THE ARBOR FUND
OVB Equity Income Portfolio
Class A Shares
Supplement dated February 28, 1997
to the Prospectus dated May 31, 1996
The Prospectus dated May 31, 1996 is hereby amended by the addition of the
following unaudited financial information for the Class A Shares of the OVB
Equity Income Portfolio for the period ended January 31, 1997.
Financial Highlights
The following table provides unaudited financial highlights for the Class A
Shares of the OVB Equity Income Portfolio for the period August 2, 1996
(commencement of operations) through January 31, 1997
August 2, 1996
OVB Equity Income Portfolio: to January 31, 1997 (1)
- ---------------------------- -----------------------
Net Asset Value Beginning of Period $ 10.00
--------
Net Investment Income 0.16
Net Realized and Unrealized Gains (Losses) on Investments 1.23
Distributions from Net Investment Income (0.16)
Distributions from Capital Gains 0.00
--------
Net Asset Value End of Period $ 11.23
========
Total Return 13.98%
========
Net Assets End of Period (000) $ 41,580
========
Ratio of Expenses to Average Net Assets 1.20%
========
Ratio of Net Investment Income to Average Net Assets 3.27%
========
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.25%
========
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers) 3.22%
========
Portfolio Turnover Rate 10%
========
Average Commission Rate $ 0.0787
========
- --------------------------------------------------------------------------------
(1) Commenced operations on August 2, 1996. All ratios for the period have
been annualized.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.
<PAGE>
THE ARBOR FUND
OVB Equity Income Portfolio
Class B Shares
Supplement dated February 28, 1997
to the Prospectus dated May 31, 1996
The Prospectus dated May 31, 1996 is hereby amended by the addition of the
following unaudited financial information for the Class B Shares of the OVB
Equity Income Portfolio for the period ended January 31, 1997.
Financial Highlights
The following table provides unaudited financial highlights for the Class B
Shares of the OVB Equity Income Portfolio for the period August 2, 1996
(commencement of operations) through January 31, 1997
August 2, 1996
OVB Equity Income Portfolio: to January 31, 1997 (1)
- ---------------------------- -----------------------
Net Asset Value Beginning of Period $ 10.00
--------
Net Investment Income 0.15
Net Realized and Unrealized Gains (Losses) on Investments 1.24
Distributions from Net Investment Income (0.15)
Distributions from Capital Gains 0.00
--------
Net Asset Value End of Period $ 11.24
========
Total Return 13.98%
========
Net Assets End of Period (000) $ 1,504
========
Ratio of Expenses to Average Net Assets 1.45%
========
Ratio of Net Investment Income to Average Net Assets 3.02%
========
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.50%
========
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers) 2.97%
========
Portfolio Turnover Rate 10%
========
Average Commission Rate $ 0.0787
========
- --------------------------------------------------------------------------------
(1) Commenced operations on August 2, 1996. All ratios for the period have
been annualized.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.
<PAGE>
THE ARBOR FUND
(the "Trust")
Supplement dated February 28, 1997 to the
Statement of Additional Information dated May 31, 1996
The Statement of Additional Information for the Trust is hereby amended and
supplemented by the following unaudited financial statements of the OVB Equity
Income Portfolio for the period August 2, 1996 (commencement of operations)
through January 31, 1997.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.
