<PAGE>
MAP-EQUITY FUND
To Our Shareholders:
MAP-Equity Fund returned 23.8% after expenses (but before deduction of
applicable sales load) to its shareholders during 1996. Comparable performance
for the Standard & Poor's 500 Index, a generally accepted index of unmanaged
securities was 23.0%, unburdened by expenses. I am pleased to report that the
Fund's return was achieved with an estimated risk level that was approximately
89% of that Index. We believe this above average risk adjusted performance is
the reason MORNINGSTAR INC., an independent mutual fund ranking organization,
favorably recognized the Fund's performance in its ratings of other growth funds
as we had originally announced to you in December. If you are interested in
hearing more about the rating, please feel free to contact First Priority
Investment Corporation, the Fund's distributor, at 800-559-5535.
The Fund's low risk posture and competitive returns continue to be recognized by
the financial press. For example, U.S. NEWS AND WORLD REPORT in its "1997 Annual
Guide to Mutual Funds" published February 3, 1997 ranked MAP-Equity Fund fourth
out of a field of 915 similar long-term growth funds in terms of risk-adjusted
return over the long term. Our recent sales promotion was aided by the Fund's
continued strong performance. By increasing Fund assets we can reduce average
annual expenses which will benefit all our shareholders. The increasing interest
in MAP-Equity Fund is encouraging.
During 1996, the Board of Directors declared total income and capital gains
distributions of $0.36 and $2.86, respectively.
The Board of Directors continues to invite you to mail your comments and
suggestions to them and thanks you for your continued support and confidence in
the Fund.
Sincerely,
EUGENE J. CIARKOWSKI
PRESIDENT
February 10, 1997
<PAGE>
REPORT OF THE INVESTMENT ADVISER
Dear Fellow Shareholders:
MAP-Equity Fund, under management by Markston Investment Management, has
outperformed the S&P 500 Index in 1996 while taking below average risks
resulting in favorable ratings for the Fund from several recognized rating
organizations and national news publications.
Some of our better performers during 1996 were Intel Corp., American Express
Company, Storage Technology Corp. and PanEnergy Corp.
INTEL is our largest holding and was our best performer for the year,
appreciating 131%. We have followed Intel for years, including the periods when
Intel made wristwatches (the Microma), and when the Japanese semiconductor
companies collectively lost $2 billion driving American companies, such as
Intel, out of the dynamic random access memory (DRAM) market. During 1996, we
realized that Intel's X86 architecture was so dominant that the Company was
likely to be able to simultaneously successfully attack several distinct
markets, thereby assuring continuing high profit growth. Part of this
realization was our belief that Intel's next generation microprocessor was very
much on schedule and will be positioned strategically when the computing
industry moves from 32 bit to 64 bit architectures. This implied Intel will be
an effective competitor in the growing data warehousing and broad graphics
market while also competing effectively in the workstation, server and small
mainframe markets.
AMERICAN EXPRESS, also a large holding, appreciated 36% during the year. We
attribute part of the appreciation to the fact that this highly profitable
enterprise is priced at less than a market price earnings multiple at a time
when, under the new leadership of Harvey Golub, it has stopped its dramatic
market share losses in the charge and credit card industry. Speculation on a
takeover by Citibank helped fuel the shares price increase.
STORAGE TECHNOLOGY appreciated because an activist Board of Directors encouraged
top management change. Employment shrank by roughly 25% and the balance sheet
was materially improved. But the most important move was to agree to supply disc
drives to IBM. Storage Technology has a superior disc drive system, but limited
clout in that market. IBM had superior marketing, but inadequate products. The
supply arrangement materially benefited both companies.
PANENERGY stock appreciated 61% during 1996, helped by its announcement that it
was merging with Duke Power on a favorable basis. As one of the leaders in the
consolidation of the natural gas market, PanEnergy has emerged as a substantial
national marketer of both gas and electricity. Duke's Board believes the de-
regulation of electric power will lead to merging of the gas and electricity
markets into a larger energy market. PanEnergy was viewed as an
entrepreneurially run enterprise that, because it had successfully negotiated
the perils of gas de-regulation, could contribute to Duke's challenges as it
faced de-regulation of the electric market.
Some of our poorer performers in the fourth quarter were Electronic Data Systems
Corp. ("EDS"), Oshkosh B'Gosh Class "A" and Time Warner, Inc.
