JANUARY 31, 1997
[OVB FUNDS LOGO]
PORTFOLIOS OF THE ARBOR FUND
ANNUAL
REPORT
TO SHAREHOLDERS
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[OVB FUNDS LOGO]
TABLE OF CONTENTS
Letter to Shareholders..............................1
Investment Adviser's Review.........................2
Management's Discussion & Analysis..................5
Report of Independent Accountants..................12
Financial Statements...............................13
Notice to Shareholders.............................46
THE OVB FUNDS:
[BULLET] ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR
ANY OTHER GOVERNMENT AGENCY;
[BULLET] ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY ONE VALLEY
BANK, N.A. OR ANY OF ITS AFFILIATES;
[BULLET] INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
SEI FINANCIAL SERVICES COMPANY, THE DISTRIBUTOR OF THE OVB FUNDS, IS NOT
AFFILIATED WITH ONE VALLEY BANK, N.A. ONE VALLEY BANK, N.A. SERVES AS INVESTMENT
ADVISER FOR THE OVB FUNDS.
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[OVB LOGO]
JANUARY 31,1997
LETTER TO SHAREHOLDERS
[PHOTO OF DAVID LEE, PRESIDENT]
DEAR OVB FUNDS SHAREHOLDER:
FISCAL 1996 SAW CONTINUED GROWTH FOR THE OVB FAMILY OF FUNDS, BOTH IN THE NUMBER
OF INVESTORS AND IN THE TOTAL ASSETS UNDER MANAGEMENT.
DURING THE YEAR, FOR EXAMPLE, TOTAL ASSETS OF THE OVB FUNDS GREW FROM $348.5
MILLION ON FEBRUARY 1, 1996 TO $483.5 MILLION AS OF JANUARY 31, 1997.
WE ARE PLEASED TO NOTE THAT A CONSIDERABLE PERCENTAGE OF THESE NEW ASSETS CAME
FROM NEW INVESTORS, WHO HAVE DISCOVERED THE OVB FUNDS THROUGH A VARIETY OF
AVENUES, INCLUDING MARKETING PROGRAMS, NEW INVESTMENT CHANNELS, OR WORD-OF-MOUTH
RECOMMENDATIONS. WE WELCOME THESE NEW INVESTORS TO OUR INVESTMENT FAMILY, AND
LOOK FORWARD TO SERVING THEM THROUGH OUR COMBINATION OF LOW-COST INVESTING,
CONVENIENCE, AND EXPERIENCED PROFESSIONAL MANAGEMENT.
WE ARE ALSO PLEASED TO REPORT ON THIS YEAR'S SUCCESSFUL INTRODUCTION OF THE OVB
FUNDS EQUITY INCOME PORTFOLIO. FROM ITS INCEPTION DATE ON AUGUST 2, 1996, THIS
FUND QUICKLY GREW FROM $24 MILLION IN ASSETS TO OVER $40 MILLION AT YEAR-END.
THIS RAPID GROWTH INDICATES THAT OUR INVESTORS RECOGNIZE THE VALUE OF A
CONSERVATIVELY MANAGED FUND THAT SEEKS BOTH CURRENT INCOME AND LONG-TERM CAPITAL
GROWTH.
ON BEHALF OF OUR INVESTMENT MANAGEMENT TEAM, WE THANK ALL OUR INVESTORS, NEW AND
LONG-STANDING, FOR THEIR CONTINUED CONFIDENCE IN THE OVB FAMILY OF FUNDS.
/S/SIGNATURE
David Lee
President
The Arbor Fund
1
<PAGE>
INVESTMENT ADVISER'S REVIEW
Following a year in which all three asset classes -- stocks, bonds, and money
market instruments -- rose dramatically, fiscal 1996 saw continued upward
movement, although to a lesser degree.
The same was true for the portfolios of the OVB Funds, which all produced
positive results, despite minor disappointments along the way.
Given the uncertainties of the market, one of the most gratifying results of
1996 was the continued confidence demonstrated by investors in the OVB Funds.
Over the course of the year, our growing family of shareholders added to their
investments on a steady basis, regardless of the market's actions in the
near-term.
This indicates that our investors understand the value of remaining committed
to the market for the long run. We believe this type of commitment is the key to
positive long-term results.
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JANUARY 31,1997
MONEY MARKET REVIEW
Money market funds continued to perform well in 1996, benefitting from a stable
environment for short-term interest rates. In fact, while there were minor
fluctuations throughout the year, short-term rates began and ended 1996 at about
the same level.
As in 1994, the money market sector actually outperformed the longer-term
fixed income sector. For example, the Donoghue's First Tier Average delivered a
total return of 4.84%, compared with a total return of 2.39% for the Lehman
Government/Corporate Index.
In the year ahead, we see a continuation of the current trend for short-term
rates, which should move narrowly in the absence of any major action by the
Federal Reserve Board. This scenario could change, of course, if economic growth
or other market conditions spur the Fed to take more aggressive action.
BOND MARKET REVIEW
Fiscal 1996 was a disappointing year for bonds, particularly following the
outstanding performance of 1995. Total returns for most bonds were barely
positive, with the Lehman Government/Corporate Index showing a gain of less than
3% for the year.
Ironically, this performance was not the result of any action by the Federal
Reserve Board, which remained neutral throughout the year, but rather of the
market's fear of Fed action. Investor nervousness over any positive economic
signals created a self-fulfilling prophesy of higher market rates.
Over the course of the year, investors pushed the ten-year Treasury Note from
a yield of 5.60% to 6.40%, leading to a significant decline in prices.
In the year to come, we believe the market will remain volatile, given the
continued strength of the economy and the growing threat of at least minor
tightening by the Federal Reserve Board. However, we don't anticipate a major
rate hike during the year -- unless, of course, investors continue to play the
role of a virtual Fed.
(CONTINUED)
3
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INVESTMENT ADVISOR'S REPORT (CONTINUED)
EQUITY MARKET REVIEW
After the spectacular gains of 1995, it was widely expected that the equity
markets would take a breather in 1996. Instead, stocks continued their march
upward, with the Dow Jones Industrial Average moving easily past 6000, and then
7000.
It was, however, a somewhat difficult year for the nation's active fund
managers, who struggled to keep up with a market that was pouring assets into
passively-managed index funds. The result of this trend was that any issues
fortunate enough to be listed on the S&P 500 were buoyed to new heights, while
many mid-cap and small-cap issues found it difficult to win investor attention.
Going forward, we believe there could be a change in leadership in the stock
market, as investors realize that there are more than 500 stars in the equity
universe, and that many of them offer much more favorable valuations than their
larger counterparts.
Cautionary indicators include continuing economic growth as indicated by the
GDP and rising employment levels. This, along with concerns about "irrational
exuberance" in the equity markets, could lead the Federal Reserve Board to take
preemptive action on interest rates.
CONCLUSION
In short, fiscal year 1996 continued to demonstrate what it means to be an
investor.
Very often, being an investor means contending with a confusing array of
contradictions, such as this year's demonstration that a good economy is bad
news for bonds.
It means having the patience to endure periodic downturns such as those of
last summer, while waiting for the good days that make it all worthwhile.
It means being an active participant in the business of America, hoping that
profits will grow, and that debts will be paid in a timely manner.
Above all, it means having confidence to set aside money today in hopes of
greater rewards tomorrow.
We believe that investing is an important part of the American fabric. And
we feel privileged to serve those who continue to express their confidence in
the future by investing through the OVB Family of Funds.
/S/ SIGNATURE
J. Randy Valentine
Senior Vice President
One Valley Bank
4
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JANUARY 31,1997
MANAGEMENT'S DISCUSSION & ANALYSIS
THE OVB FUNDS PRIME
OBLIGATIONS PORTFOLIO
- --------------------------------------------------------------------------------
SUB-ADVISER: WELLINGTON MANAGEMENT COMPANY LLP
For the fiscal year ended January 31, 1997, The OVB Funds Prime Obligations
Portfolio, Class A, posted a total return of 5.11%, while Class B shares
returned 4.85%. By comparison, the fund's benchmark, the IBC's First Tier
Average, returned 4.84%.
A line graph depicting the comparison of change in the value of a $10,000
investment in the OVB Prime Obligation Money Market, Class A, versus the
IBC/Donoghue First Tier Average
12/31/93 1/31/94 1/31/95 1/31/96 1/31/97
OVB Prime Obligation Money
Market, Class A $10,000 $10,025 $10,441 $11,031 $11,595
IBC/Donoghue First Tier
Average $10,000 $10,022 $10,413 $10,978 $11,510
A line graph depicting the comparison of change in the value of a $10,000
investment in the OVB Prime Obligation Money Market, Class B, versus the
IBC/Donoghue First Tier Average
2/28/94 1/31/95 1/31/96 1/31/97
OVB Prime Obligation Money
Market, Class B $10,000 $10,368 $10,927 $11,457
IBC/Donoghue First Tier
Average $10,000 $10,370 $10,933 $11,462
The Federal Reserve left short-term rates unchanged throughout the fiscal
year. With the central bank anchoring short-term yields at 5.25%, yields on
longer maturity instruments moved with the ebbs and flows of market psychology.
Signs of stronger economic growth, even without the shadow of inflation,
prompted the Fed to shift their bias toward raising rates later in the year.
However, no action was taken.
For most of the first half of the year, the fund sought extra yield by
maintaining a longer average maturity. In the second half
(CONTINUED)
5
<PAGE>
MANAGEMENT'S DISCUSSION & ANALYSIS (CONTINUED)
of the year, we looked for opportunities to lengthen maturities still further
when we felt the market prices fully discounted the Fed's outlook.
Throughout the year, the portfolio's holdings consisted primarily of
commercial paper and U.S. agency securities.
Looking ahead, we see a continuation of the current environment for
short-term instruments, and plan to keep maturities extended as long as the
yield advantage remains strong.
THE OVB FUNDS WEST VIRGINIA
TAX-EXEMPT INCOME PORTFOLIO
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For the fiscal year ended January 31, 1997, The OVB Funds West Virginia
Tax-Exempt Income Portfolio, Class A, posted a total return of 3.35%. For Class
B shares, total return was 3.19%. By comparison, the fund's two benchmarks, the
Lipper Intermediate Term Municipal Debt Funds Average and the Lipper General
Municipal Debt Funds Average, returned 3.07% and 2.79%, respectively, for the
period.
The surprising strength of the economy weighed heavily on the municipal bond
market during 1996. With 3.4% growth in the Gross Domestic Product for calendar
year 1996, and increasing competition from the high-flying equity markets,
municipals turned in a disappointing performance overall.
On a positive note, the West Virginia Tax-Exempt Income Portfolio benefitted
from an early decision to shorten average weighted maturity to about 15 years
for most of 1996, compared with a range of up to 17 years during 1995. This
adjustment to the maturity of the fund was a function of the shape of the
tax-free yield curve. We felt that the fund was not going to be rewarded for its
longer duration. This decision reduced the fund's vulnerability to falling
prices.
A line graph depicting the comparison of change in the value of a $10,000
investment in the OVB West Virginia Tax-Exempt Income Fund, Class A and B,
versus the Lehman Municipal Bond Index, the Lipper General Muni Debt Funds
Average, and the Lipper Intermediate Muni Debt Funds Average
12/31/93 1/31/94 1/31/95 1/31/96 1/31/97
OVB West Virginia Tax-
Exempt Income, Class A $10,000 $10,094 $9,753 $11,085 $11,456
OVB West Virgina Tax-
Exempt Income, Class B $10,000 $10,092 $9,727 $11,016 $11,368
Lehman Municipal Bond Index $10,000 $10,114 $9,754 $11,223 $11,655
Lipper General Municipal
Debt Funds Average $10,000 $10,113 $9,624 $10,972 $11,278
Lipper Intermediate Municipal
Debt Funds Average $10,000 $10,104 $9,842 $10,989 $11,326
6
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JANUARY 31,1997
The portfolio's commitment to superior quality was maintained throughout the
year, and we continue to focus on insured and escrowed issues that offer strong
credit quality and high degrees of liquidity.
Looking ahead, we believe that West Virginia municipal securities continue to
offer attractive current yields, particularly for those in higher income
brackets. And, we believe that overall market conditions are improving, which
should lead to better total returns in the coming year.
THE OVB FUNDS GOVERNMENT
SECURITIES PORTFOLIO
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For the fiscal year ended January 31, 1997, The OVB Funds Government Securities
Portfolio, Class A, posted a total return of 1.83%. For Class B shares, total
return was 1.69%. By comparison, the fund's two benchmarks, the Lehman Brothers
Government/Corporate Index and the Lipper Intermediate Investment-Grade Debt
Funds Average, returned 2.39% and 2.77%, respectively, for the period.