<PAGE>
January 31, 1997 (Unaudited)
- -------------------------------------------------------------------------------
The OVB Funds Equity
Income Portfolio
- -------------------------------------------------------------------------------
PIE CHART WAS LOCATED HERE IN PRINTED VERSION
WITH THE FOLLOWING BREAKDOWNS
Common Stock -- 80%
U.S. Treasury Obligations -- 6%
Repurchase Agreement -- 7%
Preferred Stock -- 7%
% of Total Portfolio
Investments
Value
Description Shares (000)
- --------------------------------------------------------------------------------
Common Stocks--80.2%
Aerospace & Defense--2.8%
Boeing 252 $ 27
General Motors, Class H 5,000 294
Rockwell International 6,000 395
United Technologies 7,000 488
Total Aerospace & Defense 1,204
Automotive--1.3%
Chrysler 15,700 548
Banks--3.5%
Bankers Trust 4,000 340
Chase Manhattan 4,000 370
Citicorp 3,500 407
PNC Bank 10,000 398
- --------------------------------------------------------------------------------
Total Banks 1,515
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Value
Description Shares (000)
- --------------------------------------------------------------------------------
Chemicals--1.7%
Hercules 9,000 $ 397
Witco 12,000 357
Total Chemicals 754
Containers & Packaging--0.9%
Crown Cork & Seal 7,000 403
Cosmetics, Soaps & Toiletries--2.7%
Colgate-Palmolive 4,000 387
International Flavors & Fragrances 8,000 355
Procter & Gamble 3,500 404
Total Cosmetics, Soaps & Toiletries 1,146
Drugs--4.9%
American Home Products 13,200 837
Bristol-Myers Squibb 3,500 445
Johnson & Johnson 10,000 576
Pharmacia & Upjohn 7,000 261
Total Drugs 2,119
Electric Services--8.6%
Cinergy 11,000 380
CMS Energy 10,000 335
Dominion Resources of Virginia 18,000 713
DTE Energy 10,000 314
Entergy 12,000 323
FPL Group 6,500 288
Illinova 12,000 317
LG&E 13,000 315
Southern 32,900 720
Total Electric Services 3,705
Electronic & Other Electrical Equipment--1.7%
General Electric 7,000 721
Financial Services--2.8%
Beneficial 6,000 404
FHLMC 14,000 424
FNMA 10,000 395
- --------------------------------------------------------------------------------
Total Financial Services 1,223
- --------------------------------------------------------------------------------
1
<PAGE>
Statement of Net Assets (Unaudited)
- -------------------------------------------------------------------------------
The OVB Funds Equity
Income Portfolio (continued)
- -------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Value
Description Shares (000)
- --------------------------------------------------------------------------------
Food, Beverage & Tobacco--2.4%
General Mills 5,000 $339
H.J. Heinz 17,000 684
Total Food, Beverage & Tobacco 1,023
Gas/Natural Gas--7.7%
AGL Resources 15,000 313
Consolidated Natural Gas 6,000 334
El Paso Natural Gas 8,000 431
KN Energy 9,000 350
MCN 12,000 389
National Fuel & Gas 10,000 423
Washington Gas Light 15,000 332
Williams 18,400 738
Total Gas/Natural Gas 3,310
Insurance--5.2%
American General 10,000 399
Jefferson Pilot 10,000 590
Marsh & McLennan 3,500 377
Safeco 10,000 380
Travelers 9,333 489
Total Insurance 2,235
Machinery--0.5%
Pall 10,000 224
Medical Products & Services--1.4%
Baxter International 7,000 323
C.R. Bard 10,000 283
Total Medical Products & Services 606
Office Equipment--0.7%
Xerox 5,000 293
Paper & Paper Products--0.5%
Tambrands 5,000 205
Petroleum Refining--5.9%
Amoco 7,300 635
Atlantic Richfield 4,000 529
Exxon 6,000 622
Occidental Petroleum 15,000 383
Texaco 3,500 371
- --------------------------------------------------------------------------------
Total Petroleum Refining 2,540
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Value
Description Shares (000)
- --------------------------------------------------------------------------------
Printing & Publishing--2.1%
McGraw-Hill 12,000 $ 597
Tribune 8,000 306
Total Printing & Publishing 903
Real Estate Investment Trust--10.6%
Cali Realty 14,000 462
Camden Property Trust 14,000 378
Carr Realty 15,000 437
Centerpoint Properties Trust 13,000 423
CWM Mortgage Holdings 15,000 326
Duke Realty Investments 12,000 476
Liberty Property Trust 16,000 412
National Golf Properties 13,000 397
Post Properties 10,000 415
Public Storage 16,000 468
Security Capital Pacific Trust 16,000 380
Total Real Estate Investment Trust 4,574
Retail--0.9%
Sears Roebuck 8,000 384
Semi-Conductors/Instruments--0.8%
AMP 8,000 326
Telephones & Telecommunication--5.4%
Alltel 12,000 386
Bellsouth 16,800 746
GTE 8,000 376
SBC 9,000 494
Sprint 8,000 326
- --------------------------------------------------------------------------------
Total Telephones & Telecommunication 2,328
- --------------------------------------------------------------------------------