EDS declined after the company forecast slower growth for the fourth quarter of
1996 and early 1997. The Company faces several challenges from increased
competition in the very competitive services market. Despite these challenges,
we believe that the basic business is growing fast enough and that EDS is
sufficiently well positioned to make the stock attractive.
2
<PAGE>
We initially bought OSHKOSH B'GOSH CLASS "A" because we saw insider buying and
stock repurchase by the company. It has been our experience that this
combination often leads to high positive returns. In addition to the stock
repurchase, there was substantial restructuring. While favorable developments
have occurred, domestic demand has been disappointing. We are monitoring the
situation.
TIME WARNER declined in sympathy with all cable television companies -- the
worst performing group in the S&P 500. Additionally, management filed to
restructure their joint venture with US West. We believe that the stock trades
at a discount to its asset value, but are extremely frustrated by management's
inability to close that gap. We continue to monitor this position.
Sincerely,
/s/ Michael J. Mullarkey
MICHAEL J. MULLARKEY
Managing Director
MARKSTON INVESTMENT MANAGEMENT
February 10, 1997
3
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE MAP-EQUITY FUND
AND THE STANDARD & POOR'S 500 INDEX
FOR THE TEN YEAR PERIOD ENDED DECEMBER 31, 1996
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C> <C>
1 Year 5 Year 10 Year
17.94% 14.04% 14.04%
MAP - Equity Fund S&P 500
1986 9,525 10000
1987 9102 10500
1988 11825 12243
1989 15158 16112
1990 14386 15612
1991 18370 20358
1992 20304 21906
1993 22065 24118
1994 22674 24434
1995 30044 33604
1996 37200 41320
</TABLE>
THE GRAPH ABOVE DEPICTS THE PERFORMANCE OF MAP-EQUITY FUND VERSUS THE STANDARD &
POOR'S 500 INDEX (AN UNMANAGED INDEX OF STOCKS CONSIDERED REPRESENTATIVE OF THE
OVERALL STOCK MARKET). IT IS IMPORTANT TO NOTE THAT MAP-EQUITY FUND IS A
PROFESSIONALLY MANAGED MUTUAL FUND WHILE THE INDEX IS NOT AVAILABLE FOR
INVESTMENT, IS UNMANAGED AND IS SHOWN FOR COMPARISON ONLY.
THIS GRAPH ASSUMES AN INITIAL INVESTMENT OF $10,000, THE MAXIMUM 4.75% SALES
CHARGE ON FUND SHARES, AS WELL AS REINVESTMENT OF DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS. PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT, WHEN REDEEMED, AN INVESTOR'S
SHARES MAY BE WORTH MORE OR LESS THAN WHEN ORIGINALLY PURCHASED.
4
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors of
MAP-Equity Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of portfolio investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of MAP-Equity Fund (the "Fund") at
December 31, 1996, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for each of the four years in the period then ended, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1996 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above. The financial highlights for each of the six years
in the period ended December 31, 1992 were audited by other independent
accountants whose report dated February 12, 1993 expressed an unqualified
opinion on those statements.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 10, 1997
5
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
MAP-EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
Investments:
Common stocks (cost $46,106,057).............................................. $ 65,448,948
Preferred stock (cost $37,892)................................................ 44,400
Corporate bonds (cost $456,713)............................................... 549,488
Short-term investments (cost $7,606,023)...................................... 7,606,023
-------------
73,648,859
Cash............................................................................ 93,034
Receivable for Fund shares sold................................................. 5,575
Dividends and interest receivable............................................... 141,803
Other assets.................................................................... 8,081
-------------
Total Assets............................................................ 73,897,352
-------------
LIABILITIES
Payable for investment securities purchased..................................... 183,702
Accrued investment advisory fee................................................. 54,389
Accounts payable and accrued expenses........................................... 68,647
-------------
Total Liabilities....................................................... 306,738
-------------
Net Assets.............................................................. $ 73,590,614
-------------
-------------
NET ASSETS
Capital stock (3,562,495 shares of $1.00 par value capital stock outstanding,
21,000,000 shares authorized)................................................. $ 3,562,495
Capital paid-in................................................................. 50,046,422
Accumulated undistributed net investment income................................. 87,026
Accumulated undistributed net realized gain from security transactions.......... 452,497
Net unrealized appreciation of investments...................................... 19,442,174
-------------
Net Assets.............................................................. $ 73,590,614
-------------
-------------
Net asset value and redemption price per share ($73,590,614 DIVIDED BY
3,562,495 shares of capital stock outstanding)................................ $20.66
-------------
-------------
Computation of maximum public offering price per share -- $20.66 DIVIDED BY
.9525 (on sales of $50,000 or more, the maximum sales charge and, accordingly,
the offering price, is reduced)............................................... $21.69
-------------
-------------
See notes to financial statements.
