ARK FUNDS/MA, 485A24F, 1995-12-12

ARK FUNDS/MA
485A24F, 1995-12-12

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As filed with the Securities and Exchange Commission on December 11, 1995

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ x ]
File No. 33-53690

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 6 [ x ]

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ x ]
File No. 811-7310

Amendment No. 4 [ x ]

ARK Funds
(Exact Name of Registrant as Specified in Charter)

CT Corporation, 2 Oliver Street, Boston, MA 02109
(Address of Principal Executive Office)

Registrant's Telephone Number
610-254-1000

Mr. Richard J. Shoch
Vice President and Secretary
ARK Funds
680 East Swedesford Road
Wayne, PA 19087
(Name and Address of Agent for Service)

Copies to:
Alan C. Porter, Esq.
Piper & Marbury, L.L.P.
1200 Nineteenth St., N.W.
Washington, D.C. 20036

It is proposed that this filing will become effective:

( ) Immediately upon filing pursuant to paragraph (b) of Rule 485
( ) On ( ) pursuant to paragraph (b) of Rule 485
( ) 60 days after filing pursuant to paragraph (a)(i)
( ) On (April _, 1995) pursuant to paragraph (a)(ii)
(x) 75 days after filing pursuant to paragraph (a)(ii)
( ) On (_________, 1996) pursuant to paragraph (a)(iii) of Rule 485.

The Registrant hereby elects to register an indefinite number of
shares of beneficial interest of its U.S. Treasury Money Market
Portfolio, U.S. Government Money Market Portfolio, Money Market
Portfolio, Tax-Free Money Market Portfolio, Short-Term Treasury
Portfolio, Income Portfolio, Growth and Income Portfolio, Blue
Chip Equity Portfolio, Capital Growth Portfolio, International
Equity Portfolio, Special Equity Portfolio, and Maryland Tax-Free
Portfolio pursuant to Rule 24f-2 under the Investment Company
Act of 1940. The Registrant has previously elected to register
an indefinite number of shares. The Rule 24f-2 Notice for the
Registrant's most recent fiscal year was filed on June 30, 1995.

Page 1 of

ARK FUNDS

CONTENTS OF
POST-EFFECTIVE AMENDMENT NO. 6

Page

Facing Sheet

Table of Contents

Part A Cross Reference Sheet for Institutional Class

Prospectus for Institutional Class

Part A Cross Reference Sheet for Institutional II Class

Prospectus for Institutional II Class

Part A Cross Reference Sheet for Retail Class

Prospectus for Retail Class

Part B Cross Reference Sheet for Institutional Class and Institutional
II Class

Statement of Additional Information for Institutional Class and Institutional
II Class

Part B Cross Reference Sheet for Retail Class

Statement of Additional Information for Retail Class

Part C

Signature Page

Exhibit Index

ARK FUNDS: INSTITUTIONAL CLASS

U.S. TREASURY MONEY MARKET PORTFOLIO
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
MONEY MARKET PORTFOLIO
TAX-FREE MONEY MARKET PORTFOLIO
SHORT-TERM TREASURY PORTFOLIO
INCOME PORTFOLIO
GROWTH AND INCOME PORTFOLIO
BLUE CHIP EQUITY PORTFOLIO
CAPITAL GROWTH PORTFOLIO
INTERNATIONAL EQUITY PORTFOLIO
SPECIAL EQUITY PORTFOLIO
MARYLAND TAX-FREE PORTFOLIO

CROSS REFERENCE SHEET

Form N-1A Item Number

Part A Prospectus Caption

1 ......................... Cover Page
2 ......................... Summary of Portfolio Expenses
3 a,b...................... Financial Highlights
c........................ Performance
4 a(i)..................... General Information
a(ii),b,c................ Investment Objectives, Policies
and Risk Considerations

5 a,b,c,d,e,f.............. Management of the Fund
g........................ Portfolio Transactions and Valuation
5A *
6 a........................ General Information
b,c,d.................... *
e........................ General Information
f,g...................... Portfolio Transactions and Valuations,
Tax Matters
h........................ General Information
7 a........................ Purchases, Exchanges and Redemptions
b(i),(ii)................ Portfolio Transactions and Valuations
b(iii,iv,v),c............ *
d........................ Purchases, Exchanges and Redemptions
e, f(i),(ii)............. Management of the Fund
f(iii)................... *
8 ......................... Purchases, Exchanges and Redemptions
9 ......................... *

* Not Applicable

ARK Funds -- Institutional Class
Prospectus
__________, 1996

ARK Funds (the "Fund") is a registered open-end management
investment company that offers eleven diversified investment
portfolios and one non-diversified investment portfolio. These
twelve investment portfolios encompass a selection of money
market, fixed-income, equity and international portfolios (the
"Portfolios"). The First National Bank of Maryland ("First
Maryland") serves as investment advisor to the Portfolios, with
the exception of International Equity Portfolio, which is advised
by AIB Investment Managers Limited ("AIB I.M."), an affiliate of
First Maryland.

Shares of the Institutional Class of each of the Portfolios (the
"Shares") are offered through this Prospectus. The Shares are
offered only to individuals, institutions and other entities that
have established trust, custodial or money management
relationships with First Maryland or its affiliated banks
(including Allied Irish Banks, p.l.c. and its affiliates) or
correspondent banks of First Maryland or their affiliated banks.
Investments in the Shares are made at net asset value without a
sales charge. A brief description of each Portfolio follows.

U.S. Treasury Money Market Portfolio, U.S. Government Money
Market Portfolio, and Money Market Portfolio each seek to
maximize current income and provide liquidity and security of
principal. Each Portfolio seeks to maintain a constant net asset
value per share of $1.00.

Tax-Free Money Market Portfolio seeks to provide a high level of
interest income, exempt from federal income taxes, as is
consistent with a portfolio of high quality, short-term municipal
obligations selected on the basis of liquidity and stability of
principal. This Portfolio seeks to maintain a constant net asset
value per share of $1.00.

An investment in a money market Portfolio is neither insured nor
guaranteed by the U.S. government. There can be no assurance
that any money market Portfolio will maintain a stable net asset
value per share of $1.00.

Short-Term Treasury Portfolio seeks to provide current income, with
a secondary objective of stability of principal, by investing in
instruments which are issued or guaranteed as to principal and
interest by the U.S. government, with a secondary objective of
stability of principal.

Income Portfolio seeks to provide a high level of current income
with a secondary objective of capital growth, consistent with
reasonable risk, by investing primarily in a broad range of fixed-
income securities within the standards of quality and maturity
prescribed.

Growth and Income Portfolio seeks to achieve long-term total
returns from both capital appreciation and current income by
investing in a broad range of stocks, bonds, and cash
equivalents.

Blue Chip Equity Portfolio seeks to achieve long-term capital
appreciation by investing primarily in equity securities of large
capitalization companies which are recognized market leaders.

Capital Growth Portfolio seeks to achieve long-term capital
appreciation by investing primarily in common stock and
securities convertible into common stock.

International Equity Portfolio seeks to achieve long-term capital
growth and to maximize total returns by investing primarily in
foreign equity securities.

Special Equity Portfolio seeks to achieve capital appreciation by
investing primarily in securities of companies believed by First
Maryland to be "special equities." "Special equities" include
equity securities of: (1) a company with a market capitalization
of $1.2 billion or less at the time of the Portfolio's investment
and deemed by the Portfolio manager to have above average growth
potential; or (2) a company experiencing a "special situation";
that is, an unusual and possibly non-repetitive development
taking place in that company.

Maryland Tax-Free Portfolio seeks to achieve high current income
that is free from federal income tax and the Maryland state and
county income taxes by investing primarily in municipal
securities.

Shares of each Portfolio are not deposits or obligations of, or
guaranteed by, First Maryland or any depository institution.
Shares are not federally insured by the FDIC, the Federal Reserve
Board or any other agency, and are subject to investment risk,
including possible loss of principal amount invested.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

This Prospectus is designed to provide investors with information
that they should know before investing. Please read and retain
this document for future reference. A Statement of Additional
Information (SAI) (dated _________, 1996) and the Financial
Statements (including portfolio listing) for the fiscal period
ended April 30, 1995 have been filed with the Securities and
Exchange Commission ("SEC") and are incorporated herein by
reference. This Statement and the Annual Report are available
upon request without charge by calling 1-800-624-4116.

Table of Contents

Summary of Portfolio Expenses.................................
Financial Highlights..........................................
Investment Objectives, Policies and Risk Considerations.......
Performance...................................................
Portfolio Transactions and Valuation..........................
Purchases, Exchanges and Redemptions..........................
Management of the Fund........................................
Banking Law Matters...........................................
Tax Matters...................................................
General Information...........................................
Appendix......................................................

SUMMARY OF PORTFOLIO EXPENSES

The expense summary format below was developed for use by
all mutual funds to help investors make their investment
decisions. Investors should consider this expense information
along with other important information, including each
Portfolio's investment objectives, performance (if any) and
financial highlights.

A. Annual Institutional Class Operating Expenses (as a percentage of average
net assets):

Total
Advisory Other Operating
Fee Expenses Expenses

U.S. Treasury Money Market Portfolio.... .16%* .22% .38%*
U.S. Government Money Market Portfolio.. .13%* .18% .31%*
Money Market Portfolio.................. .10%* .15% .25%*
Tax-Free Money Market Portfolio......... .08%* .14% .22%*
Short-Term Treasury Portfolio........... .30%* .25% .55%*
Income Portfolio........................ .50% .24% .74%
Growth and Income Portfolio............. .55% .22% .77%
Blue Chip Equity Portfolio.............. .00* .65%* .65%*
Capital Growth Portfolio................ .00*** .25% .25%
International Equity Portfolio.......... .56%* .99%* 1.55%**
Special Equity Portfolio................ .60%* .34% .94%
Maryland Tax-Free Portfolio(1).......... .50% .24% .74%

* After applicable waivers.
**This figure reflects the 1.55% cap for International Equity Portfolio.
See Note A below.
***The .60% advisory fee for Capital Growth Portfolio has been waived
through the end of 1996.
(1)The Institutional Class of this Portfolio has not commenced operations
as of the date of this Prospectus.

B. Example: An investor would pay the following expenses on a
$1,000 investment in the Shares, assuming (1) 5% annual return,
(2) redemption at the end of each time period and (3) fee waivers
continue at the same levels for each time period.

1 Year 3 Years 5 Years 10 Years

U.S. Treasury Money Market Portfolio....... $4 $12 $21 $48
U.S. Government Money Market Portfolio..... 3 10 17 39
Money Market Portfolio..................... 3 8 14 32
Tax-Free Money Market Portfolio............ 2 7 12 28
Short-Term Treasury Portfolio.............. 6 18 31 69
Income Portfolio........................... 8 24 41 92
Growth and Income Portfolio................ 8 25 43 95
Blue Chip Equity Portfolio................. 7 21 36 81
Capital Growth Portfolio................... 3 8 14 32
International Equity Portfolio............. 16 49 84 185
Special Equity Portfolio................... 10 30 52 115
Maryland Tax-Free Portfolio ............... 8 24 41 92

Explanation of Table: The purpose of the table is to assist
investors in understanding the various costs and expenses that an
investor in the Shares would bear directly or indirectly as a
result of an investment in the Shares. (For a more complete
discussion of the various costs and expenses, see "Management of
the Fund.") As more fully described under the heading
"Purchases, Exchanges and Redemptions," the Shares are currently
available only to clients of First Maryland or its affiliated
banks who have established trust, custodial or money management
relationships with First Maryland, its affiliated banks
(including Allied Irish Banks, p.l.c. and its affiliates) or
correspondent banks of First Maryland or their affiliated banks.
Such relationships may involve the payment of account or service
fees not reflected in the table above.

A. Annual Operating Expenses. Advisory Fees are paid by
each Portfolio to First Maryland or AIB I.M. (in the case of
International Equity Portfolio) for managing its investments.
Operating Expenses for Short Term Treasury Portfolio, Blue Chip
Equity Portfolio, Special Equity Portfolio and Maryland Tax-Free
Portfolio are estimated for their respective first years of
operations. The Institutional Class incurs Other Expenses for
certain administrative services such as maintaining shareholder
records, furnishing shareholder statements and reports, and for
other services.

AIB I.M. has voluntarily agreed to waive its advisory fee or
reimburse other expenses of International Equity Portfolio in
order to limit its total expense ratio to 1.55% of the
Portfolio's average daily net assets, subject to annual review
and termination by AIB I.M. Had AIB I.M. not agreed to limit the
Portfolio's expenses, the Advisory Fee, Other Expenses, and Total
Operating Expenses for International Equity Portfolio would have
been .80%, .99%, and 1.79%, respectively. See "Investment
Advisors" for further information.

First Maryland has voluntarily agreed to waive 0.9% of its
advisory fees for U.S. Treasury Money Market Portfolio, .12% of
its advisory fee for U.S. Government Money market Portfolio, .15%
of its advisory fee for Money Market Portfolio, .17% of its
advisory fee for Tax-Free Money Market Portfolio, .05% of its
advisory fee for Short-Term Treasury Portfolio, .60% of its
advisory fee for Blue Chip Equity Portfolio and .60% of its
advisory fee for Capital Growth Portfolio. SEI Financial
Management Corporation has voluntarily agreed to waive .018% of
its administration fee for Money Market Portfolio and .033% of
its administration fee for Tax-Free Money Market Portfolio.
There can be no assurance that fee and expense waivers will
continue at the stated levels or otherwise during the current
fiscal year. Expenses eligible for waiver do not include
interest, taxes, brokerage commissions (if any), or extraordinary
expenses. Absent such waivers, Advisory Fees, Other Expenses and
Total Operating Expenses would have been: .25%, .22% and .47%
(U.S. Treasury Money Market Portfolio); .25%, .18% and .43% (U.S.
Government Money Market Portfolio); .25%, .17% and .42% (Money
Market Portfolio); .25%, .17% and .42% (Tax-Free Money Market
Portfolio); .35%, .25% and .60% (Short-Term Portfolio); .60%, .78%
and 1.38% (Blue Chip Equity Portfolio); and .60%, .25% and .85%
(Capital Growth Portfolio).

Advisory Fees and Other Expenses are reflected in share
prices of or dividends on the Institutional Class of each
Portfolio and are not charged directly to individual shareholder
accounts.

B. Example. The Example assumes that all dividends and
distributions are reinvested and that the amounts listed under
"Annual Institutional Class Operating Expenses" remain the same
in the years shown. The Example should not be considered a
representation of past or future expenses and actual expenses may
be greater or less than those shown.

FINANCIAL HIGHLIGHTS

The following tables provide information about the financial
history of the Institutional Class of each Portfolio, except for
Short-Term Treasury Portfolio and Blue Chip Equity Portfolio,
the Institutional Classes of which are expected to commence operations
on or about the date of this Prospectus, and Special Equity
Portfolio and Maryland Tax-Free Portfolio, the Institutional
Classes of which have not yet commenced operations as of
the date of this Prospectus. These tables express the
information in terms of a single share outstanding throughout
the period. The data is for the fiscal period ended
October 31, 1995 and is unaudited.

[Table to be completed by Amendment]

INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS

The Fund currently consists of twelve investment Portfolios
with a variety of investment objectives and policies. First
Maryland or AIB I.M. (in the case of International Equity
Portfolio) provides a continuous investment program in accordance
with each Portfolio's investment objective and policies. Except
for each Portfolio's investment objective and those policies
identified as fundamental, each Portfolio's policies are not
fundamental. Non-fundamental policies may be changed without
shareholder approval. Further information relating to the types
of securities in which each Portfolio may invest and the
investment policies of each Portfolio in general is set forth in
the Appendix to this Prospectus. As is the case with any
investment in securities, an investment in a Portfolio involves
certain risks and there can be no assurance a Portfolio will
achieve its investment objective. Each Portfolio can use various
techniques to manage its investment exposure. These techniques
may involve derivative transactions. By itself, no one Portfolio
constitutes a balanced investment plan. From time to time, a
Portfolio, to the extent consistent with its investment
objective, policies, restrictions and applicable law, may invest
in securities of companies with which First Maryland and/or its
affiliates has a lending relationship. The lending relationship
will not be a factor in the selection of securities.

U.S. Treasury Money Market Portfolio, U.S. Government Money
Market Portfolio, Money Market Portfolio and Tax-Free Money
Market Portfolio (the "ARK Money Market Portfolios") each seek to
maximize current income and provide liquidity and security of
principal by investing in high-quality, short-term, U.S. dollar-
denominated instruments determined by First Maryland to present
minimal credit risks in accordance with guidelines adopted by the
Fund's Board of Trustees (the "Board"). The ARK Money Market
Portfolios each will seek to maintain a net asset value per share
("NAV") of $1.00, will limit its investments to securities with
remaining maturities of 397 days or less, and will maintain a
dollar-weighted average maturity of 90 days or less. In
determining a security's maturity for purposes of calculating the
Portfolios' average maturity, estimates of the expected time for
principal to be paid may be used. An estimated maturity can be
substantially shorter than its stated final maturity.

Although the ARK Money Market Portfolios' policies are
designed to help maintain a stable $1.00 share price, all money
market instruments can change in value when interest rates or
issuers' creditworthiness change, or if an issuer or guarantor of
a security fails to pay interest or principal when due. If these
changes in value were large enough, a Portfolio's share price
could fall below $1.00. In general, securities with longer
maturities are more vulnerable to price changes, although they
may provide higher yields.