Transportation Services--1.6%
CSX 14,500 703
- --------------------------------------------------------------------------------
2
<PAGE>
January 31, 1997 (Unaudited)
- -------------------------------------------------------------------------------
The OVB Funds Equity
Income Portfolio (concluded)
- -------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Face Amt (000)/ Value
Description Shares (000)
- --------------------------------------------------------------------------------
Water Utilities--3.6%
American Water Works 29,000 $ 674
Aquarion 6,100 171
IWC Resources 2,000 64
Southern California Water 29,000 653
Total Water Utilities 1,562
Total Common Stocks (Cost $30,798) 34,554
Preferred Stocks--7.2%
Georgia Power 15,000 371
J.P. Morgan 7,000 351
MCI 20,000 500
Merrill Lynch 15,000 441
Microsoft 8,000 666
TVA 15,000 388
US West 15,000 371
Total Preferred Stocks (Cost $3,061) 3,088
U S. Treasury Obligations--5.8%
U.S. Treasury Bill
0.000%, 05/01/97 $ 500 494
U.S. Treasury Bond
6.000%, 08/15/99 1,000 999
U.S. Treasury Note
6.250%, 07/31/98 1,000 1,006
Total U.S Treasury Obligations (Cost $2,492) 2,499
Repurchase Agreement--6.5 %
Morgan Stanley
5.52%, dated 01/31/97, matures
02/03/97, repurchase price $2,822,889
(collateralized by FNMA obligation,
par value $3,099,000, 8.500%, matures
08/01/11, market value $2,908,355) 2,822 2,822
- --------------------------------------------------------------------------------
Total Repurchase Agreement (Cost $2,822) 2,822
- --------------------------------------------------------------------------------
Total Investments--99.7% (Cost $39,173) 42,963
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Value
Description (000)
- --------------------------------------------------------------------------------
Other Assets and Liabilities--0.3 %
Other Assets and Liabilities, Net $ 121
Total Other Assets and Liabilities 121
Net Assets:
Portfolio shares of Class A (unlimited
authorization--no par value) based on
3,701,778 outstanding shares of
beneficial interest 37,882
Portfolio shares of Class B (unlimited
authorization--no par value) based on
133,901 outstanding shares of
beneficial interest 1,411
Accumulated net realized gain on investments 1
Net unrealized appreciation on investments 3,790
Total Net Assets--100.0% $43,084
Net Asset Value, Offering Price and
Redemption Price Per Share--Class A $ 11.23
Net Asset Value, Offering Price and
Redemption Price Per Share--Class B $ 11.24
- --------------------------------------------------------------------------------
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
TVA Tennessee Valley Authority
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
Statement of Operations
- -------------------------------------------------------------------------------
For the six-month period ended January 31, 1997 (Unaudited)
(In Thousands)
--------------
Equity Income
Portfolio
--------------
Investment Income:
Interest Income .............................................. $226
Dividend Income .............................................. 506
------
Total Investment Income ...................................... 732
------
Expenses:
Administrator Fees ........................................... 33
Less Administration Fees Waiver............................... --
Investment Advisory Fees ..................................... 120
Less Investment Advisory Fees Waiver ......................... (8)
Sub-Advisory Fees ............................................ --
Custodian Fees ............................................... 3
Professional Fees ............................................ 5
Registration & Filing Fees ................................... 14
Printing Expenses ............................................ 2
Trustee Fees ................................................. 2
Pricing Fees ................................................. 1
Distribution Fees(l) ......................................... 1
Transfer Agency Fees ......................................... 20
Amortization of Organization Costs ........................... 2
Miscellaneous Expenses ....................................... 1
------
Total Expenses ............................................... 196
------
Net Investment Income ...................................... 536
Net Realized Gain From Securities Sold ....................... 1
Net Change in Unrealized Appreciation
on Investments ............................................. 3,790
------
Net Realized and Unrealized Gain on Investments
3,791
======
Increase in Net Assets Resulting From
Operations ................................................. $4,327
======
(1) Distribution Fees are only incurred on Class B shares.