</TABLE>
STATEMENT OF OPERATIONS
MAP-EQUITY FUND
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
Investment Income:
Dividends..................................................................... $ 1,048,511
Interest...................................................................... 621,469
-------------
1,669,980
Expenses:
Investment advisory fee....................................................... 231,755
Custodian..................................................................... 73,887
Transfer Agent................................................................ 64,350
Audit......................................................................... 30,152
Legal......................................................................... 17,127
Registration and filing fees.................................................. 16,710
Miscellaneous................................................................. 16,539
Insurance expense............................................................. 14,386
Printing...................................................................... 10,018
Directors' fees............................................................... 6,300
-------------
481,224
-------------
Net Investment Income................................................... 1,188,756
-------------
Realized and Unrealized Gain on
Investments:
Net realized gain from security transactions.................................. 9,760,046
Increase in unrealized appreciation of investments............................ 3,273,899
-------------
Net Gain on Investments..................................................... 13,033,945
-------------
Net Increase in Net Assets Resulting from Operations........................ $ 14,222,701
-------------
-------------
</TABLE>
6
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
MAP-EQUITY FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS
Net investment income......................................................... $ 1,188,756 $ 1,217,484
Net realized gain from security transactions ($9,352,010 and $5,320,112,
respectively, for federal income tax purposes).............................. 9,760,046 4,912,081
Increase in unrealized appreciation of investments............................ 3,273,899 9,049,889
----------------- -----------------
Net Increase in Net Assets Resulting from Operations........................ 14,222,701 15,179,454
----------------- -----------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income ($.36 and $.43, per share,
respectively)............................................................... (1,177,663) (1,212,694)
Distributions from net realized gain from security transactions ($2.86 and
$2.07, per share, respectively)............................................. (8,902,823) (5,842,295)
Distribution required for tax purposes over amounts recorded for financial
reporting purposes ($0 and $.14, per share, respectively)................... 0 (404,726)
----------------- -----------------
Total Distributions to Shareholders......................................... (10,080,486) (7,459,715)
----------------- -----------------
FROM CAPITAL SHARE TRANSACTIONS
Net increase in net assets from capital share transactions.................... 8,981,118 4,617,372
----------------- -----------------
Net Increase in Net Assets.................................................. 13,123,333 12,337,111
NET ASSETS
Beginning of year............................................................. 60,467,281 48,130,170
----------------- -----------------
End of year (including undistributed net investment income of $87,026 and
$75,933, respectively)...................................................... $ 73,590,614 $ 60,467,281
----------------- -----------------
----------------- -----------------
</TABLE>
See notes to financial statements.