The biggest story of 1996 was the continuing strength of the economy as
measured by the Gross Domestic Product. The GDP's rise of 3.4% for the calendar
year came as a considerable surprise to the fixed income markets, which had
expected weaker growth in light of rising personal debt levels and bankruptcies.
The result was total returns that were well below the coupon rates of most
government securities.
A line graph depicting the comparison of change in the value of a $10,000
investment in the OVB Government Securities Fund, Class A and B,
versus the Lehman Government/Corporate Index, the Lipper Intermediate
Investment-Grade Debt Funds Average
12/31/93 1/31/94 1/31/95 1/31/96 1/31/97
OVB Government Securities
Fund, Class A $10,000 $10,100 $9,648 $11,398 $11,606
OVB Government Securities
Fund, Class B $10,000 $10,098 $9,631 $11,338 $11,530
Lehman Government/Corporate
Index $10,000 $10,150 $9,834 $11,577 $11,854
Lipper Intermediate Investment-
Grade Debt Funds Average $10,000 $10,125 $9,789 $11,312 $11,625
As fiscal 1996 began, the average weighted maturity of the Government
Securities Portfolio was lengthened somewhat in anticipation of lower rates and
a stronger taxable fixed income market. For most of the year, the average
weighted maturity of the portfolio stood near the upper end of its range, at
just under nine years. This strategy had worked well in 1995, but led to lower
returns in the economic environment of 1996.
(CONTINUED)
7
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MANAGEMENT'S DISCUSSION & ANALYSIS (CONTINUED)
Throughout the year, we maintained our strategy of investing primarily in
government issues. Short-term returns may have been enhanced by exercising the
fund's option to invest up to 35% of assets in non-government issues. However,
it is our continued belief that investors have the right to expect that the fund
will have the characteristics of a government portfolio. Therefore, our
non-government investments generally averaged about 15% of assets.
Looking ahead, we see conflicting signals in the government bond market for
the year ahead.
On the negative side, the continued strength in the equity markets not only
draws assets away from the fixed income markets, but also contributes to a
heightened sense of economic well-being on the part of consumers, encouraging
further borrowing and spending.
On the positive side, tax revenues are currently exceeding the rate of
Federal spending so that, when debt interest is factored out, the government is
actually running at a primary budget surplus.
In addition, economic weakness in most of the largest industrialized nations
is keeping inflation and interest rates at relatively low levels, and dampening
export demand. This should help keep a lid on inflation in the U.S. further
increasing the chance that the Federal Reserve Board will remain neutral or
accommodative.
Taken on balance, these factors appear to point to a more rewarding, though
volatile, bond market in the coming year.
THE OVB FUNDS EMERGING
GROWTH PORTFOLIO
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For the fiscal year ended January 31, 1997, The OVB Funds Emerging Growth
Portfolio, Class A, posted a total return of 9.30%, compared with a 14.91%
return for its benchmark, the Frank Russell 2000 Growth Index. For Class B
shares, total return was 9.09%.
For the first three quarters of the fiscal year, the fund performed well.
However, in the final quarter earnings disappointments in the technology and
telecommunications sectors, which represent approximately half of the
portfolio's holdings, led to sharp corrections in a number of issues.
In addition, investors in 1996 continued to favor the largest issues, to the
exclusion of most small-company stocks. This is illustrated by the fact that all
of the positive return for the 5300-company NASDAQ Composite Index was
attributable to just 100 of the largest names.
Despite these disappointments, the fund enjoyed excellent results from a
number of its holdings, including technology companies such as Applied Graphics,
Aspen Technologies, and Veritas Software; med-
8
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JANUARY 31,1997
ical companies such as Jones Medical and Dura Pharmaceuticals,
telecommunications companies such as ACC Corporation; retailers such as St. John
Knits, and financial services companies such as Americredit Corp. In addition,
the fund benefitted from a late-year surge in energy services holdings such as
Marine Drilling, Falcon Drilling, and in natural gas provider Barrett Resources.
A line graph depicting the comparison of change in the value of a $10,000
investment in the OVB Emerging Growth Fund, Class A and B,
versus the NASDAQ/OTC Index, and the Frank Russell 2000 Growth Index
12/31/93 1/31/94 1/31/95 1/31/96 1/31/97
OVB Emerging Growth
Fund, Class A $10,000 $10,325 $7,744 $11,261 $12,308
OVB Emerging Growth
Fund, Class B $10,000 $10,325 $7,714 $11,191 $12,208
NASDAQ/OTC Index $10,000 $10,305 $9,723 $13,645 $17,766
Frank Russell 2000 Growth
Index $10,000 $10,266 $9,558 $12,678 $14,569
Looking ahead, we are aware that a correction in the large-cap sector could
lead to declines across the board. However, we remain optimistic that the
small-cap market will demonstrate its growth potential over the long term. And
we will continue to view the market's current large-cap emphasis as an
opportunity to build a portfolio of strong young companies that appear to be
undervalued.
THE OVB FUNDS CAPITAL
APPRECIATION PORTFOLIO
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For the fiscal year ended January 31, 1997, The OVB Funds Capital Appreciation
Portfolio, Class A, posted a total return of 22.06%, compared with a 26.33%
return for its benchmark, the Standard & Poor's 500 Composite Stock Index. For
Class B shares, total return was 21.81%.
For the better part of 1996, the fund performed well in relation to the
benchmark. Its slight underperformance at year-end is attributable to weakness
in its technology and telecommunications holdings, which declined in response to
third-quarter decreases in corporate sales activity. In addition, the fund's
relatively large component of mid-capitalization issues dampened performance as
the market continued to focus on large-cap stocks.
Along the way, however, many of the portfolio's holdings performed extremely
(CONTINUED)
9
<PAGE>
MANAGEMENT'S DISCUSSION & ANALYSIS (CONTINUED)
well. These included large healthcare companies such as American Home Products,
Johnson & Johnson, Merck, and Pfizer, as well as technology leaders such as
Intel, Lucent Technologies, Dell Computer, and Cisco Systems. In the financial
services sector, the fund benefitted from gains in Citicorp, American Express,
Federal National Mortgage Association, and Wells Fargo. Other strong performers
included aerospace giant Boeing, and sneaker manufacturer Nike.
A line graph depicting the comparison of change in the value of a $10,000
investment in the OVB Capital Appreciation Fund, Class A and B,
versus the Standard & Poor's 500 Composite Index
12/31/93 1/31/94 1/31/95 1/31/96 1/31/97
OVB Capital Appreciation
Fund, Class A $10,000 $10,203 $9,301 $13,143 $16,043
OVB Capital Appreciation
Fund, Class B $10,000 $10,204 $9,274 $13,066 $15,915
Standard & Poor's 500
Composite Index $10,000 $10,340 $10,395 $14,409 $18,203
Near the end of the fiscal year, the fund purchased a number of oil field
service issues, in the belief that this long-dormant industry is about to enter
a positive cycle and offers exceptional values. Recent additions in this sector
include Baker Hughes, Global Marine, Halliburton, and Schlumberger.
Looking ahead, we believe that the favorable economic environment will
continue to boost corporate profits, although not to the extent of the past two
years. In addition, with valuations in the large-cap sector at historic highs,
any earnings disappointments may be met with strong price corrections.
We also believe that the market should soon begin to look beyond large-cap
issues, and recognize that many outstanding values exist in the overlooked
mid-cap sector. If this occurs, the fund is well positioned to take advantage of
the change in market leadership.
10
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[OVB LOGO]
JANUARY 31,1997
THE OVB FUNDS EQUITY
INCOME PORTFOLIO
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Since its inception on August 2, 1996, The OVB Funds Equity Income Portfolio,
Class A, posted an annualized total return of 29.83% and a cumulative total
return of 13.98%, compared with a 23.90% return for its benchmark, the S&P/BARRA
Value Index. For Class B shares, annualized total return was 29.82% and
cumulative total return was 13.98%.
The Equity Income Portfolio has met with strong investor acceptance, growing
from $24 million in assets at inception to over $40 million in assets by fiscal
year-end.
In its early months of existence, the portfolio held an exceptionally large
proportion of fixed income instruments, which served to provide current income
while the careful process of selecting stocks was underway. By the close of the
fiscal year, the majority of assets had been rolled into stocks that met the
fund's criteria for yield, value, and financial soundness.
Among the portfolio's major holdings at fiscal year-end were such blue-chip
names as BellSouth, Bristol-Myers Squibb, American Home Products, Amoco, Exxon,
General Electric, and Citicorp. The common characteristics of these companies
include strong balance sheets, valuable brand franchises, large market shares,
long track records of predictable earnings, and management teams who are
actively involved in day-to-day operations.
Looking ahead, we believe that the historically low dividend yield of the S&P
500 Index points to the potential for a correction in large-cap issues. However,
we believe that the fundamental reasons for owning large, well-established
companies remain intact, and that our emphasis on stocks with below-average
price/earnings ratios may help cushion against volatility. Therefore, we will
view any market declines as opportunities to build our portfolio of companies
which offer good value and exceptional yields.
A line graph depicting the comparison of change in the value of a $10,000
investment in the OVB Equity Income Fund, Class A and B,
versus the S&P/BARRA Value Index, and the Lipper Equity Income Funds Average
8/31/96 1/31/97
OVB Equity Income
Fund, Class A $10,000 $11,330
OVB Equity Income
Fund, Class B $10,000 $11,319
S&P/BARRA Value Index $10,000 $11,941
Lipper Equity Income Funds
Average $10,000 $11,562
11
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REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
OF THE ARBOR FUND
In our opinion, the accompanying statements of net assets 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 OVB Prime Obligations, OVB West Virginia Tax-Exempt
Income, OVB Government Securities, OVB Emerging Growth, OVB Equity Income
and OVB Capital Appreciation Portfolios (separately managed portfolios of
The Arbor Fund, hereafter referred to as the "Fund") at January 31, 1997
and the results of each of their operations, the changes in each of
their net assets and the financial highlights for each of the periods
presented, 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 January 31, 1997 by correspondence with
the custodian and with respect to unsettled securities transactions, the
application of alternative auditing procedures, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Philadelphia, PA
March 14, 1997
12
<PAGE>
STATEMENT OF NET ASSETS
[LOGO OMITTED]
JANUARY 31, 1997
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THE OVB FUNDS PRIME
OBLIGATIONS PORTFOLIO
- --------------------------------------------------------------------------------
[PIE CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
BANKER'S ACCEPTANCE 2%
FLOATING RATE INSTRUMENTS 12%
U.S. GOVERNMENT AGENCY OBLIGATIONS 10%
CERTIFICATE OF DEPOSIT BANK NOTES 20%
REPURCHASE AGREEMENT 5%
COMMERCIAL PAPER 51%
% OF TOTAL PORTFOLIO INVESTMENTS
PIE CHART UNAUDITED
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FACE AMT. VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
COMMERCIAL PAPER -- 51.2%
Banking -- 6.0%
Bank of Scotland
5.300%, 05/12/97 $3,000 $2,956
National Bank of Canada
5.410%, 07/21/97 3,000 2,923
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TOTAL BANKING 5,879
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Financial Services-- 30.0%
Bear Stearns
5.310%, 02/13/97 3,000 2,995
Corporate Receivables
5.350%, 03/20/97 3,000 2,979
Enterprise Funding
5.360%, 04/28/97 3,000 2,962
Eureka Securities
5.380%, 03/25/97 2,500 2,481
Island Finance
5.360%, 04/25/97 3,110 3,072
Kitty Hawk Funding
5.380%, 03/03/97 3,000 2,987
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FACE AMT. VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
COMMERCIAL PAPER (CONTINUED)
Financial Services (continued)
Ranger Funding
5.380%, 02/28/97 $3,000 $2,988
Rose Funding
5.500%, 02/24/97 3,000 2,989
Unifunding
5.380%, 04/21/97 3,000 2,965
Westpac Capital
5.300%, 05/09/97 3,000 2,957
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TOTAL FINANCIAL SERVICES 29,375
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Industrial-- 14.2%
American Brands
5.300%, 04/02/97 1,500 1,485
Chrysler Financial
5.350%, 02/13/97 3,000 2,995
Cie de Saint Gobain
5.310%, 04/28/97 3,000 2,962
Ciesco
5.350%, 02/26/97 3,500 3,487
General Motors Acceptance
5.495%, 07/14/97 3,000 2,925
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TOTAL INDUSTRIAL 13,854
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Utilities-- 1.0%
National Fuel and Gas
5.380%, 02/20/97 1,000 997
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TOTAL UTILITIES 997
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TOTAL COMMERCIAL PAPER (COST $50,105) 50,105
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U.S. GOVERNMENT AGENCY OBLIGATIONS -- 9.7%
FFCB
5.600%, 06/03/97 3,000 2,999
FHLMC
5.394%, 04/17/97 440 435
FNMA
5.306%, 02/04/97 (A) 6,000 6,000
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TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $9,434) 9,434
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(CONTINUED)
13
<PAGE>
STATEMENT OF NET ASSETS
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THE OVB FUNDS PRIME
OBLIGATIONS PORTFOLIO (CONTINUED)
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FACE AMT. VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
FLOATING RATE INSTRUMENTS -- 12.3%
Bank One, Columbus
5.230%, 02/04/97 (A) $3,000 $2,997
Key Bank
5.380%, 02/03/97 (A) 3,000 2,998
People's Security Life
5.670%, 05/01/97 (A) 3,000 3,000
SMM Trust 1996-I
5.488%, 03/03/97 (A) 1,000 1,000
Travelers Insurance
5.687%, 05/01/97 (A) 2,000 2,000
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TOTAL FLOATING RATE INSTRUMENTS
(COST $11,995) 11,995
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BANKER'S ACCEPTANCE -- 2.0%
Corestates Bank
5.350%, 04/14/97 2,000 1,979
- --------------------------------------------------------------------------------
TOTAL BANKER'S ACCEPTANCE (COST $1,979) 1,979
- --------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT/BANK NOTES -- 20.1%
Bank of Tokyo - Mitsubishi
5.460%, 02/05/97 3,000 3,000
BankAmerica, Illinois
5.490%, 04/07/97 1,700 1,700
Banque National de Paris
5.400%, 03/10/97 4,000 4,000
Chase Manhattan Bank
5.500%, 07/01/97 3,000 3,000
First National Bank of Boston
5.470%, 02/12/97 3,000 3,000
Southtrust Bank, Central Carolina
5.500%, 04/30/97 2,000 2,000
Svenska Handelsbanken
5.430%, 05/19/97 3,000 3,000
- --------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT/BANK NOTES
(COST $19,700) 19,700
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 4.8%
Lehman Brothers
5.55%, dated 01/31/97, matures
02/03/97, repurchase price
$4,679,163 (collateralized by
U.S. Treasury obligation,
par value $25,335,000, 0.000%,
matures 08/15/20, market
value $4,869,387) $4,677 $ 4,677
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT (COST $4,677) 4,677
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS-- 100.1% (COST $97,890) 97,890
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (0.1%)
Other Assets and Liabilities, Net (88)
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (88)
- --------------------------------------------------------------------------------
NET ASSETS:
Portfolio shares of Class A (unlimited
authorization--no par value) based on
90,308,263 outstanding shares of
beneficial interest 90,308
Portfolio shares of Class B (unlimited
authorization--no par value) based on
7,501,264 outstanding shares of
beneficial interest 7,501
Accumulated net realized loss
on investments (7)
- --------------------------------------------------------------------------------
TOTAL NET ASSETS-- 100.0% $97,802
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE--CLASS A $1.00
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE--CLASS B $1.00
- --------------------------------------------------------------------------------
(A) Floating Rate Instrument. Rate reflected on the Statement of Net
Assets is the rate in effect on January 31, 1997. The date shown is
the next reset date.