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Statement of Changes in Net Assets January 31, 1997
- -------------------------------------------------------------------------------
For the six-month period ended January 31, 1997 (Unaudited)
(In Thousands)
--------------
Equity Income
Portfolio
--------------
1997
--------------
Operations:
Net Investment Income ........................................ $536
Net Realized Gain from Securities Sold ....................... 1
Net Change in Unrealized Appreciation
on Investments ............................................. 3,790
-------
Net Increase in Net Assets Resulting
from Investment Operations ................................. 4,327
-------
Distributions:
Net Investment Income:
Class A .................................................... (522)
Class B .................................................... (14)
Net Realized Gains
Class A .................................................... --
Class B .................................................... --
-------
Total Distributions: ......................................... (536)
-------
Capital Share Transactions:
Class A:
Shares Issued .............................................. 39,723
Shares Issued in Lieu of Cash Distributions ................ --
Shares Redeemed ............................................ (1,841)
-------
Total Class A Transactions ................................... 37,882
-------
Class B:
Shares Issued .............................................. 1,424
Shares Issued in Lieu of Cash Distributions ................ 14
Shares Redeemed ............................................ (27)
-------
Total Class B Transactions ................................... 1,411
-------
Increase in Net Assets from Capital
Share Transactions ......................................... 39,293
-------
Total Increase in Net Assets ................................. 43,084
-------
Net Assets:
Beginning of Year............................................. --
-------
End of Year .................................................. $43,084
=======
Capital Share Transactions:
Class A:
Shares Issued .............................................. 3,875
Shares Issued in Lieu of Cash Distributions ................ --
Shares Redeemed ............................................ (173)
-------
Total Class A Share Transactions ............................. 3,702
-------
Class B:
Shares Issued .............................................. 135
Shares Issued in Lieu of Cash Distributions ................ 1
Shares Redeemed ............................................ (2)
-------
Total Class B Share Transactions ............................. 134
-------
Total Share Transactions ..................................... 3,836
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Financial Highlights
- -------------------------------------------------------------------------------
For a Share Outstanding Throughout the Period (Unaudited)
<TABLE>
<CAPTION>
Net Asset Net Realized Distributions Distributions Net Asset
Value, Net and Unrealized from Net from Value,
Beginning Investment Gains (Losses) Investment Capital End of
of Period Income (Loss) on Investments Income Gains Period
--------- ------------- -------------- ------------- ------------- ---------
Equity Income Portfolio
<S> <C> <C> <C> <C> <C> <C>
CLASS A
1997(1) $10.00 $0.16 $1.23 $(0.16) $ 0.00 $11.23
CLASS B
1997(1) $10.00 $0.15 $1.24 $(0.15) $ 0.00 $11.24
</TABLE>
- ----------
(1) Commenced operations on August 2, 1996. All ratios for the period have been
annualized.
