusted for the fund's sales charge.* Tax-sensitive
Pennsylvania residents had invested more than $221 million in the fund by the
end of the reporting period.
MARKETVEST SHORT-TERM BOND FUND, which offers a relatively conservative
approach to bond investing, paid dividends totaling $0.49 per share, while
producing a total return of 4.49%, or 0.86% adjusted for the fund's sales
charge.* At the end of the reporting period, its net asset value was $9.95, a
slight decline over the $10.00 share price on the first day of the reporting
period. Net assets stood at $146 million at the end of the reporting period.
MARKETVEST INTERMEDIATE U.S. GOVERNMENT BOND FUND, a portfolio of
intermediate-maturity government securities, paid dividends totaling $0.59 per
share. The fund's total return was 4.18%, or 0.56% adjusted for the fund's
sales charge.* Net asset value declined slightly from $10.00 on the first day
of the reporting period to $9.82 on the last day of the reporting period. By
the end of the reporting period, the fund's net assets stood at $259 million.
- ---------
* Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
** Income may be subject to the federal alternative minimum tax.
Thank you for putting your money to work toward your financial goals through the
Marketvest Group of Funds. Each fund is managed by experts at Dauphin Deposit
Bank and Trust Company to bring you and other shareholders professionally
managed investment opportunities from key financial markets.
You have our commitment to provide the highest level of service as we keep you
up-to-date on a regular basis.
Sincerely,
[LOGO]
Edward C. Gonzales
President
April 15, 1997
Investment Reviews
MARKETVEST EQUITY FUND
Q Despite periods of turbulence, the stock market continued its
record-breaking climb during the reporting period--with the Dow Jones
Industrial average reaching the 7000 milestone. How did Marketvest Equity
Fund perform in this environment versus the market overall?
A During its first year of operation, Marketvest Equity Fund more than held
its own in performance. Particularly impressive was how the fund performed
during the third quarter, the most turbulent period of the calendar year.
The value oriented approach of the fund weathered the ups and downs of the
broader markets, beating the Standard & Poors' 500 Index ("S&P 500")*
performance of 3.09% with a showing of 4.31% for that period. For the period
April 1, 1996 to February 28, 1997, the fund reported a total return of 22.77%**
versus total returns of 17.40% for the Lipper Growth Fund Average* and 24.96%
for the S&P 500.
Q Marketvest Equity Fund is managed to bring shareholders long-term growth
opportunities by focusing on undervalued stocks. As we discussed in the
fund's previous report, in such a highly valued market, it has become a
challenge to uncover stocks that meet the fund's criteria. Do any particular
sectors continue to offer value in this market?
A We continue to identify selective issues within the technology, energy and
interest sensitive groups that appear to offer good value in the current
market environment.
Q What are your current weightings among the different market sectors?
A As of the end of the reporting period, the fund's holdings were allocated
among the different market sectors as follows:
<TABLE>
<S> <C>
Consumer Products--Non Durable 26.6%
Capital and Intermediate Goods 23.2%
Interest Sensitive 17.4%
Technology 15.4%
Energy 10.6%
Consumer Products--Durable 6.1%
Transportation 0.7%
</TABLE>
* Standard & Poors' 500 Index is an unmanaged broad-based index measuring
changes in stock market conditions based on the average performance of 500
widely held common stocks. Lipper Growth Fund Average is an average of the
total returns for 580 growth funds tracked by Lipper Analytical Services,
Inc., an independent mutual fund rating service. Investments cannot be made
in an index.
** Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. The quoted total return for the fund does not reflect the
sales charge some customers may incur.
Q Can you single out a few holdings added during the reporting period and
comment on their attractiveness?
A Several issues have been added to the portfolio or have had their positions
significantly increased during the reporting period. Each had a strong
performance during the last year and contributed significantly to the
overall strength of the fund. Those issues are: J.P. Morgan, Becton Dickinson,
Travelers Group, Motorola, Texas Instruments and Bausch & Lomb.
Q Do you foresee some type of correction for stocks in 1997?
A History indicates that a meaningful correction is long overdue. On December
31, 1990, the S&P 500 stood at 330.22. By January 31, 1997 it had more than
doubled to 786.16. This unrelenting 455.94 point move to the upside
occurred within a marketplace where not so much as a 10% consolidation took
place along the way. In addition, the stock market completed its sixth
consecutive up year in 1996, unprecedented in the market's history. This is part
of yet another milestone, where the market has risen eleven of the past twelve
years.
Despite this venture into uncharted territory, the equity market continued to
behave amazingly well. Excessive speculation and huge cash reserves flowing into
stock mutual funds have been driving equity valuations to exaggerated extremes.
A meaningful consolidation would put valuations at much more acceptable levels
and, in the process, enhance confidence within the overall equity market.
Marketvest Equity Fund
GROWTH OF $10,000 INVESTED IN MARKETVEST EQUITY FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Marketvest Equity Fund (the "Fund") from April 1, 1996 (start of performance) to
February 28, 1997, compared to the Standard & Poor's 500 Index (S&P 500)+ and
the Lipper Growth Fund Average (LGFA).+
GRAPHIC REPRESENTATION `A1'' OMITTED - SEE APPENDIX.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 4.75% ($10,000 investment minus $475 sales charge
= $9,525). The Fund's performance assumes the reinvestment of all dividends
and distributions. The S&P 500 and LGFA have been adjusted to reflect
reinvestment of dividends on securities in the index and average.
**Total return quoted reflects all applicable sales charges.
+The S&P 500 is not adjusted to reflect sales charges, expenses, or other fees
that the SEC requires to be reflected in the Fund's performance. The index is
unmanaged.
++The LGFA represents the average of the total returns reported by all of the
mutual funds designated by Lipper Analytical Services, Inc. as falling into
the respective category and is not adjusted to reflect any sales charges.
However, these total returns are reported net of expenses or other fees that
the SEC requires to be reflected in a fund's performance.
Marketvest Pennsylvania Intermediate Municipal Bond Fund
Q Compared to a difficult taxable bond market, municipal bonds fared somewhat
better during the reporting period. Can you comment?
A Tax-free bonds outperformed taxable bonds on a total return basis during
the fund's fiscal year. As an example of this, compare the performance of
the two intermediate Marketvest bond funds. The taxable Marketvest
Intermediate U.S. Government Bond Fund had a total return of 4.18% for the
reporting period, while the tax-free Marketvest Pennsylvania Intermediate
Municipal Bond Fund posted a 5.03% total return.* After adjustment of the return
for taxes, the spread becomes even wider.
The taxable market was rocked with volatility and rate increase pressures during
much of 1996. While municipals are affected by market rate increases, and rates
did increase across the yield curve, the past year offers ample evidence that
other factors can significantly impact the municipal market. Throughout 1996,
the municipal market was dominated by simple supply and demand economics,
causing prices to stabilize due to an excess demand for this product.
Q How did Marketvest Pennsylvania Intermediate Municipal Bond Fund perform in
this environment in terms of tax-free income stream and total return?
A The fund had a total return of 5.03%* for the reporting period versus a
total return of 5.35% for the Lehman Brothers Five-Year State General
Obligations Bond Index** and 5.19% for the Lipper Pennsylvania Intermediate
Municipal Debt Funds Average.**
Q In the fund's previous report, you discussed the strategy of moving out the
yield curve, or buying longer-term securities with attractive yield, to
offer investors higher current income. Have you continued this strategy,
and what is the average life of the fund's holdings now?
A The fund has been an active trader since inception, lengthening average
life and consolidating into larger trading positions. As we restructured
our fund to pursue the stated objectives, we moved out the yield curve to
lock up higher coupon issues, significantly increasing our income yield to
customers. The fund ended the reporting period with an average life of 8.5
years.
* Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. The quoted total return for the fund does not reflect the
sales charge some customers may incur.
** Lehman Brothers Five-Year State General Obligations Bond Index is an
unmanaged index comprised of all state general obligation debt issues with
maturities between four and six years. These bonds are rated A or better and
represent a variety of coupon ranges. Index figures are total returns
calculated for one, three, and twelve month periods as well as year-to-date.
Total returns are also calculated as of the index inception, December 31,
1979. Lipper Pennsylvania Intermediate Municipal Debt Funds Average is a
composition of funds that invest at least 65% of their assets in municipal
debt issues which are exempt from taxation in Pennsylvania, with dollar
weighted average maturities of five to ten years. Investments cannot be made
in an index.
Q What is your outlook for the Pennsylvania municipal market for the
remainder of 1997?
A Supply and demand issues should continue to dominate the tax-free market.
Pennsylvania forward supply is thin, indicating the likelihood of a
continuation of stable performance. Although short-term rates are under
increased upward pressure, the intermediate-to-longer end of the municipal curve
has held up well, with smaller increases in rates. The fund is positioned out
the yield curve to weather this rate environment well.
Marketvest Pennsylvania Intermediate Municipal Bond Fund
GROWTH OF $10,000 INVESTED IN MARKETVEST PENNSYLVANIA INTERMEDIATE MUNICIPAL
BOND FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Marketvest Pennsylvania Intermediate Municipal Bond Fund (the "Fund") from April
1, 1996 (start of performance) to February 28, 1997, compared to the Lehman
Brothers Five-Year State General Obligations Bond Index (L5YSGOBI)+ and the
Lipper Pennsylvania Intermediate Municipal Debt Funds Average (LPAIMDFA).+
GRAPHIC REPRESENTATION `A2'' OMITTED - SEE APPENDIX.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 3.50% ($10,000 investment minus $350 sales charge
= $9,650). The Fund's performance assumes the reinvestment of all dividends
and distributions. The L5YSGOBI and the LPAIMDFA have been adjusted to reflect
reinvestment of dividends on securities in the index and average.
**Total return quoted reflects all applicable sales charges.
+The L5YSGOBI is not adjusted to reflect sales charges, expenses, or other fees
that the SEC requires to be reflected in the Fund's performance. The index is
unmanaged.
++The LPAIMDFA represents the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling
into the respective category and is not adjusted to reflect any sales
charges. However, these total returns are reported net of expenses or other
fees that the SEC requires to be reflected in a fund's performance.
Marketvest Short-Term Bond Fund
Q Mixed economic signals and rising rates caused volatility during much of
the reporting period, which was not a stellar time for bonds. Can you give
us a brief review of the market during the reporting period?
A Fears of inflation, fueled by stronger than expected economic growth, led
investors to anticipate a move by the Federal Reserve Board (the "Fed") to
tighten monetary policy in early 1996. The effect was evidenced by the
change in yield on the two-year Treasury Note from just shy of 5.00% in January
to 6.34% by mid-year.
The second half of calendar year 1996 was more positive. By the third quarter,
economic activity had moderated, sending rates downward toward 6.00%. During the
fourth quarter, the bond market continued to rally, buoyed by continued moderate
growth in the economy and the favorable political environment caused by the
November elections. Rates continued to ease throughout the fall, bottoming out
at 5.70%. But, significant strength in the economy during the holiday season
produced a sell-off in prices as the prospect for a pickup in inflation
prevailed. The two-year note ended calendar year 1996 at 5.86%.
Through February 1997, rates continued to move higher, as the probability that
the Fed would increase rates solidified. The two-year note ended the fund fiscal
year yielding 6.08%.
Q How did Marketvest Short-Term Bond Fund's short-term portfolio weather this
environment in terms of income and principal value?
A For most of the year, the fund maintained a duration slightly less than or
equal to that of its peers. Only recently has the fund's duration been
extended to just beyond a neutral position. As one would expect, the rise
in yields, along with a corresponding fall in prices, resulted in a minimal
decline in the principal value of the fund during the reporting period.
Regarding income, the fund remained competitive with similarly structured
investments.
Q How are the fund's assets currently allocated and why?