FFCB Federal Farm Credit Bank
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
[LOGO OMITTTED]
JANUARY 31, 1997
THE OVB FUNDS WEST VIRGINIA
TAX-EXEMPT INCOME PORTFOLIO
[PIE CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
MUNICIPAL BONDS 99%
CASH EQUIVALENTS 1%
% OF TOTAL PORTFOLIO INVESTMENTS
PIE CHART UNAUDITED
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS -- 97.6%
West Virginia -- 97.6%
Beckley, Industrial
Development Authority,
Beckley Water Project, RB
7.000%, 10/01/17 $1,000 $1,069
Beckley, Nursing Facility
Health Care
Project, RB
6.000%, 09/01/12 310 312
Beckley, Sewage System
Refunding, RB
6.750%, 10/01/25 400 408
Berkeley County,
Board of Education,
GO, BIG
7.375%, 04/01/03 425 485
Berkeley County,
Board of Education,
GO, FGIC
5.000%, 06/01/06 500 501
4.500%, 06/01/09 1,440 1,337
4.125%, 06/01/10 600 526
Berkeley County, Sewer
System Refunding,
RB, MBIA
5.625%, 10/01/19 895 893
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
West Virginia (continued)
Brooke County,
Board of Education,
GO, AMBAC
8.800%, 08/01/97 $ 255 $ 262
9.000%, 08/01/98 15 16
8.500%, 08/01/99 500 552
Brooke County, Tyler
Wetzel Project, RB
7.400%, 08/15/10 1,675 1,964
Brooke Pleasant,
Tyler Wetzel County,
Single Family Mortgage, RB
5.000%, 08/15/10 500 476
Cabell County,
Board of Education,
GO, MBIA
6.500%, 05/01/03 150 165
6.600%, 05/01/04 1,000 1,114
Cabell, Putnam, &
Wayne Counties,
Single Family Mortgage, FGIC
7.375%, 04/01/10 250 284
7.375%, 04/01/11 440 510
Charleston County,
Community Parking
Facilities Authority, RB
6.000%, 12/01/10 300 301
0.000%, 12/01/26 5,000 619
Charleston, Parking
Facility Improvements
Project, RB, Ser A
7.000%, 06/01/16 1,080 1,158
Charleston, Public
Housing Authority, RB
5.000%, 02/01/99 100 102
Clarksburg, Water Refunding &
Improvements, RB
6.100%, 09/01/04 450 486
6.200%, 09/01/05 500 541
6.250%, 09/01/19 430 438
Crab Orchard-Macarthur,
Public Service
District Sewer Project,
RB, AMBAC
5.500%, 10/01/25 500 485
Fayette County,
Pollution Control
Union Carbide Project, RB
5.200%, 02/01/98 182 183
Greenbrier County,
Public Service
District Sewer Project,
RB, MBIA
5.850%, 10/01/15 700 718
Greenbrier County,
Public Service
District Sewer
Project, RB
5.625%, 10/01/19 500 497
(CONTINUED)
15
<PAGE>
STATEMENT OF NET ASSETS
THE OVB FUNDS WEST VIRGINIA
TAX-EXEMPT INCOME PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
West Virginia (continued)
Harrison County,
Board of Education,
GO, FGIC
6.200%, 05/01/04 $ 850 $ 928
6.400%, 05/01/07 175 195
Harrison County, Solid Waste
Disposal,Monongahela Power
Company, RB, Ser A, AMT
6.875%, 04/15/22 2,150 2,327
Harrison County, Solid Waste
Disposal, Potomac Edison
Project, Ser B, RB, AMBAC
6.250%, 05/01/23 400 411
Harrison County, Solid Waste
Disposal, RB, MBIA
6.300%, 05/01/23 200 207
Harrison County, Solid Waste
Disposal, West Penn Power
Harrison Project, Ser B,
RB, AMT
6.300%, 05/01/23 500 514
Harrison County, United
Hospital Center, RB, AMBAC
4.550%, 04/01/02 1,000 991
Huntington County, Sewer System
Refunding, RB, FSA
5.375%, 11/01/23 1,000 956
Jackson County, Residential
Mortgage, RB, FGIC
7.375%, 06/01/10 420 472
Kanawha County, Building
Commission, Charleston Area
Medical Center Project, RB
6.250%, 12/01/98 50 51
Kanawha County, Building
Commission, Charleston Area
Medical Center Project,
Ser A, RB, AMBAC
7.500%, 11/01/08 1,000 1,105
Kanawha County, Building
Commission, Charleston Area
Medical Center Project,
Ser A, RB, MBIA
7.100%, 06/01/13 200 206
Kanawha County, Residential
Mortgage, RB, FGIC
7.375%, 09/01/10 630 704
7.375%, 09/01/11 285 327
Kanawha County, Single
Family Mortgage,
RB, FGIC
7.100%, 12/01/99 15 16
7.300%, 12/01/04 805 923
7.400%, 12/01/10 185 214
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
West Virginia (continued)
Kanawha, Mercer & Nicholas
Counties, Single Family
Mortgage, RB, Prerefunded
02/01/14 @ 89.8452
0.000%, 02/01/15 $2,000 $ 655
Kanawha, Putnam County
Huntington/Charleston,
Single Family Mortgage,
RB, Ser A
0.000%, 12/01/16 2,000 623
Logan County, Health Care
Center Project, RB
8.000%, 12/01/16 690 821
Marion County, Single Family
Mortgage, RB, FGIC
7.100%, 08/01/99 135 144
Marion County, Single Family
Mortgage, RB, FGIC
7.375%, 08/01/11 495 572
Marshall County, Pollution
Control, Ohio Power Project,
Ser B, RB, MBIA
5.450%, 07/01/14 800 788
Marshall County, Pollution
Control, Ohio Power Project,
Ser C, RB, MBIA
6.850%, 06/01/22 1,000 1,076
Marshall County, Special
Obligation Refunding, GO
6.500%, 05/15/10 855 904
Mason County, Pollution Control,
Ohio Power Project, Ser B,
RB, AMBAC
5.450%, 12/01/16 1,270 1,238
Mason County, Single Family
Mortgage, Principal Custody
Receipts, RB, FGIC
5.000%, 08/01/11 335 313
Mason County, Single Family
Mortgage, RB, FGIC
7.400%, 08/01/11 608 695
Mingo County, Board of Education,
GO, AMBAC
9.700%, 10/01/97 340 353
Monongalia County, Board of
Education, GO, MBIA
7.000%, 04/01/03 1,000 1,120
Monongalia County, Single
Family Mortgage, RB
7.200%, 03/01/11 1,280 1,419
Morgantown, Building
Commission Municipal Lease,
RB, MBIA
5.750%, 01/01/19 250 253
Morgantown, Waterworks
Project, RB, BIG
8.100%, 10/01/97 255 262
16
<PAGE>
[logo omitted]
JANUARY 31, 1997
- --------------------------------------------------------------------------------
THE OVB FUNDS WEST VIRGINIA
TAX-EXEMPT INCOME PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
West Virginia (continued)
Ohio County, Board of Education,
GO, MBIA
5.250%, 06/01/16 $1,070 $1,043
5.250%, 06/01/17 830 808
Parkersburg, Waterworks & Sewer
System Project, RB, FSA
5.800%, 09/01/19 1,600 1,616
Pea Ridge, Public Service
District Sewer Project,
Ser 1994, RB, AMBAC
7.000%, 05/01/20 10 11
Pleasants County, Pollution
Control, Monongahela Power
Project, Ser C, RB, AMBAC
6.150%, 05/01/15 1,000 1,041
Pleasants County, Pollution
Control, Potomac Edison
Project, RB, AMBAC
6.150%, 05/01/15 500 521
Pleasants County, Pollution
Control, West Penn Power,
RB, AMBAC
6.150%, 05/01/15 500 521
Pleasants County, Pollution
Control, West Penn Power
Project, RB
6.125%, 11/01/07 500 500
Pleasants County, Potomac
Edison Project, RB, MBIA
6.150%, 05/01/15 1,000 1,041
Putnam County, Pollution
Control Revenue,
Appalachian Power Project,
Ser D, RB, AMBAC
5.450%, 06/01/19 700 678
Raleigh County, Board of
Education, GO, MBIA
8.375%, 04/01/98 500 526
Raleigh County, Parkway
Economic Development &
Tourism Authority, Tamarack
Project, RB, Ser 1994
6.600%, 06/01/05 480 517
Raleigh, Fayette & Nicholas
Counties, Special
Obligation Bonds
6.150%, 08/01/03 100 108
6.250%, 08/01/11 795 858
South Charleston, GO
5.700%, 09/01/97 105 106
South Charleston,
Herbert J. Thomas Memorial
Hospital Project, RB,
Prerefunded 10/01/98 @ 102
8.000%, 10/01/04 500 542
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
West Virginia (continued)
South Charleston, Herbert J.