U.S. Treasury Money Market Portfolio

The investment objective of U.S. Treasury Money Market
Portfolio is to maximize current income and provide liquidity and
security of principal by investing in instruments which are
issued or guaranteed as to principal and interest by the U.S.
government and thus constitute direct obligations of the United
States. As a non-fundamental policy, the Portfolio will invest
100% of its total assets in U.S. Treasury bills, notes, and bonds
and will limit its investments to U.S. Treasury obligations that
pay interest that is specifically exempt from state and local
taxes under federal law.

U.S. Government Money Market Portfolio

The investment objective of U.S. Government Money Market
Portfolio is to maximize current income and provide security of
principal by investing in instruments which are issued or
guaranteed as to principal and interest by the U.S. government or
any of its agencies or instrumentalities ("U.S. Government
Securities"), or in repurchase agreements backed by such
instruments. As a non-fundamental policy, 100% of the
Portfolio's total assets will be invested in U.S. Government
Securities, and in repurchase agreements collateralized by such
securities. U.S. Government Securities include U.S. Treasury
bills, notes, and bonds, and obligations issued by federal
agencies such as the Export-Import Bank of the United States, the
General Services Administration, the Government National Mortgage
Association and the Small Business Administration. Obligations
issued or guaranteed as to principal and interest by U.S.
government agencies or instrumentalities include instruments
issued by the Federal Home Loan Bank, Federal Farm Credit Bank
and Federal National Mortgage Association. The Portfolio may
enter into when-issued or delayed-delivery transactions. The
Portfolio normally may not invest more than 5% of its total
assets in the securities (other than U.S. Government Securities)
of any single issuer. Under certain conditions, however, the
Portfolio may invest up to 25% of its total assets in first tier
securities of a single issuer for up to three days.

Money Market Portfolio

The investment objective of Money Market Portfolio is to
maximize current income and provide liquidity and security of
principal by investing in a broad range of short-term, high-
quality U.S. dollar-denominated debt securities ("Money Market
Instruments"). Such Money Market Instruments include, but are
not limited to: U.S. Government Securities; custodial receipts
evidencing future interest or principal payments on U.S.
Government Securities; obligations of domestic or foreign banks
including bankers' acceptances, time deposits and certificates of
deposit ("CDs"); commercial paper (including variable and
floating rate instruments); corporate obligations; and asset-
backed securities and indexed securities each with 397 days or
less remaining to maturity. Money Market Portfolio may invest
more than 25% of its total assets in certain obligations of
domestic banks. Money Market Portfolio may engage in repurchase
and reverse repurchase agreements and may enter into when-issued
or delayed-delivery transactions. The Portfolio normally may not
invest more than 5% of its total assets in the securities (other
than U.S. Government Securities) of any single issuer. Under
certain conditions, however, the Portfolio may invest up to 25%
of its total assets in first tier securities of a single issuer
for up to three days.

The Portfolio may invest in U.S. dollar-denominated
obligations of U.S. banks and foreign branches of U.S. banks
("Eurodollars"), U.S. branches and agencies of foreign banks
("Yankee dollars"), and foreign branches of foreign banks. See
the Appendix for more information.

At least 95% of the assets of Money Market Portfolio will be
invested in securities that have received the highest rating
assigned by any two nationally recognized statistical rating
organizations ("NRSROs") or, if only one such rating organization
has assigned a rating, such single organization. Up to 5% of the
Portfolio's assets may be invested in securities that have
received ratings in the second highest category by any two NRSROs
or, if only one such rating organization has assigned a rating,
such single organization. The Portfolio may also acquire unrated
securities determined by First Maryland to be comparable in
quality to rated securities in accordance with guidelines adopted
by the Fund's Board.

Tax-Free Money Market Portfolio

The investment objective of Tax-Free Money Market Portfolio
is to provide a high level of interest income by investing
primarily in high-quality municipal obligations that are exempt
from federal income taxes. The Portfolio attempts to invest 100%
of its assets in securities exempt from federal income tax (not
including the alternative minimum tax), and maintains a
fundamental policy that at least 80% of its income will, under
normal market conditions, be exempt from federal income tax,
including the federal alternative minimum tax.

The Portfolio invests in high quality, short-term municipal
securities but also may invest in high quality, long-term fixed,
variable, or floating rate instruments (including tender option
bonds) that have demand features or interest rate adjustment
features that result in interest rates, maturities, and prices
similar to short-term instruments. The Portfolio's investments
in municipal securities may include tax, revenue, or bond
anticipation notes; tax-exempt commercial paper; general
obligation or revenue bonds (including municipal lease
obligations and resource recovery bonds); and zero coupon bonds.
The Portfolio may enter into when-issued and delayed-delivery
transactions and may purchase securities that are subject to
restrictions on resale.

Municipal securities are issued to raise money for various
public purposes, including general purpose financing for state
and local governments as well as financing for specific projects
or public facilities. Municipal securities may be backed by the
full taxing power of a municipality or by the revenues from a
specific project or the credit of a private organization. Some
municipal securities are insured by private insurance companies,
while others may be supported by letters of credit furnished by
domestic or foreign banks. First Maryland monitors the financial
condition of parties (including insurance companies, banks, and
corporations) whose creditworthiness is relied upon in
determining the credit quality of securities the Portfolio may
purchase.

A demand feature is a put that entitles the security holder
to repayment of the principal amount of the underlying security
on no more than 30 days' notice at any time or at specified
intervals. A standby commitment is a put that entitles the
security holder to same-day settlement at amortized cost plus
accrued interest.

Issuers or financial intermediaries who provide demand
features or standby commitments often support their ability to
buy securities on demand by obtaining letters of credit ("LOCs")
or other guarantees from banks. LOCs also may be used as credit
supports for other types of municipal instruments. First
Maryland may rely upon its evaluation of a bank's credit in
determining whether to purchase an instrument supported by an
LOC. In evaluating a foreign bank's credit, First Maryland will
consider whether adequate public information about the bank is
available and whether the bank may be subject to unfavorable
political or economic developments, currency controls, or other
governmental restrictions that might affect the bank's ability to
honor its credit commitment.

First Maryland anticipates that the Portfolio will be as
fully invested as is practicable in municipal obligations.
However, the Portfolio reserves the right for temporary defensive
purposes to invest without limitation in taxable Money Market
Instruments. There may be occasions when, as a result of
maturities of portfolio securities or sales of Portfolio shares,
or in order to meet anticipated redemption requests, the
Portfolio may hold cash which is not earning income.

At least 95% of the assets of Tax-Free Money Market
Portfolio will be invested in securities that have received the
highest rating assigned by any two NRSROs or, if only one such
rating organization has assigned a rating, such single
organization. The Portfolio may also acquire unrated securities
determined by First Maryland to be comparable in quality to rated
securities in accordance with guidelines adopted by the Board.

The Portfolio may invest up to 25% of its net assets in a
single issuer's securities. The Portfolio may invest any portion
of its assets in industrial revenue bonds ("IRBs") backed by
private companies, and may invest up to 25% of its total assets
in IRBs related to a single industry. The Portfolio also may
invest 25% or more of its total assets in tax-exempt securities
whose revenue sources are from similar types of projects, e.g.,
education, electric utilities, health care, housing,
transportation, water, sewer, and gas utilities. There may be
economic, business or political developments or changes that
affect all securities of a similar type. Therefore, developments
affecting a single issuer or industry, or securities financing
similar types of projects, could have a significant effect on the
Portfolio's performance.

Yields on municipal obligations depend on a variety of
factors, including the general conditions of the money markets
and of the municipal bond and municipal note markets, the size of
a particular offering, the maturity of the obligation, and the
rating of the issue. Municipal obligations with longer
maturities tend to produce higher yields and generally are
subject to potentially greater price fluctuations than
obligations with shorter maturities.

Investment Limitations for the ARK Money Market Portfolios

The following summarizes the principal investment
limitations of each of the ARK Money Market Portfolios. A
complete listing is contained in the Statement of Additional
Information. With the exception of limitations 3(b) and 4(b),
these limitations are fundamental and may only be changed with
shareholder approval.

1. Each ARK Money Market Portfolio may not, with respect to
75% of its assets, invest more than 5% of the total market value
of its assets in the securities of any one issuer, other than
U.S. Government Securities.

2. Each ARK Money Market Portfolio may not purchase the
securities of one issuer (other than U.S. Government Securities)
if more than 25% of its total assets would be invested in the
same industry. Money Market Portfolio may, however, invest 25%
or more of its assets in obligations of domestic banks.

3. Each ARK Money Market Portfolio (a) may borrow money
from a bank for temporary or emergency purposes or by engaging in
reverse repurchase agreements, but not in an amount exceeding 33
1/3% of its total assets; and (b) will not purchase securities
when borrowings (including reverse repurchase agreements) exceed
5% of its total assets.

4. Each ARK Money Market Portfolio (a) may not make a loan
if more than 33 1/3% of its total assets would be lent to other
parties; and (b) each of U.S. Treasury Money Market Portfolio,
U.S. Government Money Market Portfolio and Tax-Free Money Market
Portfolio do not currently intend to lend portfolio securities.

Short-Term Treasury Portfolio

The investment objective of Short-Term Treasury Portfolio is
to provide current income, with a secondary objective of
stability of principal, by investing in instruments which are
issued or guaranteed as to principal and interest by the U.S.
government . The Portfolio will invest 100% of its total assets
in instruments which are issued or guaranteed by the U.S.
government and thus constitute direct obligations of the United
States and repurchase agreements fully collateralized by the
United States government. As a non-fundamental policy, the
Portfolio will invest 100% of its total assets in U.S. Treasury
bills, notes, and bonds and will limit its investments to U.S.
Treasury obligations that pay interest that is specifically
exempt from state and local taxes under federal law. The
Portfolio has no restrictions on maturity but generally will
maintain a dollar-weighted average maturity of approximately two
years.

In making investment decisions for the Short-Term Treasury
Portfolio, First Maryland will consider factors in addition to
current yield, including preservation of capital, the potential
for realizing capital appreciation, maturity and yield to
maturity. First Maryland will monitor the Portfolio's
investments in particular securities in response to its appraisal
of changing economic conditions and trends, and may sell
securities in anticipation of a market decline or purchase
securities in anticipation of a market rise.

Fixed-income securities (except for securities with floating
or variable interest rates) are generally considered to be
interest rate sensitive, which means that their value (and the
Portfolio's share price) will tend to decrease when interest
rates rise and increase when interest rates fall. Securities
with shorter maturities, while offering lower yields, generally
provide greater price stability than longer-term securities and
are less affected by changes in interest rates. The average
maturity of the Portfolio's debt obligations will vary depending
on market conditions. The Portfolio has no restrictions on
maturity but generally will maintain a dollar-weighted average
maturity of approximately two years.

Income Portfolio

The investment objective of Income Portfolio is to seek a
high level of current income, with a secondary objective of
capital growth, consistent with reasonable risk, by investing
primarily in a broad range of fixed-income securities. As a non-
fundamental policy, the Portfolio will invest 65% of its total
assets in fixed-income securities. Fixed-income securities
acquired by the Portfolio may include income-producing securities
of all types, including bonds, notes, mortgage securities,
government and government agency obligations, zero coupon
securities, convertible securities, foreign securities, indexed
securities, and asset-backed securities. The Portfolio may
engage in short sales "against the box" and may buy and sell
futures contracts and options contracts. (The Portfolio may also
invest in the shares of other investment companies, as permitted by
the Investment Company Act of 1940 (the "1940 Act").

Income Portfolio normally will invest in investment grade
debt securities (including convertible securities) rated Baa or
higher by Moody's Investors Service, Inc. ("Moody's"), those
securities rated BBB or higher by Standard & Poor's Ratings Group
("S&P"), or those securities with equivalent ratings by other
NRSROs. Bonds rated Baa or BBB may have speculative
characteristics, and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to
make principal and interest payments than is the case with higher
grade bonds. The Portfolio also may purchase unrated securities
that are deemed by First Maryland to be of comparable quality to
rated issues. The Portfolio may, however, invest up to 5% of its
total assets in lower quality debt securities. First Maryland
believes that holdings in such securities, sometimes referred to
as junk bonds, may offer worthwhile investment opportunities.
See the Statement of Additional Information for a more complete
discussion of such investments.

Common stocks acquired through exercise of conversion rights
or warrants or acceptance of exchange or similar offers
ordinarily will not be retained by the Portfolio. Orderly
disposition of such common stocks will be made consistent with
the judgment of First Maryland as to the best price available.

In making investment decisions for Income Portfolio, First
Maryland will consider factors in addition to current yield,
including preservation of capital, the potential for realizing
capital appreciation, maturity and yield to maturity. First
Maryland will monitor the Portfolio's investments in particular
securities or in types of debt securities in response to its
appraisal of changing economic conditions and trends, and may
sell securities in anticipation of a market decline or purchase
securities in anticipation of a market rise.

Changes in the values of the Portfolio's investments will
generally not affect the income derived from such investments,
but will affect the Portfolio's share price. Income Portfolio's
share price, yield and total return will fluctuate, and you may
have a gain or loss when redeeming Shares.

Growth and Income Portfolio

The investment objective of Growth and Income Portfolio is
to seek long-term total returns from both capital appreciation
and current income by investing in a diversified portfolio of
stocks, debt securities, and cash equivalents.

The Portfolio's common stock investments may include foreign
and domestic issues of larger, well-established companies, as
well as medium-sized and smaller companies. The prices of small
company stocks may fluctuate more than those of large company
stocks due to risks related to more limited product lines,
markets or financial resources. These conditions may make
smaller companies more susceptible to setbacks and reversals and,
therefore, their securities may have limited marketability and
may be subject to more abrupt or erratic market movements than
securities of larger companies. The Portfolio may also invest in
preferred stock, convertible securities, may engage in short
sales "against the box," and may buy and sell futures
contracts and options. The Portfolio may also invest
in the shares of other investment companies, as permitted by
the 1940 Act.

Debt securities acquired by the Portfolio may include
mortgage or asset-backed securities, corporate issues, indexed
securities, and U.S. Government Securities. The Portfolio
normally will invest in investment grade debt securities
(including convertible securities) rated Baa or higher by
Moody's, those securities rated BBB or higher by S&P, or those
securities with equivalent ratings by other NRSROs. Bonds rated
Baa or BBB may have speculative characteristics, and changes in
economic conditions or other circumstances are more likely to
lead to a weakened capacity to make principal and interest
payments than is the case with higher grade bonds. The Portfolio
also may purchase unrated securities that are deemed by First
Maryland to be of comparable quality to rated issues. The
Portfolio may, however, invest up to 5% of its total assets in
lower quality debt securities. First Maryland believes that
holdings in such securities, sometimes referred to as junk bonds,
may offer worthwhile investment opportunities. See the Statement
of Additional Information for a more complete discussion of such
investments. The average maturity of the Portfolio's debt
obligations will vary depending on market conditions.

Growth and Income Portfolio emphasizes long-term total
return from capital appreciation and current income. Although it
is not a policy of the Portfolio to engage in short-term trading,
First Maryland may dispose of securities without regard to the
length of time held if First Maryland believes such action will
benefit the Portfolio. Although First Maryland will consider the
potential for income in selecting investments for the Portfolio,
the Portfolio is generally not intended to achieve a high level
of income at a rate comparable to fixed-income portfolios. The
Portfolio may adjust its investments based on First Maryland's
interpretation of underlying economic, financial, and security
trends; however, the Portfolio's ability to make such adjustments
successfully will depend on First Maryland's ability to predict
such market trends. Growth and Income Portfolio's share price,
yield and total return will fluctuate, and you may have a gain or
loss when redeeming Shares.

Blue Chip Equity Portfolio

The investment objective of Blue Chip Equity Portfolio is to
achieve long-term appreciation by investing primarily in
equity securities of large capitalization companies which are
recognized market leaders.

Blue Chip Equity Portfolio seeks capital appreciation from a
broadly diversified portfolio of common stocks of large capitalization
companies. First Maryland may also seek capital appreciation on
behalf of the Portfolio by investing up to 35% of its assets in
other types of securities, including preferred stock and debt
securities, securities convertible into common stock, asset-backed
securities, and indexed securities, and may, on behalf of the
Portfolio, engage in short sales "against the box" and buy and sell
futures contracts and options. Debt securities (including convertible
securities) in which the Portfolio invests will normally be rated Baa
or higher by Moody's or BBB or higher by S&P, or will receive equivalent
ratings by other NRSROs. Bonds rated Baa or BBB may have speculative
characteristics and changes in economic conditions or other circumstances
are more likely to lead to a weakened capacity to make principal and
interest payments than is the case with higher grade bonds. The
Portfolio may also purchase unrated securities that are deemed by
First Maryland to be of comparable quality to rated issues. The
Portfolio may, however, invest up to 5% of its total assets in
lower quality debt securities. First Maryland believes that
holdings in such securities, sometimes referred to as junk bonds,
may offer worthwhile investment opportunities. See the Statement
of Additional Information for a more complete discussion of such
investments. The Portfolio is expected to produce current
investment income, consistent with the primary objective.