A Seeking a reliable income stream while protecting principal remains the
goal of the fund. Therefore, the fund continues to follow an orientation
towards high quality holdings. At the end of the reporting period, over 70%
of the fund's portfolio was rated AAA, with the vast majority of the portfolio
being rated A or better. In addition, liquidity characteristics of both
individual issues and industry sectors are closely monitored. This has permitted
the fund to enhance yield and add value through spread products such as
mortgage-backed and asset-backed securities. These sectors represent
approximately 11% of the fund as of March 31, 1997.
Q What factors may influence the direction of rates for the balance of 1997,
and do you anticipate making any portfolio adjustments in response?
A For the balance of 1997, we anticipate that the economy will continue to
grow moderately, with minimal inflationary pressures. Under this scenario,
one would assume that the Fed would maintain its current neutral stance.
However, recent remarks by Fed Chairman Alan Greenspan have sent shock waves
through the financial markets. His primary message focused on the strong stock
market. However, he followed those statements with a comment on interest rates
that a "preemptive policy tightening" may be necessary even before any
inflationary pressures exist.
Based on current economic activity, we are maintaining the duration of the fund
slightly longer than the benchmark. A repositioning may be warranted should the
Fed tighten, economic activity strengthen or inflation rise. Any of these events
may provide a buying opportunity for the fund.
Marketvest Short-Term Bond Fund
GROWTH OF $10,000 INVESTED IN MARKETVEST SHORT-TERM BOND FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Marketvest Short-Term Bond Fund (the "Fund") from April 1, 1997 (start of
performance) to February 28, 1997, compared to the Lehman Brothers 1-3 Year
Government Index (L1-3GI)+ and the Lipper Short Investment Grade Debt Average
(LSIGDA).+
GRAPHIC REPRESENTATION `A3'' OMITTED - SEE APPENDIX.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 3.50% ($10,000 investment minus $350 sales charge =
$9,650). The Fund's performance assumes the reinvestment of all dividends and
distributions. The L1-3GI and the LSIGDA have been adjusted to reflect
reinvestment of dividends on securities in the index and average.
**Total return quoted reflects all applicable sales charges.
+The L1-3GI is not adjusted to reflect sales charges, expenses, or other fees
that the SEC requires to be reflected in the Fund's performance. The index is
unmanaged.
++The LSIGDA represents the average of the total returns reported by all of the
mutual funds designated by Lipper Analytical Services, Inc. as falling into
the respective category and is not adjusted to reflect any sales charges.
However, these total returns are reported net of expenses or other fees that
the SEC requires to be reflected in a fund's performance.
MARKETVEST INTERMEDIATE U.S. GOVERNMENT BOND FUND
Q What is your analysis of the bond market during the reporting period--which
saw rising rates that offered higher income opportunities, with increased
volatility?
A Interest rates increased across the yield curve during 1996, with the
largest increase in the intermediate section of the curve. Higher rates
allowed the fund to reinvest assets at greater income levels, improving the
income stream to clients. At the same time, increased interest rates meant a
decrease in bond portfolio prices, which dragged total return figures down.
This environment has led to greater volatility in the bond market as investment
advisers look for trading opportunities. In effect, the bond market has become
almost as volatile as the stock market. This increase in opportunity leads us to
look to add value by exploring other sectors of the bond market.
Q How did Marketvest Intermediate U.S. Government Bond Fund perform in terms
of income and total return in this environment?
A The fund had a total return of 4.18%* since inception. This lags the
performance of the fund's benchmarks, which were 5.53% for the Lehman
Brothers Intermediate Government/Corporate Bond Index and 5.03% for the
Lipper Intermediate U.S. Government Funds Average.** This was to be expected as
we spent most of the fiscal year short to each index. Throughout the year, we
moved out the yield curve to increase the average life and duration of the fund.
By doing so, we increased the current yield of the fund, offering our clients a
higher income stream. By year end, we were long to the Lehman index and slightly
short to the Lipper average as measured by average life. The fund ended the
reporting period at an average life of 7.5 years.
* Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. The quoted total return for the fund does not reflect the
sales charge some customers may incur.
** Lehman Brothers Intermediate Government/Corporate Bond Index is an unmanaged
index comprised of all publicly issued non-convertible domestic debt of the
U.S. government, or any agency thereof, or any quasi-federal corporation. The
index also includes corporate debt guaranteed by the U.S. government. Only
notes and bonds with a minimum outstanding principal of $1 million and a
minimum maturity of one year and maximum maturity of 9.9 years are included.
Lipper Intermediate U.S. Government Funds Average is a composition of funds
that invest at least 65% of their assets in securities issued or guaranteed
by the U.S. government, its agencies or instrumentalities with
dollar-weighted average maturities of five to ten years. Investments cannot
be made in an index.
Q Are you still emphasizing U.S. Treasury and agency securities in the fund's
portfolio? How are the fund's assets currently allocated among Treasury,
Agency and Corporate bonds?
A The fund has been very active in the Treasury market throughout the fiscal
year. We have reduced our holding of short, callable agencies and increased
our holding in treasury notes and bonds. We have emphasized the purchase of
higher coupon issues to increase our current yield. We have also been looking at
corporates and mortgage-backed securities to add value and total return. We have
added select corporates at the short end of the yield curve and utilized
mortgage-backed securities in the intermediate to longer end of the curve. As of
the end of the reporting period, the allocation was as follows:
<TABLE>
<S> <C>
Treasuries 79.0%
Agencies 8.2%
Corporates 8.0%
Cash equivalents 4.8%
</TABLE>
Marketvest Intermediate U.S. Government Bond Fund
GROWTH OF $10,000 INVESTED IN MARKETVEST INTERMEDIATE U.S. GOVERNMENT BOND FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Marketvest Intermediate U.S. Government Bond Fund (the "Fund") from April 1,
1996 (start of performance) to February 28, 1997, compared to the Lehman
Brothers Intermediate Government/Corporate Bond Index (LIGCBI)+ and the Lipper
Intermediate U.S. Government Funds Average (LIUSGFA).+
GRAPHIC REPRESENTATION `A4'' OMITTED - SEE APPENDIX.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 3.50% ($10,000 investment minus $350 sales charge =
$9,650). The Fund's performance assumes the reinvestment of all dividends and
distributions. The LIGCBI and the LIUSGFA have been adjusted to reflect
reinvestment of dividends on securities in the index and average.
**Total return quoted reflects all applicable sales charges.
+The LIGCBI is not adjusted to reflect sales charges, expenses, or other fees
that the SEC requires to be reflected in the Fund's performance. The index is
unmanaged.
++The LIUSGFA represents the average of the total returns reported by all of the
mutual funds designated by Lipper Analytical Services, Inc. as falling into
the respective category and is not adjusted to reflect any sales charges.
However, these total returns are reported net of expenses or other fees that
the SEC requires to be reflected in a fund's performance.
Shareholder Meeting Results
A Special Meeting of Shareholders of Marketvest Equity Fund, Marketvest
Intermediate U.S. Government Bond Fund and Marketvest Short-Term Bond Fund,
series of Marketvest Funds, Inc. (the "Corporation") and Marketvest Pennsylvania
Intermediate Municipal Bond Fund, a series of Marketvest Funds (the "Trust") was
held on December 16, 1996. On November 20, 1996, the record date for
shareholders voting at the meeting, there were 84,981,411 total outstanding
Corporation shares and 22,304,634 total outstanding Trust shares. The following
items were considered and approved by shareholders. The results of their voting
were as follows:
<TABLE>
<CAPTION>
WITHHELD
AUTHORITY TO
AGENDA ITEM FOR AGAINST ABSTAIN VOTE
<S> <C> <C> <C> <C>
1. The election of Directors of the Corporation:
Edward C. Gonzales 84,843,790 0
Clyde M. McGeary 84,843,790 0
Richard Seidel 84,843,790 0
George A. Ominski 84,843,790 0
Martin B. Ebbert, Jr. 84,843,790 0
2. The election of Trustees of the Trust:
Edward C. Gonzales 22,280,323 0
Clyde M. McGeary 22,280,323 0
Richard Seidel 22,280,323 0
George A. Ominski 22,280,323 0
Martin B. Ebbert, Jr. 22,280,323 0