Thomas Memorial Hospital
Project, Ser A, RB, MBIA
5.500%, 10/01/09 $1,020 $1,031
Wayne County, Board of
Education, GO, AMBAC
8.000%, 06/01/99 500 542
Webster County, Multifamily
Housing, Circlebrook Project,
Ser A, RB
6.500%, 04/01/18 1,010 1,043
West Virginia State Board of
Regents, RB, MBIA
5.900%, 04/01/04 385 411
West Virginia State Board of
Regents, RB, Ser B, MBIA
7.250%, 04/01/03 50 54
West Virginia State Board of
Regents, RB, MBIA
6.000%, 04/01/04 720 746
West Virginia State Building
Commission, Lottery
Revenue, RB
5.500%, 07/01/07 1,000 1,030
5.250%, 01/01/09 2,000 1,993
West Virginia State College,
RB, AMBAC
5.875%, 04/01/05 900 951
6.000%, 04/01/06 425 457
6.000%, 04/01/07 425 456
6.000%, 04/01/12 890 929
West Virginia State Economic
Development Tourism Authority,
Ser B, RB, FGIC
4.625%, 07/01/19 900 928
West Virginia State Hospital
Finance Authority, Cabell
County Project, RB
7.875%, 01/01/19 200 218
West Virginia State Hospital
Finance Authority, Charleston
Area Medical Center Project,
Ser A, RB
6.500%, 09/01/23 3,275 3,426
West Virginia State Hospital
Finance Authority, Linked
Bears and Bulls, RB, MBIA
6.100%, 01/01/18 1,300 1,318
West Virginia State Hospital
Finance Authority, University
Medical Center Project,
RB, Callable 01/01/02 @ 102,
MBIA
5.900%, 01/01/06 680 720
(CONTINUED)
17
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
THE OVB FUNDS WEST VIRGINIA
TAX-EXEMPT INCOME PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
West Virginia (continued)
West Virginia State Hospital
Financing Authority, Charleston
Area Medical Center Project,
Ser A, RB
6.500%, 09/01/16 $ 625 $ 655
West Virginia State Hospital
Financing Authority,
University Hospitals Project,
Callable 06/01/03 @102,
RB, MBIA
5.400%, 06/01/11 500 498
West Virginia State Housing
Development Fund, Ser E, RB
6.250%, 11/01/12 1,000 1,023
West Virginia State Parkways
Economic Development & Tourism
Authority, RB, FGIC
4.800%, 05/15/00 850 861
0.000%, 07/01/03 250 183
0.000%, 05/15/07 500 293
5.800%, 05/15/13 140 142
West Virginia State School
Building Authority, Capital
Improvement, RB, Ser B, MBIA
5.750%, 07/01/15 1,000 1,006
6.750%, 07/01/17 2,000 2,133
West Virginia State School
Building Authority, RB, MBIA
5.250%, 07/01/99 100 103
6.250%, 07/01/01 500 536
6.950%, 07/01/03 200 217
7.250%, 07/01/15 560 620
West Virginia State School
Building Authority, Ser 1994,
RB, MBIA
5.625%, 07/01/02 100 105
West Virginia State University
Project, RB, AMBAC
6.000%, 04/01/07 400 425
6.000%, 04/01/12 700 731
West Virginia State Water
Development Authority Loan
Program II, Ser A, RB, FSA
5.500%, 11/01/23 625 604
West Virginia State Water
Development Authority Loan
Program II, Ser A, RB
7.300%, 11/01/11 475 538
West Virginia State Water
Development Authority Loan
Program II, Ser A-II,
RB, FSA
6.050%, 11/01/13 1,000 1,016
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
West Virginia (continued)
West Virginia State Water
Development Authority Loan
Program II, Ser B, RB, FSA
5.375%, 11/01/25 $ 785 $ 745
West Virginia State Water
Development Authority Loan
Program, Capital Guaranty
Custodial Receipts
7.500%, 11/01/29 500 552
West Virginia State Water
Development Authority Loan
Program, Ser A, RB
7.000%, 11/01/11 800 875
West Virginia State Water
Development Authority Loan
Project II, Ser A, RB,
Prerefunded 11/01/01 @ 102
4.400%, 11/01/31 200 202
West Virginia State Water
Development Authority,
Ser A, RB
7.700%, 11/01/29 1,500 1,691
West Virginia State Water
Development Authority,
Ser A-I, RB, FSA
5.250%, 11/01/21 795 743
West Virginia State Water
Development Authority, Sewer
System Loan Program, RB
7.100%, 11/01/09 1,350 1,534
West Virginia State Water
Development Authority Loan
Program II, Ser A, RB
7.400%, 11/01/19 455 518
West Virginia State Water
Development Authority, RB, FSA
5.800%, 11/01/12 450 455
West Virginia State, Building
Commission Lease, Regional
Jail & Correction Facility
Project, Ser A, RB, MBIA
6.500%, 07/01/00 105 111
West Virginia State, GO,
Ser A, FGIC
5.750%, 11/01/21 1,340 1,345
5.250%, 11/01/26 1,150 1,094
West Virginia State, GO
5.250%, 06/01/97 130 131
5.700%, 06/01/98 500 503
6.000%, 06/01/98 15 15
4.000%, 02/01/99 15 15
6.000%, 06/01/02 180 183
18
<PAGE>
[Logo Omitted]
JANUARY 31, 1997
- --------------------------------------------------------------------------------
THE OVB FUNDS WEST VIRGINIA
TAX-EXEMPT INCOME PORTFOLIO (CONCLUDED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
West Virginia (continued)
West Virginia State, Housing
Development Authority,
Ser A, RB
5.450%, 11/01/21 $ 135 $ 128
West Virginia State, Housing
Development Fund, BIG
7.375%, 11/01/05 500 513
West Virginia State, Housing
Development Fund, RB
6.100%, 11/01/99 15 15
6.000%, 12/15/08 600 617
6.000%, 12/15/09 600 616
West Virginia State, Housing
Development Fund, Ser A, RB
6.700%, 05/01/08 210 219
6.700%, 11/01/08 265 277
6.700%, 05/01/09 275 285
6.700%, 11/01/09 285 296
West Virginia State, Housing
Development Fund, Ser A,
RB, AMBAC
5.500%, 11/01/11 530 517
West Virginia State, Housing
Development Fund, Ser E, RB
6.350%, 05/01/24 1,375 1,397
West Virginia University,
Marshall Library
Project, RB, AMBAC
5.750%, 04/01/16 1,000 1,008
West Virginia Water Development
Authority Loan Program II,
Ser A, RB, FSA
5.750%, 11/01/29 150 150
West Virginia Water Development
Authority Loan Program II,
Ser B, RB, FSA
5.375%, 11/01/25 920 873
Wheeling, Waterworks &
Sewage System,
Ser B, RB, FGIC
6.450%, 12/01/07 1,000 1,086
6.650%, 12/01/15 1,100 1,206
- --------------------------------------------------------------------------------
TOTAL WEST VIRGINIA 96,479
- --------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (COST $92,959) 96,479
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHARES VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
CASH EQUIVALENTS -- 1.4%
SEI Tax Exempt Trust Tax
Free Portfolio 1,360 $ 1,360
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENTS
(COST $1,360) 1,360
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS-- 99.0%
(COST $94,319) 97,839
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 1.0%
Other Assets and Liabilities, Net 971
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES 971
- --------------------------------------------------------------------------------
NET ASSETS:
Portfolio shares of Class A
(unlimited authorization--no
par value) based on 9,307,773
outstanding shares of
beneficial interest 89,400
Portfolio shares of Class B
(unlimited authorization--no
par value) based on 622,560
outstanding shares of
beneficial interest 6,108
Accumulated net realized loss
on investments (218)
Net unrealized appreciation
on investments 3,520
- --------------------------------------------------------------------------------
TOTAL NET ASSETS-- 100.0% $98,810
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE -- CLASS A $9.95
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE-- CLASS B $9.95
- --------------------------------------------------------------------------------
AMT Alternative Minimum Tax
AMBAC American Municipal Bond Assurance Company
BIG Bond Investors Guaranty
FGIC Financial Guaranty Insurance Company
FSA Financial Security Assurance
GO General Obligation
MBIA Municipal Bond Insurance Association
RB Revenue Bond
Ser Series
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
THE OVB FUNDS GOVERNMENT
SECURITIES PORTFOLIO
- --------------------------------------------------------------------------------
[PIE CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
CORPORATE OBLIGATIONS 1%
MUNICIPAL BONDS 8%
U.S. TREASURY OBLIGATIONS 20%
COMMON STOCKS/PREFERRED STOCKS 5%
REPURCHASE AGREEMENT 2%
U.S. GOVERNMENT AGENCY OBLIGATIONS 64%
% OF TOTAL PORTFOLIO INVESTMENTS
PIE CHART UNAUDITED
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 63.3%
FFCB
5.690%, 03/03/00 $2,000 $1,969
8.400%, 12/01/05 1,500 1,659
FFCB MTN
5.800%, 12/18/00 400 389
6.150%, 03/03/03 1,000 979
6.900%, 09/08/15 600 584
FHLB
8.030%, 12/19/97 300 306
8.020%, 08/14/98 1,000 1,030
7.040%, 05/24/99 500 510
8.375%, 10/25/99 750 792
7.780%, 10/19/01 500 527
6.380%, 04/29/03 1,660 1,613
5.440%, 10/15/03 815 767
6.410%, 12/29/03 500 487
7.310%, 06/16/04 400 416
8.160%, 10/01/04 450 463
8.090%, 12/28/04 400 436
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
FHLB (continued)
8.125%, 03/07/05 $1,000 $1,025
8.000%, 08/16/10 1,000 1,000
FHLB MTN
6.880%, 04/26/00 500 508
5.990%, 10/01/03 500 477
7.030%, 05/06/11 500 506
FHLMC
6.900%, 04/04/03 500 500
8.640%, 10/14/09 400 415
7.500%, 11/01/09 6,106 6,205
8.000%, 03/24/10 500 508
Financing Corporation
8.600%, 09/26/19 500 571
FNMA
6.390%, 12/09/03 1,000 975
6.320%, 12/23/03 400 389
8.250%, 10/12/04 500 515
Housing Urban Development 92a
Scranton, Taxable,
Callable 08/01/02 @ 100
7.800%, 08/01/10 400 423
Housing Urban Development
94a Abilene, Taxable,
Callable 08/01/03 @ 100
7.180%, 08/01/13 160 164
Housing Urban Development
94a Barberton, Taxable,
Callable 08/01/03 @ 100
7.180%, 08/01/13 520 530
Housing Urban Development
94a Egg Harbor, Taxable,
Callable 08/01/03 @ 100
6.930%, 08/01/08 160 162
7.180%, 08/01/13 220 224
Housing Urban Development
94a Ocean Shores, Taxable,
Callable 08/01/03 @ 100
6.930%, 08/01/08 225 224
Housing Urban Development
94a Pohatcong Township,
Taxable, Callable
08/01/03 @ 100
6.930%, 08/01/08 240 239
Housing Urban Development
94a Providence,
Taxable, Callable
08/01/03 @ 100
6.930%, 08/01/08 130 131
Housing Urban Development
94a Roanoke, Taxable,
Callable 08/01/03 @ 100
7.180%, 08/01/13 100 102
Housing Urban Development
94a Tacoma, Taxable,
Callable 08/01/03 @ 100
7.080%, 08/01/11 365 365
20
<PAGE>
[Logo Omitted]
JANUARY 31, 1997
- --------------------------------------------------------------------------------
THE OVB FUNDS GOVERNMENT
SECURITIES PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS (CONTINUED)
Housing Urban Development 94a-I Montgomery,
Taxable, Callable 08/01/03 @ 100
6.930%, 08/01/08 $ 55 $ 56
Private Export Funding
7.300%, 01/31/02 2,100 2,181
6.240%, 05/15/02 250 248
7.950%, 11/01/06 1,500 1,583
TVA
6.250%, 08/01/99 700 698
8.375%, 10/01/99 2,000 2,105
7.450%, 10/15/01 2,000 2,033
6.875%, 01/15/02 500 501
- --------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $38,222) 38,490
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 19.9%
U.S. Treasury Bonds
9.375%, 02/15/06 175 202
8.375%, 08/15/08 1,160 1,277
8.750%, 11/15/08 300 335
9.125%, 05/15/09 300 344
7.500%, 11/15/24 500 537
U.S. Treasury Notes
7.000%, 04/15/99 831 849
8.750%, 08/15/00 416 449
8.000%, 05/15/01 1,831 1,950
7.500%, 11/15/01 1,500 1,574
7.500%, 05/15/02 1,169 1,232
7.875%, 11/15/04 1,000 1,085
7.625%, 02/15/07 1,000 1,046
U.S. Treasury STRIPS
0.000%, 11/15/18 2,500 549
0.000%, 11/15/20 1,400 267
0.000%, 02/15/25 3,000 440
- --------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(COST $11,970) 12,136
- --------------------------------------------------------------------------------
MUNICIPAL BONDS -- 8.3%
Berkeley County, WV IRS
Computer Center Facility
Project, Ser 1994,
Taxable, RB
7.900%, 07/15/03 640 678
Berkeley County, WV IRS
Computer Center
Facility Project,
Taxable, RB
7.950%, 07/15/04 590 619
- --------------------------------------------------------------------------------
FACE AMT.(000)/ VALUE
DESCRIPTION SHARES (000)
- --------------------------------------------------------------------------------
Chicago Heights, IL, Ser B,
Taxable GO, Callable
12/01/12 @ 100
7.550%, 12/01/13 $1,000 $1,048
Fairview, MN Hospital &
Health Care Services,
Ser B, Refunding Taxable
RB, MBIA, Callable
11/15/03 @ 102
7.000%, 11/15/15 670 690
Gardena, CA Financing Agency,
Taxable RB, Prerefunded
07/01/03 @ 102
9.250%, 07/01/13 200 228
Henry County, GA Water & Sewer
Authority, Ser B, Taxable
RB, AMBAC
6.000%, 02/01/04 250 240
6.000%, 02/01/05 220 210
6.700%, 02/01/11 200 192
Las Vegas, NV Fremont Street
Project, Taxable GO, Callable
07/01/03 @ 101, FGIC
7.200%, 07/01/15 800 810
San Bernardino County,
CA COP, Taxable,
Prerefunded 03/01/04 @ 102
8.500%, 03/01/14 275 310
- --------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(COST $4,932) 5,025
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS -- 1.1%
American Heavy Lift Title XI
7.180%, 06/01/17 200 195
General Electric Capital MTN
6.020%, 12/15/03 500 483
- --------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS
(COST $700) 678
- --------------------------------------------------------------------------------
COMMON STOCK -- 4.2%
Electric Services -- 3.9%
Allegheny Power System 8,300 254
American Electric Power 6,200 257
CMS Energy 10,000 335
Dominion Resources of Virginia 6,200 246
Duke Power 5,000 234
FPL Group 4,200 186
LG&E 20,000 485
Public Service of Colorado 6,200 242
Union Electric Power 4,200 160
- --------------------------------------------------------------------------------
TOTAL ELECTRIC SERVICES 2,399
- --------------------------------------------------------------------------------
(CONTINUED)
21
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
THE OVB FUNDS GOVERNMENT
SECURITIES PORTFOLIO (CONCLUDED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHARES/FACE VALUE
DESCRIPTION AMT. (000) (000)
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Telephone Communications -- 0.3%
SBC Telecommunications 3,300 $ 181
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK (COST $2,293) 2,580
- --------------------------------------------------------------------------------
PREFERRED STOCK -- 0.3%
Merrill Lynch 6,800 200
- --------------------------------------------------------------------------------
TOTAL PREFERRED STOCK (COST $175) 200
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 1.6%
Lehman Brothers
5.08%, dated 01/31/97, matures
02/03/97, repurchase price
$961,287
(collateralized by U.S.