7
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS
MAP-EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER
OF
SHARES MARKET VALUE
- -------------- -------------
<C> <S> <C>
COMMON STOCKS (88.93%)
AEROSPACE AND DEFENSE (0.15%)
4,782 Allegheny Teledyne, Inc............................................... $ 109,986
-------------
AGRICULTURE (0.40%)
7,600 IMC Global, Inc....................................................... 297,350
-------------
AUTOMOTIVE (1.62%)
42,000 First Brands Corp..................................................... 1,191,750
-------------
BANKING AND FINANCE (7.19%)
54,600 American Express Co................................................... 3,084,900
33,718 BanPonce Corp......................................................... 1,129,553
26,600 Northern Trust Corp................................................... 964,250
2,900 Wilmington Trust Corp................................................. 114,550
-------------
5,293,253
-------------
BUILDING (2.24%)
15,100 Lone Star Industries, Inc............................................. 556,812
19,600 Morgan Products Ltd.*................................................. 144,550
15,500 Vulcan Materials Co................................................... 943,563
-------------
1,644,925
-------------
CHEMICALS (0.45%)
10,600 Lubrizol Corp......................................................... 328,600
-------------
COMPUTERS AND COMPUTING (7.91%)
4,600 Bay Networks, Inc.*................................................... 96,025
1,600 Calcomp Technology, Inc.*............................................. 4,300
22,200 Data General Corp.*................................................... 321,900
15,000 Electronic Data Systems Corp.......................................... 648,750
1,420 Imation Corp.*........................................................ 39,937
54,400 National Computer Systems, Inc........................................ 1,360,000
36,100 Novell, Inc.*......................................................... 340,694
61,800 Sequent Computer Systems, Inc.*....................................... 1,089,225
25,800 Storage Technology Corp.*............................................. 1,228,725
47,575 Symantec Corp.*....................................................... 689,838
-------------
5,819,394
-------------
CONGLOMERATES (1.60%)
14,200 Minnesota Mining & Manufacturing Co................................... 1,176,825
-------------
CONSUMER GOODS AND SERVICES (13.53%)
14,900 American Greetings Corp., Class A..................................... 422,787
13,300 Clorox Co............................................................. 1,334,987
39,000 Eastman Kodak Co...................................................... 3,129,750
17,188 Gillette Co........................................................... 1,336,367
2,200 Hasbro, Inc........................................................... 85,525
8,621 Mattel, Inc........................................................... 239,233
41,100 National Service Industries, Inc...................................... 1,536,113
33,100 Time Warner, Inc...................................................... 1,241,250
11,200 Valspar Corp.......................................................... 634,200
-------------
9,960,212
-------------
<CAPTION>
NUMBER
OF
SHARES MARKET VALUE
- -------------- -------------
<C> <S> <C>
ELECTRICAL AND ELECTRONICS (10.26%)
14,600 Avnet, Inc............................................................ $ 850,450
30,000 Intel Corp............................................................ 3,926,250
37,800 Motorola, Inc......................................................... 2,319,975
19,430 Vishay Intertechnology, Inc.*......................................... 454,176
-------------
7,550,851
-------------
FOOD AND BEVERAGES (6.79%)
7,500 CPC International, Inc................................................ 581,250
22,400 Coca-Cola Co.......................................................... 1,178,800
5,100 Kellogg Co............................................................ 334,687
18,500 Luby's Cafeterias, Inc................................................ 367,687
17,400 McDonald's Corp....................................................... 787,350
21,400 Quaker Oats Co........................................................ 815,875
27,450 Showbiz Pizza Time, Inc.*............................................. 497,531
34,700 Vicorp Restaurants, Inc.*............................................. 433,750
-------------
4,996,930
-------------
HEALTHCARE AND MEDICAL (3.86%)
48,600 Cooper Companies, Inc.*............................................... 838,350
24,257 Medpartners, Inc.*.................................................... 509,397
13,700 Schering-Plough Corp.................................................. 887,075
12,400 Shared Medical System Corp............................................ 609,150
-------------
2,843,972
-------------
INDUSTRIAL SERVICES (0.52%)
20,600 Ogden Corp............................................................ 386,250
-------------
INSURANCE (4.40%)
98,300 Allmerica Property & Casualty Companies, Inc. ........................ 2,985,862
6,000 Argonaut Group, Inc................................................... 184,500
3,200 USF&G Corp............................................................ 66,800
-------------
3,237,162
-------------
INVESTMENT COMPANIES (0.81%)
3,800 Dean Witter Government Income Trust................................... 31,350
18,700 Gemini II, Inc., Income Shares........................................ 175,312
17,800 Quest for Value Dual Purpose Fund, Inc., Income Shares................ 204,700
5,100 Quest for Value Dual Purpose Fund, Inc., Capital Shares*.............. 184,238
-------------
595,600
-------------
OIL AND GAS (5.82%)
7,500 Amoco Corp............................................................ 603,750