It is the Portfolio's policy, under normal circumstances, to
invest at least 65% of the value of its total assets in securities of
established companies, based primarily in the United States, with
significant operating histories and strong financial positions.
The Portfolio will invest in securities that First Maryland
believes offer above-average growth potential based on their
fundamental strength. First Maryland considers many factors when
evaluating the overall quality of a security for investment by the
Portfolio, including a company's current financial strength and relative
value. The Portfolio may also invest in the
shares of other investment companies, as permitted by the 1940 Act.

Blue Chip Equity Portfolio's share price and return will
tend to fluctuate in response to changes in the stock market and
investors may have a gain or loss when redeeming Shares. While
First Maryland purchases securities for the Portfolio that it
believes present the greatest opportunity for growth, some
securities held by the Portfolio may not perform well during
certain market cycles and may not respond to general market
movements to the same extent as other securities.

Capital Growth Portfolio

The investment objective of Capital Growth Portfolio is to
seek long-term capital appreciation by investing primarily in
common stock and securities convertible into common stock.

Capital Growth Portfolio seeks capital appreciation from a
broadly diversified portfolio of common stocks, and securities
convertible into common stock. First Maryland may also seek
capital appreciation on behalf of the Portfolio by investing up
to 35% of its assets in other types of securities, including
preferred stock, debt securities, asset-backed securities,
indexed securities, and may, on behalf of the Portfolio, engage
in short sales "against the box" and buy and sell futures contracts
and options. Debt securities (including convertible securities)
in which the Portfolio invests will normally be rated Baa or
higher by Moody's or BBB or higher by S&P, or will receive
equivalent ratings by other NRSROs. Bonds rated Baa or BBB
may have speculative characteristics and changes in economic
conditions or other circumstances are more likely to lead to a
weakened capacity to make principal and interest payments than
is the case with higher grade bonds. The Portfolio may also
purchase unrated securities that are deemed by First Maryland to
be of comparable quality to rated issues. The Portfolio may,
however, invest up to 5% of its total assets in lower quality
debt securities. First Maryland believes that holdings in such
securities, sometimes referred to as junk bonds, may offer
worthwhile investment opportunities. See the Statement of
Additional Information for a more complete discussion of such
investments. The Portfolio is expected to produce modest
dividend or interest income. This income will be incidental to
the Portfolio's primary objective.

It is the Portfolio's policy to invest in the securities of
both well-known, established companies and smaller, less well-
known companies. The prices of small company stocks may
fluctuate more than those of larger companies due to risks
related to more limited product lines, markets or financial
resources. These conditions may make smaller companies more
susceptible to setbacks and reversals and, therefore, their
securities may have limited marketability and may be subject to
more abrupt or erratic market movements than securities of larger
companies. The Portfolio will invest in securities that First
Maryland believes offer above-average growth potential based on
their fundamental strength. First Maryland considers many
factors when evaluating the overall quality of a security for
investment by the Portfolio, including a company's current
financial strength, earnings momentum, and relative value. The
Portfolio may also invest in the shares of other investment
companies, as permitted by the 1940 Act.

Capital Growth Portfolio's share price and return will tend
to fluctuate in response to changes in the stock market and
investors may have a gain or loss when redeeming Shares. While
First Maryland purchases securities for the Portfolio that it
believes present the greatest opportunity for growth, some
securities held by the Portfolio may not perform well during
certain market cycles and may not respond to general market
movements to the same extent as other securities.

International Equity Portfolio

The investment objective of International Equity Portfolio
is to achieve long-term capital growth by investing at least 65%
of its total assets in foreign equity securities. The Portfolio
invests in companies in at least three countries other than the
United States. The Portfolio's investments will be primarily
focused on those equity securities of well-established companies
with large market capitalizations. Dividend Income is incidental
to the Portfolio's primary objective.

When allocating the Portfolio's investments among geographic
regions and individual countries, AIB I.M. considers various
factors such as prospects for relative economic growth, expected
levels of inflation, anticipated interest rate movements,
government policies influencing business conditions and the
outlook for currency relationships. AIB I.M. expects that the
Portfolio's investments will focus mainly on countries which are
included in the Morgan Stanley Capital International Europe,
Australia, Far East Index (the "EAFE Index"), although other
geographical regions, such as Latin America and emerging Far East
markets, are permitted. The countries that make up the EAFE
Index include, but are not limited to: United Kingdom, Ireland,
France, Germany, Switzerland, the Netherlands, Italy, Spain,
Belgium, Sweden, Norway, Finland, Denmark, Austria, Japan,
Australia, New Zealand, Hong Kong, and Singapore. It is not the
objective of the Portfolio to replicate the EAFE Index.

The Portfolio may purchase illiquid investments, restricted
securities and warrants, and may enter into options on foreign
currencies. The Portfolio may also invest in the shares of other
investment companies, as permitted by the 1940 Act, as well as in
initial public offerings. The Portfolio may also invest in
investment grade convertible debt securities, rated at least Baa
or higher by Moody's or BBB or higher by S&P, and may purchase
U.S. government securities and indexed securities. Bonds rated
Baa or BBB may have speculative characteristics and changes in
economic conditions or other circumstances are more likely to
lead to a weakened capacity to make principal and interest
payments than is the case with higher grade bonds.

Risk Factors Concerning International Investing and International
Equity Portfolio

International investments in general may involve greater
risks than U.S. investments. There is generally less publicly
available information about foreign issuers, and there may be
less government regulation and supervision of foreign stock
exchanges, brokers, and listed companies. There may be
difficulty in enforcing legal rights outside the United States.
Foreign companies generally are not subject to uniform
accounting, auditing, and financial reporting standards,
practices, and requirements comparable to those that apply to
U.S. companies. Security trading practices abroad may offer less
protection to investors such as the Portfolio. Settlement of
transactions in some foreign markets may be delayed or may be
less frequent than in the United States, which could affect the
liquidity of the Portfolio's securities. Additionally, in some
foreign countries, there is the possibility of expropriation or
confiscatory taxation; limitations on the removal of securities,
property, or other assets of the Portfolio; political or social
instability; and diplomatic developments that could affect U.S.
investments in foreign countries. AIB I.M. will take these
factors into consideration in managing the Portfolio's
investments.

Many markets around the globe offer the potential for
significant growth over time; however, investing in foreign
markets means assuming greater risks than those assumed when
investing in the United States. Factors like changes in a
country's financial markets, its local political and economic
climate, and the value of its currency create these risks.
Because International Equity Portfolio invests primarily in
equity securities, its performance is related to foreign stock
markets. In addition, the Portfolio's performance will be
affected by the value of foreign currencies relative to the U.S.
dollar. For these reasons, International Equity Portfolio's
performance may be more volatile than that of a fund that invests
primarily in the United States.

Foreign Currencies. The value of the Portfolio's
investments, and the value of dividends and interest earned by
the Portfolio, may be significantly affected by changes in
currency exchange rates. AIB I.M. will endeavor, through
appropriate hedging and currency management strategies, to
mitigate the possible impact of weaknesses in foreign currencies.
Some foreign currency values may be volatile, and there is the
possibility of governmental controls on currency exchange or
governmental intervention in currency markets, which could
adversely affect the Portfolio. For example, if AIB I.M.
increases the Portfolio's exposure to a foreign currency, and
that currency's value subsequently falls, AIB I.M.'s currency
management may result in increased losses to the Portfolio.
Similarly, if AIB I.M. hedges the Portfolio's exposure to a
foreign currency, and that currency's value rises, the Portfolio
will lose the opportunity to participate in the currency's
appreciation.

Special Equity Portfolio

The investment objective of Special Equity Portfolio is to
achieve capital appreciation by investing primarily in securities
of companies believed by First Maryland to be "special equities."
As used in this Prospectus, "special equities" include equity
securities of: (1) a company with a market capitalization of $1.2
billion or less at the time of the Portfolio's investment and
deemed by the Portfolio manager to have above average growth
potential; or (2) a company experiencing a "special situation";
that is, an unusual and possibly non-repetitive development
taking place in that company. The Portfolio will invest in
securities that First Maryland believes offer above-average
growth potential based on their fundamental strength.

A "special situation" may involve one or more of the
following characteristics:

- a technological advance or discovery, the offering of a
new or unique product or service, or changes in consumer demand
or consumption forecasts.

- changes in the competitive outlook or growth potential of
an industry or a company within an industry, including changes in
the scope or nature of foreign competition or the development of
an emerging industry.

- new or changed management or material changes in
management policies or corporate structure.

- significant economic or political occurrences abroad,
including changes in foreign or domestic import and tax laws or
other regulations.

- other events, including natural disasters, favorable
litigation settlements, or a major change in demographic
patterns.

In seeking capital appreciation, the Portfolio also may
invest in securities of companies that are not special equities,
but which are companies with valuable fixed assets and whose
securities are believed by First Maryland to be undervalued in
relation to the companies' assets, earnings, or growth
potentials. As a non-fundamental policy, the Portfolio normally
will invest at least 65% of its total assets in special equities,
as defined above.

First Maryland intends to invest primarily in common stocks
and securities that are convertible into common stocks; however,
under normal market conditions, the Portfolio also may invest up
to 35% of its total assets in debt securities of all types and
quality if First Maryland believes that investing in these
securities will result in capital appreciation. As a non-
fundamental investment policy, the Portfolio may invest in lower
rated, high-yielding debt securities (sometimes referred to as
"junk bonds"), although it intends to limit its investments in
these securities to 35% of its total assets. The Portfolio also
may invest in unrated securities. Unrated securities are not
necessarily of lower quality than rated securities, but they may
not be attractive to as many buyers. The Portfolio may invest up
to 35% of its total assets in foreign securities of all types and
may enter into forward currency contracts for the purpose of
managing exchange rate risks and to facilitate transactions in
foreign securities. The Portfolio may purchase or engage in
indexed securities, illiquid instruments, loans and other direct
debt instruments, options and futures contracts, repurchase
agreements, securities loans, restricted securities, swap
agreements, warrants, real estate-related instruments and zero
coupon bonds. Further information about the Portfolio's
investment policies can be found in the Statement of Additional
Information.

Investing in domestic and foreign companies with market
capitalization of $1.2 billion or less carries more risk than
investing in larger companies. Their reliance on limited product
lines, markets, financial resources, or other factors may make
small capitalization companies more susceptible to setbacks or
downturns. As a result, their stock prices may be particularly
volatile.

Foreign securities, foreign currencies and securities issued
by U.S. entities with substantial foreign operations may involve
additional risks and considerations. These include risks
relating to political or economic conditions in foreign
countries, fluctuations in foreign currencies, withholding or
other taxes, operational risks, increased regulatory burdens and
the potentially less stringent investor protection and disclosure
standards of foreign markets. Additionally, governmental issuers
of foreign securities may be unwilling to repay principal and
interest when due, and may require that the conditions for
payment be renegotiated. All these factors can make foreign
investments, especially those in developing countries, more
volatile.

The Portfolio spreads investment risk by limiting its
holdings in any one company or industry. First Maryland may use
various investment techniques to hedge the Portfolio's risks, but
there is no guarantee that these strategies will work as First
Maryland intends. When you sell your shares, they may be worth
more or less than what you paid for them.

First Maryland normally invests the Portfolio's assets
according to its investment strategy. The Portfolio expects to
be fully invested under most market conditions. The Portfolio
also reserves the right to invest without limitation in preferred
stocks and investment-grade debt instruments for temporary,
defensive purposes when, in First Maryland's judgment, a more
conservative approach to investment is desirable.

Maryland Tax-Free Portfolio

The investment objective of Maryland Tax-Free Portfolio is
to achieve high current income that is free from federal income
tax and the Maryland state and county income taxes by investing
primarily in municipal securities judged by First Maryland to be
of investment-grade quality, although it can also invest in lower-
quality securities. The Portfolio has no restrictions on
maturity, but it generally invests in medium- and long-term bonds
and maintains a dollar-weighted average maturity of 7-10 years.
In determining a security's maturity for purposes of calculating
the fund's average maturity, estimates of the expected time for
its principal to be paid may be used. This can be substantially
shorter than its stated final maturity. First Maryland normally
invests at least 65% of the Portfolio's total assets in Maryland
municipal securities, and normally invests, as a matter of
fundamental policy, so that at least 80% of the Portfolio's
income is free from federal income tax, including the federal
alternative minimum tax.

The Portfolio's performance is affected by the economic and
political conditions within the state of Maryland. The ability
of issuers to repay their debt can be affected by many factors
that impact the economic vitality of either the state or a region
within the state. Maryland's rate of economic growth has been
slower in the early 1990s than it had been during the 1980s.
State revenues in recent years have been less than expected and,
because Maryland's constitution requires a balanced budget,
expenditures were cut.

The Portfolio's yield and share price change daily and are
based on changes in interest rates, market conditions, and other
economic and political news and on the quality and maturity of
its investments. In general, bond prices rise when interest
rates fall, and vice versa. This effect is usually more
pronounced for longer-term securities. Lower-quality securities
offer higher yields, but also carry more risk. The Portfolio may
invest up to 5% of its total assets in lower-quality debt
securities. First Maryland may use various investment techniques
to hedge the Portfolio's risks, but there is no guarantee that
these strategies will work as intended. When you sell your
Shares of the Portfolio, they may be worth more or less than what
you paid for them.

If you are subject to the federal alternative minimum tax,
you should note that the Portfolio may invest some of its assets
in municipal securities issued to finance private activities.
The interest from these investments is a tax-preference item for
purposes of the tax.

First Maryland normally invests the Portfolio's assets
according to its investment strategy and does not expect to
invest in federally or state taxable obligations. The Portfolio
also reserves the right to invest without limitation in short-
term instruments, to hold a substantial amount of uninvested
cash, or to invest more than normally permitted in taxable
obligations for temporary, defensive purposes.

Additional Investment Policies of Short-Term Treasury Portfolio,
Income Portfolio, Growth and Income Portfolio, Blue Chip Equity
Portfolio, Capital Growth Portfolio, International Equity
Portfolio, Special Equity Portfolio and Maryland Tax-Free
Portfolio

For temporary defensive purposes, Short-Term Treasury
Portfolio, Income Portfolio, Growth and Income Portfolio, Blue
Chip Equity Portfolio, Capital Growth Portfolio, International
Equity Portfolio, Special Equity Portfolio and Maryland Tax-Free
Portfolio (the "ARK Non-Money Market Portfolios") may invest all
or a portion of their respective assets in Money Market
Instruments. In addition, for temporary defensive purposes,
Maryland Tax-Free Portfolio may invest more than normally
permitted in taxable obligations.

The ARK Non-Money Market Portfolios, except International
Equity Portfolio, Short-Term Treasury Portfolio, and Maryland Tax-
Free Portfolio, may invest up to 25% of their respective assets
in American Depository Receipts ("ADRs"), European Depository
Receipts ("EDRs"), and securities issued by foreign companies and
foreign governments. International Equity Portfolio may invest
up to 100% of its assets in these securities. Short-Term
Treasury Portfolio and Maryland Tax-Free Portfolio may not invest
its assets in these securities. Foreign investments may be less
liquid or more volatile than domestic investments, and may be
denominated in foreign currencies. The value of these
investments will fluctuate with changes in exchange rates between
those currencies and the U.S. dollar. See the Appendix for
further information on investing in foreign securities.

The value of each Portfolio's securities will fluctuate in
response to market conditions and the value of a Share in each
ARK Non-Money Market Portfolio may vary. Investors should review
the investment objective and policies of each Portfolio and
carefully consider their ability to assume any risk involved in
purchasing Shares of each Portfolio.

Investment Limitations for the ARK Non-Money Market Portfolios

The following summarizes each of the ARK Non-Money Market
Portfolios' principal investment limitations. A complete listing
is contained in the Statement of Additional Information. With
the exception of limitation 3(b), these limitations are
fundamental and may only be changed with shareholder approval.

1. Except Maryland Tax-Free Portfolio, the ARK Non-Money
Market Portfolios may not, with respect to 75% of each
Portfolio's total assets, purchase the securities of any issuer
(other than U.S. Government Securities) if as a result, (a) more
than 5% of a Portfolio's total assets would be invested in the
securities of that issuer, or (b) a Portfolio would hold more
than 10% of the outstanding voting securities of that issuer.

2. The ARK Non-Money Market Portfolios may not purchase a
security if, as a result, more than 25% of a Portfolio's total
assets would be invested in securities of a particular industry
(other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities).

3. Each ARK Non-Money Market Portfolio (a) may borrow money
from a bank for temporary or emergency purposes or by engaging in
reverse repurchase agreements, but not in an amount exceeding 33
1/3% of its total assets; and (b) will not purchase securities
when borrowings (including reverse repurchase agreements) exceed
5% of its total assets.

4. Each ARK Non-Money Market Portfolio may not make a loan
if more than 33 1/3% of its assets would be lent to other
parties.

PERFORMANCE

The performance of each class of shares of each Portfolio
may be quoted in advertising in terms of yield, effective yield
or total return. In addition, the tax-equivalent yield may be
quoted for shares of Tax-Free Money Market Portfolio and for
shares of Maryland Tax-Free Portfolio. All types of performance
are based on historical results and are not intended to indicate
future performance.