3. The ratification of the selection of the firm of Ernst & Young LLP as independent auditors for the
funds:
For the Corporation: 84,843,790 0 0
For the Trust: 22,280,323 0 0
</TABLE>
MARKETVEST GROUP OF FUNDS
Portfolios of Investments February 28, 1997
MARKETVEST EQUITY FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS--95.4%
Capital & Intermediate
Goods22.1%
Aerospace5.0%
55,538 Lockheed Martin Corp. $ 4,915,154
56,300 Northrop Corp. 4,088,788
120,400 Raytheon Co. 5,673,850
108,100 Rockwell International
Corp. 6,999,475
73,200 United Technologies Corp. 5,508,300
-----------
Total 27,185,567
-----------
Chemicals--4.0%
73,400 Dow Chemical Co. 5,945,400
54,000 Du Pont (E.I.) de Nemours
& Co. 5,791,500
106,000 Lubrizol Corp. 3,670,250
107,800 PPG Industries, Inc. 6,036,800
-----------
Total 21,443,950
-----------
Diversified/Miscellaneous--
3.9%
73,000 Allied-Signal, Inc. 5,274,250
153,000 Pentair, Inc. 4,800,375
108,600 TRW, Inc. 5,687,925
134,600 Tenneco, Inc. 5,299,875
-----------
Total 21,062,425
-----------
Electrical Equipment--1.8%
52,900 Emerson Electric Co. 5,237,100
45,900 General Electric Co. 4,721,963
-----------
Total 9,959,063
-----------
Machinery & Equipment--2.2%
145,900 Deere & Co. 6,218,987
120,400 Ingersoll-Rand Co. 5,719,000
-----------
Total 11,937,987
-----------
Manufacturing/
Distribution--1.1%
70,300 Johnson Controls, Inc. 5,922,775
-----------
Mining/Metals--2.0%
135,200 Alcan Aluminum, Ltd. 4,850,300
82,400 Phelps Dodge Corp. 5,891,600
-----------
Total 10,741,900
-----------
<CAPTION>
Shares Value
<C> <S> <C>
Paper/Forest Products2.1%
62,600 Kimberly-Clark Corp. $ 6,635,600
101,500 Weyerhaeuser Co. 4,694,375
-----------
Total 11,329,975
-----------
Total Capital &
Intermediate Goods 119,583,642
-----------
Consumer Products--Non
Durable--25.4%
Beverages--2.6%
173,400 Anheuser-Busch Cos., Inc. 7,716,300
189,600 PepsiCo, Inc. 6,233,100
-----------
Total 13,949,400
-----------
Cosmetics--1.0%
121,900 Tambrands, Inc. 5,241,700
-----------
Drugs--2.7%
80,300 (a)Amgen, Inc. 4,908,337
285,500 Mylan Laboratories, Inc. 4,782,125
64,100 Schering Plough Corp. 4,911,663
-----------
Total 14,602,125
-----------
Food--2.7%
266,444 Archer-Daniels-Midland
Co. 4,929,214
154,000 Heinz (H.J.) Co. 6,410,250
88,000 Sara Lee Corp. 3,410,000
-----------
Total 14,749,464
-----------
Health Care--4.2%
78,400 Abbott Laboratories 4,410,000
87,200 American Home Products
Corp. 5,580,800
153,000 Becton, Dickinson & Co. 7,535,250
39,700 Bristol-Myers Squibb Co. 5,180,850
-----------
Total 22,706,900
-----------
Household Products--2.0%
46,900 Colgate-Palmolive Co. 4,854,150
31,200 Unilever N.V., ADR 5,943,600
-----------
Total 10,797,750
-----------
Houseware/Home
Furnishings--1.2%
177,000 Newell Co. 6,571,125
-----------
</TABLE>
(See Notes to Portfolios of Investments)
MARKETVEST EQUITY FUND (continued)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS--continued
Medical Equipment/
Supplies--2.5%
51,000 Bausch & Lomb, Inc. $ 1,906,125
108,600 Baxter International,
Inc. 4,995,600
214,800 Diagnostic Products Corp. 6,658,800
-----------
Total 13,560,525
-----------
Merchandise-Mass--1.7%
107,900 Penney (J.C.) Co., Inc. 5,314,075
152,400 Wal-Mart Stores, Inc. 4,019,550
-----------
Total 9,333,625
-----------
Publishing/Printing--1.1%
75,300 Gannett Co., Inc. 6,005,175
-----------
Restaurant--1.0%
127,600 McDonald's Corp. 5,518,700
-----------
Retailers--1.6%
117,000 Albertsons, Inc. 4,124,250
89,300 May Department Stores Co. 4,163,613
-----------
Total 8,287,863
-----------
Textiles--1.1%
84,800 V.F. Corp. 5,893,600
-----------
Total Consumer Products
Non Durable 137,217,952
-----------
Consumer
Product--sDurable--5.8%
Appliances/
Furnishings--1.1%
113,300 Whirlpool Corp. 5,721,650
-----------
Automobile
Manufacturer--1.4%
87,000 Chrysler Corp. 2,947,125
150,200 Ford Motor Co. 4,937,825
-----------
Total 7,884,950
-----------
Automobile Parts--1.5%
49,100 Eaton Corp. 3,522,925
140,300 Echlin, Inc. 4,857,887
-----------
Total 8,380,812
-----------
Hardware/Tools--0.7%
92,400 Snap-On Tools Corp. 3,592,050
-----------
Tire/Rubber--1.1%
107,800 Goodyear Tire & Rubber
Co. 5,686,450
-----------
Total Consumer Products
Durable 31,265,912
-----------
<CAPTION>
Shares Value
<C> <S> <C>
Energy--10.1%
Domestic Oils--5.9%
56,700 Atlantic Richfield Co. $ 7,087,500
84,400 Chevron Corp. 5,443,800
217,800 Occidental Petroleum
Corp. 5,553,900
152,100 Phillips Petroleum Co. 6,293,138
270,800 Sun Co., Inc. 7,311,600
-----------
Total 31,689,938
-----------
International Oils--3.4%
80,900 Amoco Corp. 6,836,050
47,300 Exxon Corp. 4,724,087
56,300 Mobil Corp. 6,910,825
-----------
Total 18,470,962
-----------
Oil Services--0.8%
150,400 Dresser Industries, Inc. 4,568,400
-----------
Total Energy 54,729,300
-----------
Interest Sensitive--16.6%
Banks-Money Center--3.1%
52,600 Bankers Trust New York
Corp. 4,773,450
54,900 Citicorp 6,409,575
52,000 J.P. Morgan & Co., Inc. 5,466,500
-----------
Total 16,649,525
-----------
Banks-Reg--3.7%
138,200 Banc One Corp. 6,098,075
145,000 Barnett Banks, Inc. 6,706,250
142,500 Norwest Corp. 7,089,375
-----------
Total 19,893,700
-----------
Insurance--2.0%
43,000 CIGNA Corp. 6,573,625
82,000 Travelers Group, Inc. 4,397,250
-----------
Total 10,970,875
-----------
Misc (Financial Svs)--0.8%
115,000 Federal National Mortgage
Association 4,600,000
-----------
Utilities-Gas--3.6%
9,606 El Paso Natural Gas 515,121
162,000 Panenergy Corp. 6,905,250
136,900 Questar Corp. 4,963,463
163,800 Williams Cos., Inc. (The) 7,166,250
-----------
Total 19,550,084
-----------
</TABLE>
(See Notes to Portfolios of Investments)
MARKETVEST EQUITY FUND (continued)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS--continued
Utilities-Telephone--3.4%
127,000 BellSouth Corp. $ 5,953,125
117,500 GTE Corp. 5,493,125
65,900 SBC Communications, Inc. 3,789,250
84,700 U.S. West, Inc. 3,049,200
-----------
Total 18,284,700
-----------
Total Interest Sensitive 89,948,884
-----------
Technology--14.7%
Electronics--2.6%
104,700 Avnet, Inc. 6,543,750
135,000 Hewlett-Packard Co. 7,560,000
-----------
Total 14,103,750
-----------
EDP & Office
Equipment--6.6%
89,500 (a)Compaq Computer Corp. 7,092,875
98,500 (a)Dell Computer Corp. 7,005,812
41,800 International Business
Machines Corp. 6,008,750
153,400 (a)Seagate Technology,
Inc. 7,248,150
135,000 Xerox Corp. 8,437,500
-----------
Total 35,793,087
-----------
Mini Computers--0.7%
100,000 Micron Technology, Inc. 3,750,000
-----------
Semi-Conductors/
Related--2.8%
29,000 Intel Corp. 4,114,375
106,900 Motorola, Inc. 5,973,038
66,400 Texas Instruments, Inc. 5,121,100
-----------
Total 15,208,513
-----------
Software & Services--1.0%
125,000 Computer Associates
International, Inc. 5,437,500
-----------
Tele-Communication--1.0%
115,700 Sprint Corp. 5,264,350
-----------
Total Technology 79,557,200
-----------
<CAPTION>
Shares or
Principal
Amount Value
<C> <S> <C>
Transportation--0.7%
Railroads--0.7%
42,500 Burlington Northern
Santa Fe $ 3,538,125
-----------
TOTAL COMMON STOCKS
(IDENTIFIED COST
$418,972,905) 515,841,015
-----------
(b)REPURCHASE
AGREEMENT--5.9%
$31,915,496 Merrill Lynch, Pierce,
Fenner & Smith, Inc.,
5.30%, dated 2/28/1997,
due 3/3/1997 (at
amortized cost) 31,915,496
-----------
TOTAL INVESTMENTS
(IDENTIFIED COST
$450,888,401) $547,756,511
============
</TABLE>
(See Notes to Portfolios of Investments)
MARKETVEST PENNSYLVANIA INTERMEDIATE
MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(c) Value
<C> <S> <C> <C>
LONG-TERM
MUNICIPAL
SECURITIES--98.1%
General Obligation--52.8%
$1,000,000 Allegheny County, PA
Institution District,
GO UT Refunding Bonds
(Series 18), 6.60%
(MBIA INS), 4/1/1998 AAA $ 1,029,944
1,000,000 Allegheny County, PA
Institution District,
GO UT Refunding Bonds
(Series 18), 6.70%
(MBIA INS), 4/1/1999 AAA 1,052,175
5,000,000 Allegheny County, PA,
GO UT Bonds (Series
C-45), 5.10% (FGIC
INS), 10/1/2007 AAA 5,048,875
1,000,000 Allegheny County, PA,
GO UT Bonds (Series
C-36), 6.375%,
12/1/1997 AA 1,020,090
1,595,000 Bangor, PA Area School
District, GO UT Bonds,
5.35% (FGIC INS),
3/1/2010 AAA 1,609,752
1,390,000 Bensalem Township, PA,
GO UT Bonds, 5.55%
(FGIC INS),
12/1/2010 AAA 1,416,368
1,015,000 Bensalem Township, PA,
GO UT Bonds, 5.70%
(FGIC INS),
12/1/2012 AAA 1,039,614
1,000,000 Bethlehem, PA Area
School District, GO UT
Bonds, 5.70% (MBIA
INS), 3/1/2009 AAA 1,045,103
1,000,000 Bethlehem, PA Area
School District, GO UT
Bonds, 5.75% (MBIA
INS)/(Original Issue
Yield: 5.80%), 3/1/2010 AAA 1,037,699
<CAPTION>
Principal Credit
Amount Rating(c) Value
<C> <S> <C> <C>
$1,545,000 Bethlehem, PA Area
School District, GO UT
Bonds, 5.80% (MBIA
INS)/(Original Issue
Yield: 5.80%), 3/1/2011 AAA $ 1,603,118
1,635,000 Bethlehem, PA Area
School District, GO UT
Bonds, 5.85% (MBIA
INS)/(Original Issue
Yield: 5.90%), 3/1/2012 AAA 1,696,373
1,000,000 Bethlehem, PA Area
School District, GO UT
Bonds, 6.35% (United
States Treasury COL)/
(AMBAC INS),
9/1/1999 AAA 1,053,843
5,000,000 Blair County, PA, GO UT
Refunding Bonds, 5.50%
(FGIC INS)/ (Original
Issue Yield: 5.669%),
8/1/2016 Aaa 4,993,840
1,030,000 Buck County, PA, GO UT,
5.375% (Original Issue
Yield: 5.45%),
5/1/2006 AA 1,061,512