774 Apache Corp........................................................... 27,380
45,397 PanEnergy Corp........................................................ 2,042,865
2,200 Petroleum Helicopters, Inc., voting................................... 37,400
5,800 Petroleum Helicopters, Inc., non-voting............................... 91,350
5,000 Piedmont Natural Gas, Inc............................................. 116,875
10,800 Quaker State Corp..................................................... 152,550
7,100 Royal Dutch Petroleum Co.............................................. 1,212,325
-------------
4,284,495
-------------
</TABLE>
8
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS -- CONTINUED
MAP-EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER
OF
SHARES MARKET VALUE
- -------------- -------------
<C> <S> <C>
PAPER AND FOREST PRODUCTS (1.74%)
39,688 Pentair, Inc.......................................................... $ 1,279,938
-------------
PRINTING AND PUBLISHING (4.29%)
4,166 ACNielsen Corp.*...................................................... 63,011
12,500 Cognizant Corp.*...................................................... 412,500
12,500 Dun & Bradstreet Corp................................................. 296,875
26,900 Meredith Corp......................................................... 1,418,975
17,300 Nelson, Thomas Inc.................................................... 257,338
14,200 Times Mirror Co., Series A............................................ 706,450
-------------
3,155,149
-------------
REAL ESTATE INVESTMENT (2.44%)
28,300 Health Care Property
Investors, Inc...................................................... 990,500
51,900 United Dominion Realty Trust, Inc..................................... 804,450
-------------
1,794,950
-------------
RETAIL TRADE (5.86%)
47,400 Burlington Coat Factory Warehouse Corp.*.............................. 616,200
27,309 Cash America International, Inc....................................... 232,126
62,060 Genovese Drug Stores, Inc., Class A................................... 961,927
67,383 Revco D.S., Inc.*..................................................... 2,493,171
4,200 Universal International, Inc.*........................................ 7,350
-------------
4,310,774
-------------
TEXTILE & APPAREL (1.12%)
53,900 Oshkosh B'Gosh, Inc., Class A......................................... 821,975
-------------
UTILITIES -- ELECTRIC AND GAS (1.43%)
16,800 Cinergy Corp.......................................................... 560,700
6,500 Eastern Utilities Assoc............................................... 112,937
9,100 Noram Energy Corp..................................................... 139,913
9,150 Northwest Natural Gas Co.............................................. 217,313
1,500 Tucson Electric Power Co.*............................................ 24,938
-------------
1,055,801
-------------
<CAPTION>
NUMBER
OF
SHARES MARKET VALUE
- -------------- -------------
<C> <S> <C>
UTILITIES -- TELEPHONE (2.89%)
5,114 Alltel Corp........................................................... $ 160,452
22,900 GTE Corp.............................................................. 1,041,950
15,530 Sprint Corp........................................................... 619,259
13,176 360 Communications Co.*............................................... 304,695
-------------
2,126,356
-------------
VOCATIONAL TRAINING (1.61%)
77,800 National Education Corp.*............................................. 1,186,450
-------------
TOTAL COMMON STOCKS................................................... 65,448,948
-------------
PREFERRED STOCK (0.06%)
CONSUMER GOODS AND SERVICES
3,200 Craig Corp., Class A*................................................. 44,400
-------------
<CAPTION>
PRINCIPAL
AMOUNT
- --------------
<C> <S> <C>
CORPORATE BONDS (0.75%)
INSURANCE (0.16%)
$ 129,000 CII Financial, Inc.,
7.50% conv. sub. deb.,
due September 15, 2001.............................................. 115,778
-------------
VOCATIONAL TRAINING (0.59%)
474,000 National Education Corp.,
6.50% conv. sub. deb.,
due May 15, 2011.................................................... 433,710
-------------
TOTAL CORPORATE BONDS................................................. 549,488
-------------
SHORT-TERM INVESTMENTS (10.34%)
7,630,000 U.S. Treasury Bills, 4.70% to 5.02%,
due January 9 to February 20, 1997.................................. 7,606,023
-------------
TOTAL INVESTMENTS (100.08%)........................................... 73,648,859
-------------
Liabilities, less cash, receivables and other assets (-0.08%)......... (58,245)
-------------
NET ASSETS (100.00%).................................................. $ 73,590,614
-------------
-------------
</TABLE>
- ---------
* Non-income producing security.
The percentage shown for each investment category is the total value of that
category expressed as a percentage of the total net assets of the Fund.
See notes to financial statements.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAP-EQUITY FUND
NOTE A -- ACCOUNTING POLICIES
MAP-Equity Fund (the "Fund") is a diversified, open-end, management investment
company registered under the Investment Company Act of 1940, as amended.
Significant accounting policies of the Fund are as follows:
INVESTMENTS: Investments, except for short-term investments which are stated at
amortized cost which approximates market value, are valued at closing prices on
national securities exchanges. Securities traded on a national securities
exchange for which there are no sales on the valuation date and securities
traded over-the-counter, are valued at closing bid prices. Investment security
transactions are recorded on the date of purchase or sale. Realized gains and
losses on investment transactions are determined on the basis of identified
cost.