The yield of shares of the ARK Money Market Portfolios,
Short-Term Treasury Portfolio, Income Portfolio and Maryland Tax-
Free Portfolio is calculated by dividing the net investment
income earned by the shares over a 7-day period (for the ARK
Money Market Portfolios) and a 30-day period (for Short-Term
Treasury Portfolio, Income Portfolio and Maryland Tax-Free
Portfolio), by the average number of shares entitled to receive
dividends and expressing the result as an annualized percentage
rate based on each share price at the end of the 7- and 30-day
periods, respectively. The effective yield is calculated
similarly, but assumes that the income earned from the investment
is reinvested. The effective yield will be slightly higher than
the yield because of the compounding effect of this assumed
reinvestment. Because yield accounting methods differ from the
methods used for other accounting purposes, the yields of shares
of the ARK Money Market Portfolios, Income Portfolio and Maryland
Tax-Free Portfolio may not equal their respective distribution
rates, the income paid to your account or the income reported in
the financial statements of the Institutional Class of the
relevant Portfolio.

A tax-equivalent yield shows the approximate taxable yield
that would have to be earned before taxes to equal a tax-free
yield. A tax-equivalent yield is calculated by dividing the
shares' tax-exempt yield by the result of one minus a stated
federal and/or state tax rate. If only a portion of a
Portfolio's income was tax-exempt, only that portion is adjusted
in the calculation.

Total returns are based on the overall dollar or percentage
change in value of a hypothetical investment in a class and
assumes that all distributions are reinvested. A cumulative
total return reflects a class' performance over a stated period
of time. An average annual total return reflects the
hypothetical annually compounded return that would have produced
the same cumulative total return if a class' performance had been
constant over the entire period. Because average annual total
returns tend to smooth out variations in a class' return, it
should be recognized that they are not the same as actual year-by-
year results. When a class of a Portfolio quotes an average
annual return covering a period of less than one year, the
calculation assumes that the performance will remain constant for
the rest of the year. Since this may or may not occur, average
annual returns should be viewed as hypothetical rather than
actual performance figures.

For additional performance information, please contact your
Investment Professional or the Distributor for a free Annual
Report, Semi-Annual Report and Statement of Additional
Information.

PORTFOLIO TRANSACTIONS AND VALUATION

Subject to the general supervision of the Board, First
Maryland or, in the case of International Equity Portfolio, AIB
I.M., is responsible for placing orders for securities
transactions for each Portfolio. Transactions for the ARK Money
Market Portfolios, Short-Term Treasury Portfolio, Income
Portfolio and Maryland Tax-Free Portfolio, as well as purchases
of debt securities for Growth and Income Portfolio, Capital
Growth Portfolio and International Equity Portfolio, are expected
to occur primarily with issuers, underwriters or major dealers
acting as principals. Such transactions are normally effected on
a net basis and do not involve payment of brokerage commissions.
Securities transactions for Blue Chip Equity Portfolio, Capital
Growth Portfolio and Special Equity Portfolio, and transactions
involving equity securities for Growth and Income Portfolio and
International Equity Portfolio, will normally be conducted
through brokerage firms entitled to receive commissions for
effecting such transactions. The Portfolios have no obligation
to enter into securities transactions with any particular dealer,
issuer, underwriter or other entity. In placing orders for the
Portfolios, it is the policy of First Maryland and AIB I.M. to
obtain the most favorable execution.

Where such execution may be obtained from more than one
broker or dealer, securities transactions may be directed at
higher commission rates to those who provide research,
statistical and other information to First Maryland or AIB I.M.,
as applicable. If more than one Portfolio or another account
managed by First Maryland, or if International Equity Portfolio
and another account managed by AIB I.M., are purchasing or
selling the same security, such orders may be aggregated in the
interest of achieving the most favorable execution.

The Portfolios have authorized First Maryland or AIB I.M.,
as applicable, to allocate transactions to some broker-dealers
who help distribute the Portfolios' shares, and on an agency
basis to Goodbody Stockbrokers, an affiliate of First Maryland
and AIB I.M. First Maryland or AIB I.M., as applicable, may make
such allocations if commissions are comparable to those charged
by non-affiliated, qualified broker-dealers for similar services.

The frequency of portfolio transactions, the portfolio
turnover rate, will vary from year to year depending on market
conditions. The annual portfolio turnover rate is estimated to
be 200% for Special Equity Portfolio, ____ for Short-Term
Treasury Portfolio, 75% for Blue Chip Equity Portfolio, and 20%
for Maryland Tax-Free Portfolio. Because a higher turnover rate
increases transaction costs and may increase taxable capital
gains, First Maryland and AIB I.M. carefully weigh the
anticipated benefits of short-term investing against these
consequences.

Money market obligations are generally traded in the over-
the-counter market through dealers. A dealer is a securities
firm or bank which makes a market for such securities by offering
to buy at one price and sell at a slightly higher price. The
difference between the prices is known as a spread. The
selection of such dealers is generally made based upon the price,
quality of execution services and research provided. Money
market securities purchased and sold by each ARK Money Market
Portfolio will be traded on a net basis (i.e., without
commission) through dealers acting for their own account and not
as agents or will involve transactions directly with the issuer
of the instrument.

Valuation. The NAV of the Shares of each Portfolio is
calculated by adding the Institutional Class's pro rata share
(which, in the case of International Equity Portfolio, is the
whole) of the value of all securities and other assets
attributable to a Portfolio, deducting the Institutional Class's
pro rata share of Portfolio-level liabilities, deducting
Institutional Class-specific liabilities, if applicable, and
dividing the result by the number of Shares outstanding. Those
assets that are traded on an exchange or in the over-the-counter
market are valued based upon market quotations. Short-term
obligations with maturities of 60 days or less are valued at
amortized cost. Other assets for which market quotations are not
readily available are valued at their fair value as determined in
good faith by or under the supervision of the Board. Assets in
the ARK Money Market Portfolios are valued based upon the
amortized cost method. Although each ARK Money Market Portfolio
seeks to maintain an NAV of $1.00 for the Shares, there can be no
assurance that this NAV will not vary.

Non-money market securities are valued on the basis of
market quotations or, if quotations are not readily available, by
a method that the Board believes accurately reflects fair value.
Fair value of these portfolio securities is determined by an
independent pricing service approved by the Board based primarily
upon information concerning market transactions and dealer
quotations for similar securities. Foreign securities held by a
Portfolio are valued on the basis of quotations from the primary
U.S. market in which they are traded or, if not traded on a U.S.
market, then their primary foreign market and are translated from
foreign market quotations into U.S. dollars using current
exchange rates.

Pricing of Shares. The Portfolios are open for business and
their NAVs are calculated each day the New York Stock Exchange
("NYSE") and the Federal Reserve Bank of New York are open
("Business Day"). An investor's purchase will be processed at
the NAV next calculated after the order is received and accepted
by the Transfer Agent. The NAVs of the ARK Non-Money Market
Portfolios are determined at the close of business of the NYSE,
normally 4:00 p.m. Eastern Time ("4:00 p.m."). The NAVs of U.S.
Treasury Money Market Portfolio and Tax-Free Money Market
Portfolio are determined at 12:00 noon Eastern Time ("12:00
noon") and the close of business of the NYSE, normally 4:00 p.m.
The NAVs of U.S. Government Money Market Portfolio and Money
Market Portfolio are determined at 1:30 p.m. Eastern Time ("1:30
p.m.") and the close of business of the NYSE, normally 4:00 p.m.
Shares purchased at 12:00 noon and 1:30 p.m. begin to earn
dividends that Business Day. Shares purchased at 4:00 p.m. are
eligible to earn dividends on the following Business Day.

PURCHASES, EXCHANGES AND REDEMPTIONS

Opening an Account. Shares are sold without a sales charge
and are currently available only to clients of First Maryland or
its affiliated banks (including Allied Irish Banks, p.l.c. and
its affiliates) who have established trust, custodial or money
management relationships with First Maryland or its affiliated
banks or correspondent banks of First Maryland or their
affiliated banks ("qualified accounts"). An initial investment
in the Shares must be preceded or accompanied by the
establishment of a qualified account. This may require that
certain documents and applications be signed before an investment
can be made. Fees may be charged in addition to those described
herein based upon agreements for those qualified accounts. Fee
schedules and agreements for opening qualified accounts are
available upon request from First Maryland at (800) 624-4116
outside Maryland and (800) 638-7751 inside Maryland.

The minimum initial investment to establish a new account is
$100,000. After meeting the initial investment requirement, a
registered shareholder must, within six months, reach and
maintain an aggregate balance of $250,000. Accounts of
individual investors or trusts maintained in a master account of
a bank or other institution may be aggregated for this minimum
investment purpose. Subsequent investments may be made in any
amount.

Purchasing Shares

ARK Money Market Portfolios. Payments for Shares of each
ARK Money Market Portfolio must be made in federal funds or other
funds immediately available to each Portfolio. An order for the
purchase of Shares paid for in such available funds will become
effective on the day of receipt of the order by the transfer
agent and are entitled to that day's dividend if received prior
to 12:00 noon for U.S. Treasury Money Market Portfolio and Tax-
Free Money Market Portfolio, or 1:30 p.m. for Money Market
Portfolio and U.S. Government Money Market Portfolio. If a
purchase order, together with such available funds, is received
after 12:00 noon for U.S. Treasury Money Market Portfolio and Tax-
Free Money Market Portfolio, or 1:30 p.m. for Money Market
Portfolio and U.S. Government Money Market Portfolio, but before
4:00 p.m., such purchases will receive the NAV determined at 4:00
p.m. and will begin earning dividends the following Business Day.
If an order or payment is received after 4:00 p.m., an investor
will receive the next determined NAV the following Business Day.
Each Portfolio reserves the right to reject any purchase order.
Each ARK Money Market Portfolio declares dividends daily and pays
them monthly.

ARK Non-Money Market Portfolios. Purchase orders for Shares
of the ARK Non-Money Market Portfolios must be received before
4:00 p.m. any Business Day in order to receive the NAV determined
on that day and be eligible for dividends the next Business Day.
Any orders received after 4:00 p.m. will receive the next
determined NAV the following Business Day. Payment for the
purchase is expected at the time of the purchase order but must
be received within five Business Days of the date of the purchase
order. If funds are not received within five Business Days, the
order may be canceled and notice thereof will be provided to the
party placing the order. Any fees and/or losses incurred due to
cancellation of a purchase order may be the responsibility of the
party placing the purchase order. Short-Term Treasury Portfolio,
Income Portfolio and Maryland Tax-Free Portfolio each declares
and pays dividends monthly, Growth and Income Portfolio and Blue
Chip Equity Portfolio each declares and pays dividends quarterly,
and Capital Growth Portfolio, International Equity Portfolio and
Special Equity Portfolio each declares and pays dividends
annually. Net realized capital gains, if any, for any Portfolio,
are declared and paid annually.

Other Information

It is anticipated that First Maryland will be the holder of
record for all Shares held through qualified accounts. First
Maryland, at least as often as quarterly, will provide each
client who is a beneficial owner of the Shares, a statement
showing details of all transactions effected on behalf of such
client in Shares, including the then-current balance of full and
fractional Shares. No certificates representing Shares will be
issued.

Shareholders may instruct First Maryland to purchase Shares
automatically at intervals established by the client. Additional
fees may be charged by First Maryland for this and other
services, including cash sweeps. For more complete information
concerning these services and associated fees, please call First
Maryland toll free at (800) 624-4116 outside Maryland and (800)
638-7751 inside Maryland.

The services rendered by First Maryland in the management of
its accounts are not duplicative of any of the services for which
First Maryland (or AIB I.M., with respect to International Equity
Portfolio) is compensated for managing and advising any
Portfolio. The charges paid by clients of First Maryland or its
affiliates should be considered in calculating the net yield or
total return on investments in the Shares. Clients of First
Maryland and its affiliates should read this Prospectus in
connection with those documents that govern the qualified account
program in which each client participates.

It is the responsibility of each financial institution to
transmit orders to purchase, redeem or exchange Shares to the
transfer agent before the next-determined NAV calculation in
order to receive the next-determined Share price. The transfer
agent must receive payment within two Business Days after an
order is placed. Otherwise, the purchase order may be canceled
and the financial institution could be held liable for resulting
fees and/or losses.

Distribution Options

The following distribution options are available to
shareholders:

A. The Share Option reinvests income dividends and capital
gain distributions, if any, in additional Shares. This option
will be assigned automatically if no choice is specified on the
account application. Income dividends and capital gain
distributions will be reinvested at the NAV as of the payment
date for the distribution.

B. The Income-Earned Option reinvests your capital gain
distributions and pays income dividends in cash.

C. The Cash Option pays you income dividends and capital
gain distributions in cash. Distribution checks will be mailed
no later than seven days after the last day of the month, quarter
or year.

If you select Option B or C and the U.S. Postal Service
cannot deliver the checks, or if the checks remain uncashed for
six months, distributions will be reinvested in the account at
the then-current NAV and your election will be converted to the
Share Option.

Exchanging Shares

An exchange is a convenient way to buy and sell Shares of
another Portfolio registered in your state. Institutional Class
Shares may be exchanged for Institutional Class Shares of another
Portfolio. The redemption will be made at the next determined
NAV of the Shares to be redeemed after the exchange request is
received by the transfer agent.

Each exchange between Portfolios actually represents the
sale of Shares of one Portfolio and the purchase of Shares in
another, which may produce a gain or loss for tax purposes. In
order to protect each Portfolio's performance and its
shareholders, First Maryland and AIB I.M. each discourage
frequent exchange activity in response to short-term market
fluctuations. Each Portfolio reserves the right to modify or
withdraw the exchange privilege or to suspend the offering of
Shares without notice to shareholders if, in First Maryland's
(or, in the case of International Equity Portfolio, AIB I.M.'s)
judgment, a Portfolio would be unable to invest effectively in
accordance with its investment objective and policies, or would
otherwise potentially be adversely affected. Each Portfolio also
reserves the right to reject any specific purchase order,
including certain purchases by exchange. Shareholders of record
whose aggregate account balances fall below $250,000 due to
redemption may be automatically redeemed upon thirty days'
notice.

An exchange between the Institutional Class and either the
Retail Class or Institutional II Class of any Portfolio is
generally not permitted, except that such an exchange to the
Retail Class of the Portfolio will occur automatically should an
investor in the Institutional Class become ineligible to purchase
additional Institutional Class shares (except in the case of a
Portfolio which has no Retail Class); for example, if an
Institutional Class investor receives a distribution from a
trust, and such investor would be investing individually (and
becomes a shareholder of record) rather than through a qualified
account. An exchange from the Institutional Class to the Retail
Class of a Portfolio will occur automatically when an
Institutional Class shareholder's account falls below the
$250,000 minimum balance. The Fund will provide thirty days'
notice of any such exchange. The exchange will take place at
NAV, without the imposition of a sales load (if any), fee, or
other charge. After the exchange, the exchanged Shares will be
subject to all fees applicable to the Retail Class. If a
shareholder declines to accept an automatic exchange, and if the
shareholder does not meet the requirements for investing in
Institutional Class shares, the Fund reserves the right to redeem
the Shares upon expiration of the thirty-day period. Each
Portfolio reserves the right to require shareholders to complete
an application or other documentation in connection with the
exchange.

Retail Class shares of a Portfolio may be exchanged for
Institutional Class shares of the same Portfolio should the
shareholder establish a trust, custodial or money management
relationship with First Maryland or its affiliates and satisfy
the minimum initial investment to establish a new account. The
Fund has received a tax private letter ruling from the Internal
Revenue Service that certain exchanges will occur as non-taxable
events. See your trust officer for additional information.

Redeeming Shares

Shareholders may redeem all or a portion of their Shares by
mail, telephone or telecommunication privilege. A shareholder
may redeem Shares on each Business Day. Shares will be redeemed
at the NAV next determined after the transfer agent has received
and accepted a redemption request. Shares of each ARK Money
Market Portfolio redeemed at 12:00 noon for U.S. Treasury Money
Market Portfolio or Tax-Free Money Market Portfolio, or 1:30 p.m.
for U.S. Government Money Market Portfolio or Money Market
Portfolio, do not earn the dividend declared on the day of the
redemption. Shares redeemed at 4:00 p.m. continue to earn
dividends on the date of redemption. With respect to the ARK Non-
Money Market Portfolios, Shares will be eligible to earn
dividends through the date of redemption; however, Shares
redeemed on a Friday or prior to a holiday will continue to earn
dividends until the next Business Day. Shareholders may initiate
redemptions:

By Mail. To redeem by mail send a written request to The
First National Bank of Maryland, Trust Division [Banc #101-621],
P.O. Box 1596, Baltimore, Maryland, 21203.

The signatures on the written request must be properly
guaranteed. Signature guarantees will be accepted from banks,
brokers, dealers, municipal securities dealers and brokers,
government securities dealers and brokers, credit unions (if
authorized under state law), national securities exchanges,
registered securities associations, clearing agencies and savings
associations.

By Telephone. To redeem by telephone or telecommunication,
call First Maryland toll free at (800) 624-4116 outside Maryland
and (800) 638-7751 inside Maryland.

With respect to the ARK Money Market Portfolios, under
normal circumstances, if the request for redemption is received
by 12:00 noon for U.S. Treasury Money Market Portfolio and Tax-
Free Money Market Portfolio or 1:30 p.m. for U.S. Government
Money Market Portfolio and Money Market Portfolio on any Business
Day, the proceeds of such redemption will be wired via federal
funds on the same day. If, under normal circumstances, the
request is received after 12:00 noon or 1:30 p.m., respectively,
and before 4:00 p.m., and on a Business Day, that day's dividend
will be received and the redemption proceeds will be wired the
next Business Day.