Treasury obligation,
par value $656,521,
11.250%, matures
02/15/15, market value
$993,262) $961 961
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT (COST $961) 961
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS-- 98.7% (COST $59,253) 60,070
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 1.3%
Other Assets and Liabilities, Net 774
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES 774
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VALUE
DESCRIPTION (000)
- --------------------------------------------------------------------------------
NET ASSETS:
Portfolio shares of Class A
(unlimited authorization--no
par value) based on 6,049,559
outstanding shares of
beneficial interest $58,246
Portfolio shares of Class B
(unlimited authorization--no
par value) based on 187,303
outstanding shares of
beneficial interest 1,827
Accumulated net realized loss
on investments (46)
Net unrealized appreciation
on investments 817
- --------------------------------------------------------------------------------
TOTAL NET ASSETS-- 100.0% $60,844
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE -- CLASS A $9.76
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE-- CLASS B $9.77
- --------------------------------------------------------------------------------
AMBAC American Municipal Bond Assurance Company
COP Certificate of Participation
FFCB Federal Farm Credit Bank
FGIC Financial Guaranty Insurance Company
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
GO General Obligation
MBIA Municipal Bond Insurance Association
MTN Medium-Term Note
RB Revenue Bond
Ser Series
STRIPS Separate Trading of Registered Interest and Principal of Securities
TVA Tennessee Valley Authority
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
[Logo Omitted]
JANUARY 31, 1997
- --------------------------------------------------------------------------------
THE OVB FUNDS EMERGING
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
[PIE CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
REPURCHASE AGREEMENT 1%
COMMON STOCKS 99%
% OF TOTAL PORTFOLIO INVESTMENTS
PIE CHART UNAUDITED
- --------------------------------------------------------------------------------
VALUE
DESCRIPTION SHARES (000)
- --------------------------------------------------------------------------------
COMMON STOCKS -- 99.9%
Aircraft -- 1.8%
BE Aerospace* 41,500 $1,102
- --------------------------------------------------------------------------------
Apparel/Textiles -- 5.2%
Sport-Haley* 85,000 1,190
St. John Knits 42,000 1,911
- --------------------------------------------------------------------------------
TOTAL APPAREL/TEXTILES 3,101
- --------------------------------------------------------------------------------
Communications Equipment-- 9.1%
Act Networks* 43,100 1,325
Pairgain Technologies* 25,400 1,040
Premiere Technologies* 51,700 1,331
Uniphase* 40,000 1,745
- --------------------------------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT 5,441
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VALUE
DESCRIPTION SHARES (000)
- --------------------------------------------------------------------------------
Computer Software -- 18.7%
Aspen Technology* 18,900 $ 1,403
Indus Group* 37,100 909
McAfee Associates* 41,550 2,420
MDSI Mobile Data Solutions* 30,400 581
Project Software & Development* 30,200 1,352
Transaction Systems Architects* 40,300 1,073
Veritas Software* 39,225 2,040
Visio* 26,400 1,356
- --------------------------------------------------------------------------------
TOTAL COMPUTER SOFTWARE 11,134
- --------------------------------------------------------------------------------
Computers & Services -- 7.4%
Ciber* 41,000 1,281
Cotelligent Group* 26,500 518
Harbinger* 35,600 1,433
Whittman-Hart* 58,800 1,191
- --------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES 4,423
- --------------------------------------------------------------------------------
Drugs -- 8.8%
Bio-Technology General* 80,000 1,350
Dura Pharmaceuticals* 42,700 1,793
Jones Medical 32,300 1,227
Medicis Pharmaceutical, Class A* 14,100 902
- --------------------------------------------------------------------------------
TOTAL DRUGS 5,272
- --------------------------------------------------------------------------------
Electrical Technology -- 3.0%
SBS Technologies* 25,000 763
Viisage Technology* 90,000 1,046
- --------------------------------------------------------------------------------
TOTAL ELECTRICAL TECHNOLOGY 1,809
- --------------------------------------------------------------------------------
Entertainment -- 1.7%
Penske Motorsports* 18,600 539
Speedway Motorsports* 20,000 470
- --------------------------------------------------------------------------------
TOTAL ENTERTAINMENT 1,009
- --------------------------------------------------------------------------------
Financial Services -- 2.6%
Americredit* 77,500 1,540
- --------------------------------------------------------------------------------
Medical Products & Services -- 2.2%
Chad Therapeutics* 87,447 1,290
- --------------------------------------------------------------------------------
(CONTINUED)
23
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
THE OVB FUNDS EMERGING
GROWTH PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VALUE
DESCRIPTION SHARES (000)
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
Oil & Gas Well Equipment -- 12.3%
Falcon Drilling* 37,550 $ 1,413
Halter Marine* 43,000 699
Hvide Marine* 20,000 498
Marine Drilling* 101,600 1,683
Parker Drilling * 58,500 570
Seacor Holdings* 21,600 1,269
Trico Marine Services* 26,200 1,225
- --------------------------------------------------------------------------------
TOTAL OIL & GAS WELL EQUIPMENT 7,357
- --------------------------------------------------------------------------------
Petroleum & Fuel Products-- 3.0%
Barrett Resources* 45,850 1,771
- --------------------------------------------------------------------------------
Printing & Publishing -- 3.4%
Applied Graphics Technologies* 73,600 2,006
- --------------------------------------------------------------------------------
Real Estate Investment Trust -- 0.9%
First Union Real Estate 42,000 567
- --------------------------------------------------------------------------------
Schools -- 1.2%
Computer Learning Centers* 25,400 737
- --------------------------------------------------------------------------------
Semi-Conductors/Instruments-- 12.2%
ANADIGICS* 19,300 1,028
CFM Technologies* 31,400 1,115
Cyrix 24,000 618
ESS Technology* 44,000 1,425
SDL* 22,800 519
Triquint Semiconductor* 21,500 779
Ultratech Stepper* 40,700 1,099
Vitesse Semiconductor* 13,000 713
- --------------------------------------------------------------------------------
TOTAL SEMI-CONDUCTORS/INSTRUMENTS 7,296
- --------------------------------------------------------------------------------
Telephones & Telecommunication -- 2.4%
ACC* 43,950 1,406
- --------------------------------------------------------------------------------
Wholesale -- 4.0%
Fresh America* 33,400 635
MSC Industrial Direct* 45,200 1,752
- --------------------------------------------------------------------------------
TOTAL WHOLESALE 2,387
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $44,196) 59,648
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 1.3%
Lehman Brothers
5.08%, dated 01/31/97, matures
02/03/97, repurchase price
$753,491 (collateralized by
U.S. Treasury obligation,
par value $514,605, 11.250%,
matures 02/15/15,
market value $778,554) $753 $ 753
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(COST $753) 753
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS-- 101.2%
(COST $44,949) 60,401
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (1.2%)
Other Assets and Liabilities, Net (718)
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (718)
- --------------------------------------------------------------------------------
NET ASSETS:
Portfolio shares of Class A
(unlimited authorization--no
par value) based on 4,531,915
outstanding shares of
beneficial interest 41,786
Portfolio shares of Class B
(unlimited authorization--no
par value) based on 307,236
outstanding shares of
beneficial interest 3,348
Accumulated net realized loss
on investments (903)
Net unrealized appreciation
on investments 15,452
- --------------------------------------------------------------------------------
Total Net Assets-- 100.0% $59,683
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE -- CLASS A $12.34
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE -- CLASS B $12.24
- -------------------------------------------------------------------------------
* Non-income producing securities
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
[Logo Omitted]
JANUARY 31, 1997
- --------------------------------------------------------------------------------
THE OVB FUNDS CAPITAL
APPRECIATION PORTFOLIO
- --------------------------------------------------------------------------------
[PIE CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
REPURCHASE AGREEMENT 1%
COMMON STOCKS 99%
% OF TOTAL PORTFOLIO INVESTMENTS
PIE CHART UNAUDITED
- --------------------------------------------------------------------------------
VALUE
DESCRIPTION SHARES (000)
- --------------------------------------------------------------------------------
COMMON STOCKS -- 99.7%
Aircraft -- 3.5%
Boeing 29,335 $3,143
Rockwell International* 17,500 1,151
- --------------------------------------------------------------------------------
TOTAL AIRCRAFT 4,294
- --------------------------------------------------------------------------------
Apparel/Textiles -- 1.9%
Nike 35,400 2,403
- --------------------------------------------------------------------------------
Banks -- 5.6%
Chase Manhattan 11,600 1,073
Citicorp 26,500 3,084
Wells Fargo 9,000 2,743
- --------------------------------------------------------------------------------
TOTAL BANKS 6,900
- --------------------------------------------------------------------------------
Communications Equipment-- 3.4%
ADC Telecommunications* 36,400 1,306
Tellabs* 71,000 2,924
- --------------------------------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT 4,230
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VALUE
DESCRIPTION SHARES (000)
- --------------------------------------------------------------------------------
Computer Networking Products -- 4.2%
Ascend Communications* 21,000 $1,462
Cisco Systems* 53,000 3,697
- --------------------------------------------------------------------------------
TOTAL COMPUTER NETWORKING PRODUCTS 5,159
- --------------------------------------------------------------------------------
Computer Software -- 1.3%
Microsoft* 6,000 612
Sterling Commerce* 29,700 1,006
- --------------------------------------------------------------------------------
TOTAL COMPUTER SOFTWARE 1,618
- --------------------------------------------------------------------------------
Computers & Services -- 6.6%
Dell Computer* 27,600 1,825
Gateway 2000* 20,000 1,223
Quantum* 58,500 2,223
Seagate Technology* 55,000 2,833
- --------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES 8,104
- --------------------------------------------------------------------------------
Drugs -- 14.3%
American Home Products 36,000 2,282
Astra, Class A, ADR* 46,000 2,202
Biochem* 41,000 2,301
Johnson & Johnson 46,000 2,651
Merck 35,400 3,213
Pfizer 23,400 2,173
SmithKline Beecham 38,200 2,760
- --------------------------------------------------------------------------------
TOTAL DRUGS 17,582
- --------------------------------------------------------------------------------
Electrical Technology -- 1.4%
Electronics for Imaging* 18,000 1,670
- --------------------------------------------------------------------------------
Financial Services -- 7.3%
American Express 37,800 2,358
FHLMC 40,000 1,210
First Data 61,000 2,196
FNMA 68,700 2,714
Merrill Lynch 7,000 590
- --------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES 9,068
- --------------------------------------------------------------------------------
Household Products -- 1.5%
Gillette 22,600 1,842
- --------------------------------------------------------------------------------
Insurance -- 3.6%
AIG 9,400 1,139
MGIC Investment 28,500 2,102
SunAmerica 25,000 1,153
- --------------------------------------------------------------------------------
TOTAL INSURANCE 4,394
- --------------------------------------------------------------------------------
(CONTINUED)
25
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
THE OVB FUNDS CAPITAL
APPRECIATION PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VALUE
DESCRIPTION SHARES (000)
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
Medical Products & Services -- 3.6%
Boston Scientific* 47,500 $ 3,242
Medtronic 18,000 1,233
- --------------------------------------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES 4,475
- --------------------------------------------------------------------------------
Miscellaneous Business Services -- 2.8%
Computer Sciences* 16,000 1,132
CUC International* 96,000 2,376
- --------------------------------------------------------------------------------
TOTAL MISCELLANEOUS BUSINESS SERVICES 3,508
- --------------------------------------------------------------------------------
Office Equipment -- 1.8%
Ikon Office Solutions 50,000 2,200
- --------------------------------------------------------------------------------
Oil & Gas Well Equipment-- 15.3%
Baker Hughes 65,000 2,535
Ensco International* 45,000 2,481
Global Marine* 140,000 3,133
Halliburton 38,000 2,750
Rowan* 109,000 2,752
Schlumberger 27,100 3,011
Tidewater 47,000 2,209
- --------------------------------------------------------------------------------
TOTAL OIL & GAS WELL EQUIPMENT 18,871
- --------------------------------------------------------------------------------
Retail -- 2.8%
CVS 55,000 2,379
TJX 28,500 1,133
- --------------------------------------------------------------------------------
TOTAL RETAIL 3,512
- --------------------------------------------------------------------------------
Semi-Conductors/Instruments-- 12.3%
Altera* 28,000 1,211
Analog Devices* 86,666 2,503
Applied Materials* 54,000 2,666
Intel 22,500 3,651
Teradyne* 81,000 2,501
Texas Instruments 33,500 2,626
- --------------------------------------------------------------------------------
TOTAL SEMI-CONDUCTORS/INSTRUMENTS 15,158
- --------------------------------------------------------------------------------
Specialty Machinery -- 1.0%