1,000,000 Buck County, PA, GO UT
Bonds, 5.15% (Original
Issue Yield: 5.20%),
5/1/2004 AA 1,027,071
1,000,000 Buck County, PA, GO UT
Refunding Bonds (Series
A), 5.60%,
3/1/1998 AA 1,017,141
4,000,000 Burrell, PA School
District, GO UT School
Improvements, 5.25%
(Original Issue Yield:
5.45%), 11/15/2010 AAA 4,008,352
1,000,000 Central Bucks, PA
School District, GO UT
Refunding Bonds, 6.30%,
2/1/2000 Aa 1,055,787
2,000,000 Coatsville, PA School
District, GO UT, 5.40%
(FSA INS), 4/1/2013 Aaa 1,990,000
</TABLE>
(See Notes to Portfolios of Investments)
MARKETVEST PENNSYLVANIA INTERMEDIATE
MUNICIPAL BOND FUND (continued)
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(c) Value
<C> <S> <C> <C>
General
Obligation--continued
$3,000,000 Commonwealth of
Pennsylvania, GO UT ,
5.375% (FGIC INS),
5/15/2005 AAA $ 3,131,274
2,000,000 Commonwealth of
Pennsylvania, GO UT
Bonds (Second Series
A), 6.875% (United
States Treasury PRF),
11/1/1999 (@101.5) AAA 2,170,016
2,000,000 Commonwealth of
Pennsylvania, GO UT
Bonds (Series A),
5.80%, 11/15/2000 AA- 2,098,314
4,000,000 Commonwealth of
Pennsylvania, GO UT
Bonds, 5.375% (FGIC
INS), 5/15/2004 AAA 4,181,976
1,000,000 Commonwealth of
Pennsylvania, GO UT
Refunding Bonds (First
Series A), 6.60%,
6/1/1999 AA- 1,051,111
3,000,000 Commonwealth of
Pennsylvania, GO UT
Refunding Bonds (First
Series), 4.80%
(Original Issue Yield:
4.85%),
4/15/2001 AA- 3,033,423
2,250,000 Commonwealth of
Pennsylvania, GO UT
Refunding Bonds (First
Series), 5.00%
(Original Issue Yield:
5.10%),
5/1/2003 AA- 2,291,702
2,500,000 Commonwealth of
Pennsylvania, GO UT
Refunding Bonds (Second
Series), 4.75% (MBIA
INS), 6/15/1999 AAA 2,536,778
<CAPTION>
Principal Credit
Amount Rating(c) Value
<C> <S> <C> <C>
$2,000,000 Commonwealth of
Pennsylvania, GO UT
Refunding Bonds (Second
Series), 5.30%
(Original Issue Yield:
5.40%), 7/1/1999 AA- $ 2,048,460
5,000,000 Commonwealth of
Pennsylvania, GO UT
Refunding Bonds, 5.375%
(FGIC INS),
11/15/2007 AAA 5,164,185
1,000,000 Commonwealth of
Pennsylvania, GO UT
Series A, 6.50%
(Original Issue Yield:
6.55%), 1/1/2000 AAA 1,060,383
975,000 Delaware County, PA, GO
UT Bonds, 5.30%,
10/1/2007 AA 997,023
1,000,000 Delaware County, PA, GO
UT Bonds, 5.35%,
10/1/2008 AA 1,018,728
2,000,000 Delaware Valley, PA
Regional Finance
Authority, Revenue
Bonds (Series A), 5.90%
(AMBAC INS)/ (Original
Issue Yield: 6.00%),
4/15/2016 AAA 2,035,126
1,000,000 Delaware Valley, PA
School District, GO UT
Refunding Bonds (Series
A), 6.50% (MBIA INS),
4/1/2001 AAA 1,080,910
1,000,000 Franklin, PA Regional
School District, GO UT
Refunding Bonds (Series
I), 6.25% (FGIC INS),
10/1/2001 AAA 1,001,614
1,170,000 Johnstown, PA, GO UT
Refunding Bonds, 4.875%
(FGIC INS)/ (Original
Issue Yield: 4.90%),
10/1/1999 AAA 1,192,759
</TABLE>
(See Notes to Portfolios of Investments)
MARKETVEST PENNSYLVANIA INTERMEDIATE
MUNICIPAL BOND FUND (continued)
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(c) Value
<C> <S> <C> <C>
General
Obligation--continued
$1,000,000 Lehigh County, PA
General Purpose
Authority, GO UT
Refunding Bonds (Series
A), 6.60% (AMBAC
INS)/(United States
Treasury PRF),
10/15/1999 (@100) AAA $ 1,063,219
1,270,000 Lehigh County, PA
General Purpose
Authority, Hospital
Refunding Revenue Bonds
(Series 1996A), 5.75%
(Muhlenberg Hospital
Center)/ (Original
Issue Yield: 5.85%),
7/15/2010 A 1,279,401
1,730,000 Lehigh County, PA
General Purpose
Authority, Revenue
Bonds, 5.75%
(Muhlenberg Hospital
Center)/(Original Issue
Yield: 5.85%),
7/15/2010 A 1,742,805
2,000,000 Lehigh County, PA, GO
UT Bonds (Series A),
5.50% (Original Issue
Yield: 5.60%),
11/15/2011 Aa 2,028,686
2,100,000 Lehigh County, PA, GO
UT Bonds (Series A),
5.55% (Original Issue
Yield: 5.65%),
11/15/2012 Aa 2,130,049
2,520,000 Lehigh County, PA, GO
UT Bonds (Series B),
5.65% (Original Issue
Yield: 5.75%),
11/15/2014 Aa 2,555,892
4,000,000 Lehigh County, PA, GO
UT Bonds, 5.125% (FGIC
INS)/(Original Issue
Yield: 5.25%),
11/15/2008 AAA 4,010,944
<CAPTION>
Principal Credit
Amount Rating(c) Value
<C> <S> <C> <C>
$1,000,000 Mars, PA Area School
District, GO UT Bonds
(Series A), 6.05% (MBIA
INS), 3/1/1998 AAA $ 1,023,444
1,000,000 Montgomery County, PA,
GO UT Bonds, 5.00%,
10/15/2000 Aaa 1,026,290
1,000,000 Northampton County, PA,
GO UT Bonds, 5.10%
(AMBAC INS), 8/1/2005 AAA 1,007,830
1,000,000 Northampton County, PA,
GO UT Bonds, 5.20%
(AMBAC INS), 8/1/2006 AAA 1,012,954
1,200,000 Norwin, PA School
District, GO UT
Refunding Bonds, 6.00%
(AMBAC INS), 8/1/1998 AAA 1,237,589
1,000,000 Pennridge, PA School
District, GO UT Bonds,
6.40%, 3/15/2001 A 1,063,856
5,000,000 Philadelphia, PA School
District, GO UT Bonds
(Series A), 5.35% (MBIA
INS), 7/1/2003 AAA 5,212,295
2,000,000 Philadelphia, PA School
District, GO UT Bonds
(Series A), 5.85%,
7/1/2009 AAA 2,099,238
1,000,000 Philadelphia, PA School
District, GO UT Bonds,
5.375% (Original Issue
Yield: 5.45%), 7/1/2005 AAA 1,037,342
2,000,000 Philadelphia, PA, GO UT
Bonds, 5.00% (MBIA
INS)/(Original Issue
Yield: 5.20%),
5/15/2009 AAA 1,960,470
</TABLE>
(See Notes to Portfolios of Investments)
MARKETVEST PENNSYLVANIA INTERMEDIATE
MUNICIPAL BOND FUND (continued)
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(c) Value
<C> <S> <C> <C>
General
Obligation--continued
$1,000,000 Pittsburgh, PA School
District, GO UT
Refunding Bonds (Series
C), 5.25% (United
States Treasury
COL)/(FGIC INS),
8/1/1998 AAA $ 1,007,100
5,000,000 Pittsburgh, PA, GO UT
Bonds (Series B), 4.90%
(Original Issue Yield:
5.10%), 3/1/2007 AAA 4,972,635
2,000,000 Pittsburgh, PA, GO UT,
5.00% (MBIA INS),
3/1/2000 AAA 2,046,470
1,000,000 Pocono Mountain, PA
School District, GO UT
Bonds, 6.80% (United
States Treasury COL)/
(AMBAC INS),
10/1/2000 AAA 1,018,877
1,000,000 Pocono Mountain, PA
School District, GO UT
Bonds, 6.90% (AMBAC
INS), 10/1/2001 AAA 1,019,457
3,000,000 Riverside, PA Beaver
County School District,
GO UT Bonds, 5.50% (FSA
INS), 2/15/2017 AAA 3,008,340
1,270,000 South Western School
District, PA York, GO
UT Bonds, 5.00% (FGIC
INS), 6/15/1998 AAA 1,289,524
1,000,000 Westmoreland County,
PA, GO UT Refunding
Bonds, 6.35% (AMBAC
INS), 12/1/1999 AAA 1,058,843
-----------
TOTAL GENERAL
OBLIGATION (IDENTIFIED
COST $115,860,047) 116,813,989
-----------
<CAPTION>
Principal Credit
Amount Rating(c) Value
<C> <S> <C> <C>
Revenue--45.3%
College/University--10.0%
$1,500,000 Bucks County, PA
Community College
Authority, Revenue
Bonds, 5.50% (Original
Issue Yield: 5.60%),
6/15/2014 Aa $ 1,505,716
1,550,000 Northampton County, PA
Higher Education
Authority, Refunding
Revenue Bonds, 6.75%
(Lehigh University)/
(MBIA INS), 11/15/1999 AAA 1,658,057
3,975,000 Northampton County, PA
Higher Education
Authority, Revenue
Bonds, 5.375% (Lehigh
University)/(Original
Issue Yield: 5.55%),
11/15/2016 AAA 3,912,926
3,000,000 Pennsylvania State
Higher Education
Facilities Authority,
Refunding Revenue Bonds
(Series A), 5.50%
(University of
Pennsylvania)/(Original
Issue Yield: 5.55%),
1/1/2009 AA 3,036,420
1,000,000 Pennsylvania State
Higher Education
Facilities Authority,
Revenue Bonds (Series
E), 6.00% (State
Systems)/(MBIA INS),
6/15/1997 AAA 1,006,898
1,000,000 Pennsylvania State
University, Refunding
Revenue Bonds, 5.00%,
3/1/1997 AA- 1,000,105
</TABLE>
(See Notes to Portfolios of Investments)
MARKETVEST PENNSYLVANIA INTERMEDIATE
MUNICIPAL BOND FUND (continued)
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(c) Value
<C> <S> <C> <C>
Revenue--continued
$5,000,000 Pennsylvania State
University, Refunding
Revenue Bonds, 5.30%
(Original Issue Yield:
5.40%), 8/15/2003 AA- $ 5,140,215
1,255,000 State Public School
Building Authority, PA
College, Revenue Bonds,
6.10% (Harrisburg Area
Community College-
D)/(MBIA INS),
4/1/1999 AAA 1,307,067
2,000,000 University Pittsburgh,
PA Higher Education,
Refunding Revenue Bonds
(Series B), 5.30% (MBIA
INS), 6/1/1999 AAA 2,055,044
1,500,000 University of
Pittsburgh, Revenue
Bonds, 5.05% (Original
Issue Yield: 5.15%),
6/1/2010 AAA 1,478,516
-----------
Total 22,100,964
-----------
Highway--0.5%
1,000,000 Pennsylvania State
Turnpike Commission,
Revenue Bonds (Series
L), 6.15% (MBIA INS),
6/1/1999 AAA 1,044,590
-----------
Hospital--12.0%
1,790,000 Allegheny County, PA
HDA, Refunding Revenue
Bonds, 5.70% (Magee
Womens
Hospital)/(Original
Issue Yield: 5.85%),
10/1/2001 AAA 1,871,334
2,000,000 Allegheny County, PA
HDA, Revenue Bonds,
4.80% (University of
Pittsburgh Medical
Center)/(MBIA INS)/
(Original Issue Yield:
4.85%), 12/1/2005 AAA 1,982,940
<CAPTION>
Principal Credit
Amount Rating(c) Value
<C> <S> <C> <C>
$1,000,000 Allegheny County, PA
HDA, Revenue Bonds,
5.20% (Magee Womens
Hospital)/(FGIC INS)/
(Original Issue Yield:
5.30%), 10/1/2005 AAA $ 1,021,488
2,800,000 Allegheny County, PA
HDA, Revenue Bonds,
5.375% (Children's
Hospital of
Pittsburgh)/(Original
Issue Yield: 5.641%),
7/1/2017 AAA 2,705,682
3,045,000 Chester County, PA
HEFA, Refunding Revenue
Bonds, 5.30% (Main Line
Health Systems)/(MBIA
INS)/ (Original Issue
Yield: 5.40%),
5/15/2007 AAA 3,069,031
965,000 Chester County, PA
HEFA, Refunding Revenue
Bonds, 5.50% (Chester
County Hospital,
PA)/(MBIA
INS)/(Original Issue
Yield: 5.70%), 7/1/2007 AAA 1,003,918