With respect to the ARK Non-Money Market Portfolios, under
normal circumstances, if a redemption request is received before
4:00 p.m., the redemption proceeds will be wired via federal
funds on the next Business Day.

Although at present First Maryland pays the wire costs
involved, the Fund reserves the right at any time to require the
investor to pay such costs.

If making immediate payment could adversely affect a
Portfolio, a Portfolio may take up to seven (7) days after
redemption to pay the proceeds. When the NYSE is closed (or when
trading is restricted) for any reason other than its customary
weekend or holiday closings, or under any emergency circumstances
as determined by the SEC to merit such action, a Portfolio may
suspend redemption or payment dates. When the NYSE or the
Federal Reserve Bank of New York closes early, the Portfolios
reserve the right to advance the time on any such day by which
purchase and redemption orders must be received. To the extent
portfolio securities are traded in other markets on days which
are not Business Days of the Fund, the NAV of the Shares of a
Portfolio may be affected at a time when investors do not have
access to such Portfolio to purchase or redeem Shares.

If a shareholder redeems all the Shares of a Portfolio in an
account, the Shareholder will receive, in addition to the value
thereof, any declared but unpaid distributions thereon at the
beginning of the following month.

MANAGEMENT OF THE FUND

Investment Advisors

First Maryland, 25 South Charles Street, Baltimore, MD 21203
provides investment advisory services to each Portfolio, with the
exception of International Equity Portfolio, subject to the
general supervision of the Board. Pursuant to an Investment
Advisory Contract ("Advisory Agreement") dated April 12, 1993,
First Maryland is entitled to receive for its advisory services
payment at an annual rate based on the following fee schedule:
ARK Money Market Portfolios: .25% of each such Portfolio's
average daily net assets; Short-Term Treasury Portfolio: .35% of
average daily net assets; Income Portfolio: .50% of average daily
net assets; Growth and Income Portfolio: .55% of average daily
net assets; Blue Chip Equity Portfolio .60% of average daily net
assets; Capital Growth Portfolio: .60% of average daily net
assets; Special Equity Portfolio: .60% of average daily net
assets; and Maryland Tax-Free Portfolio: .50% of average daily
assets. First Maryland, in its sole discretion, may waive all or
any portion of its advisory fee for any Portfolio. Any such
voluntary waiver will increase such Portfolio's yield for the
period during which the waiver is in effect.

First Maryland, established in 1806, had total assets of
approximately $10 billion as of September 30, 1995, and is a
wholly-owned subsidiary of First Maryland Bancorp, which is a
subsidiary of Allied Irish Banks, p.l.c. First Maryland Bancorp
was organized in 1974 as a bank holding company registered under
the Federal Bank Holding Company Act of 1956 and files annual and
periodic reports with the SEC under the Securities Exchange Act
of 1934. See "Banking Law Matters". First Maryland has
experience as an investment advisor to individual, corporate, and
institutional advisory clients, pension plans and collective
investment funds, with approximately $32.7 million in assets
under administration, $5.3 million of which were assets under
investment management as of September 30, 1995. First Maryland
has managed mutual funds since June 1993.

AIB I.M., AIB Investment House, Percy Place, Dublin 4,
Ireland, provides investment advisory services to International
Equity Portfolio, subject to the general supervision of the
Board. AIB I.M. is the discretionary investment management arm
of the AIB Group, Ireland's largest banking and financial
services group. As of September 30, 1995, AIB I.M. had assets
under management of $7.1 billion. AIB I.M. has experience
managing the investments of corporations, public and private
pension funds, high-net-worth individuals, and has an extensive
range of international foreign mutual fund accounts. Prior to
the commencement of operations of International Equity Portfolio
on December 30, 1994, AIB I.M. had no experience advising U.S.
registered investment companies. AIB I.M. is an affiliate of
First Maryland and is registered as an investment adviser under
the Investment Advisers Act of 1940. Pursuant to an Advisory
Agreement dated June 7, 1994 between AIB I.M. and the Fund, AIB
I.M. is entitled to receive a fee for its advisory services to
International Equity Portfolio at an annual rate of .80% of the
Portfolio's average daily net assets. The management fee is
higher than those paid by most mutual funds, due to greater
complexity, expense and commitment of resources involved in
international investing, but not necessarily higher than those of
a typical international fund. AIB I.M., in its sole discretion,
may waive all or any portion of its advisory fee for the
Portfolio. Any such voluntary waiver will increase the
Portfolio's yield for the period during which the waiver is in
effect. AIB I.M. has voluntarily agreed to waive a portion of
its advisory fee or reimburse other expenses in order to limit
International Equity Portfolio's total operating expenses from
exceeding 1.55% of average daily net assets. This expense cap is
subject to annual review by AIB I.M.

Portfolio Management

James M. Hannan is a vice president of First Maryland and
has been the portfolio manager for the ARK Money Market
Portfolios since June 1993. He is also responsible for the
management of several separately managed institutional portfolios
which he has managed since 1992. Prior to 1987 he served as the
Treasurer for the City of Hyattsville, Maryland.

Susan S. Schnaars, vice president of First Maryland, has
been the portfolio manager for Income Portfolio since May
1994 and is the portfolio manager for Maryland Tax-Free Portfolio
and Short-Term Treasury Portfolio. Ms. Schnaars is also
responsible for managing several commingled funds (taxable and
tax-free) and several large institutional accounts. Prior to
1992, Ms. Schnaars managed institutional and commingled fixed-income
portfolios, including the RAF Fixed Income Fund for PNC Investment
Management and Research (formerly known as Provident National Bank).
Ms. Schnaars is a Chartered Financial Analyst and a Certified
Public Accountant.

Charles E. Knudsen is a vice president of First Maryland and
has been the portfolio manager for Growth and Income Portfolio
since July 1993. He follows several equity industry groups. In
addition, he is a senior portfolio manager for key, tax-free
institutional accounts, including pension and profit sharing
plans, foundations, and endowments. Mr. Knudsen is a Chartered
Financial Analyst.

Clyde L. Randall is a Vice President of First Maryland and
serves as the co-portfolio manager for Blue Chip Equity Portfolio
with Allen J. Ashcroft, Jr. Prior to March 1995, Mr. Randall
was an equity analyst and portfolio manager for more than five
years at Mercantile Safe Deposit and Trust, Baltimore, Maryland.
Mr. Randall is a Chartered Financial Analyst.

Allen J. Ashcroft, Jr. is a Vice President of First Maryland
and serves as the co-portfolio manager for Blue Chip Equity
Portfolio with Clyde L. Randall. Prior to joining First
Maryland, Mr. Ashcroft was an equity analyst and portfolio
manager for McGlinn Capital Management, Wyomissing, Pennsylvania.
Mr. Ashcroft has over 17 years experience in investment research
and equity analysis.

H. Giles Knight, senior vice president of First Maryland,
has been the portfolio manager of Capital Growth Portfolio since
January 1995 and is the co-portfolio manager of Special Equity
Portfolio with Christopher E. Baggini. He also serves as
Director of Equity Research of First Maryland. Prior to joining
First Maryland, Mr. Knight was with ASB Capital Management, a
subsidiary of NationsBank from 1990 to 1994. He was the Director
of Special Equity Investments, Capital Markets Division where he
was responsible for one mutual fund and six employee benefit and
personal trust common stock funds.

Christopher E. Baggini is a Vice President of First Maryland
and serves as the co-portfolio manager of Special Equity
Portfolio with H. Giles Knight. Prior to joining First Maryland,
Mr. Baggini served as portfolio manager and research analyst for
First Metropolitan Development Corporation. Mr. Baggini has over
nine years experience in investment management, including
over four years at Salomon Brothers with responsibilities in equity
research, sales and trading.

Joseph H. Costello is Executive Vice President and
Investment Director of AIB I.M., with overall responsibility for
international equities. Prior to joining AIB I.M. in 1992, he
was Deputy Investment Manager with the New Ireland Assurance
Company Limited where he managed equity and fixed income
portfolios from 1978. Mr. Costello is assisted in managing
International Equity Portfolio by several regional managers, each
focusing on a market or geographical area.

Investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures
for personal investing and restricts certain transactions.

Transfer Agent

SEI Financial Management Corporation, 680 East Swedesford
Road, Wayne, Pennsylvania 19087, provides transfer agent and
related services for the Portfolios. SEI Financial Management
Corporation is a wholly-owned subsidiary of SEI Corporation
("SEI"). SEI Financial Management Corporation has subcontracted
the transfer agency services to State Street Bank and Trust
Company ("State Street Bank"). State Street Bank maintains
shareholder accounts and records for the Portfolios.

Administrator and Distributor

SEI Financial Management Corporation serves as the
Portfolios' administrator (the "Administrator") under the
Administration Agreement dated November 1, 1995 between the
Administrator and the Fund. SEI Financial Services Company, a
wholly-owned subsidiary of SEI, serves as the distributor (the
"Distributor") for the Fund pursuant to a Distribution Agreement
dated November 1, 1995 between the Distributor and the Fund. The
Distributor, a Pennsylvania corporation incorporated on July 20,
1981, is a broker-dealer registered under the Securities Exchange
Act of 1934 and a member of the National Association of
Securities Dealers. Inc. The Administrator and the Distributor
are located at 680 East Swedesford Road, Wayne, Pennsylvania
19087.

The Administrator of the Fund assists in each Portfolio's
administration and operation, including providing facilities for
maintaining each Portfolio's organization, supervising relations
with the custodian, transfer and pricing agents, accountants,
underwriters, and other persons dealing with each Portfolio,
preparing all general shareholder communications and conducting
shareholder relations, maintaining (or providing for the
maintenance of) the Fund's records and the registration of each
Portfolio's shares under federal and state law, developing
management services for the Portfolios and furnishing reports,
evaluation and analyses on a variety of subjects to the Board.
The Administrator is entitled to receive an annual fee of .13% of
the aggregate average daily net assets of the Fund, paid monthly,
for services performed under the Administration Agreement. Except
that the Blue Chip Equity Portfolio and the Short-Term Treasury
Portfolio shall pay the Administrator a fee at an annual rate
equal to the greater of (i) .13% of the aggregate daily net assets
or (ii) a minimum of $60,000. This minimum is waivable by the
Administrator at its discretion. The Administrator has voluntarily
agreed to waive a portion of its administration fee on certain Portfolios
of the Fund in order to limit total operating expenses of such
Portfolios. Any such voluntary waiver, which can be discontinued at
any time, will increase such Portfolio's yield for the period during
which the waiver is in effect.

The Distributor sells Shares of each Portfolio as agent on
behalf of the Fund at no additional cost to the Fund. The
Distributor is the principal underwriter of the Fund. First
Maryland and its affiliates neither participate in nor are
responsible for the underwriting of Portfolio Shares.

Custodian

The First National Bank of Maryland, 25 South Charles
Street, Baltimore, Maryland 21201, is custodian (the "Custodian")
for the securities and cash of the Fund. Under the Custody
Agreement between the Fund and the Custodian, the Custodian holds
the Fund's portfolio securities in safekeeping and keeps all
necessary records and documents relating to its duties. For the
services provided to the Fund pursuant to the Custody Agreement,
the Fund pays the Custodian a monthly fee at the annual rate of
.015% of the average daily net assets of the Fund. The Custodian
also charges the Fund transaction handling fees ranging from $5
to $75 per transaction and receives reimbursement for out-of-
pocket expenses. Foreign securities purchased by the
International Equity Portfolio are held by foreign banks
participating in a network coordinated by Bankers Trust Company,
which serves as sub-custodian for the Fund. All expenses
incurred through this network are paid by the Portfolio.

BANKING LAW MATTERS

Banking laws and regulations generally permit a bank or bank
affiliate to act as an investment adviser and to purchase shares
of an investment company as agent for and upon the order of a
customer. However, banking laws and regulations, including the
Glass-Steagall Act as currently interpreted by the Board of
Governors of the Federal Reserve System, prohibit a bank holding
company registered under the Federal Bank Holding Company Act of
1956 or any affiliate thereof from sponsoring, organizing,
controlling, or distributing the shares of a registered, open-end
investment company continuously engaged in the issuance of its
shares, and prohibit banks generally from issuing, underwriting,
selling or distributing securities. Upon advice of counsel, the
Board believes that First Maryland and AIB I.M. may perform the
advisory services described in this Prospectus for each Portfolio
and its shareholders without violating applicable federal banking
laws or regulations.

However, judicial or administrative decisions or
interpretations of, as well as changes in, either federal or
state statutes or regulations relating to the activities of banks
and their affiliates could prevent a bank or bank affiliate from
continuing to perform all or a part of the activities
contemplated by this Prospectus. If banks or bank affiliates
were prohibited from so acting, changes in the operation of the
Fund might occur. It is not anticipated, however, that any such
change would affect the Shares' NAVs or result in any financial
loss to any shareholder.

TAX MATTERS

The following discussion is only a brief summary of some of
the important tax considerations generally affecting the
Portfolios and their shareholders and is not intended as a
substitute for careful tax planning. Accordingly, investors in
the Portfolios should consult their tax advisers with specific
reference to their own tax situation.

Each Portfolio has elected to be taxed as a regulated
investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended. So long as a Portfolio qualifies for
this tax treatment, it will be relieved of federal income tax on
amounts distributed to shareholders, but shareholders, unless
otherwise exempt, will pay income or capital gains taxes on
amounts so distributed (except distributions that constitute
"exempt interest dividends" or that are treated as a return of
capital) regardless of whether such distributions are paid in
cash or reinvested in additional Shares.

Distributions out of the "net capital gain" (the excess of
net long-term capital gain over net short-term capital loss), if
any, of any Portfolio will be taxed to shareholders as long-term
capital gains at a maximum marginal rate of 28%, regardless of
the length of time a shareholder has held Shares, whether such
gain was reflected in the price paid for the Shares, or whether
such gain was attributable to bonds bearing tax-exempt interest.
All other distributions, to the extent they are taxable, are
taxed as ordinary income at a maximum marginal rate of 39.6%.
Corporate taxpayers are currently taxed at the same maximum
marginal rates on both ordinary income and capital gains.

Tax-Free Money Market Portfolio and Maryland Tax-Free
Portfolio intend to pay substantially all of their respective
dividends as "exempt interest dividends." Investors in these
Portfolios should note, however, that taxpayers are required to
report the receipt of tax-exempt interest and "exempt interest
dividends" in their federal income tax returns and that in two
circumstances such amounts, while exempt from regular federal
income tax, are taxable to persons subject to alternative minimum
tax. Alternative minimum tax is currently imposed at a maximum
marginal rate of 28% in the case of non-corporate taxpayers and
at the rate of 20% in the case of corporate taxpayers. First,
tax-exempt interest and "exempt interest dividends" derived from
certain private activity bonds issued after August 7, 1986, will
generally constitute an item of tax preference for corporate and
non-corporate taxpayers in determining alternative minimum tax
liability. Tax-Free Money Market Portfolio and Maryland Tax-Free
Portfolio intend to avoid investing their assets in such private
activity bonds but may do so if required by market conditions.
Second, tax-exempt interest and "exempt interest dividends"
derived from all municipal securities must be taken into account
by corporate taxpayers in determining their adjusted current
earnings adjustments for alternative minimum tax purposes.
Realized market discount on tax-exempt obligations purchased
after April 30, 1993 is treated as ordinary income and not as
capital gain. Shareholders who are recipients of Social Security
Act or Railroad Retirement Act benefits should further note that
tax-exempt interest and "exempt interest dividends" will be taken
into account in determining the taxability of their benefit
payments.

Tax-Free Money Market Portfolio and Maryland Tax-Free
Portfolio will determine annually the percentage of their
respective net investment incomes that is fully tax-exempt, the
percentage which constitutes an item of tax preference for
alternative minimum tax purposes and the percentage that is fully
taxable, and will apply such percentages uniformly to all
distributions declared from net investment income during that
year. These percentages may differ significantly from the actual
percentages for any particular day.

To the extent that Tax-Free Money Market Portfolio and
Maryland Tax-Free Portfolio income dividends and capital gain
distributions are derived from Maryland state tax-free
investments, they will be free from Maryland state and county
taxes (including City of Baltimore local taxes).

The Fund anticipates that a substantial portion of dividends
paid by Blue Chip Equity Portfolio, Capital Growth Portfolio,
Growth and Income Portfolio, International Equity Portfolio and
Special Equity Portfolio will be eligible for the 70% dividends
received deduction allowed to certain corporations to the extent
of the gross amount of qualified dividends received,
respectively, by each Portfolio for the year. However, corporate
shareholders will have to take into account the entire amount of
any dividend received in determining their adjusted current
earnings adjustment for alternative minimum tax purposes. The
dividends received deduction is not available for capital gain
dividends.

Many state income tax laws exempt from taxation dividends
paid by a regulated investment company to the extent such
dividends are derived from interest paid on U.S. Treasury
obligations. The Fund will advise shareholders annually of the
percentage of the ordinary income dividends paid by each
Portfolio that is attributable to interest earned on U.S.
Treasury obligations.