U.S. Filter* 32,500 1,247
- --------------------------------------------------------------------------------
Telephones & Telecommunication-- 5.5%
L.M. Ericsson Telephone ADR* 55,600 1,872
Lucent Technologies 64,000 3,472
Nokia, Class A ADR 21,600 1,445
- --------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATION 6,789
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $84,072) 123,024
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 1.0%
Lehman Brothers
5.08%, dated 01/31/97, matures
02/03/97, repurchase price
$1,204,032 (collateralized by
U.S. Treasury obligation,par
value $822,308, 11.250%,
matures 02/15/15, market
value $1,244,082) $1,204 $ 1,204
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(COST $1,204) 1,204
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS-- 100.7%
(COST $85,276) 124,228
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (0.7%)
Other Assets and Liabilities, Net (873)
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (873)
- --------------------------------------------------------------------------------
NET ASSETS:
Portfolio shares of Class A
(unlimited authorization--no
par value) based on 7,727,445
outstanding shares of
beneficial interest 74,497
Portfolio shares of Class B
(unlimited authorization--no
par value) based on 293,257
outstanding shares of
beneficial interest 3,695
Distributions in excess of net
investment income (55)
Accumulated net realized gain
on investments 6,266
Net unrealized appreciation
on investments 38,952
- --------------------------------------------------------------------------------
TOTAL NET ASSETS-- 100.0% $123,355
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE -- CLASS A $15.38
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE-- CLASS B $15.28
- --------------------------------------------------------------------------------
* Non-income producing securities
ADR American Depository Receipt
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
[Logo Omitted]
JANUARY 31, 1997
- --------------------------------------------------------------------------------
THE OVB FUNDS EQUITY
INCOME PORTFOLIO
- --------------------------------------------------------------------------------
[PIE CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
COMMON STOCK 80%
U.S. TREASURY OBLIGATIONS 6%
REPURCHASE AGREEMENT 7%
PREFERRED STOCK 7%
% OF TOTAL PORTFOLIO INVESTMENTS
PIE CHART UNAUDITED
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
27
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
28
<PAGE>
[Logo Omitted]
JANUARY 31, 1997
- --------------------------------------------------------------------------------
THE OVB FUNDS EQUITY
INCOME PORTFOLIO (CONCLUDED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHARES/FACE VALUE
DESCRIPTION AMT. (000) (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
5.270%, 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.
29
<PAGE>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JANUARY 31, 1997
<TABLE>
<CAPTION>
(IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------------------------------------
PRIME OBLIGATIONS WEST VIRGINIA TAX-EXEMPT
PORTFOLIO INCOME PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
2/1/96 TO 1/31/97 2/1/96 TO 1/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest Income ...................... $5,263 $3,180
Dividend Income ...................... -- --
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME ............ 5,263 3,180
- ------------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Administrator Fees ................... 192 110
Investment Advisory Fees ............. 240 247
Less: Investment Advisory Fees Waiver (158) (47)
Sub-Advisory Fees .................... 72 --
Custodian Fees ....................... 12 6
ProfessionaL Fees .................... 24 22
Registration & Filing Fees ........... 9 9
Printing Expenses .................... 11 7
Trustee Fees ......................... 10 4
Pricing Fees ......................... 1 6
Distribution Fees (1) ................ 17 13
Transfer Agency Fees ................. 53 43
Amortization of Organization Costs ... 6 6
Miscellaneous Expenses ............... 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES ....................... 490 427
- ------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) ....... 4,773 2,753
- ------------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) From Securities Sold -- (53)
Net Change in Unrealized Appreciation
(Depreciation) on Investments ...... -- 2,317
- ------------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss)
on Investments ..................... -- 2,264
====================================================================================================================================
Increase in Net Assets Resulting
From Operations .................... $4,773 $5,017
====================================================================================================================================
<FN>
(1) Distribution Fees are only incurred on Class B shares.
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
[Logo Omitted]
JANUARY 31, 1997
(IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES EMERGING GROWTH CAPITAL APPRECIATION EQUITY INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
2/1/96 TO 1/31/97 2/1/96 TO 1/31/97 2/1/96 TO 1/31/97 8/2/96 TO 1/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest Income ..................... $3,601 $123 $167 $226
Dividend Income ..................... 132 17 889 506
- ------------------------------------------------------------------------------------------------------------------------------------
TOTALINVESTMENT INCOME ............ 3,733 140 1,056 732
- ------------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Administrator Fees .................. 114 113 209 33
Investment Advisory Fees ............ 426 535 993 120
Less: Investment Advisory Fees Waiver (183) (96) (270) (8)
Sub-Advisory Fees ................... -- -- -- --
Custodian Fees ...................... 9 8 13 3
Professional Fees ................... 22 20 29 5
Registration & Filing Fees .......... 9 4 5 14
Printing Expenses ................... 7 9 14 2
Trustee Fees ........................ 6 6 11 2
Pricing Fees ........................ 1 -- -- 1
Distribution Fees (1) ............... 4 8 8 1
Transfer Agency Fees ................ 45 45 56 20
Amortization of Organization Costs .. 6 6 6 2
Miscellaneous Expenses .............. 13 1 3 1
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES ...................... 479 659 1,077 196
- ------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) ...... 3,254 (519) (21) 536
- ------------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) From Securities Sold 32 3,935 9,585 1
Net Change in Unrealized Appreciation
(Depreciation) on Investments ..... (2,140) 3,217 15,858 3,790
- ------------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss)
on Investments .................... (2,108) 7,152 25,443 3,791
====================================================================================================================================
Increase in Net Assets Resulting
From Operations ................... $1,146 $6,633 $25,422 $4,327
====================================================================================================================================
<FN>
(1) Distribution Fees are only incurred on Class B shares.
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
30 & 31
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
[Logo Omitted]
JANUARY 31, 1997
FOR THE PERIOD ENDED JANUARY 31
(IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------------------------------------
PRIME OBLIGATIONS
PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
2/1/96 TO 1/31/97 2/1/95 TO 1/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net Investment Income ....................... $4,773 $5,058
Net Realized Gain (Loss) from Securities Sold -- --
Net Change in Unrealized Appreciation
(Depreciation) on Investments ............. -- --
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM INVESTMENT OPERATIONS ................ 4,773 5,058
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income:
Class A ................................... (4,444) (4,935)
Class B ................................... (329) (123)
Net Realized Gains:
Class A ................................... -- --
Class B ................................... -- --
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS: ........................ (4,773) (5,058)
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Class A:
Shares Issued ............................. 170,977 222,222
Shares Issued in Lieu of Cash Distributions 1 --
Shares Redeemed ........................... (165,337) (214,858)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS A TRANSACTIONS .................. 5,641 7,364
- ------------------------------------------------------------------------------------------------------------------------------------
Class B:
Shares Issued ............................. 14,171 8,627
Shares Issued in Lieu of Cash Distributions 244 85
Shares Redeemed ........................... (13,068) (3,226)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS B TRANSACTIONS .................. 1,347 5,486
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS .................. 6,988 12,850
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ..... 6,988 12,850
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Year ........................... 90,814 77,964
- ------------------------------------------------------------------------------------------------------------------------------------
End of Year ................................. $97,802 $90,814
====================================================================================================================================
CAPITAL SHARE TRANSACTIONS:
Class A:
Shares Issued ............................. 170,977 222,222
Shares Issued in Lieu of Cash Distributions 1 --
Shares Redeemed ........................... (165,337) (214,858)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS A SHARE TRANSACTIONS ............ 5,641 7,364
- ------------------------------------------------------------------------------------------------------------------------------------
Class B:
Shares Issued ............................. 14,171 8,627
Shares Issued in Lieu of Cash Distributions 244 85
Shares Redeemed ........................... (13,068) (3,226)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS B SHARE TRANSACTIONS ............ 1,347 5,486
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL SHARE TRANSACTIONS .................... 6,988 12,850
====================================================================================================================================
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
[Logo Omitted]
JANUARY 31, 1997
(IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA TAX-EXEMPT GOVERNMENT SECURITIES
INCOME PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
2/1/96 TO 1/31/97 2/1/95 TO 1/31/96 2/1/96 TO 1/31/97 2/1/95 TO 1/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income ....................... $ 2,753 $ 1,846 $ 3,254 $ 3,343
Net Realized Gain (Loss) from Securities Sold (53) (3) 32 125
Net Change in Unrealized Appreciation
(Depreciation) on Investments ............. 2,317 2,701 (2,140) 6,459
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM INVESTMENT OPERATIONS ................ 5,017 4,544 1,146 9,927
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income:
Class A ................................... (2,511) (1,696) (3,166) (3,302)
Class B ................................... (242) (150) (88) (41)
Net Realized Gains:
Class A ................................... -- -- -- --
Class B ................................... -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS: ........................ (2,753) (1,846) (3,254) (3,343)
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Class A:
Shares Issued ............................. 62,118 13,270 30,767 12,560
Shares Issued in Lieu of Cash Distributions -- -- -- --
Shares Redeemed ........................... (8,422) (5,221) (29,916) (19,904)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS A TRANSACTIONS .................. 53,696 8,049 851 (7,344)
- ------------------------------------------------------------------------------------------------------------------------------------
Class B:
Shares Issued ............................. 3,020 1,974 1,183 655
Shares Issued in Lieu of Cash Distributions 203 123 71 26
Shares Redeemed ........................... (1,296) (280) (548) (50)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS B TRANSACTIONS .................. 1,927 1,817 706 631
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS .................. 55,623 9,866 1,557 (6,713)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ..... 57,887 12,564 (551) (129)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Year ........................... 40,923 28,359 61,395 61,524
- ------------------------------------------------------------------------------------------------------------------------------------
End of Year ................................. $98,810 $40,923 $60,844 $61,395
====================================================================================================================================
CAPITAL SHARE TRANSACTIONS:
Class A:
Shares Issued ............................. 6,540 1,365 3,187 1,292
Shares Issued in Lieu of Cash Distributions -- -- -- --
Shares Redeemed ........................... (851) (533) (3,073) (2,072)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS A SHARETRANSACTIONS ............. 5,689 832 114 (780)
- ------------------------------------------------------------------------------------------------------------------------------------
Class B:
Shares Issued ............................. 308 201 122 67
Shares Issued in Lieu of Cash Distributions 20 12 3 3
Shares Redeemed ........................... (132) (28) (26) (5)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS B SHARE TRANSACTIONS ............ 196 185 99 65
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL SHARE TRANSACTIONS .................... 5,885 1,017 213 (715)
====================================================================================================================================
The accompanying notes are an integral part of the financial statements.