FEDERAL INCOME TAXES: The Fund does not provide for federal income taxes since
it intends to continue to qualify as a "regulated investment company" under the
Internal Revenue Code and to maintain this qualification by distributing each
year substantially all of its taxable net income and net realized capital gains
to its shareholders. Income dividends and capital gain distributions are
determined in accordance with Federal income tax regulations which may differ
from generally accepted accounting principles. Dividends and distributions which
exceed net investment income and net realized capital gains for financial
reporting purposes, but not for tax purposes, are reported as distributions in
excess of net investment income and distributions in excess of net realized
capital gains. During the year ended December 31, 1995, the Fund realized
$404,726 of capital losses which for federal income tax purposes are treated as
if they occurred on January 1, 1996.
DIVIDENDS: Dividends receivable on investment securities and dividends payable
to shareholders are recorded on the ex-dividend date.
ESTIMATES: The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
NOTE B -- INVESTMENT ADVISORY AND SERVICE AGREEMENTS
The Fund has investment advisory and service agreements with Markston Investment
Management ("Adviser"), a partnership between Markston International, Inc.
("Markston") and MBL Sales Corporation ("MBL Sales"). Markston is a 49% general
partner of Adviser, and MBL Sales is a 51% general partner. MBL Sales is a
wholly-owned subsidiary of MBLLAC Holding Corporation which is a wholly-owned
subsidiary of the MBL Life Assurance Corporation ("MBL Life"). Under the
investment advisory and service agreements, the Fund pays Adviser a periodic fee
(basic fee) at the annual rate of .50% of the first $200,000,000 of the Fund's
net assets, .45% of the next $100,000,000 of such value, .40% of the next
$100,000,000 of such value, and .35% of such value in excess of $400,000,000.
The basic fee may be adjusted by an amount determined according to a formula
based on the Fund's performance in relation to the Standard & Poor's 500 Index
("Index"). The formula provides for a weekly increase or decrease in the basic
fee by an amount equal to .05% of net assets per annum for each full two
percentage points that the Fund's investment performance, over a 24-month
period, is better or worse than that of the Index. The maximum adjustment is
.30%. The fee is computed and accrued daily and paid quarterly. For the year
ended December 31, 1996, the basic advisory fee amounted to $325,830. The actual
fee amounted to $231,755 which reflected a downward performance adjustment of
$94,075.
10
<PAGE>
NOTE B -- INVESTMENT ADVISORY AND SERVICE AGREEMENTS -- CONTINUED
In the event operating expenses of the Fund, exclusive of taxes and interest,
but including the investment advisory fee, exceed 1.5% of the first $30,000,000
of the Fund's average daily net asset value and 1% of the Fund's average daily
net asset value in excess of $30,000,000 for any fiscal year related thereto,
Adviser will reimburse the Fund promptly after the end of the fiscal year for
such excess. No reimbursement was required for the year ended December 31, 1996.
In addition, the Fund has a distribution agreement with First Priority
Investment Corporation ("FPIC"), a wholly-owned subsidiary of MBLLAC Holding
Corporation. During the year ended December 31, 1996, the Fund was advised that
FPIC received $22,754 as distributor of the Fund's shares. From this amount,
FPIC paid commissions to its sales force, as well as the cost of printing
prospectuses, advertising and other sales literature.
The compensation of each disinterested director is paid by the Fund at the rate
of $400 per meeting attended, plus an annual retainer of $900. Aggregate fees
paid during the year to the Fund's disinterested directors amounted to $6,300.
Two of the directors of the Fund and all officers of the Fund are either
officers or employees of MBL Life. The compensation of the directors, officers
and any employees of the Fund affiliated with Adviser or FPIC is paid by the
affiliated entities.
At December 31, 1996, MBL Life owned 1,794,449 Fund shares.