The Fund will send written notices to shareholders annually
regarding the tax status of distributions made by each Portfolio.
Dividends declared in October, November or December of any year
payable to shareholders of record on a specified date in such a
month will be deemed to have been received by the shareholders on
December 31, provided such dividends are paid during January of
the following year. Each Portfolio intends to make sufficient
actual or deemed distributions prior to the end of each calendar
year to avoid liability for federal excise tax.

Investors should be careful to consider the tax implications
of buying Shares just prior to a distribution. The price of
Shares purchased at that time will reflect the amount of the
forthcoming distribution. Those investors purchasing just prior
to a distribution will nevertheless be taxed on the entire amount
of the distribution received. The foregoing considerations do
not apply to the purchase of Shares of the ARK Money Market
Portfolios, which are offered at the constant NAV of $1.00.

Shareholders who exchange Shares representing interests in
one Portfolio for Shares representing interests in another
Portfolio will generally recognize capital gain or loss for
federal income tax purposes.

To avoid being subject to federal income tax withholding at
the rate of 31% on taxable dividends, distributions and
redemption payments, shareholders must furnish the Fund with
their taxpayer identification numbers and certify under penalties
of perjury that the number provided is correct and that they are
not subject to backup withholding for any reason. Redemptions of
Shares are reported annually on information returns that are
filed with the IRS with respect to each shareholder that is not
otherwise exempt.

Shareholders who are nonresident alien individuals, foreign
trusts or estates, foreign corporations or foreign partnerships
may be subject to different U.S. federal income tax treatment.

Effects of Foreign Taxes. International Equity Portfolio
sometimes pays withholding or other taxes to foreign governments
during the year. These taxes reduce the Portfolio's
distributions but, under an election that International Equity
Portfolio intends to make, are included in the taxable dividend
income reported on an investor's tax statement. As a result of
election, an investor may be able to claim an offsetting tax
credit or itemized deduction for foreign taxes paid by the
Portfolio. The tax statement will generally show the amount of
foreign tax for which a credit or deduction will be available.

Currency Considerations. If International Equity
Portfolio's dividends exceed its taxable income in any year,
which is sometimes the result of currency-related losses, all or
a portion of the Portfolio's distributions may be treated as a
return of capital to shareholders for tax purposes. To minimize
the risk of a return of capital, the Portfolio may adjust its
distributions to take currency fluctuations into account, which
may cause the distributions to vary. Any return of capital will
reduce the cost basis of an investor's Shares, which will result
in a higher reported capital gain or a lower reported capital
loss when those Shares are sold. The statement received in
January will specify if any distribution included a return of
capital.

* * *

An investment in any one Portfolio is not intended to
constitute a balanced investment program. Shares of Tax-Free
Money Market Portfolio and Maryland Tax-Free Portfolio would not
be suitable for tax-exempt institutions and may not be suitable
for retirement plans qualified under Section 401 of the Internal
Revenue Code, H.R. 10 plans and individual retirement accounts
because such plans and accounts are generally tax-exempt.
Therefore, such plans and accounts would not gain any additional
benefit from the Portfolios dividends' tax-exempt status and,
moreover, such dividends would be taxable when distributed to the
beneficiary.

Future legislative or administrative changes or court
decisions may materially affect the tax consequences of investing
in one or more Portfolios of the Fund. From time to time,
proposals have been introduced before Congress that would have
the effect of reducing or eliminating the federal tax exemption
on municipal obligations. If such a proposal were enacted, the
ability of Tax-Free Money Market Portfolio and Maryland Tax-Free
Portfolio to pay exempt-interest dividends might be adversely
affected. Shareholders are also urged to consult their tax
advisers concerning the application of state and local income
taxes to investments in the Fund, which may differ from the
Federal income tax consequences described above.

GENERAL INFORMATION

ARK Funds is an open-end diversified management investment
company organized as a Massachusetts business trust pursuant to a
Declaration of Trust dated October 22, 1992, and amended and
restated on March 19, 1993. The Board supervises Fund activities
and reviews contractual arrangements with companies that provide
the Portfolios with services. The Fund may issue an unlimited
number of shares of each of its Portfolios. The Shares of a
Portfolio have equal voting, liquidation and other rights. When
issued and paid for, Shares will be fully paid and non-assessable
by the Fund and will have no preference, conversion, exchange or
preemptive rights. The Board may authorize the Fund to offer
other portfolios which may differ in the types of securities in
which their assets may be invested.

As a Massachusetts business trust, the Fund is not required
to hold annual shareholder meetings, although special meetings
may be called for a specific Portfolio or class of shares with
respect to issues affecting that Portfolio or class, or for the
Fund as a whole for purposes such as electing or removing
Trustees. Shareholders are entitled to one vote for each full
share owned and fractional votes for fractional shares owned.
Separate votes are taken by each class of shares, Portfolio, or
the Fund if a matter affects just that class, portfolio or the
Fund, respectively.

The Fund offers three classes of shares of each ARK Money
Market Portfolio; two classes of shares of Short-Term Treasury
Portfolio, Income Portfolio, Growth and Income Portfolio, Blue
Chip Equity Portfolio, Capital Growth Portfolio, Special Equity
Portfolio and Maryland Tax-Free Portfolio; and one class of
shares of International Equity Portfolio. The classes of shares
of a Portfolio have a common investment objective and investment
limitations and policies. The classes of shares of a Portfolio
have different sales charges and other expenses that may affect
performance. The Institutional Classes of Short-Term Treasury
Portfolio, and Blue Chip Equity Portfolio, are expected to
commence operations on or about the date of this Prospectus. The
Institutional Class of Maryland Tax-Free Portfolio has not yet
commenced operations. The Retail Class of U.S. Treasury Money
Market Portfolio, U.S. Government Money Market Portfolio,
Short-Term Treasury Portfolio, Blue Chip Equity Portfolio,
Special Equity Portfolio and Maryland Tax-Free Portfolio
have not yet commenced operations. You may obtain more information
on the classes of shares not offered through this Prospectus
by calling 1-800-624-4116 or from your Investment Professional.

APPENDIX

The following paragraphs provide a brief description of the
securities in which Portfolios may invest and the transactions
they may make. A Portfolio's investments are not limited by this
discussion, however, and a Portfolio may include other types of
securities and other types of transactions consistent with its
investment objective.

A complete listing of the Portfolios' policies and
limitations and more detailed information about the Portfolios'
investments are contained in the Portfolios' SAI. Current
holdings and recent investment strategies are described in the
Portfolios' financial reports, which are sent to shareholders
twice a year.

The ARK Non-Money Market Portfolios, except Maryland Tax-
Free Portfolio and Short-Term Treasury Portfolio, may invest in
American Depository Receipts and European Depository Receipts
("ADRs" and "EDRs"). ADRs and EDRs are certificates evidencing
ownership of shares of a foreign-based issuer held in trust by a
bank or similar financial institution. Designed for use in U.S.
and European securities markets, respectively, ADRs and EDRs are
alternatives to the purchase of the underlying securities in
their national markets and currencies.

Each Portfolio, except U.S. Treasury Money Market Portfolio,
U.S. Government Money Market Portfolio, Short-Term Treasury
Portfolio and International Equity Portfolio, may purchase asset-
backed securities which consist of undivided fractional interests
in pools of consumer loans (unrelated to mortgage loans) held in
a trust. Payments of principal and interest are passed through
to certificate holders and are typically supported by some form
of credit enhancement, such as a letter of credit, surety bond,
limited guaranty, or senior subordination. The degree of credit
enhancement varies, but generally amounts to only a fraction of
the asset-backed security's par value until exhausted. If the
credit enhancement is exhausted, certificate holders may
experience losses or delays in payment if the required payments
of principal and interest are not made to the trust with respect
to the underlying loans. The value of these securities also may
change because of changes in the market's perception of the
creditworthiness of the servicing agent for the loan pool, the
originator of the loans, or the financial institution providing
the credit enhancement. Asset-backed securities are ultimately
dependent upon payment of consumer loans by individuals, and the
certificate holder generally has no recourse to the entity that
originated the loans. The underlying loans are subject to
prepayments which shorten the securities' weighted average life
and may lower their return. (As prepayments flow through at par,
total returns would be affected by the prepayments: if a security
were trading at a premium, its total return would be lowered by
prepayments, and if a security were trading at a discount, its
total return would be increased by prepayments.)

Each Portfolio, except U.S. Treasury Money Market Portfolio,
U.S. Government Money Market Portfolio and Short-Term Treasury
Portfolio, may purchase bank obligations. These include:
bankers' acceptances which are negotiable obligations of a bank
to pay a draft which has been drawn on it by a customer;
certificates of deposit which are negotiable certificates
representing a commercial bank's obligation to repay funds
deposited with it, earning specified rates of interest over given
periods or issued at a discount; and time deposits which are non-
negotiable deposits in a banking institution earning a specified
interest rate over a given period of time.

Each Portfolio, except U.S. Treasury Money Market Portfolio,
U.S. Government Money Market Portfolio and Short-Term Treasury
Portfolio, may purchase commercial paper. Commercial paper is an
obligation issued by a bank, broker-dealer, corporation and other
entities for purposes such as financing its current operations.

The ARK Non-Money Market Portfolios, except Short-Term
Treasury Portfolio, may purchase convertible securities.
Convertible securities are usually preferred stock or bond issues
that may be converted or exchanged by the holder into shares of
the underlying common stock at a stated exchange ratio. A
convertible security may also be subject to redemption by the
issuer but only after a particular date and under certain
circumstances (including a specified price) established upon
issue. If a convertible security held by a Portfolio is called
for redemption, that Portfolio could be required to tender it for
redemption, convert it to the underlying common stock, or sell it
to a third party.

Each Portfolio, except U.S. Treasury Money Market Portfolio,
U.S. Government Money Market Portfolio, Short-Term Treasury
Portfolio, and Maryland Tax-Free Portfolio, may invest in
Eurodollars, Yankee dollars and foreign bank obligations which
involve risks that are different from investments in securities
of U.S. banks. These risks may include future unfavorable
political and economic developments, withholding taxes, seizures
of foreign deposits, currency controls, interest limitations, or
other governmental restrictions that might affect payment of
principal or interest. Additionally, there may be less public
information available about foreign banks and their branches and
agencies. Foreign branches of domestic banks are not regulated
by U.S. banking authorities and generally are not subject to
accounting, auditing, and financial reporting standards
comparable to those applicable to U.S. banks. For this purpose,
domestic banks include foreign branches of domestic banks for
which the domestic parent is unconditionally liable in the event
the foreign branch failed to pay on its instruments for any
reason.

Each Portfolio, except U.S Treasury Money Market Portfolio,
U.S. Government Money Market Portfolio, Short-Term Treasury
Portfolio and Maryland Tax-Free Portfolio, may invest in U.S.
dollar-denominated securities of foreign issuers. Each ARK Non-
Money Market Portfolio, except Short-Term Treasury Portfolio and
Maryland Tax-Free Portfolio, may invest in foreign securities
denominated in foreign currencies. Foreign investments involve
risks in addition to the risks inherent in domestic investments.
A Portfolio's foreign securities and securities denominated in or
indexed to foreign currencies may be affected by the strength of
foreign currencies relative to the U.S. dollar, or by political
or economic developments in foreign countries. Foreign companies
may not be subject to accounting standards or governmental
supervision comparable to U.S. companies, and there may be less
public information about their operations. Foreign markets may
be less liquid or more volatile than U.S. markets, and may offer
less protection to investors. In addition to the political and
economic factors that can affect foreign securities, a
governmental issuer may be unwilling to repay principal and
interest when due, and may require that the conditions for
payment be renegotiated. These factors could make foreign
investments, especially those in developing countries, more
volatile. First Maryland or AIB I.M., as applicable, considers
these factors in making investments in foreign securities for a
Portfolio. There is no direct limitation specifically intended
to limit the amount of each Portfolio's assets that may be
invested in foreign securities or in any one country or currency.

Foreign securities, foreign currencies and securities issued
by U.S. entities with substantial foreign operations may involve
additional risks and considerations. These include risks
relating to political or economic conditions in foreign
currencies, withholding or other taxes, operational risks,
increased regulatory burdens and the potentially less stringent
investor protection and disclosure standards of foreign markets.
Additionally, governmental issuers of foreign securities may be
unwilling to re-pay principal and interest when due, and may
require that the conditions for payment be re-negotiated. All
these factors can make foreign investments, especially those in
developing countries, more volatile.

The ARK Non-Money Market Portfolios, except Short-Term
Treasury Portfolio and Maryland Tax-Free Portfolio, may enter
into forward currency contracts (agreements to exchange one
currency for another at a future date) to manage currency risks
and to facilitate transactions in foreign securities. Although
forward currency contracts can be used to protect a Portfolio
from adverse exchange rate changes, they involve a risk of loss
if First Maryland or AIB I.M., as applicable, fails to predict
foreign currency values correctly.

Hedging Strategies. The ARK Non-Money Market Portfolios,
except for the Short-Term Treasury Portfolio, may buy and sell
options on securities, currencies, futures contracts and options
on such contracts ("Hedging Instruments") to manage their
exposure to changing interest rates, security prices, and
currency exchange rates. Some strategies using these
instruments, including selling futures, buying puts and writing
calls, tend to hedge a Portfolio's investments against price
fluctuations. Other strategies, including buying futures,
writing puts and buying calls, tend to increase market exposure.
Hedging Instruments may be used in combination with each other or
with forward currency contracts in order to adjust the risk and
return characteristics of the overall strategy. A Portfolio may
invest in Hedging Instruments based on any type of security,
index, or currency, including options and futures traded on
foreign exchanges and options not traded on exchanges. These
strategies may increase the volatility of the Portfolios and may
involve a small investment of cash relative to the magnitude of
the risk assumed. In addition, these strategies could result in
a loss to a Portfolio if the counterparty to the transaction does
not perform as promised.

Hedging Instruments can be volatile investments, and involve
certain risks. If First Maryland or AIB I.M., as applicable,
applies a hedge at an inappropriate time or judges market
conditions incorrectly, use of Hedging Instruments may lower a
Portfolio's return. A Portfolio could also experience a loss if
the prices of its options and futures positions were poorly
correlated with its other investments, or if it could not close
out its positions because of an illiquid secondary market.

No Portfolio will hedge more than 25% of its total assets by
selling futures, writing calls, and buying puts under normal
conditions. In addition, a Portfolio will not buy futures or
write puts where the value of the underlying investment exceeds
25% of its total assets, and will not buy calls with a value
exceeding 5% of its total assets.

Under currently applicable regulations, each ARK Money
Market Portfolio, except U.S. Treasury Money Market Portfolio,
may invest up to 10% of its net assets in illiquid securities;
the ARK Non-Money Market Portfolios may invest up to 15% of their
respective net assets in illiquid securities. Illiquid
securities are securities that cannot be disposed of in the usual
course of business within seven days without taking a reduced
price. Generally, securities subject to restriction on resale,
variable rate demand notes, repurchase agreements with more than
seven days to maturity, and time deposits are considered to be
illiquid unless First Maryland or AIB I.M., as applicable,
determines, in accordance with guidelines established by the
Board, that such securities are readily marketable. The absence
of a trading market can make it difficult to ascertain a market
value for illiquid securities, and it may be difficult or
impossible for a Portfolio to sell them promptly at an acceptable
price. In addition, unless securities are registered for sale,
securities can only be sold in privately negotiated transactions
or pursuant to an exemption from registration.

The ARK Non-Money Market Portfolios, except for the Short-
Term Treasury Portfolio, may invest in indexed securities whose
value depends on the price of securities indices, or other
financial indicators. These include commercial paper and
certificates of deposit. These securities may be positively or
negatively indexed; that is, their value may increase or decrease
if the underlying instrument appreciates. Some indexed
securities may be based on underlying instruments whose total
value is greater than the value of the indexed security itself.
Some indexed securities may have return characteristics similar
to direct investments in the underlying instrument. Indexed
securities may be more volatile than the underlying instrument
itself.

Special Equity Portfolio may purchase lower-rated debt
securities which are high-yielding debt securities, or junk
bonds, (those rated Ba or lower by Moody's or BB or lower by S&P)
that have poor protection against default in the payment of
principal and interest. These securities are often considered to
be speculative and involve greater risk of loss or price changes
due to changes in the issuer's capacity to pay. The market
prices of lower-rated debt securities may fluctuate more than
those of higher-rated debt securities, and may decline
significantly in periods of general economic difficulty which may
follow periods of rising interest rates. The table below
provides a summary of ratings assigned to debt securities (not
including money market instruments) that may be included in a
Portfolio.