32 & 33
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
[Logo Omitted]
JANUARY 31, 1997
FOR THE PERIOD ENDED JANUARY 31
(IN THOUSANDS)
-----------------------------------------------------------------------
EMERGING GROWTH
PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
2/1/96 TO 1/31/97 2/1/95 TO 1/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net Investment Income (Loss) ............... $ (519) $ (438)
Net Realized Gain from Securities Sold ..... 3,935 6,404
Net Change in Unrealized Appreciation
on Investments ........................... 3,217 10,258
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM INVESTMENT OPERATIONS ............... 6,633 16,224
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income:
Class A .................................. -- --
Class B .................................. -- --
In Excess of Net Investment Income:
Class A .................................. -- --
Class B .................................. -- --
Net Realized Gains
Class A .................................. (625) --
Class B .................................. (43) --
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS: ....................... (668) --
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Class A:
Shares Issued ............................ 21,222 10,791
Shares Issued in Lieu of Cash Distributions -- --
Shares Redeemed .......................... (19,180) (13,290)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS A TRANSACTIONS ................. 2,042 (2,499)
- ------------------------------------------------------------------------------------------------------------------------------------
Class B:
Shares Issued ............................ 2,726 1,475
Shares Issued in Lieu of Cash Distributions 42 --
Shares Redeemed .......................... (1,502) (292)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTA CLASS B TRANSACTIONS .................. 1,266 1,183
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS ................. 3,308 (1,316)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS ............... 9,273 14,908
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Year .......................... 50,410 35,502
- ------------------------------------------------------------------------------------------------------------------------------------
End of Year ................................ $59,683 $50,410
====================================================================================================================================
CAPITAL SHARE TRANSACTIONS:
Class A:
Shares Issued ............................ 1,871 1,057
Shares Issued in Lieu of Cash Distributions -- --
Shares Redeemed .......................... (1,547) (1,276)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS A SHARETRANSACTIONS ............ 324 (219)
- ------------------------------------------------------------------------------------------------------------------------------------
Class B:
Shares Issued ............................ 222 138
Shares Issued in Lieu of Cash Distributions 3 --
Shares Redeemed .......................... (122) (27)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS B SHARE TRANSACTIONS ........... 103 111
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL SHARE TRANSACTIONS ................... 427 (108)
====================================================================================================================================
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
(IN THOUSANDS)
------------------------------------------------------------------------------
CAPITAL APPRECIATION EQUITY INCOME
PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
2/1/96 TO 1/31/97 2/1/95 TO 1/31/96 8/2/96 TO 1/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net Investment Income (Loss) ............. $ (21) $ 66 $ 536
Net Realized Gain from Securities Sold ... 9,585 12,232 1
Net Change in Unrealized Appreciation
on Investments ......................... 15,858 17,868 3,790
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM INVESTMENT OPERATIONS ............. 25,422 30,166 4,327
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income:
Class A ................................ -- (61) (522)
Class B ................................ -- -- (14)
In Excess of Net Investment Income:
Class A ................................ (38) -- --
Class B ................................ -- -- --
Net Realized Gains:
Class A ................................ (5,300) (1,472) --
Class B ................................ (198) (25) --
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS: ..................... (5,536) (1,558) (536)
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Class A:
Shares Issued .......................... 31,064 30,408 39,723
Shares Issued in Lieu of Cash Distributions -- -- --
Shares Redeemed ........................ (31,168) (29,613) (1,841)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS A TRANSACTIONS ............... (104) 795 37,882
- ------------------------------------------------------------------------------------------------------------------------------------
Class B:
Shares Issued .......................... 1,997 1,493 1,424
Shares Issued in Lieu of Cash Distributions 197 24 14
Shares Redeemed ........................ (466) (82) (27)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTA CLASS B TRANSACTIONS ................ 1,728 1,435 1,411
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS ............... 1,624 2,230 39,293
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS ............. 21,510 30,838 43,084
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Year ........................ 101,845 71,007 --
- ------------------------------------------------------------------------------------------------------------------------------------
End of Year .............................. $123,355 $101,845 $43,084
====================================================================================================================================
CAPITAL SHARE TRANSACTIONS:
Class A:
Shares Issued .......................... 2,489 2,627 3,875
Shares Issued in Lieu of Cash Distributions -- -- --
Shares Redeemed ........................ (2,247) (2,509) (173)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS A SHARE TRANSACTIONS ......... 242 118 3,702
- ------------------------------------------------------------------------------------------------------------------------------------
Class B:
Shares Issued .......................... 144 121 135
Shares Issued in Lieu of Cash Distributions 14 2 1
Shares Redeemed ........................ (34) (7) (2)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CLASS B SHARE TRANSACTIONS ......... 124 116 134
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL SHARE TRANSACTIONS ................. 366 234 3,836
====================================================================================================================================
The accompanying notes are an integral part of the financial statements.
</TABLE>
34 & 35
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
[Logo Omitted]
JANUARY 31, 1997
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
NET ASSET NET REALIZED DISTRIBUTIONS NET ASSET
VALUE, NET AND UNREALIZED FROM NET VALUE
BEGINNING INVESTMENT GAINS (LOSSES) INVESTMENT END OF
OF PERIOD INCOME ON INVESTMENTS INCOME PERIOD
- ------------------------------------------------------------------------------------------------------------------------------------
PRIME OBLIGATIONS PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
CLASS A
1997 $ 1.00 $ 0.05 -- $(0.05) $ 1.00
1996 1.00 0.06 -- (0.06) 1.00
1995 1.00 0.04 -- (0.04) 1.00
1994 (1) 1.00 -- -- -- 1.00
CLASS B
1997 $ 1.00 $ 0.05 -- $(0.05) $ 1.00
1996 1.00 0.05 -- (0.05) 1.00
1995 (2) 1.00 0.04 -- (0.04) 1.00
- ------------------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA TAX-EXEMPT INCOME PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
1997 $10.12 $ 0.49 $(0.17) $(0.49) $ 9.95
1996 9.36 0.49 0.76 (0.49) 10.12
1995 10.17 0.46 (0.81) (0.46) 9.36
1994 (1) 10.00 0.07 0.17 (0.07) 10.17
CLASS B
1997 $10.11 $ 0.47 $(0.16) $(0.47) $ 9.95
1996 9.36 0.47 0.75 (0.47) 10.11
1995 10.17 0.43 (0.81) (0.43) 9.36
1994 (3) 10.07 0.05 0.10 (0.05) 10.17
- ------------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
1997 $10.15 $ 0.56 $(0.39) $(0.56) $ 9.76
1996 9.09 0.55 1.06 (0.55) 10.15
1995 10.06 0.51 (0.97) (0.51) 9.09
1994 (1) 10.00 0.08 0.06 (0.08) 10.06
CLASS B
1997 $10.15 $ 0.53 $(0.38) $(0.53) $ 9.77
1996 9.10 0.53 1.05 (0.53) 10.15
1995 10.06 0.49 (0.96) (0.49) 9.10
1994 (4) 10.01 0.04 0.05 (0.04) 10.06
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Commenced operations on December 1, 1993. All ratios for the period have been annualized.
(2) Commenced operations on February 7, 1994. All ratios for the period have been annualized.
(3) Commenced operations on December 17, 1993. All ratios for the period have been annualized.
(4) Commenced operations on December 31, 1993. All ratios for the period have been annualized.
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
RATIO OF NET INVESTMENT
RATIO OF EXPENSES TO INCOME TO
RATIO OF NET INVESTMENT AVERAGE AVERAGE
NET ASSETS, EXPENSES TO INCOME NET ASSETS NET ASSETS PORTFOLIO
TOTAL END OF AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER
RETURN PERIOD (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- ------------------------------------------------------------------------------------------------------------------------------------
PRIME OBLIGATIONS PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
1997 5.11% $90,301 0.49% 5.00% 0.66% 4.83% N/A
1996 5.65 84,660 0.49 5.50 0.64 5.35 N/A
1995 4.15 77,295 0.49 4.08 0.69 3.88 N/A
1994 (1) 2.95 82,477 0.49 2.89 0.80 2.58 N/A
CLASS B
1997 4.85% $ 7,501 0.74% 4.75% 0.91% 4.58% N/A
1996 5.39 6,154 0.74 5.15 0.89 5.00 N/A
1995 (2) 3.95 669 0.74 4.33 0.93 4.14 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA TAX-EXEMPT INCOME PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
1997 3.35% $92,619 0.75% 5.01% 0.85% 4.91% 26%
1996 13.66 36,611 0.75 5.02 0.89 4.88 43
1995 (3.38) 26,096 0.75 4.88 1.09 4.54 28
1994 (1) 2.43 20,477 0.75 4.18 1.62 3.31 17
CLASS B
1997 3.19% $ 6,191 1.00% 4.76% 1.10% 4.66% 26%
1996 13.26 4,312 1.00 4.78 1.14 4.64 43
1995 (3.62) 2,263 1.00 4.68 1.34 4.34 28
1994 (3) 1.48 935 1.00 3.87 2.14 2.73 17
- ------------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
1997 1.83% $59,014 0.83% 5.75% 1.16% 5.42% 46%
1996 18.14 60,228 0.83 5.68 1.11 5.40 28
1995 (4.48) 61,067 0.83 5.61 1.17 5.27 13
1994 (1) 1.39 34,654 0.83 4.64 1.49 3.98 5
CLASS B
1997 1.69% $ 1,830 1.08% 5.50% 1.41% 5.17% 46%
1996 17.72 1,167 1.08 5.39 1.36 5.11 28
1995 (4.62) 457 1.08 5.34 1.42 5.00 13
1994 (4) 0.89 141 1.08 4.47 2.00 3.35 5
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Commenced operations on December 1, 1993. All ratios for the period have been annualized.
(2) Commenced operations on February 7, 1994. All ratios for the period have been annualized.
(3) Commenced operations on December 17, 1993. All ratios for the period have been annualized.
(4) Commenced operations on December 31, 1993. All ratios for the period have been annualized.
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
36 & 37
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
[Logo Omitted]
JANUARY 31, 1997
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
NET ASSET NET REALIZED DISTRIBUTIONS DISTRIBUTIONS NET ASSET
VALUE, NET AND UNREALIZED FROM NET FROM VALUE,
BEGINNING INVESTMENT GAINS (LOSSES) INVESTMENT CAPITAL END OF TOTAL
OF PERIOD INCOME (LOSS) ON INVESTMENTS INCOME GAINS PERIOD RETURN
- ------------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
1997 $11.43 $(0.10) $1.16 $-- $(0.15) $12.34 9.30%
1996 7.86 (0.10) 3.67 -- -- 11.43 45.42
1995 10.48 (0.06) (2.56) -- -- 7.86 (25.00)
1994 (1) 10.00 -- 0.48 -- -- 10.48 (4.80)
CLASS B
1997 $11.36 $(0.12) $1.15 $-- $(0.15) $12.24 9.09%
1996 7.83 (0.12) 3.65 -- -- 11.36 45.08
1995 10.48 (0.06) (2.59) -- -- 7.83 (25.29)
1994 (2) 9.77 -- 0.71 -- -- 10.48 7.27
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL APPRECIATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
1997 $13.31 $ -- $2.86 $(0.01) $(0.78) $15.38 22.06%
1996 9.57 0.01 3.93 (0.01) (0.19) 13.31 41.31
1995 10.53 0.03 (0.96) (0.03) -- 9.57 (8.84)
1994 (1) 10.00 -- 0.53 -- -- 10.53 5.30
CLASS B
1997 $13.25 $(0.03) $2.84 $-- $(0.78) $15.28 21.81%
1996 9.55 (0.01) 3.90 -- (0.19) 13.25 40.88
1995 10.52 0.01 (0.97) (0.01) -- 9.55 (9.11)
1994 (3) 10.33 -- 0.19 -- -- 10.52 1.84
- ------------------------------------------------------------------------------------------------------------------------------------
EQUITY INCOME PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
1997(4) $10.00 $ 0.16 $1.23 $(0.16) $-- $11.23 13.98%
CLASSB
1997 (4) $10.00 $ 0.15 $1.24 $(0.15) $-- $11.24 13.98%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<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
END OF AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER COMMISSION
PERIOD (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE RATE
- ------------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
1997 $55,924 1.15% (0.91)% 1.33% (1.09)% 119% $0.0574
1996 48,090 1.15 (0.92) 1.32 (1.09) 117 N/A
1995 34,772 1.15 (0.75) 1.42 (1.02) 126 N/A
1994 (1) 36,670 1.15 (0.83) 1.70 (1.38) 7 N/A
CLASS B
1997 $ 3,759 1.40% (1.15)% 1.58% (1.33)% 119% $0.0574
1996 2,320 1.40 (1.19) 1.57 (1.36) 117 N/A
1995 730 1.40 (0.98) 1.67 (1.25) 126 N/A
1994 (2) 330 1.40 (1.08) 2.15 (1.83) 7 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL APPRECIATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
1997 $118,873 1.02% (0.01)% 1.28% (0.27)% 90% $0.0739
1996 99,612 1.02 0.08 1.27 (0.17) 119 N/A
1995 70,502 1.02 0.28 1.33 (0.03) 107 N/A
1994 (1) 54,022 1.02 0.12 1.51 (0.37) 7 N/A
CLASS B
1997 $ 4,482 1.27% (0.27)% 1.53% (0.53)% 90% $0.0739
1996 2,233 1.27 (0.16) 1.52 (0.41) 119 N/A
1995 505 1.27 0.02 1.58 (0.29) 107 N/A
1994 (3) 171 1.27 0.19 2.01 (0.55) 7 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
EQUITY INCOME PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
1997(4) $41,580 1.20% 3.27% 1.25% 3.22% 10% $0.0787
CLASSB
1997 (4) $ 1,504 1.45% 3.02% 1.50% 2.97% 10% $0.0787
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Commenced operations on December 1, 1993. All ratios for the period have been annualized.