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
January 31, 1997 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratio of
Ratio Of Net Investment
Ratio of Expenses to Income (Loss)
Ratio of Net Investment Average to Average
Net Assets, Expenses to Income (Loss) Net Assets Net Assets Portfolio Average
Total End Of Average to Average (Excluding (Excluding Turnover Commission
Return Period (000) Net Assets Net Assets Waivers) Waivers) Rate Rate
------ ------------ ----------- ------------- ----------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
13.98% $41,580 1.20% 3.27% 1.25% 3.22% 10% $0.0787
13.98% $ 1,504 1.45% 3.02% 1.50% 2.97% 10% $0.0787
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- -------------------------------------------------------------------------------
1. Organization
The Arbor Fund (the "Trust") was organized as a Massachusetts business trust
under a Declaration of Trust dated July 24, 1992 and had no operations through
February 1, 1993, other than those related to organizational matters and the
sale of initial shares to SEI Fund Resources (the "Administrator"), on October
9, 1992. SEI Financial Management Corporation, a wholly-owned subsidiary of SEI
Investments Company, is the owner of all beneficial interest in the
Administrator. The Trust is registered under the Investment Company Act of 1940,
as amended, as an open-end management company. The financial statements included
herein relate to the Trust's OVB Equity Income Portfolio (the "Portfolio"). The
portfolios' prospectus provides a description of the portfolio's investment
objectives, policies and strategies. The financial statements of the other
portfolios in the OVB Family of Funds are presented separately. The assets of
each portfolio are segregated, and a shareholder's interest is limited to the
portfolio in which shares are held. The Portfolio is registered to offer two
classes of shares: Class A and Class B (see note 3).
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies followed by
the Portfolio.
Security Valuation --
Investments in equity securities that are traded on a national securities
exchange (or reported on NASDAQ national market system) are stated at the last
quoted sales price, if readily available for such equity securities on each
business day; other equity securities traded in the over-the-counter market and
listed equity securities for which no sale was reported on that date are stated
at the last quoted bid price. Debt obligations exceeding sixty days to maturity
for which market quotations are readily available are valued at the most
recently quoted bid price. Debt obligations with sixty days or less until
maturity are valued at their amortized cost.
Federal Income Taxes --
It is the Portfolio's intention to continue to qualify as a regulated investment
company for Federal income tax purposes by complying with the appropriate
provisions of the Internal Revenue Code of 1986, as amended. Accordingly, no
provision for Federal income taxes is required in the financial statements.
<PAGE>
8
January 31, 1997 (Unaudited)
- -------------------------------------------------------------------------------
Security Transactions and Related Income --
Security transactions are accounted for on the date the security is purchased or
sold (trade date). Dividend income is recognized on the ex-dividend date, and
interest income is recognized on the accrual basis. Costs used in determining
realized gains and losses on the sales of investment securities are those of the
specific securities sold.
Repurchase Agreements --
The Portfolio invests in tri-party repurchase agreements. Securities held as
collateral for tri-party repurchase agreements are maintained in a segregated
account by the broker's custodian bank until maturity of the repurchase
agreement. Provisions of the repurchase agreements require that the market value
of the collateral, including accrued interest thereon, is sufficient in the
event of default of the counterparty. If the counterparty defaults and the value
of the collateral declines or if the counterparty enters an insolvency
proceeding, realization and/or retention of the collateral by the Portfolio may
be delayed or limited.
Net Asset Value Per Share --
The net asset value per share of the Portfolio is calculated each business day.
In general, it is computed by dividing the assets of the Portfolio, less its
liabilities, by the number of outstanding shares of the Portfolio.
Classes --
Class specific expenses are borne by that class. Income, expenses, and realized
and unrealized gains/losses are allocated to the respective classes of shares on
the basis of their relative daily net assets.
Expenses --
Expenses that are directly related to one of the portfolios are charged directly
to that portfolio. Other operating expenses of the Trust are prorated to the
portfolios on the basis of relative net assets.
Distributions --
Distributions from net investment income for the Portfolio are paid to
shareholders in the form of quarterly dividends. Any net realized capital gains
on sales of securities are distributed to shareholders at least annually.