NOTE C -- CAPITAL STOCK
A summary of capital share transactions follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1996 Year Ended December 31, 1995
----------------------------- -----------------------------
Shares Amount Shares Amount
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Shares sold................................. 62,033 $ 1,297,411 47,046 $ 862,252
Shares issued in reinvestment of income
dividends and capital gain
distributions............................. 478,896 9,781,641 378,061 7,251,403
------------- ------------- ------------- -------------
540,929 11,079,052 425,107 8,113,655
Less shares repurchased..................... (101,992) (2,097,934) (189,308) (3,496,283)
------------- ------------- ------------- -------------
Net increase in number of shares outstanding
and net assets resulting from capital
share transactions........................ 438,937 $ 8,981,118 235,799 $ 4,617,372
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
NOTE D -- PURCHASES AND SALES OF INVESTMENTS
Purchases and proceeds from sales of investments during the year ended December
31, 1996, other than short-term investments, aggregated $31,025,750 and
$28,574,775, respectively.
The identified cost of investments owned at December 31, 1996 for federal income
tax purposes was $54,213,022. At December 31, 1996, gross unrealized
appreciation of investments was $20,207,066 and gross unrealized depreciation
was $771,229 resulting in net unrealized appreciation of $19,435,837 for federal
income tax purposes.
------------------------------------------------------------------------------
11
<PAGE>
FINANCIAL HIGHLIGHTS
MAP-EQUITY FUND
Selected data for each share of capital stock outstanding throughout the years
indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year...... $ 19.36 $ 16.67 $ 18.13 $ 20.02 $ 19.66 $ 15.84 $ 17.46 $ 14.27 $ 11.65 $ 13.65
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net investment income................... 0.36 0.43 0.37 0.36 0.42 0.49 0.52 0.36 0.32 0.33
Net realized and unrealized gain (loss)
on investments........................ 4.16 4.90 0.13 1.32 1.65 3.87 (1.41) 3.68 3.13 (0.825)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase (decrease) in net assets
from operations....................... 4.52 5.33 0.50 1.68 2.07 4.36 (0.89) 4.04 3.45 (0.495)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Dividends from net investment income.... (0.36) (0.43) (0.37) (0.36) (0.43) (0.49) (0.54) (0.41) (0.31) (0.475)
Distributions from net realized gain
from security transactions............ (2.86) (2.07) (1.59) (3.21) (1.28) (0.05) (0.19) (0.44) (0.52) (1.03)
Distribution required for tax purposes
over amounts recorded for financial
reporting purposes.................... -- (0.14) -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions..................... (3.22) (2.64) (1.96) (3.57) (1.71) (0.54) (0.73) (0.85) (0.83) (1.505)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of Year............ $ 20.66 $ 19.36 $ 16.67 $ 18.13 $ 20.02 $ 19.66 $ 15.84 $ 17.46 $ 14.27 $ 11.65
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Return(1)......................... 23.82% 32.50% 2.76% 8.67% 10.53% 27.69% -5.09% 28.18% 29.92% -4.44%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net Assets, End of Year (thousands)..... $73,591 $60,467 $48,130 $49,438 $48,602 $46,228 $37,148 $35,947 $20,752 $14,401
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Ratio of Expenses to Average Net
Assets................................ 0.74% 0.81% 1.07% 1.04% 1.01% 0.85% 1.01% 1.45% 1.52% 1.34%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Ratio of Net Investment Income to
Average Net Assets.................... 1.82% 2.30% 2.03% 1.76% 2.01% 2.69% 3.32% 2.47% 2.57% 2.29%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Portfolio Turnover Rate................. 52.88% 39.40% 39.31% 19.55% 17.60% 9.12% 6.22% 14.34% 16.85% 20.84%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Average Commission Rate Paid............ $0.0261 -- -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
</TABLE>
- -------------
(1) Total return does not reflect the sales commission (maximum 4.75%) charged
on Fund shares.
See notes to financial statements.
12
<PAGE>
NET ASSET VALUES AND PAYOUTS (UNAUDITED)
Following is a tabular illustration of the Fund's history since shares of the
Fund were first offered for sale on January 21, 1971. Prior to May 1, 1995, the
Fund was known as the Mutual Benefit Fund.