(2) Commenced operations on December 29, 1993. All ratios for the period have been annualized.
(3) Commenced operations on December 31, 1993. All ratios for the period have been annualized.
(4) 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.
</FN>
</TABLE>
38 & 39
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 Family of Funds. The OVB Family of Funds
includes the Prime Obligations Portfolio (the "Money Market Portfolio"), Capital
Appreciation Portfolio, Emerging Growth Portfolio, Equity Income Portfolio (the
"Equity Portfolios"), Government Securities Portfolio and West Virginia
Tax-Exempt Income Portfolio (the "Fixed Income Portfolios"). The financial
statements of the remaining portfolios of the Trust 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 Portfolios' prospectus
provides a description of each Portfolio's investment objectives, policies and
strategies. The Portfolios are 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 Portfolios.
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 may be valued at their amortized cost.
Investment securities held by the Money Market Portfolio are stated at
amortized cost which approximates market value. Under the amortized cost method,
any discount or premium is amortized ratably to the maturity of the security and
is included in interest income.
FEDERAL INCOME TAXES--
It is each 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.
40
<PAGE>
[Logo Omitted]
JANUARY 31, 1997
Accordingly, no provision for Federal income taxes is required in the financial
statements.
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. Purchase discounts and premiums on securities held by
the Fixed Income Portfolios are accreted and amortized to maturity using the
scientific interest method, which approximates the effective interest method.
REPURCHASE AGREEMENTS--
The Portfolios, except the West Virginia Tax-Exempt Income Portfolio, invest 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 Portfolios may be delayed or limited.
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. Class B shares bear a class
specific 12b-1 fee. Income, other expenses and accumulated realized and
unrealized gains and losses of a Portfolio are allocated to the respective class
on the basis of relative net asset value each day.
DISTRIBUTIONS--
Distributions from net investment income for the Equity Portfolios are paid to
shareholders in the form of quarterly dividends. Distributions from net
investment income for the Money Market and Fixed Income Portfolios are declared
daily and paid to shareholders on a monthly basis. 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 differ from those amounts determined
(CONTINUED)
41
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
$519,000 relating to permanent differences attributable to cumulative net
operating losses of the Emerging Growth Portfolio as of January 31, 1997, has
been reclassified from that portfolio's accumulated net investment losses to
paid-in capital. This reclassification has no effect on net assets or net asset
value per share.
3. INVESTMENT ADVISORY, ADMINISTRATION,
TRANSFER AGENT, AND DISTRIBUTION AGREEMENTS:
One Valley Bank, National Association (the "Adviser") serves as investment
adviser to each Portfolio pursuant to an investment advisory agreement (the
"Advisory Agreement") with the Trust. For its services, the Adviser is entitled
to a fee, that is calculated daily and paid monthly, at an annual rate based on
the average daily net assets of each Portfolio as follows: Prime Obligations
Portfolio --.25%, Capital Appreciation Portfolio --.95%, Emerging Growth
Portfolio --.95%, Equity Income Portfolio --.74%, Government Securities
Portfolio --.75% and West Virginia Tax-Exempt Income Portfolio--.45%. The
Adviser has agreed to voluntarily waive a portion of its fee so that the total
annual expenses of each portfolio will not exceed the voluntary expense
limitations adopted by the Adviser. In the event that the total annual expenses
of a 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.
Wellington Management Company, LLP (the "Sub-Adviser") serves as the
investment sub-adviser to the Prime Obligations Portfolio pursuant to a
sub-advisory agreement (the "Sub-Advisory Agreement") with the Adviser and the
Trust. Under the Sub-Advisory Agreement, the Sub-Adviser manages the Portfolio,
selects investments, and places all orders for purchases and sales of the
Portfolio's securities, subject to the general supervision of the Trustees of
the Trust and the Adviser. For the services provided and expenses incurred
pursuant to the Sub-Advisory Agreement, the Sub-Adviser is entitled to receive a
fee, computed daily and paid monthly, at the annual rate of .075% of the first
$500 million of "managed assets" and .02% of "managed assets" in excess of $500
million. "Managed assets" are all of the money market fund assets that the
Sub-Adviser manages for the Trust, including assets of funds other than the
42
<PAGE>
[Logo Omitted]
JANUARY 31, 1997
Prime Obligations Portfolio. The fee paid by the Portfolio is based on its
proportionate share of "managed assets."
The Trust and the Administrator have 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 each Portfolio. There is a minimum annual fee of
$100,000 payable to the Administrator by each Portfolio. The Administrator has
voluntarily agreed to waive a portion of its fee relating to the West Virginia
Tax-Exempt Income Portfolio in order to limit that Portfolio's administration
fee to .20% of its average daily net assets on an annualized basis. 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 Portfolios 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 each Portfolio have a distribution
plan (the "Class B Plan"), pursuant to Rule 12b-1 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 each 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 and a Trustee 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)
43
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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:
WEST VIRGINIA TAX-
EXEMPT INCOME PORTFOLIO (A)
U.S.
GOVERNMENT
SECURITIES ALL OTHER TOTAL
(000) (000) (000)
------- ------- -------
Purchases $ -- $22,962 $22,962
Sales -- 14,323 14,323
GOVERNMENT SECURITIES PORTFOLIO (B)
U.S.
GOVERNMENT
SECURITIES ALL OTHER TOTAL
(000) (000) (000)
------- ------- -------
Purchases $ 7,973 $ 491 $ 8,464
Sales 23,351 1,556 24,907
EMERGING GROWTH PORTFOLIO (C)
U.S.
GOVERNMENT
SECURITIES ALL OTHER TOTAL
(000) (000) (000)
------- ------- -------
Purchases $ -- $63,624 $63,624
Sales -- 64,608 64,608
CAPITAL APPRECIATION PORTFOLIO (D)
U.S.
GOVERNMENT
SECURITIES ALL OTHER TOTAL
(000) (000) (000)
------- ------- -------
Purchases $ -- $80,427 $80,427
Sales -- 94,761 94,761
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 each Equity and Fixed Income Portfolio is as follows:
NET
UNREALIZED
APPRECIATED DEPRECIATED APPRECIATION/
SECURITIES SECURITIES (DEPRECIATION)
(000) (000) (000)
----------- ----------- --------------
West Virginia
Tax-Exempt
Income $ 3,958 $(438) $ 3,520
Government
Securities 1,506 (689) 817
Emerging
Growth 16,205 (753) 15,452
Capital
Appreciation 39,031 (79) 38,952
Equity
Income 3,969 (179) 3,790
At January 31, 1997, the following Portfolios had available realized
capital losses to offset future net capital gains through fiscal year ending:
CAPITAL POST
LOSS 10/31/96
CARRYFORWARDS DEFERRED
2003 2004 2005 UTILIZED LOSSES
(000) (000) (000) (000) (000)
------ ------ ------ ------ ------
Prime
Obligations $ 6 $-- $-- $ 2 $ 3
West Virginia
Tax-Exempt
Income 24 141 48 -- --
Government
Securities -- 59 -- 12 --
Emerging
Growth -- -- -- 4,170 903
(a) Does not include $46,931,572 of securities received in exchange for shares
of the Portfolio.
(b) Does not include $19,014,338 of securities received in exchange for shares
of the Portfolio.
(c) Does not include $7,198,673 of securities received in exchange for shares
of the Portfolio.
(d) Does not include $11,128,529 of securities received in exchange for shares
of the Portfolio.
44
<PAGE>
[Logo Omitted]
JANUARY 31, 1997
For tax purposes, capital losses can be carried foward for a maximum of eight
years to offset any future net realized capital gains. Post-October deferred
losses have been deferred to fiscal year 1998 for tax purposes.
6. CONCENTRATION OF CREDIT RISK:
The Money Market Portfolio invests primarily in money market instruments
maturing in 397 days or less whose ratings are within the two highest ratings
categories assigned by a nationally recognized statistical rating organization
or, if not rated, are believed to be of comparable quality. The Fixed Income
Portfolios invest primarily in marketable debt instruments. The market value of
these investments will change in response to interest rate changes and other
factors. During periods of falling interest rates, the values of debt securities
generally rise. Conversely, during periods of rising interest rates the values
of such securities generally decline. The ability of the issuers of the
securities held by these Portfolios to meet their obligations may be affected by
economic and political developments in a specific industry, state or region.
Changes by recognized rating organizations in the ratings of any debt security
and in the ability of an issuer to make payments of interest and principal may
also affect the value of these investments.
7. IN KIND TRANSFER OF SECURITIES:
During the period ended January 31, 1997, the following Portfolios issued shares
of beneficial interest in exchange for portfolio securities at their current
value from certain accounts managed by One Valley Bank, N.A.:
SHARES SECURITIES UNREALIZED
ISSUED RECEIVED APPRECIATION
---------- ----------- ------------
West Virginia
Tax-Exempt
Income ...... 4,712,005 $46,931,572 $8,951,535
Government
Securities .. 1,918,702 19,014,338 1,426,736
Emerging Growth 584,782 7,198,673 2,378,851
Capital
Appreciation 781,497 11,128,529 8,894,598
The tax basis of the securities exchanged for shares of beneficial interest
of the Portfolios was carried over and included the unrealized appreciation
shown above.
45
<PAGE>
NOTICE TO SHAREHOLDERS OF THE OVB FUNDS
UNAUDITED
FOR TAXPAYERS FILING ON A CALENDAR YEAR BASIS, THIS NOTICE IS FOR INFORMATIONAL
PURPOSES ONLY.
For the fiscal year ended January 31, 1997 the portfolios of the OVB Family of
Funds are designating long term capital gains and qualifying dividend income
with regard to distributions paid during the year as follows:
(A) (B)
LONG TERM ORDINARY
CAPITAL GAINS INCOME TOTAL
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS)
- --------- ------------- ------------- --------------
Prime Obligations Money Market.. 0% 100% 100%
Capital Appreciation............ 99% 1% 100%
Emerging Growth................. 100% 0% 100%
Equity Income................... 0% 100% 100%
Government Securities........... 0% 100% 100%
WestVirginia Tax-Exempt Income.. 0% 100% 100%
(C) (D)
QUALIFYING TAX EXEMPT
PORTFOLIO DIVIDENDS (1) INTEREST (2)
- --------- ------------- ------------
Prime Obligations Money Market.. 0% 0%
Capital Appreciation............ 0% 0%
Emerging Growth................. 0% 0%
Equity Income................... 70% 0%
Government Securities........... 4% 0%
WestVirginia Tax-Exempt Income.. 0% 100%
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
(2) None of the OVB Funds satisfy California's, Connecticut's, or New York's
statutory requirements to pass through income from Federal obligations.
Accordingly, the pro rata portion of income from Federal obligations will
not be exempt from these states' respective income tax.
* Items (A) and (B) are based on the percentage of each Portfolio's total
distribution.
** Item (C) is based on the percentage of ordinary income of the fund.
*** Item (D) is based on the percentage of the gross income of the fund.
46
<PAGE>
Notes
<PAGE>
Notes
<PAGE>
BACK COVER
49
<PAGE>