Moody's S&P
Rating Rating Description

Investment Grade

Aaa/Aa/A AAA/AA/A Highest quality/high
quality/upper medium grade

Baa BBB Medium grade

Non-Investment Grade

Ba BB Moderately speculative

B B Speculative

Caa CCC Highly speculative

Ca/C CC/C Poor quality/lowest quality
no interest

- D In default, in arrears

Income Portfolio, Growth and Income Portfolio and Special
Equity Portfolio may purchase mortgage-backed securities issued
by government and non-government entities such as banks, mortgage
lenders, or other financial institutions. Mortgage-backed
securities include mortgage pass-through securities, mortgage-
backed securities, and mortgage pay-through securities. A
mortgage pass-through security is a pro-rata interest in a pool
of mortgages where the cash flow generated from the mortgage
collateral is passed through to the security holder. Mortgage-
backed bonds are general obligations of their issuers, payable
out of the issuers' general funds and additionally secured by a
first lien on a pool of mortgages. Mortgage pay-through
securities exhibit characteristics of both pass-throughs and
mortgage-backed bonds. Mortgage-backed securities also include
other debt obligations secured by mortgages on commercial real
estate or residential properties. The value of mortgage-backed
securities may change due to shifts in the market's perception of
issuers. In addition, regulatory or tax changes may adversely
affect the mortgage securities market as a whole. Non-government
mortgage-backed securities may offer higher yields than those
issued by government entities, but also may be subject to greater
price changes than government issues. Because mortgage
securities pay both principal and interest as their underlying
mortgages are paid off, they are subject to pre-payment risk.
Pre-payment, which occurs when unscheduled or early payments are
made on the underlying mortgages, may shorten the effective
maturities of these securities and may lower their total returns.
Finally, the value of a mortgage security may be affected by
changes in market interest rates.

Each Portfolio, except U.S. Treasury Money Market Portfolio,
U.S. Government Money Market Portfolio, Short-Term Treasury
Portfolio and International Equity Portfolio, may purchase
municipal obligations which are issued to raise money for a
variety of public or private purposes, including general
financing for state and local governments, or financing for
specific projects or public facilities. They may be issued in
anticipation of future revenues, and may be backed by the full
taxing power of a municipality, the revenues from a specific
project or the credit of a private organization. The value of
some or all municipal securities may be affected by uncertainties
in the municipal market related to legislation or litigation
involving the taxation of municipal securities or the rights on
municipal securities holders. A Portfolio may own a municipal
security directly or through a participation interest.

Each Portfolio, except U.S. Treasury Money Market Portfolio
and Tax-Free Money Market Portfolio, may enter into repurchase
agreements. In a repurchase agreement, the Portfolio buys a
security at one price and simultaneously commits to resell that
security back at a higher price. Each Portfolio, except U.S.
Treasury Money Market Portfolio, Tax-Free Money Market Portfolio
and International Equity Portfolio may make securities loans to
parties such as broker-dealers and institutional investors. In
the event of bankruptcy of the other party to either a repurchase
agreement or a securities loan, a Portfolio could experience
delays in recovering its cash or the securities it lent. To the
extent, in the meantime, the value of the securities purchased
had decreased, or the value of the securities lent had increased,
the Portfolio could experience a loss. In all cases, First
Maryland must find the creditworthiness of the other party to the
transaction satisfactory.

International Equity Portfolio may enter into foreign
repurchase agreements, which may be less well secured than U.S.
repurchase agreements, and may be denominated in foreign
currencies. They may involve greater risk of loss if the
counterparty defaults. Some counterparties in these transactions
may be less creditworthy than those in U.S. markets.

Borrowing Money and Reverse Repurchase Agreements. Each
Portfolio may borrow money by engaging in reverse repurchase
agreements. In a reverse repurchase agreement a Portfolio sells
a portfolio instrument to another party, such as a bank, in
return for cash and agrees to repurchase the instrument at a
particular price and time. While a reverse repurchase agreement
is outstanding, a Portfolio will maintain appropriate liquid
assets in a segregated custodial account to cover its obligation
under the agreement. A Portfolio will enter into reverse
repurchase agreements only with parties whose creditworthiness is
deemed satisfactory by First Maryland or AIB I.M., as applicable.

The ARK Non-Money Market Funds, except Short-Term Treasury
Portfolio, may enter into short sales with respect to securities
owned ("short sales against the box"). These transactions may
help to hedge against the effect of price declines, but may
result in losses if the price of the underlying securities
increases.

Each Portfolio, except U.S. Treasury Money Market Portfolio
and Short-Term Treasury Portfolio, may purchase U.S. Government
Securities which are securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities. They may be
backed by the full faith and credit of the U.S. government as a
whole or only by the issuing agency. For example, securities
issued by the Federal Home Loan Banks and the Federal Home Loan
Mortgage Corporation are supported only by the credit of the
issuing agency, and not by the U.S. government. Securities
issued by the Federal Farm Credit System, the Federal Land Banks
and the Federal National Mortgage Association are supported by
the agency's right to borrow money from the U.S. Treasury under
certain circumstances. U.S. Treasury securities and some agency
securities, such as those issued by the Federal Housing
Administration and the Government National Mortgage Association,
are backed by the full faith and credit of the U.S. government
and are the highest quality government securities.

Each Portfolio, except U.S. Treasury Money Market Portfolio
and Short-Term Treasury Portfolio, may purchase variable or
floating rate instruments. Variable or floating rate instruments
(including notes purchased directly from issuers) bear variable
or floating interest rates and may carry rights that permit
holders to demand full payment from issuers or certain financial
intermediaries. Floating rate securities have interest rates
that change whenever there is a change in a designated base rate,
while variable rate instruments provide for a specified periodic
adjustment in the interest rate. These formulas are designed to
result in a market value for the instrument that approximates its
par value. Many variable and floating rate instruments also
carry demand features that permit a Portfolio to sell them at par
value plus accrued interest on short notice.

International Equity Portfolio and Special Equity Portfolio
may invest in warrants which entitle the holder to buy equity
securities at a specific price for a specific period of time.
Warrants may be considered more speculative than certain other
types of investments because they do not entitle a holder to
dividends or voting rights with respect to the securities which
may be purchased, nor do they represent any rights in the assets
of the issuing company. The value of a warrant may be more
volatile than the value of the securities underlying the
warrants. Also, the value of the warrant does not necessarily
change with the value of the underlying securities and a warrant
ceases to have value if it is not exercised prior to the
expiration date.

Each Portfolio may engage in transactions on a when-issued
or delayed-delivery basis. The market value of securities
purchased in this way may change before the delivery date, which
could affect the market value of the assets and could increase
fluctuations in a Portfolio's share price, yield and return.
Ordinarily, the Portfolios will not earn interest on the
securities purchased until they are delivered.

Each Portfolio, except International Equity Portfolio, may
purchase zero coupon debt securities which do not make regular
interest payments. Instead, they are sold at a deep discount
from their face value. In calculating its daily dividend, each
Portfolio takes into account as income a portion of the
difference between these securities' purchase prices and their
face values. Because they do not pay current income, the prices
of zero coupon debt securities can be volatile when interest
rates change.

Additional Investments for Tax-Free Money Market Portfolio and
Maryland Tax-Free Portfolio

Municipal Lease Obligations are issued by a state or local
government or authority to acquire land and a wide variety of
equipment and facilities. These obligations typically are not
fully backed by the municipality's credit, and their interest may
become taxable if the interest is assigned. If funds are not
appropriated for the following year's lease payments, the lease
may terminate, with the possibility of default on the lease
obligation and significant loss to the Portfolio. Certificates
of participation in municipal lease obligations or installment
sales contracts entitle the holder to a proportionate interest in
the lease-purchase payments made. Each Portfolio will only
purchase rated municipal lease obligations.

Municipal Securities include general obligation securities,
which are backed by the full taxing power of a municipality, and
revenue securities, which are backed by the revenues of a
specific tax, project, or facility. Industrial development bonds
are a type of revenue bond backed by the credit and security of a
private issuer and may involve greater risk.

Refunding Contracts. The Portfolios may purchase securities
on a when-issued basis in connection with the refinancing of an
issuer's outstanding indebtedness. Refunding contracts require
the issuer to sell and a Portfolio to buy refunded municipal
obligations at a stated price and yield on a settlement date that
may be several months or several years in the future. Although a
Portfolio may sell its rights under a refunding contract, these
contracts are relatively new and the secondary market for them
may be less liquid than the secondary market for other types of
municipal securities.

Resource Recovery Bonds are a type of revenue bond issued to
build facilities such as solid waste incinerators or waste-to-
energy plants. Typically, a private corporation will be
involved, at least during the construction phase, and the revenue
stream will be secured by fees or rents paid by municipalities
for use of the facilities. The viability of a resource recovery
project, environmental protection regulations, and project
operator tax incentives may affect the value and credit quality
of resource recovery bonds.

Tax and Revenue Anticipation Notes are issued by
municipalities in expectation of future tax or other revenues,
and are payable from those specific taxes or revenues. Bond
anticipation notes normally provide interim financing in advance
of an issue of bonds or notes, the proceeds of which are used to
repay the anticipation notes. Tax-exempt commercial paper is
issued by municipalities to help finance short-term capital or
operating needs.

ARK FUNDS: INSTITUTIONAL II CLASS

U.S. TREASURY MONEY MARKET PORTFOLIO
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
MONEY MARKET PORTFOLIO
TAX-FREE MONEY MARKET PORTFOLIO

CROSS REFERENCE SHEET

Form N-1A Item Number

Part A Prospectus Caption

* Not Applicable

ARK Funds -- Institutional II Class

Prospectus ________, 1996

ARK Funds (the "Fund") is a registered open-end management
investment company that offers four money market portfolios: U.S.
Treasury Money Market Portfolio, U.S. Government Money Market
Portfolio, Money Market Portfolio and Tax-Free Money Market
Portfolio (the "ARK Money Market Portfolios"). The First National
Bank of Maryland ("First Maryland") serves as investment advisor
to the ARK Money Market Portfolios.

The ARK Money Market Portfolios that offer Institutional II Class
shares (the "Portfolios") are offered through this Prospectus
(the "Shares"). The Portfolios consist of four money market
portfolios. The Shares are offered only to individuals,
institutions and other entities that direct their own investments
and that have established trust relationships with The First
Maryland National Bank of Maryland ("First Maryland") or its
affiliated banks (including Allied Irish Banks, p.l.c. and its
affiliates) or correspondent banks of First Maryland or their
affiliated banks. Investments in the Shares are made at net
asset value without a sales charge. A brief description of each
Portfolio whose shares are offered through this Prospectus
follows.

An investment in a money market Portfolio is neither insured nor
guaranteed by the U.S. government. There can be no assurance that
any money market Portfolio will maintain a stable net asset value
per share of $1.00.

This Prospectus is designed to provide investors with information
that they should know before investing. Please read and retain
this document for future reference. A Statement of Additional
Information (SAI) (dated __________, 1996) and the Financial
Statements (including portfolio listing) for the fiscal period
ended April 30, 1995 have been filed with the Securities and
Exchange Commission ("SEC") and are incorporated herein by
reference. This Statement and the Annual Report are available
upon request without charge by calling 1-800-624-4116.

Table of Contents

Summary Of Portfolio Expenses...............................
Financial Highlights........................................
Investment Objectives, Policies and Risk Considerations.....
Performance.................................................
Portfolio Transactions and Valuation........................
Purchases, Exchanges and Redemptions........................
Management of the Fund......................................
Banking Law Matters.........................................
Tax Matters.................................................
General Information.........................................
Appendix....................................................

SUMMARY OF PORTFOLIO EXPENSES

A. Annual Institutional II Class Operating Expenses
(as a percentage of average net assets):
<S> <C> <C> <C> <C>

Total
Advisory 12b-1 Other Operating
Fee Fee Expenses Expenses
U.S. Treasury Money Market Portfolio.... .16%* .10% .18% .44%*
U.S. Government Money Market Portfolio.. .13%* .10% .18%* .41%*
Money Market Portfolio.................. .10%* .10% .15%* .35%*
Tax-Free Money Market Portfolio......... .08%* .10% .14%* .32%* *

*After applicable waivers
</TABLE>

B. Example: An investor would pay the following
expenses on a $1,000 investment in the Shares, assuming (1)
5% annual return, (2) redemption at the end of each time
period, and (3) fee waivers continue at the same levels for
each time period.

1 Year 3 Years 5 Years 10 Years
U.S. Treasury Money Market Portfolio.... $5 $14 $25 $55
U.S. Government Money Market Portfolio.. 4 13 23 52
Money Market Portfolio.................. 4 11 20 44
Tax-Free Money Market Portfolio......... 3 10 18 41

Explanation of Table: The purpose of the table is to assist
investors in understanding the various costs and expenses that an
investor in the Shares would bear directly or indirectly as a
result of an investment in the Shares. (For a more complete
discussion of the various costs and expenses, see "Management of
the Fund"). As more fully described under the heading
"Purchases, Exchanges and Redemptions," the Shares are currently
available only to individuals, institutions and other entities
that direct their own investments and that have established
trust, custodial or money management relationships with First
Maryland, its affiliated banks (including Allied Irish Banks,
p.l.c. and its affiliates) or correspondent banks of First
Maryland or their affiliated banks. Such relationships may
involve the payment of account or service fees not reflected in
the table above.

A. Annual Operating Expenses (Institutional II Class) are
based on the Institutional II Class' projected expenses for its
first year of operations. Advisory Fees are paid by each
Portfolio to First Maryland for managing its investments. 12b-1
Fees represent fees for services and expenses, paid by each
Portfolio to SEI Financial Services Company, in connection with
the distribution of the Institutional II Class shares. Long-term
shareholders may pay more than the economic equivalent of the
maximum front-end sales charge permitted by the National
Association of Securities Dealers, Inc. (NASD) due to 12b-1 fees.
Institutional II Class incurs Other Expenses for certain
administrative services such as maintaining shareholder records,
furnishing shareholder statements and reports, and for other
services. First Maryland has agreed to waive .09% of its
advisory fee for U.S. Treasury Money Market Portfolio, .12% of
its advisory fee for U.S. Government Money Market Portfolio, .15%
of its advisory fee for Money Market Portfolio and .17% of its
advisory fee for Tax-Free Money Market Portfolio. SEI Financial
Management Corporation has voluntarily agreed to waive .018% of
its administration fee for Money Market Portfolio and .033% of
its administration fee for Tax-Free Money Market Portfolio.
There can be no assurance that waivers will continue at the
stated levels or otherwise during the current fiscal year.
Expenses eligible for waiver do not include interest, taxes,
brokerage commissions (if any), or extraordinary expenses.

Absent such waivers, estimated Advisory Fees, 12b-1 Fees,
Other Expenses and Total Operating Expenses would be: .25%, .10%,
.18% and .53% (U.S. Treasury Money Market Portfolio); .25%, .10%,
.20% and .55% (U.S. Government Money Market Portfolio); 25%,
.10%, .18% and .53% (Money Market Portfolio); .25%, .10%, .22%
and .57% (Tax-Free Money Market Portfolio).

Advisory Fees, 12b-1 Fees and Other Expenses are reflected
in share prices or dividends of the Institutional II Class of
each Portfolio and are not charged directly to individual
shareholder accounts.

B. Example. The Example assumes that all dividends and
distributions are reinvested and that the amounts listed under
"Annual Institutional II Class Operating Expenses" remain the
same in the years shown. The Example should not be considered a
representation of past or future expenses and actual expenses may
be greater or less than those shown.

FINANCIAL HIGHLIGHTS

The following tables provide information about the financial
history of the Institutional II Class of each Portfolio. These
tables express the information in terms of a single share
outstanding throughout the period. The data is for the fiscal
period ended October 31, 1995 and is unaudited.

[To be Completed by Amendment]

INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS

The Fund currently consists of twelve investment Portfolios
with a variety of investment objectives and policies. First
Maryland provides a continuous investment program in accordance
with each Portfolio's investment objective and policies. Except
for each Portfolio's investment objective and those policies
identified as fundamental, each Portfolio's policies are not
fundamental. Non-fundamental policies may be changed without
shareholder approval. Further information relating to the types
of securities in which each Portfolio may invest and the
investment policies of each Portfolio in general is set forth in
the Appendix to this Prospectus. As is the case with any
investment in securities, an investment in a Portfolio involves
certain risks and there can be no assurance a Portfolio will
achieve its investment objective. Each Portfolio can use various
techniques to manage its investment exposure. These techniques
may involve derivative transactions. By itself, no one Portfolio
constitutes a balanced investment plan. From time to time, a
Portfolio, to the extent consistent with its investment
objective, policies, restrictions and applicable law, may invest
in securities of companies with which First Maryland and/or its
affiliates has a lending relationship. The lending relationship
will not be a factor in the selection of securities.

U.S. Treasury Money Market Portfolio, U.S. Government Money
Market Portfolio, Money Market Portfolio and Tax-Free Money
Market Portfolio each seek to maximize current income and provide
liquidity and security of principal by investing in high-quality,
short-term, U.S. dollar-denominated instruments determined by
First Maryland to present minimal credit risks in accordance with
guidelines adopted by the Fund's Board of Trustees (the "Board").
The ARK Money Market Portfolios each will seek to maintain a net
asset value per share ("NAV") of $1.00, will limit its
investments to securities with remaining maturities of 397 days
or less, and will maintain a dollar-weighted average maturity of
90 days or less. In determining a security's maturity for
purposes of calculating the Portfolios' average maturity,
estimates of the expected time for principal to be paid may be
used. An estimated maturity can be substantially shorter than its
stated final maturity.

U.S. Treasury Money Market Portfolio

The investment objective of U.S. Treasury Money Market
Portfolio is to maximize current income and provide liquidity and
security of principal by investing in instruments which are
issued or guaranteed as to principal and interest by the U.S.
government and thus constitute direct obligations of the United
States. As a non-fundamental operating policy, the Portfolio
intends to invest 100% of its total assets in U.S. Treasury
bills, notes, and bonds and will limit its investments to U.S.
Treasury obligations that pay interest that is specifically
exempt from state and local taxes under federal law.