1,675,000 Chester County, PA
HEFA, Refunding Revenue
Bonds, 5.625% (Chester
County Hospital,
PA)/(MBIA
INS)/(Original Issue
Yield: 5.90%), 7/1/2010 AAA 1,707,239
1,985,000 Chester County, PA
HEFA, Refunding Revenue
Bonds, 5.625% (MBIA
INS)/(Original Issue
Yield: 5.85%),
7/1/2009 AAA 2,045,302
1,000,000 Geisinger Authority, PA
Health System,
Refunding Revenue
Bonds, 5.70% (Original
Issue Yield: 5.75%),
7/1/2002 AA 1,046,685
</TABLE>
(See Notes to Portfolios of Investments)
MARKETVEST PENNSYLVANIA INTERMEDIATE
MUNICIPAL BOND FUND (continued)
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(c) Value
<C> <S> <C> <C>
Revenue--continued
$1,000,000 Lancaster County, PA
Hospital Authority,
Health Center Refunding
Revenue Bonds, 4.75%
(Masonic Homes),
11/15/2002 A+ $ 998,940
3,250,000 Philadelphia, PA
Hospitals & Higher
Education Facilities
Authority, Refunding
Revenue Bonds (Series
A), 5.25% (Children's
Hospital of
Philadelphia)/(Original
Issue Yield: 5.55%),
2/15/2007 AA 3,307,038
1,500,000 Philadelphia, PA
Hospitals & Higher
Education Facilities
Authority, Refunding
Revenue Bonds (Series
A), 5.625% (Children's
Hospital of
Philadelphia),
2/15/1999 AA 1,537,731
2,290,000 Scranton-Lackawanna, PA
Health & Welfare
Authority, Refunding
Revenue Bonds, 5.00%
(Mercy Health Care
Systems)/(MBIA INS)/
(Original Issue Yield:
5.15%), 1/1/2006 AAA 2,294,713
2,000,000 Scranton-Lackawanna, PA
Health & Welfare
Authority, Refunding
Revenue Bonds, 5.625%
(Mercy Health Care
Systems)/(MBIA INS)/
(Original Issue Yield:
5.75%), 1/1/2016 AAA 1,995,224
-----------
Total 26,587,265
-----------
<CAPTION>
Principal Credit
Amount Rating(c) Value
<C> <S> <C> <C>
Housing--0.7%
$1,500,000 Pennsylvania Housing
Finance Authority,
Refunding Revenue
Bonds, 6.00%, 10/1/2013 AA+ $ 1,542,738
-----------
Industrial Development
Revenue--3.8%
1,000,000 Pennsylvania State IDA,
Refunding Revenue
Bonds, 5.80% (AMBAC
INS), 1/1/2008 AAA 1,050,861
5,000,000 Pennsylvania State IDA,
Revenue Refunding
Bonds, 6.00% (AMBAC
INS), 7/1/2007 AAA 5,428,995
2,000,000 Philadelphia Authority
for Industrial
Development, Revenue
Bonds, 5.50% (Girard
Estate Coal Mining
Project)/(Original
Issue Yield: 5.75%),
11/15/2016 AA 1,967,392
-----------
Total 8,447,248
-----------
Lease--3.1%
1,500,000 Erie County, PA Prison
Authority Lease,
Revenue Bonds, 6.30%
(United States Treasury
COL)/(MBIA INS),
11/1/1999 AAA 1,582,306
1,600,000 Harrisburg, PA Lease
Authority, Revenue
Bonds, 5.90% (CGIC
INS)/(Original Issue
Yield: 6.001%),
6/1/1998 AAA 1,641,589
1,450,000 Northumberland County,
PA Commonwealth Lease
Authority, Revenue
Bonds, 6.00% (MBIA
INS)/(Original Issue
Yield: 6.15%),
10/15/1997 AAA 1,471,428
</TABLE>
(See Notes to Portfolios of Investments)
MARKETVEST PENNSYLVANIA INTERMEDIATE
MUNICIPAL BOND FUND (continued)
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(c) Value
<C> <S> <C> <C>
Revenue--continued
$1,000,000 Northumberland County,
PA Commonwealth Lease
Authority, Revenue
Bonds, 6.25% (MBIA
INS)/(Original Issue
Yield: 6.932%),
10/15/2009 AAA $ 1,077,111
1,000,000 Schuylkill, PA
Redevelopment
Authority, Commonwealth
Lease Revenue Bonds
(Series A), 6.35% (FGIC
INS), 6/1/1998 AAA 1,026,869
-----------
Total 6,799,303
-----------
Pooled Loan--2.6%
1,000,000 Dauphin County, PA,
Revenue Bonds, 5.80%,
6/1/2026 A 1,005,214
2,720,000 Pennsylvania
Infrastructure
Investment Authority,
Revenue Bonds, 5.25%
(MBIA INS), 9/1/2007 AAA 2,783,980
1,000,000 Pennsylvania
Infrastructure
Investment Authority,
Revenue Bonds, 5.30%
(Pennvest)/(MBIA INS),
9/1/2008 AAA 1,020,737
1,000,000 Pennsylvania
Infrastructure
Investment Authority,
Revenue Bonds, 6.00%
(MBIA INS), 9/1/2006 AAA 1,082,017
-----------
Total 5,891,948
-----------
<CAPTION>
Principal Credit
Amount Rating(c) Value
<C> <S> <C> <C>
Special Tax--6.6%
$2,930,000 Pennsylvania
Intergovernmental
Co-op Authority,
Refunding Revenue
Bonds, 4.85% (FGIC
INS), 6/15/2003 AAA $ 2,974,261
2,145,000 Pennsylvania
Intergovernmental
Co-op Authority,
Refunding Revenue
Bonds, 5.40% (FGIC
INS), 6/15/2009 AAA 2,180,875
2,000,000 Pennsylvania
Intergovernmental
Co-op Authority,
Refunding Revenue
Bonds, 5.50%
(Philadelphia Funding
Program)/(FGIC INS)/
(Original Issue Yield:
5.82%), 6/15/2016 AAA 2,005,592
4,000,000 Pennsylvania
Intergovernmental
Co-op Authority,
Revenue Bonds, 4.80%
(Philadelphia, PA)/
(Commonwealth of
Pennsylvania GTD)/
(Original Issue Yield:
4.90%), 6/15/2002 AAA 4,061,392
3,300,000 Pennsylvania
Intergovernmental
Co-op Authority,
Revenue Bonds, 5.50%
(Philadelphia Funding
Program)/(FGIC INS)/
(Original Issue Yield:
5.65%), 6/15/2011 AAA 3,342,834
-----------
Total 14,564,954
-----------
</TABLE>
(See Notes to Portfolios of Investments)
MARKETVEST PENNSYLVANIA INTERMEDIATE
MUNICIPAL BOND FUND (continued)
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(c) Value
<C> <S> <C> <C>
Revenue--continued
Utilities--6.0%
$4,250,000 Bucks County, PA Water
& Sewer Authority,
Revenue Bonds, 5.55%
(FGIC INS)/(Original
Issue Yield: 5.65%),
12/1/2017 AAA $ 4,223,701
1,000,000 Clinton County, PA
Solid Waste Authority,
Revenue Bonds, 6.45%
(Clinton County, PA
Solid Waste Authority
GTD)/(AMBAC INS)/
(Original Issue Yield:
6.50%), 11/1/2001 AAA 1,049,627
1,000,000 Philadelphia, PA Water
& Wastewater System,
Refunding Revenue
Bonds, 5.50% (Original
Issue Yield: 5.61%),
6/15/2006 AAA 1,043,537
3,000,000 Philadelphia, PA Water
& Wastewater System,
Refunding Revenue
Bonds, 6.25% (MBIA
INS), 8/1/2007 AAA 3,324,816
2,690,000 Pittsburgh, PA Water &
Sewer Authority,
Refunding Revenue Bonds
(Series A), 4.70% (FGIC
INS),
9/1/2004 AAA 2,688,300
1,000,000 Pittsburgh, PA Water &
Sewer Authority,
Refunding Revenue Bonds
(Series A), 6.00%
(United States Treasury
COL)/(FGIC
INS)/(Original Issue
Yield: 6.10%), 9/1/1997 AAA 1,011,927
-----------
Total 13,341,908
-----------
TOTAL REVENUE
(IDENTIFIED COST
$96,674,490) 100,320,918
-----------
<CAPTION>
Principal Credit
Amount Rating(c) Value
<C> <S> <C> <C>
Open-Ended Investment
Company--2.8%
$6,095,036 PNC Pennsylvania
Municipal Money Market
Portfolio (at net asset
value) $ 6,095,036
-----------
TOTAL INVESTMENTS
(IDENTIFIED COST
$218,629,573) $223,229,943
-----------
-----------
</TABLE>
(See Notes to Portfolios of Investments)
MARKETVEST SHORT-TERM
BOND FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C> <C>
ASSET BACKED
SECURITIES--1.4%
Finance--1.4%
$2,000,000 Green Tree Home
Improvement Loan Trust
1995-F, 6.750%, 1/15/2021
(IDENTIFIED COST
$1,999,063) $ 1,980,800
-----------
CORPORATE BONDS--25.9%
Banking--0.7%
1,000,000 NBD Bank, N.A. Indiana,
Medium Term Note, 7.50%,
2/28/1998 1,013,184
-----------
Finance--18.5%
1,000,000 American General Finance
Corp., Medium Term
Note, 7.29%, 3/20/1998 1,011,960
2,000,000 American General Finance
Corp., Sr. Note, 7.25%,
3/1/1998 2,021,732
2,000,000 Bankers Trust New York
Corp., Sr. Note, 6.625%,
7/30/1999 2,005,700
2,000,000 CIT Group Holdings, Inc.,
Medium Term Note, 6.125%,
9/1/1998 2,000,778
1,000,000 Chrysler Financial Corp.,
Medium Term Note, 7.50%,
3/16/1998 1,014,184
3,000,000 Ford Motor Credit Co.,
Note, 6.85%, 8/15/2000 3,022,689
2,000,000 GMAC, Medium Term Note,
6.20%, 5/11/1998 2,001,072
2,000,000 GMAC, Note, 6.45%,
4/15/1999 2,001,318
2,000,000 Lehman Brothers,
Holdings, Inc., Note,
6.625%, 11/15/2000 1,988,026
2,000,000 New England Educational
Loan Marketing Corp.,
Note, 6.125%, 7/17/1998 1,996,154
3,000,000 Salomon, Inc., 6.50%,
3/1/2000 3,000,000
<CAPTION>
Principal
Amount Value
<C> <S> <C> <C>
$2,000,000 Travelers Aetna Property
& Casualty, Sr. Note,
6.75%, 4/15/2001 $ 2,000,060
3,000,000 Xerox Credit Corp.,
Medium Term Note, 7.125%,
4/1/1998 3,030,612
-----------
Total 27,094,285
-----------
Industrial Services--2.1%
3,000,000 Sears Roebuck Acceptance
Corp., Medium Term Note,
6.50%, 6/15/2000 2,987,061
-----------
Retail Trade--1.4%
2,000,000 Rite Aid Corp., Note,
6.70%, 12/15/2001 1,987,882
-----------
Services--2.2%
1,250,000 Hertz Corp., 6.50%,
4/1/2000 1,245,786
2,000,000 Hertz Corp., Note, 6.70%,
6/15/2002 1,980,408
-----------
Total 3,226,194
-----------
Utilities--1.0%
1,500,000 Massachusetts Electric
Co., 7.80%, 2/13/1998 1,520,889
-----------
TOTAL CORPORATE BONDS
(IDENTIFIED COST
$37,872,890) 37,829,495
-----------
MORTGAGE BACKED
SECURITIES--3.3%
Finance--3.3%
3,000,000 Prudential Home Mortgage
Securities 1992-45, Class
A4, 6.50%, 1/25/2000 2,985,960
1,828,401 Prudential Home Mortgage
Securities, Class A3,
6.250%, 3/25/2000 1,824,964
-----------
TOTAL MORTGAGE BACKED
SECURITIES (IDENTIFIED
COST $4,793,339) 4,810,924
-----------
</TABLE>
(See Notes to Portfolios of Investments)
MARKETVEST SHORT-TERM
BOND FUND (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C> <C>
U.S. GOVERNMENT
AGENCIES--39.0%
Federal Farm Credit
Bank--3.1%
$3,000,000 6.38%, 2/25/2002 $ 2,997,690
1,500,000 7.51%, 2/13/1998 1,522,152
-----------
Total 4,519,842
-----------
Federal Home Loan
Bank--7.1%
2,000,000 5.526%, 3/25/1999 1,967,220
3,000,000 6.03%, 12/18/2000 2,954,079
2,000,000 6.55%, 9/19/2003 1,955,400
2,000,000 7.31%, 6/20/2005 1,981,110
1,500,000 7.54%, 2/13/1998 1,521,970
-----------
Total 10,379,779
-----------
Federal Home Loan Bank,
Floating Rate Note(d)--0.7%