<TABLE>
<CAPTION>
Per share
--------------------------
Dividends
Net asset from net Capital
value investment gains
Year ended per share income distributions
- ----------------------------------------------------------
<S> <C> <C> <C>
December 31, 1971 $ 10.81 $ .09 --
December 31, 1972 11.27 .10 $ .02
December 31, 1973 8.98 .08 --
December 31, 1974 6.52 .17 --
December 31, 1975 8.26 .155 --
December 31, 1976 9.70 .18 --
December 31, 1977 9.05 .225 --
December 31, 1978 8.86 .33 --
December 31, 1979 9.46 .43 --
December 31, 1980 10.77 .53 --
December 31, 1981 10.55 .45 --
December 31, 1982 11.60 .775 1.39
December 31, 1983 13.93 .37 .28
December 31, 1984 11.08 .39 2.51
December 31, 1985 12.89 .38 1.01
December 31, 1986 13.65 .315 1.66
December 31, 1987 11.65 .475 1.03
December 31, 1988 14.27 .31 .52
December 31, 1989 17.46 .41 .44
December 31, 1990 15.84 .54 .19
December 31, 1991 19.66 .49 .05
December 31, 1992 20.02 .43 1.28
December 31, 1993 18.13 .36 3.21
December 31, 1994 16.67 .37 1.59
December 31, 1995 19.36 .43 2.21
December 31, 1996 20.66 .36 2.86
- ----------------------------------------------------------
</TABLE>
PORTFOLIO CHANGES (UNAUDITED)
For the year ended December 31, 1996:
INVESTMENTS ADDED
ACNielsen Corp.
AIM Strategic Income Fund, Inc.
Amoco Corp.
Avnet, Inc.
Bay Networks, Inc.
Burlington Coat Factory Warehouse Corp.
Cash America International, Inc.
Cognizant Corp.
Counsellors Tandem Securities Fund, Inc.
Data General Corp.
Dean Witter Government Income Trust
Electronic Data Systems Corp.
Gemini II, Inc., Income Shares
Imation Corp.
IMC Global, Inc.
Intel Corp.
Medpartners, Inc.
Motorola, Inc.
Nelson, Thomas Inc.
Novell, Inc.
Quest for Value Dual Purpose Fund, Inc.,
(Income and Capital Shares)
Schering-Plough Corp.
Sequent Computer Systems, Inc.
Silicon Graphics, Inc.
Storage Technology Corp.
Symantec Corp.
360 Communications Co.
Tucson Electric Power Co.
USF&G Corp.
Vicorp Restaurants, Inc.
Vishay Intertechnology, Inc.
INVESTMENTS ELIMINATED
AIM Strategic Income Fund, Inc.
Caremark International, Inc.
CCH, Inc. (Classes A and B)
Counsellors Tandem Securities Fund, Inc.
Cray Research, Inc.
Data I/O Corp.
Digital Equipment Corp.
Emerging Tigers Fund, Inc.
Global Government Plus Fund, Inc.
Global Total Return Fund, Inc.
Grossman's, Inc.
Intel Corp.
NextHealth, Inc.
Rhone-Poulenc Rorer, Inc.
Rite Aid Corp.
Silicon Graphics, Inc.
Smith's Food & Drug Centers, Inc., Class B
Teledyne, Inc., Series E (preferred)
Western Gas Resources, Inc.
13
<PAGE>
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<PAGE>
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<PAGE>
MAP-EQUITY FUND
520 Broad Street
Newark, New Jersey 07102-3111
1-800-559-5535
FUND DIRECTORS
Eugene J. Ciarkowski
Horace J. DePodwin
Herbert M. Groce Jr.
Kathleen M. Koerber
Jerome M. Scheckman
INVESTMENT ADVISER
Markston Investment Management
1 North Lexington Avenue
White Plains, New York 10601-1702
DISTRIBUTOR
First Priority Investment Corporation
520 Broad Street
Newark, New Jersey 07102-3111
1-800-559-5535
CUSTODIAN and TRANSFER AGENT
State Street Bank & Trust Co.
P.O. Box 8500
Boston, Massachusetts 02266-8500
1-800-343-0529
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
THIS REPORT HAS BEEN PREPARED FOR THE SHAREHOLDERS OF THE FUND. IT IS NOT
AUTHORIZED FOR OTHER DISTRIBUTION UNLESS PRECEDED OR ACCOMPANIED BY A CURRENT
PROSPECTUS, WHICH INCLUDES INFORMATION CONCERNING THE FUND AND THE SALES
COMMISSION CHARGED ON FUND SHARES.
[LOGO]
ANNUAL REPORT
DECEMBER 31, 1996
-------------------------------
FS-306 (2-97)
15152
<PAGE>