The amounts of distributions from net investment income and net realized
capital gains are determined in accordance with federal income tax regulations,
which may
(continued)
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (Unaudited)
- -------------------------------------------------------------------------------
differ from those amounts determined under generally accepted accounting
principles. These book/tax differences are either temporary or permanent in
nature. To the extent these differences are permanent, they are charged or
credited to paid-in capital in the period that the difference arises.
3. Investment Advisory, Administrative, Transfer Agent, and Distribution
Agreements:
One Valley Bank, National Association (the "Adviser") serves as investment
adviser to the Portfolio pursuant to an investment advisory agreement (the
"Advisory Agreement") with the Trust. For its services, the Adviser is entitled
to a fee, which is calculated daily and paid monthly, at an annual rate based on
the average daily net assets of the Portfolio of .74%. The Adviser has agreed to
voluntarily waive a portion of its fee so that the total annual expenses of the
portfolio will not exceed the voluntary expense limitations adopted by the
Adviser. In the event that the total annual expenses of the portfolio, after
reflecting a waiver of all fees by the Adviser, exceed the specific limitations,
the Adviser has agreed to bear such excess. Fee waivers by the Adviser are
voluntary and may be terminated at any time.
The Trust and the Administrator have
10
<PAGE>
January 31, 1997 (Unaudited)
- -------------------------------------------------------------------------------
entered into an administration agreement. Under terms of the administration
agreement, the Administrator is entitled to a fee calculated daily and paid
monthly at an annual rate of .20% of the average daily net assets of the
portfolio. There is a minimum annual fee of $100,000 payable to the
Administrator by the Portfolio. The Administrator also serves as the shareholder
servicing agent for the Trust. Compensation for this service is paid under the
administration agreement.
DST Systems, Inc. serves as the transfer agent and dividend disbursing
agent for the Portfolio under a transfer agency agreement with the Trust.
The Trust and SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI Investments Company, have entered into a
distribution agreement. The Class B shares of the Portfolio have a distribution
plan (the "Class B Plan"), pursuant to Rule 12b1 under the Investment Company
Act of 1940, as amended. As provided in the Distribution Agreement and the Class
B Plan, the Trust will pay a fee, at an annual rate of .25% of the Portfolio's
average daily net assets attributable to Class B shares to the Distributor as
compensation for its services.
4. Organizational Costs and Transactions with Affiliates:
Organizational costs have been capitalized by the Trust and are being amortized
over sixty months beginning with the commencement of operations. In the event
any of the initial shares are redeemed by any holder thereof during the period
that the fund is amortizing its organizational costs, the redemption proceeds
payable to the holder thereof by the Trust will be reduced by the unamortized
organizational costs in the same ratio as the number of initial shares being
redeemed bears to the number of initial shares outstanding at the time of the
redemption. These costs include legal fees of approximately $23,000 for
organizational work performed by a law firm of which two officers of the Trust
and a Trustee of the Trust are partners.
Certain officers of the Trust are also officers of the Administrator
and/or Distributor. Such officers are paid no fees by the Trust for serving in
their respective roles.
(continued)
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (Unaudited)
- -------------------------------------------------------------------------------
5. Investment Transactions:
The cost of security purchases and the proceeds from the sale of securities,
other than temporary cash investments, during the period ended January 31, 1997
were as follows:
Equity Income Portfolio
U.S.
Government
Securities All Other Total
(000) (000) (000)
---------- --------- -------
Purchases $ 5,011 $33,929 $38,940
Sales 3,006 75 3,081
At January 31, 1997, the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes were not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation on investment securities at
January 31, 1997, for the Portfolio is as follows:
Net
Appreciated Depreciated Unrealized
Securities Securities Appreciation
(00O) (000) (000)
----------- ----------- -------------
Equity
Income 3,969 (179) 3,790
12
<PAGE>