1,030,000 (e)6.25%, 6/12/1997 1,032,575
-----------
Federal Home Loan
Mortgage Corporation--6.9%
2,000,000 6.747%, 8/23/2001 2,006,464
3,000,000 6.80%, 5/14/1999 3,006,951
3,000,000 6.925%, 6/30/1999 3,014,340
2,000,000 7.00%, 8/7/2000 2,020,046
-----------
Total 10,047,801
-----------
Federal Home Loan
Mortgage Corporation,
PC--2.9%
1,445,110 5.50%, 10/1/1998 1,438,013
1,783,291 6.50%, 10/15/2000 1,791,245
1,019,683 7.50%, 2/1/1998 1,026,850
-----------
Total 4,256,108
-----------
Federal National Mortgage
Association--15.2%
2,000,000 6.02%, 1/20/1998 2,003,630
2,000,000 6.23%, 11/29/2001 1,966,158
3,000,000 6.30%, 12/3/2001 2,955,510
3,000,000 6.375%, 9/29/1999 2,987,715
2,000,000 6.58%, 10/26/2001 1,994,268
2,000,000 7.00%, 4/24/2001 2,006,850
<CAPTION>
Principal
Amount Value
<C> <S> <C> <C>
$3,000,000 7.02%, 9/17/2001 $ 3,042,408
2,250,000 7.17%, 6/12/2001 2,280,521
3,000,000 7.36%, 9/29/1999 3,029,058
-----------
Total 22,266,118
-----------
Federal National Mortgage
Association, Floating
Rate Note(d)--1.4%
2,000,000 6.375%, 10/8/1997 2,010,660
-----------
Federal National Mortgage
Association, REMIC--1.7%
2,508,920 8.00%, 7/25/2018 2,550,872
-----------
TOTAL U.S. GOVERNMENT
AGENCIES (IDENTIFIED COST
$57,076,633) 57,063,755
-----------
U.S. TREASURY
OBLIGATIONS--24.0%
U.S. Treasury Notes--24.0%
6,000,000 5.875%, 6/30/2000 5,928,750
4,000,000 6.125%, 8/31/1998 4,010,000
3,000,000 6.25%, 5/31/2000 3,000,000
3,000,000 6.25%, 8/31/2000 2,997,183
3,000,000 6.25%, 4/30/2001 2,990,625
5,000,000 6.375%, 5/15/1999 5,028,125
3,000,000 6.375%, 8/15/2002 2,997,183
3,000,000 6.50%, 5/31/2001 3,015,000
2,000,000 6.75%, 6/30/1999 2,026,250
3,000,000 7.125%, 10/15/1998 3,049,683
-----------
TOTAL U.S. TREASURY
OBLIGATIONS (IDENTIFIED
COST $35,137,109) 35,042,799
-----------
(b) Repurchase
Agreement--7.9%
11,605,996 Merrill Lynch, Pierce,
Fenner and Smith, Inc.,
5.30%, dated 2/28/1997,
due 3/3/1997 (at
amortized cost) 11,605,996
-----------
TOTAL INVESTMENTS
(IDENTIFIED COST
$148,485,030) $148,333,769
-----------
</TABLE>
(See Notes to Portfolios of Investments)
MARKETVEST INTERMEDIATE
U.S. GOVERNMENT BOND FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C> <C>
U.S. GOVERNMENT AGENCY
OBLIGATIONS--8.2%
Federal Home Loan
Mortgage Corporation--2.9%
$2,000,000 7.225%, 11/8/2006 $ 1,974,854
2,000,000 8.00%, 7/18/2011 2,042,330
3,500,000 8.06%, 3/24/2010 3,609,235
-----------
Total 7,626,419
-----------
Federal National Mortgage
Association--3.3%
2,000,000 7.23%, 1/24/2007 1,983,668
2,000,000 7.875%, 2/24/2005 2,133,218
3,250,000 8.625%, 11/10/2004 3,379,558
1,000,000 9.05%, 4/10/2000 1,075,306
-----------
Total 8,571,750
-----------
Federal National Mortgage
Association REMIC--0.8%
2,000,000 7.00%, 5/25/2020, Series
1992-124-PH 1,991,860
-----------
Tennessee Valley
Authority--1.2%
3,000,000 8.375%, 10/1/1999 3,148,653
-----------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS
(IDENTIFIED COST
$21,328,448) 21,338,682
-----------
CORPORATE BONDS--5.9%
Banking--1.6%
2,000,000 Central Fidelity Banks,
Inc., 8.150%, 11/15/2002 2,104,578
2,000,000 Signet Banking Corp.,
7.80%, 9/15/2006 2,063,578
-----------
Total 4,168,156
-----------
Finance--3.6%
2,000,000 Bankers Trust New York
Corp., 8.125%, 4/1/2002 2,105,880
2,000,000 Conseco, Inc., 8.125%,
2/15/2003 2,085,122
3,000,000 Ford Motor Credit Corp.,
8.375%, 1/15/2000 3,139,515
<CAPTION>
Principal
Amount Value
<C> <S> <C> <C>
$2,000,000 PaineWebber Group, Inc.,
8.25%, 5/1/2002 $ 2,111,362
-----------
Total 9,441,879
-----------
Technology--0.7%
2,000,000 Seagate Technology, Inc.,
7.125%, 3/1/2004 2,000,500
-----------
TOTAL CORPORATE BONDS
(IDENTIFIED COST
$15,749,482) 15,610,535
-----------
CORPORATE NOTE--2.0%
Finance--2.0%
5,000,000 Salomon, Inc., 7.250%,
5/1/2001 (IDENTIFIED COST
$5,084,450) 5,052,480
-----------
U.S. TREASURY
OBLIGATIONS--78.7%
U.S. Treasury Bonds--65.3%
20,000,000 9.125%, 5/15/2009 22,812,500
10,000,000 9.250%, 2/15/2016 12,471,860
15,000,000 10.375%, 11/15/2009 18,337,500
23,000,000 10.375%, 11/15/2012 29,281,875
28,000,000 10.75%, 5/15/2003 34,081,208
21,000,000 10.75%, 8/15/2005 26,630,625
10,000,000 11.625%, 11/15/2002 12,475,000
10,000,000 11.625%, 11/15/2004 13,046,860
-----------
Total 169,137,428
-----------
U.S. Treasury Notes--13.4%
12,000,000 7.125%, 2/29/2000 12,292,500
9,000,000 7.875%, 11/15/2004 9,725,625
12,000,000 8.00%, 5/15/2001 12,727,500
-----------
Total 34,745,625
-----------
TOTAL U.S. TREASURY
OBLIGATIONS (IDENTIFIED
COST $206,228,281) 203,883,053
-----------
(b) REPURCHASE
AGREEMENT--4.7%
12,337,732 Merrill Lynch, Pierce,
Fenner and Smith, Inc.,
5.30%,
dated 2/28/1997, due
3/3/1997 (at amortized
cost) 12,337,732
-----------
TOTAL INVESTMENTS
(IDENTIFIED COST
$260,728,393) $258,222,482
-----------
-----------
</TABLE>
(See Notes to Portfolios of Investments)
MARKETVEST GROUP OF FUNDS
Notes to Portfolios of Investments February 28, 1997
(a) Non-income producing security.
(b) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(c) Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings. Credit ratings are unaudited.
(d) Floating rate note with current rate and next reset date shown.
(e) Represents step-up bond.
The following acronyms are used throughout this portfolio:
AMBAC -- American Municipal Bond Assurance Corporation
ADR -- American Depositary Receipt
CGIC -- Capital Guaranty Insurance Corporation
COL -- Collateralized
FGIC -- Financial Guaranty Insurance Company
FSA -- Financial Security Assurance
GO -- General Obligation
GTD -- Guaranteed
HDA -- Hospital Development Authority
HEFA -- Health and Education Facilities Authority
IDA -- Industrial Development Authority
INS -- Insured
MBIA -- Municipal Bond Investors Assurance
PC -- Participation Certificate
PRF -- Prerefunded
REMIC -- Real Estate Mortgage Investment Conduit
UT -- Unlimited Tax
VRDNs -- Variable Rate Demand Notes
<TABLE>
<CAPTION>
FOR FEDERAL TAX PURPOSES
NET UNREALIZED GROSS GROSS TOTAL
COST OF APPRECIATION UNREALIZED UNREALIZED NET
FUND INVESTMENTS (DEPRECIATION) APPRECIATION DEPRECIATION ASSETS*
<S> <C> <C> <C> <C> <C>
Marketvest Equity Fund $450,888,401 $96,868,110 $98,615,067 $1,746,957 $540,888,724
Marketvest Pennsylvania Intermediate
Municipal Bond Fund $218,629,573 $ 4,600,370 $ 4,640,450 $ 40,080 $221,393,114
Marketvest Short-Term Bond Fund $148,485,030 $ (151,261) $ 336,365 $ 487,626 $146,177,817
Marketvest Intermediate U.S. Government
Bond Fund $260,753,080 $(2,530,598) $ 94,784 $2,625,382 $259,041,823
</TABLE>
* The categories of investments are shown as a percentage of net assets at
February 28, 1997.
(See Notes which are an integral part of the Financial Statements)
MARKETVEST GROUP OF FUNDS
Statements of Assets and Liabilities February 28, 1997
<TABLE>
<CAPTION>
MARKETVEST MARKETVEST
PENNSYLVANIA INTERMEDIATE
INTERMEDIATE MARKETVEST U.S.
MARKETVEST MUNICIPAL SHORT-TERM GOVERNMENT
EQUITY FUND BOND FUND BOND FUND BOND FUND
<S> <C> <C> <C> <C>
ASSETS:
Total investments in securities, at value $547,756,511 $223,229,943 $148,333,769 $258,222,482
Income receivable 1,360,463 3,356,474 1,945,222 4,704,871
Receivable for investments sold -- 2,185,909 -- --
Receivable for shares sold 133,400 43,000 81,041 207,292
--------------- --------------- --------------- ---------------
Total assets 549,250,374 228,815,326 150,360,032 263,134,645
--------------- --------------- --------------- ---------------
LIABILITIES:
Payable for investments purchased 6,365,033 6,575,673 3,000,000 2,001,770
Payable for shares redeemed 1,840,002 -- 822,144 991,314
Income distribution payable -- 784,115 299,729 1,010,184
Accrued expenses 156,615 62,424 60,342 89,554
--------------- --------------- --------------- ---------------
Total liabilities 8,361,650 7,422,212 4,182,215 4,092,822
--------------- --------------- --------------- ---------------
NET ASSETS CONSIST OF:
Paid in capital 431,871,237 217,158,321 146,327,296 262,494,547
Net unrealized appreciation (depreciation)
of investments 96,868,110 4,600,370 (151,261) (2,505,911)
Accumulated net realized gain (loss)
on investments 12,098,050 (365,577) (3,581) (948,400)
Undistributed net investment income 51,327 -- 5,363 1,587
--------------- --------------- --------------- ---------------
Total Net Assets $540,888,724 $221,393,114 $146,177,817 $259,041,823
--------------- --------------- --------------- ---------------
NET ASSET VALUE PER SHARE, AND REDEMPTION PROCEEDS PER
SHARE (net assets / shares outstanding) $11.91 $10.09 $9.95 $9.82
--------------- --------------- --------------- ---------------
Offering Price Per Share*** $12.50 * $10.46 ** $10.31 ** $10.18 **
--------------- --------------- --------------- ---------------
SHARES OUTSTANDING 45,433,644 21,947,952 14,698,134 26,392,385
--------------- --------------- --------------- ---------------
Investments, at identified cost $ 450,888,401 $ 218,629,573 $ 148,485,030 $ 260,728,393
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
Investments, at tax cost $ 450,888,401 $ 218,629,573 $ 148,485,030 $ 260,753,080
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
</TABLE>
* Computation of offering price: 100/95.25 of net asset value.
** Computation of offering price: 100/96.50 of net asset value.
*** See "What Shares Cost" in the Prospectus.
(See Notes which are integral part of the Financial Statements)
Statements of Operations MARKETVEST GROUP OF FUNDS
Period Ended February 28, 1997 (a)
<TABLE>
<CAPTION>
MARKETVEST MARKETVEST
PENNSYLVANIA INTERMEDIATE
INTERMEDIATE MARKETVEST U.S.
MARKETVEST MUNICIPAL SHORT-TERM GOVERNMENT
EQUITY FUND BOND FUND BOND FUND BOND FUND
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 8,614,420 $ -- $ -- $ --
Interest 1,522,243 10,768,105 7,581,835 15,523,954
--------------- --------------- --------------- ---------------
Total income 10,136,663 10,768,105 7,581,835 15,523,954
--------------- --------------- --------------- ---------------
EXPENSES:
Investment advisory fee 4,011,688 1,540,764 893,616 1,574,330
Administrative personnel and services fee 601,643 320,653 178,723 314,866
Custodian fees 43,715 36,296 20,446 31,951
Transfer and dividend disbursing agent fees
and expenses 27,898 22,260 24,163 20,781
Directors'/Trustees' fees 3,751 3,749 3,750 3,751
Legal fees 3,490 3,490 3,490 3,490
Portfolio accounting fees 89,742 74,423 56,300 65,566
Share registration costs 161,591 77,170 57,734 90,085
Printing and postage 8,798 8,082 12,000 12,226
Insurance premiums 6,100 7,180 1,626 7,180
Taxes 80,100 -- 24,198 40,898
Miscellaneous 7,484 7,425 7,425 7,425
--------------- --------------- --------------- ---------------
Total expenses 5,046,000 2,101,492 1,283,471 2,172,549
--------------- --------------- --------------- ---------------
Waivers--
Waiver of investment advisory fee (802,338) (320,653) (178,723) (314,866)
Waiver of administrative personnel and services fee (46,223) (73,421) (36,384) (63,541)
--------------- --------------- --------------- ---------------
Total waivers (848,561) (394,074) (215,107) (378,407)
--------------- --------------- --------------- ---------------
Net expenses 4,197,439 1,707,418 1,068,364 1,794,142
--------------- --------------- --------------- ---------------
Net investment income 5,939,224 9,060,687 6,513,471 13,729,812
--------------- --------------- --------------- ---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments 21,301,868 (365,577) (3,581) (948,400)
Net change in unrealized appreciation (depreciation)
of investments 96,868,110 4,600,370 (151,261) (2,505,911)
--------------- --------------- --------------- ---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 118,169,978 4,234,793 (154,842) (3,454,311)
--------------- --------------- --------------- ---------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $124,109,202 $13,295,480 $6,358,629 $10,275,501
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
</TABLE>
(a) For the period from April 1, 1996 (date of initial public investment) to
February 28, 1997.
(See Notes which are integral part of the Financial Statements)
Statements of Changes in Net Assets MARKETVEST GROUP OF FUNDS
Period Ended February 28, 1997 (a)
<TABLE>
<CAPTION>
MARKETVEST
PENNSYLVANIA MARKETVEST
INTERMEDIATE MARKETVEST INTERMEDIATE
MARKETVEST MUNICIPAL SHORT-TERM U.S. GOVERNMENT
EQUITY FUND BOND FUND BOND FUND BOND FUND
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATION:
Net investment income $ 5,939,224 $ 9,060,687 $ 6,513,471 $13,729,812
Net realized gain (loss) on investment transactions 21,301,868 (365,577) (3,581) (948,400)
Net change in unrealized appreciation (depreciation) 96,868,110 4,600,370 (151,261) (2,505,911)
--------------- --------------- --------------- ---------------
Change in net assets resulting from operations 124,109,202 13,295,480 6,358,629 10,275,501
--------------- --------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income (5,887,897) (9,060,687) (6,508,108) (13,728,225)
Distributions from net realized gain on investments (8,725,186) -- -- --
--------------- --------------- --------------- ---------------
Change in net assets resulting from distributions
to shareholders (14,613,083) (9,060,687) (6,508,108) (13,728,225)
--------------- --------------- --------------- ---------------
SHARE TRANSACTIONS:
Proceeds from sale of shares 471,399,997 246,896,507 166,519,656 279,905,103
Net asset value of shares issued to shareholders in
payment of distributions declared 6,978,053 5,376 3,233,858 3,481,126
Cost of shares redeemed (46,985,445) (29,843,562) (23,426,218) (20,991,682)
--------------- --------------- --------------- ---------------
Change in net assets resulting from
share transactions 431,392,605 217,058,321 146,327,296 262,394,547
--------------- --------------- --------------- ---------------
Change in net assets 540,888,724 221,293,114 146,177,817 258,941,823
NET ASSETS:
Beginning of period -- 100,000 -- 100,000
--------------- --------------- --------------- ---------------
End of period $540,888,724 $221,393,114 $146,177,817 $259,041,823
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
Undistributed net investment income $ 51,327 $ -- $ 5,363 $ 1,587
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
Net realized gain (loss) as computed for federal
income tax purposes $21,301,868 $ (365,577) $ (3,581) $ (923,712)
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
</TABLE>
(a) For the period from April 1, 1996 (date of initial public investment) to
February 28, 1997.
(See Notes which are integral part of the Financial Statements)
Financial Highlights
<TABLE>
<CAPTION>
(For a share outstanding throughout the period)
PERIOD NET REALIZED AND
ENDED NET ASSET UNREALIZED DISTRIBUTIONS TO DISTRIBUTIONS TO
FEBRUARY VALUE, NET GAIN/(LOSS) ON TOTAL FROM SHAREHOLDERS FROM SHAREHOLDERS FROM
28, BEGINNING INVESTMENT INVESTMENT INVESTMENT NET INVESTMENT NET REALIZED GAIN TOTAL
1997(A) OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME ON INVESTMENTS DISTRIBUTIONS
<S> <C> <C> <C> <C> <C> <C> <C>
MARKETVEST EQUITY FUND
$ 10.00 0.14 2.10 2.24 (0.14) (0.19) (0.33)
MARKETVEST PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
$ 10.00 0.40 0.09 0.49 (0.40) -- (0.40)
MARKETVEST SHORT-TERM BOND FUND
$ 10.00 0.49 (0.05) 0.44 (0.49) -- (0.49)
MARKETVEST INTERMEDIATE U.S. GOVERNMENT BOND FUND
$ 10.00 0.59 (0.18) 0.41 (0.59) -- (0.59)
<CAPTION>
PERIOD
ENDED
FEBRUARY NET ASSET
28, VALUE,
1997(A) END OF PERIOD
<S> <C>
MARKETVEST EQUITY FUND
$ 11.91
MARKETVEST PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
$ 10.09
MARKETVEST SHORT-TERM BOND FUND
$ 9.95
MARKETVEST INTERMEDIATE U.S. GOVERNMENT BOND FUND
$ 9.82
</TABLE>
(a) Reflects operations for the period from April 1, 1996 (date of initial
public investment) to February 28, 1997.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(e) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are integral part of the Financial Statements)
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS(C)
NET ASSETS,
END OF AVERAGE
NET PERIOD PORTFOLIO COMMISSION
TOTAL INVESTMENT EXPENSE (000 TURNOVER RATE
RETURN(B) EXPENSES INCOME WAIVER(D) OMITTED) RATE PAID(E)
<C> <C> <C> <C> <C> <C> <C>
22.77% 1.05% 1.48% 0.21% $ 540,889 37% $0.0616
5.03% 0.83% 4.41% 0.19% $ 221,393 86% --
4.49% 0.90% 5.47% 0.18% $ 146,178 112% --
4.18% 0.85% 6.54% 0.18% $ 259,042 255% --
</TABLE>
Notes to Financial Statements MARKETVEST GROUP OF FUNDS
February 28, 1997
(1) ORGANIZATION
The Marketvest Group of Funds consists of Marketvest Funds, Inc. (the
"Corporation") and Marketvest Funds (the "Trust") which are registered under
the Investment Company Act of 1940, as amended (the "Act"), as open-end
management investment companies. The Corporation and the Trust consist of four
portfolios (individually referred to as the "Fund" or collectively as the
"Funds") which are presented herein:
<TABLE>
<CAPTION>
Portfolio Name Diversification Investment Objective
<S> <C> <C>
Marketvest Equity Fund* diversified Provide growth of principal.
("Equity Fund")
Marketvest Pennsylvania Intermediate Municipal Bond Fund** non-diversified Provide current income which is
("Pennsylvania Intermediate Municipal Bond Fund") exempt from federal regular
income tax and the personal and
corporate income taxes imposed by
the Commonwealth of Pennsylvania.
Marketvest Short-Term Bond Fund* diversified Provide current income.
("Short-Term Bond Fund")
Marketvest Intermediate U.S. Government Bond Fund* diversified Provide current income.
("Intermediate U.S. Government Bond Fund")
</TABLE>
*A portfolio of Marketvest Funds, Inc.
**A portfolio of Marketvest Funds.
The assets of each portfolio are segregated and a shareholder's interest is
limited to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Municipal bonds are valued by an independent
pricing service, taking into consideration yield, liquidity, risk, credit
quality, coupon, maturity, type of issue, and any other factors or market
data the service deems relevant. U.S. government securities, listed
corporate bonds, other fixed income and asset-backed securities, and
unlisted securities and private placement securities are generally valued
at the mean of the latest bid and asked price as furnished by an
independent pricing service. Listed equity securities are valued at the
last sale price reported on a national securities exchange. Short-term
debt securities are valued at the prices provided by an independent
pricing service. However, short-term debt securities with remaining
maturities of sixty days or less at the time of purchase may be valued at
amortized cost, which approximates fair market value. Investments in other
open-end regulated investment companies are valued at net asset value.
REPURCHASE AGREEMENTS--It is the policy of the Funds to require the
custodian bank to take possession, to have legally segregated in
the Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under
repurchase agreement transactions. Additionally, procedures have been
established by the Funds to monitor, on a daily basis, the market value
of each repurchase agreement's collateral to ensure that the value of
collateral at least equals the repurchase price to be paid under the
repurchase agreement transaction.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are
deemed by the Funds' adviser to be creditworthy pursuant to the guidelines
and/or standards reviewed or established by the Board of
Directors/Trustees (the "Directors/ Trustees"). Risks may arise from the
potential inability of counterparties to honor the terms of the repurchase
agreement. Accordingly, the Funds could receive less than the repurchase
price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended (the
"Code"). Dividend income and distributions to shareholders are recorded on
the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are attributable to differing book/tax
treatments for capital gain distributions. Amounts as of February 28,
1997, have been reclassified to reflect the following:
<TABLE>
<CAPTION>
Increase (Decrease)
<S> <C> <C>
Paid in Accumulated Net
Fund Capital Realized Gain
Equity Fund $ 478,632 ($ 478,632)
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
FEDERAL TAXES--It is the Funds' policy to comply with the provisions of
the Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of their income. Accordingly, no
provisions for federal tax are necessary.
At February 28, 1997, Intermediate U.S Government Bond Fund, Pennsylvania
Intermediate Municipal Bond Fund and Short-Term Bond Fund, for federal tax
purposes, had capital loss carryforwards, as noted below, which will
reduce the Fund's taxable income arising from future net realized gains on
investments, if any, to the extent permitted by the Code, and thus will
reduce the amount of the distributions to shareholders which would
otherwise be necessary to relieve the Funds of any liability for federal
tax.
<TABLE>
<CAPTION>
Total Capital Tax-Loss
Fund Carryforward
<S> <C>
Intermediate U.S. Government Bond Fund $ 923,712
Pennsylvania Intermediate Municipal Bond Fund 365,577
Short-Term Bond Fund 3,581
</TABLE>
Pursuant to the Code, such capital loss carryforwards will expire as follows:
<TABLE>
<CAPTION>
Intermediate U.S. Government Bond Fund Pennsylvania Intermediate Municipal Bond Fund
<S> <C> <C> <C>
Expiration Year Expiration Amount Expiration Year Expiration Amount
2005 $ 923,712 2005 $ 365,577
</TABLE>
<TABLE>
<CAPTION>
Short-Term Bond Fund
<S> <C>
Expiration Year Expiration Amount
2005 $ 3,581
</TABLE>
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on
the settlement date.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARE TRANSACTIONS
The Articles of Incorporation permit the Directors of the Corporation to issue
full and fractional shares of common stock in each Fund as follows:
<TABLE>
<CAPTION>
Authorized
Fund Shares Par Value
<S> <C> <C>
Equity Fund 1,000,000,000 $ 0.0001
Short-Term Bond Fund 1,000,000,000 $ 0.0001
Intermediate U.S. Government Bond Fund 1,000,000,000 $ 0.0001
</TABLE>
The Declaration of Trust permits the Trustees of Pennsylvania Intermediate
Municipal Bond Fund to issue an unlimited number of full and fractional shares
of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
Pennsylvania
Intermediate Intermediate
Municipal Bond Short-Term U.S. Government
Equity Fund* Fund* Bond Fund* Bond Fund*
<S> <C> <C> <C> <C>
Shares sold 49,148,379 24,915,809 16,727,339 28,154,162
Shares issued to shareholders in payment of
distributions declared 626,699 535 324,445 351,509
Shares redeemed (4,341,434) (2,978,392) (2,353,650) (2,123,286)
-------------- -------------- -------------- ---------------
Net change resulting from share
transactions 45,433,644 21,937,952 14,698,134 26,382,385
-------------- -------------- -------------- ---------------
-------------- -------------- -------------- ---------------
</TABLE>
*For the period from April 1, 1996 (date of initial public investment) to
February 28, 1997.
(4) INVESTMENT ADVISORY FEE AND OTHER
TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Dauphin Deposit Bank and Trust Company, the Funds'
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee based on a percentage of each Fund's average daily net
assets as follows:
<TABLE>
<CAPTION>
Annual
Fund Rate
<S> <C>
Equity Fund 1.00%
Pennsylvania Intermediate Municipal Bond Fund 0.75%
Short-Term Bond Fund 0.75%
Intermediate U.S. Government Bond Fund 0.75%
</TABLE>
The Adviser may voluntarily choose to waive a portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the
Funds with certain administrative personnel and services. The fee paid to FAS
is based on a percentage of each Fund's average daily net assets. FAS may
voluntarily choose to waive a portion of its fee. FAS can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder Services
Company ("FSSC") serves as transfer and dividend disbursing agent for the
Funds. The fee paid to FSSC is based on the size, type, and number of accounts
and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Funds' average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Dauphin Deposit Bank and Trust Company is the Funds'
custodian. The fee is based on the level of each Fund's average daily net
assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses were borne initially by FAS.
The Funds have agreed to reimburse FAS for the organizational expenses during
the five year period following each Fund's effective date. Each Fund's initial
organizational expenses are as follows:
<TABLE>
<CAPTION>
Expenses of
Organizing
Fund the Funds
<S> <C>
Equity Fund $ 32,052
Pennsylvania Intermediate Municipal Bond Fund $ 38,575
Short-Term Bond Fund $ 30,839
Intermediate U.S. Government Bond Fund $ 30,886
</TABLE>
INTERFUND TRANSACTIONS--During the period ended February 28, 1997, the
Corporation and Trust engaged in purchase transactions with trust funds that
have a common investment adviser (or affiliated investment advisers), common
Directors/Trustees, and/or common Officers. These purchase transactions were
made at current market value pursuant to Rule 17a-7 under the Act. Interfund
transactions were as follows:
<TABLE>
<CAPTION>
Fund Purchases Sales
<S> <C> <C>
Equity Fund $381,784,267 $0
Pennsylvania Intermediate Municipal Bond Fund $221,136,687 $0
Short-Term Bond Fund $113,502,054 $0
Intermediate U.S. Government Bond Fund $199,521,958 $0
</TABLE>
GENERAL--Certain of the Officers and Directors or Trustees of the Corporation
and Trust are Officers and Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended February 28, 1997, were as follows:
<TABLE>
<CAPTION>
Fund Purchases Sales
<S> <C> <C>
Equity Fund $543,596,487 $145,925,450
Pennsylvania Intermediate Municipal Bond Fund $402,664,997 $189,745,158
Short-Term Bond Fund $269,371,858 $132,489,242
Intermediate U.S. Government Bond Fund $806,064,460 $556,725,399
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
Since Pennsylvania Intermediate Municipal Bond Fund invests a substantial
portion of its assets in issuers located in one state, it will be more
susceptible to factors adversely affecting issuers of that state than would be
a comparable tax-exempt mutual fund that invests nationally. In order to
reduce the credit risk associated with such factors, at February 28, 1997,
61.5% of the securities in Pennsylvania Intermediate Municipal Bond Fund are
backed by letters of credit or bond insurance of various financial
institutions and financial guaranty assurance agencies. The value of
investments insured by or supported (backed) by a letter of credit from any
one institution or agency did not exceed 24.4% of total investments.
Report of Ernst & Young LLP, Independent Auditors
To the Board of Directors, Trustees and Shareholders of
MARKETVEST FUNDS, INC. and MARKETVEST FUNDS:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Marketvest Funds, Inc., (Marketvest Equity
Fund, Marketvest Short-Term Bond Fund, and Marketvest Intermediate U.S.
Government Bond Fund, respectively) and Marketvest Funds (Marketvest
Pennsylvania Intermediate Municipal Bond Fund) as of February 28, 1997, and the
related statements of operations, the statements of changes in net assets and
the financial highlights for the period presented therein. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
February 28, 1997, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Marketvest Funds, Inc. (Marketvest Equity Fund, Marketvest Short-Term Bond Fund,
and Marketvest Intermediate U.S. Government Bond Fund, respectively) and
Marketvest Funds (Marketvest Pennsylvania Intermediate Municipal Bond Fund) at
February 28, 1997, and the results of their operations, changes in their net
assets, and financial highlights for the period presented therein, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
April 14, 1997
MARKETVEST GROUP OF FUNDS
------------------------------------------------
DIRECTORS/TRUSTEES AND OFFICERS
- ------------------------------------ ------------------------------------
DIRECTORS/TRUSTEES OFFICERS
MARTIN B. EBBERT, JR. EDWARD C. GONZALES
EDWARD C. GONZALES Chairman, President and Treasurer
CLYDE M. MCGEARY JEFFREY W. STERLING
GEORGE A. OMINSKI Vice President and Assistant Treasurer
RICHARD SEIDEL VICTOR R. SICLARI
Secretary
C. TODD GIBSON
Assistant Secretary
MUTUAL FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS, ARE NOT GUARANTEED BY ANY
BANK, AND ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN MUTUAL FUNDS INVOLVES INVESTMENT RISK,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
THIS REPORT IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN
PRECEDED OR ACCOMPANIED BY THE FUNDS' PROSPECTUS WHICH CONTAINS FACTS
CONCERNING THEIR OBJECTIVES AND POLICIES, MANAGEMENT FEES, EXPENSES AND OTHER
INFORMATION.
DAUPHIN DEPOSIT BANK
and Trust Company
Investment Adviser
EDGEWOOD SERVICES, INC.
Federated Investors Tower
Pittsburgh, PA 15222-3779
Edgewood Services, Inc. is the distributor of the Funds
and is a subsidiary of Federated Investors
CUSIP 57061D107
CUSIP 57061E105
CUSIP 57061E204
CUSIP 57061E303
G01834-02 (4/97)
A1. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The
Marketvest Equity Fund (the `Fund'') is represented by a solid line. The
Standard & Poor's 500 Index (the `S&P 500'') is represented by a dotted
line and the Lipper Growth Fund Average (the `LGFA'') is represented by a
broken line. The line graph is a visual representation of a comparison of
change in value of a $10,000 hypothetical investment in the of the Fund,
the S&P 500 and the LGFA. The `x'' axis reflects computation periods from
4/1/96 to 2/28/97. The `y'' axis reflects the cost of the investment.
The right margin reflects the ending value of the hypothetical investment
in the Fund, based on a 4.75% sales charge, as compared to the S&P 500 and
the LGFA. The ending values were $11,694, $12,496, and $11,721,
respectively. The legend in the bottom quadrant of the graphic
presentation indicates the Fund's Average Annual Total Return for the
period from the Fund's start of performance (4/1/96) to 2/28/97. The total
return was 16.92%.
A2. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The
Marketvest Pennsylvania Intermediate Municipal Bond Fund (the `Fund'') is
represented by a solid line. The Lehman Brothers Five-Year State General
Obligations Bond Index (the `L5YSGOBI'') is represented by a dotted line
and the Lipper Pennsylvania Intermediate Municipal Debt Funds Average (the
`LPAIMDFA'') is represented by a broken line. The line graph is a visual
representation of a comparison of change in value of a $10,000 hypothetical
investment in the of the Fund, the L5YSGOBI and the LPAIMDFA. The `x''
axis reflects computation periods from 4/1/96 to 2/28/97. The `y'' axis
reflects the cost of the investment. The right margin reflects the ending
value of the hypothetical investment in the Fund, based on a 3.50% sales
charge, as compared to the L5YSGOBI and the LPAIMDFA. The ending values
were $10,135, $10,534, and $10,622, respectively. The legend in the bottom
quadrant of the graphic presentation indicates the Fund's Average Annual
Total Return for the period from the Fund's start of performance (4/1/96)
to 2/28/97. The total return was 1.38%.
A3. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The
Marketvest Short-Term Bond Fund (the `Fund'') is represented by a solid
line. The Lehman Brothers 1-3 Year Government Index (the `L1-3GI'') is
represented by a dotted line and the Lipper Short Investment Grade Debt
Average (the `LSIGDA'') is represented by a broken line. The line graph
is a visual representation of a comparison of change in value of a $10,000
hypothetical investment in the of the Fund, the L1-3GI and the LSIGDA. The
`x'' axis reflects computation periods from 4/1/96 to 2/28/97. The ``y''
axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in the Fund, based on a 3.50%
sales charge, as compared to the L1-3GI and the LSIGDA. The ending values
were $10,083, $10,516, and $10,512, respectively. The legend in the bottom
quadrant of the graphic presentation indicates the Fund's Average Annual
Total Return for the period from the Fund's start of performance (4/1/96)
to 2/28/97. The total return was 0.86%.
A4. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The
Marketvest Intermediate U.S. Government Bond Fund (the `Fund'') is
represented by a solid line. The Lehman Brothers Government/Corporate Bond
Index (the `LIGCBI'') is represented by a dotted line and the Lipper
Intermediate U.S. Government Funds Average (the `LIUSGFA'') is represented
by a broken Line. The line graph is a visual representation of a
comparison of change in value of a $10,000 hypothetical investment in the
of the Fund, the LIGCBI and the LIUSGFA. The `x'' axis reflects
computation periods from 4/1/96 to 2/28/97. The `y'' axis reflects the
cost of the investment. The right margin reflects the ending value of the
hypothetical investment in the Fund, based on a 3.50% sales charge, as
compared to the LIGCBI and the LIUSGFA. The ending values were $10,053,
$10,487, and $10,480, respectively. The legend in the bottom quadrant of
the graphic presentation indicates the Fund's Average Annual Total Return
for the period from the Fund's start of performance (4/1/96) to 2/28/97.
The total return was 0.56%.