U.S. Government Money Market Portfolio

The investment objective of U.S. Government Money Market
Portfolio is to maximize current income and provide security of
principal by investing in instruments which are issued or
guaranteed as to principal and interest by the U.S. government
or any of its agencies or instrumentalities ("U.S. Government
Securities"), or in repurchase agreements backed by such
instruments. As a non-fundamental policy, 100% of the Portfolio's
total assets will be invested in U.S. Government Securities, and
in repurchase agreements collateralized by such securities. U.S.
Government Securities include U.S. Treasury bills, notes and
bonds, and obligations issued by federal agencies such as the
Export-Import Bank of the United States, the General Services
Administration, the Government National Mortgage Association, the
Small Business Administration and the Washington Metropolitan
Area Transit Authority. Obligations issued or guaranteed as to
principal and interest by U.S. government agencies or
instrumentalities include instruments issued by the Federal Home
Loan Bank, Federal Farm Credit Bank and Federal National Mortgage
Association. The Portfolio may enter into when-issued or delayed-
delivery transactions. The Portfolio normally may not invest more
than 5% of its total assets in the securities (other than U.S.
Government Securities) of any single issuer. Under certain
conditions, however, the Portfolio may invest up to 25% of its
total assets in first tier securities of a single issuer for up
to three days.

Money Market Portfolio

The investment objective of Money Market Portfolio is to
maximize current income and provide liquidity and security of
principal by investing in a broad range of short-term, high-
quality U.S. dollar-denominated debt securities ("Money Market
Instruments"). Such Money Market Instruments include, but are
not limited to: U.S. Government Securities; custodial receipts
evidencing future interest or principal payments on U.S.
Government Securities; obligations of domestic or foreign banks
including bankers' acceptances, time deposits and certificates of
deposit ("CDs"); commercial paper (including variable and
floating rate instruments); corporate obligations; and asset-
backed securities and indexed securities -- each with 397 days or
less remaining to maturity. Money Market Portfolio may invest
more than 25% of its total assets in certain obligations of
domestic banks. Money Market Portfolio may engage in repurchase
and reverse repurchase agreements and may enter into when-issued
or delayed-delivery transactions. The Portfolio normally may not
invest more than 5% of its total assets in securities (other than
U.S. Government Securities) of any single issuer. Under certain
conditions, however, the Portfolio may invest up to 25% of its
total assets in first tier securities of a single issuer for up
to three days.

Tax-Free Money Market Portfolio

The Portfolio invests in high quality, short-term municipal
securities but also may invest in high quality, long-term fixed,
variable, or floating rate instruments (including tender option
bonds) that have demand features or interest rate adjustment
features that result in interest rates, maturities, and prices
similar to short-term instruments. The Portfolio's investments in
municipal securities may include tax, revenue, or bond
anticipation notes; tax-exempt commercial paper; general
obligation or revenue bonds (including municipal lease
obligations and resource recovery bonds); and zero coupon bonds.
The Portfolio may enter into when-issued and delayed-delivery
transactions and may purchase securities that are subject to
restrictions on resale.

Issuers or financial intermediaries who provide demand
features or standby commitments often support their ability to
buy securities on demand by obtaining letters of credit ("LOCs")
or other guarantees from banks. LOCs also may be used as credit
supports for other types of municipal instruments. First Maryland
may rely upon its evaluation of a bank's credit in determining
whether to purchase an instrument supported by an LOC. In
evaluating a foreign bank's credit, First Maryland will consider
whether adequate public information about the bank is available
and whether the bank may be subject to unfavorable political or
economic developments, currency controls, or other governmental
restrictions that might affect the bank's ability to honor its
credit commitment.

Yields on municipal obligations depend on a variety of
factors, including the general conditions of the money markets
and of the municipal bond and municipal note markets, the size of
a particular offering, the maturity of the obligation, and the
rating of the issue. Municipal obligations with longer maturities
tend to produce higher yields and generally are subject to
potentially greater price fluctuations than obligations with
shorter maturities.

Investment Limitations for the ARK Money Market Portfolios

1. Each ARK Money Market Portfolio may not, with respect
to 75% of its assets, invest more than 5% of the total market
value of its assets in the securities of any one issuer, other
than U.S. Government Securities.

2. Each ARK Money Market Portfolio may not purchase the
securities of one issuer (other than U.S. Government Securities)
if more than 25% of its total assets would be invested in the
same industry. Money Market Portfolio may, however, invest 25% or
more of its assets in obligations of domestic banks.

PERFORMANCE

The performance of each class of shares of each Portfolio
may be quoted in advertising in terms of yield, effective yield
or total return. In addition, the tax-equivalent yield may be
quoted for shares of Tax-Free Money Market Portfolio. All types
of performance are based on historical results and are not
intended to indicate future performance.

The yield of shares of the ARK Money Market Portfolios is
calculated by dividing the net investment income earned by the
shares over a 7-day period by the average number of shares
entitled to receive dividends and expressing the result as an
annualized percentage rate based on each share price at the end
of the 7-day periods. The effective yield is calculated
similarly, but assumes that the income earned from the investment
is reinvested. The effective yield will be slightly higher than
the yield because of the compounding effect of this assumed
reinvestment. Because yield accounting methods differ from the
methods used for other accounting purposes, the yields of shares
of the ARK Money Market Portfolios may not equal their respective
distribution rates, the income paid to your account or the income
reported in the financial statements of the Institutional II
Class of the relevant Portfolio.

A tax-equivalent yield shows the approximate taxable yield
that would have to be earned before taxes to equal a tax-free
yield. A tax-equivalent yield is calculated by dividing the
shares' tax-exempt yield by the result of one minus a stated
federal and/or state tax rate. If only a portion of a Portfolio's
income was tax-exempt, only that portion is adjusted in the
calculation.

Total returns are based on the overall dollar or percentage
change in value of a hypothetical investment in a class and
assumes that all distributions are reinvested. A cumulative total
return reflects a class' performance over a stated period of
time. An average annual total return reflects the hypothetical
annually compounded return that would have produced the same
cumulative total return if a class' performance had been constant
over the entire period. Because average annual total returns tend
to smooth out variations in a class' return, it should be
recognized that they are not the same as actual year-by-year
results. When a class of a Portfolio quotes an average annual
return covering a period of less than one year, the calculation
assumes that the performance will remain constant for the rest of
the year. Since this may or may not occur, average annual returns
should be viewed as hypothetical rather than actual performance
figures.

For additional performance information, please contact your
Investment Professional or the Distributor for a free Annual
Report, Semi-Annual Report and Statement of Additional
Information.

PORTFOLIO TRANSACTIONS AND VALUATION

Subject to the general supervision of the Board, First
Maryland is responsible for placing orders for securities
transactions for each Portfolio. Transactions for the ARK Money
Market Portfolios are expected to occur primarily with issuers,
underwriters or major dealers acting as principals. Such
transactions are normally effected on a net basis and do not
involve payment of brokerage commissions. The Portfolios have no
obligation to enter into securities transactions with any
particular dealer, issuer, underwriter or other entity. In
placing orders for the Portfolios, it is the policy of First
Maryland to obtain the most favorable execution. Where such
execution may be obtained from more than one broker or dealer,
securities transactions may be directed at higher commission
rates to those who provide research, statistical and other
information to First Maryland. If more than one Portfolio or
another account managed by First Maryland are purchasing or
selling the same security, such orders may be aggregated in the
interest of achieving the most favorable execution.

The Portfolios have authorized First Maryland to allocate
transactions to some broker-dealers who help distribute the
Portfolios' shares. First Maryland will make such allocations if
commissions are comparable to those charged by non-affiliated,
qualified broker-dealers for similar services.

Money market obligations are generally traded in the over-
the-counter market through dealers. A dealer is a securities firm
or bank which makes a market for such securities by offering to
buy at one price and sell at a slightly higher price. The
difference between the prices is known as a spread. The selection
of such dealers is generally made based upon the price, quality
of execution services and research provided. Money market
securities purchased and sold by each ARK Money Market Portfolio
will be traded on a net basis (i.e., without commission) through
dealers acting for their own account and not as agents or will
involve transactions directly with the issuer of the instrument.

Valuation. The NAV of the Shares of each Portfolio is
calculated by adding the Institutional II Class' pro rata share
of the value of all securities and other assets attributable to a
Portfolio, deducting the Institutional II Class' pro rata share
of Portfolio-level liabilities, deducting Institutional II Class-
specific liabilities, if applicable, and dividing the result by
the number of Shares outstanding. Assets in the ARK Money Market
Portfolios are valued based upon the amortized cost method. This
method involves valuing an instrument at its cost and thereafter
assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates
on the market value of the instrument. While this method provides
certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than
the price the Portfolio would receive if it sold the instrument.
Although each ARK Money Market Portfolio seeks to maintain an NAV
of $1.00 for the Shares, there can be no assurance that this NAV
will not vary.

Pricing of Shares. The Portfolios are open for business and
their NAVs are calculated each day the New York Stock Exchange
("NYSE") and the Federal Reserve Bank of New York are open
("Business Day"). An investor's purchase will be processed at the
NAV next calculated after the order is received and accepted by
the Transfer Agent. The NAVs of U.S. Treasury Money Market
Portfolio and Tax-Free Money Market Portfolio are determined at
12:00 noon Eastern Time ("12:00 noon") and the close of business
of the NYSE, normally 4:00 p.m. The NAVs of U.S. Government Money
Market Portfolio and Money Market Portfolio are determined at
1:30 p.m. Eastern Time ("1:30 p.m.") and the close of business of
the NYSE, normally 4:00 p.m. Shares purchased at 12:00 noon and
1:30 p.m. begin to earn dividends that Business Day. Shares
purchased at 4:00 p.m. are eligible to earn dividends on the
following Business Day.

PURCHASES, EXCHANGES AND REDEMPTIONS

Opening an Account. Shares are sold without a sales charge
and are currently available only to clients of First Maryland or
its affiliated banks (including Allied Irish Banks, p.l.c. and
its affiliates) who direct their own investments and have
established trust relationships with First Maryland or its
affiliated banks or correspondent banks of First Maryland or
their affiliated banks ("qualified accounts"). An initial
investment in the Shares must be preceded or accompanied by the
establishment of a qualified account. This may require that
certain documents and applications be signed before an investment
can be made. Agreements for opening qualified accounts are
available upon request from First Maryland at (800) 624-4116
outside Maryland and (800) 638-7751 inside Maryland.

The minimum initial investment to establish a new account is
$500. After meeting this minimum initial investment requirement,
there is no minimum-required account balance. Subsequent
investments may be made in any amount.

Purchasing Shares

Payments for Shares of each ARK Money Market Portfolio must
be made in federal funds or other funds immediately available to
each Portfolio. An order for the purchase of Shares paid for in
such available funds will become effective on the day of receipt
of the order by the transfer agent and are entitled to that day's
dividend if received prior to 12:00 noon for U.S. Treasury Money
Market Portfolio and Tax-Free Money Market Portfolio, or 1:30
p.m. for Money Market Portfolio and U.S. Government Money Market
Portfolio. If a purchase order, together with such available
funds, is received after 12:00 noon for U.S. Treasury Money
Market Portfolio and Tax-Free Money Market Portfolio, or 1:30
p.m. for Money Market Portfolio and U.S. Government Money Market
Portfolio, but before 4:00 p.m., such purchases will receive the
NAV determined at 4:00 p.m. and will begin earning dividends the
following Business Day. If an order or payment is received after
4:00 p.m., an investor will receive the next determined NAV the
following Business Day. Each Portfolio reserves the right to
reject any purchase order. Each ARK Money Market Portfolio
declares dividends daily and pays them monthly.

Other Information

Distribution Options

The following distribution options are available to
shareholders:

B. The Income-Earned Option reinvests your capital gain
distributions and pays income dividends in cash.

C. The Cash Option pays you income dividends and capital
gain distributions in cash. Distribution checks will be mailed no
later than seven days after the last day of the month.

Exchanging Shares

An exchange is a convenient way to buy and sell Shares of
another Portfolio registered in your state. Institutional II
Class Shares may be exchanged for Shares of another Portfolio.
The redemption will be made at the next determined NAV of the
Shares to be redeemed after the exchange request is received by
the transfer agent.

Each exchange between Portfolios actually represents the
sale of Shares of one Portfolio and the purchase of Shares in
another, which may produce a gain or loss for tax purposes. In
order to protect each Portfolio's performance and its
shareholders, First Maryland discourages frequent exchange
activity in response to short-term market fluctuations. Each
Portfolio reserves the right to modify or withdraw the exchange
privilege or to suspend the offering of Shares without notice to
shareholders if, in First Maryland's judgment, a Portfolio would
be unable to invest effectively in accordance with its investment
objective and policies, or would otherwise potentially be
adversely affected. Each Portfolio also reserves the right to
reject any specific purchase order, including purchases by
exchange. An exchange between the Institutional II Class and
another class of any Portfolio generally is not permitted.

Redeeming Shares

Shareholders may redeem all or a portion of their Shares by
mail, telephone or telecommunication privilege. A shareholder may
redeem Shares on each Business Day. Shares will be redeemed at
the NAV next determined after the transfer agent has received and
accepted a redemption request. Shares of each ARK Money Market
Portfolio redeemed at 12:00 noon for U.S. Treasury Money Market
Portfolio or Tax-Free Money Market Portfolio, or 1:30 p.m. for
U.S. Government Money Market Portfolio or Money Market Portfolio,
do not earn the dividend declared on the day of the redemption.
Shares redeemed at 4:00 p.m. continue to earn dividends on the
date of redemption. Shareholders may initiate redemptions:

By Mail. To redeem by mail send a written request to The
First National Bank of Maryland, Trust Division [Banc #101-621],
P.O. Box 1596, Baltimore, Maryland 21203.

By Telephone. To redeem by telephone or telecommunication,
call First Maryland toll free at (800) 624-4116 outside Maryland
and (800) 638-7751 inside Maryland.

Although at present First Maryland pays the wire costs
involved, the Fund reserves the right at any time to require the
investor to pay such costs.

If making immediate payment could adversely affect a
Portfolio, a Portfolio may take up to seven (7) days after
redemption to pay the proceeds. When the NYSE is closed (or when
trading is restricted) for any reason other than its customary
weekend or holiday closings, or under any emergency circumstances
as determined by the SEC to merit such action, a Portfolio may
suspend redemption or payment dates. When the NYSE or the Federal
Reserve Bank of New York closes early, the Portfolios reserve the
right to advance the time on any such day by which purchase and
redemption orders must be received. To the extent portfolio
securities are traded in other markets on days which are not
Business Days of the Fund, the NAV of the Shares of a Portfolio
may be affected at a time when investors do not have access to
such Portfolio to purchase or redeem Shares.

MANAGEMENT OF THE FUND

Investment Advisor

First Maryland, 25 South Charles Street, Baltimore, MD
21203, provides investment advisory services to each Portfolio,
subject to the general supervision of the Board. Pursuant to an
Investment Advisory Contract ("Advisory Agreement") dated April
12, 1993, First Maryland is entitled to receive for its advisory
services payment at an annual rate of .25% of each Money Market
Portfolio's average daily net assets. First Maryland, in its sole
discretion, may waive all or any portion of its advisory fee for
any Portfolio. Any such voluntary waiver, will increase such
Portfolio's yield for the period during which the waiver is in
effect.

First Maryland, established in 1806, had total assets of
approximately $10 billion as of September 30, 1995 and is a
wholly-owned subsidiary of First Maryland Bancorp, which is a
subsidiary of Allied Irish Banks, p.l.c. First Maryland Bancorp
was organized in 1974 as a bank holding company registered under
the Federal Bank Holding Company Act of 1956 and files annual and
periodic reports with the SEC under the Securities Exchange Act
of 1934. See "Banking Law Matters." First Maryland has
experience as an investment advisor to individual, corporate, and
institutional advisory clients, pension plans and collective
investment funds, with approximately $32.7 million in assets
under administration, $5.3 million of which were assets under
investment management as of September 30, 1995. First Maryland
has managed mutual funds since June 1993.

Portfolio Management

Investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures
for personal investing and restricts certain transactions.

Transfer Agent

Administrator

SEI Financial Management Corporation (the "Administrator"),
680 East Swedesford Road, Wayne, Pennsylvania 19087, serves as
the Portfolios' administrator under the Administration Agreement
dated November 1, 1995 between the Administrator and the Fund.

The Administrator of the Fund assists in each Portfolio's
administration and operation, including providing facilities for
maintaining each Portfolio's organization, supervising relations
with the custodian, transfer and pricing agents, accountants,
underwriters, and other persons dealing with each Portfolio,
preparing all general shareholder communications and conducting
shareholder relations, maintaining (or providing for the
maintenance of) the Fund's records and the registration of each
Portfolio's shares under federal and state law, developing
management services for the Portfolios and furnishing reports,
evaluation and analyses on a variety of subjects to the Board.
The Administrator is entitled to receive an annual fee of .13% of
aggregate average daily net assets of the Fund, paid monthly, for
services performed under the Administration Agreement. The
Administrator has voluntarily agreed to waive a portion of its
administration fee on certain Portfolios of the Fund in order to
limit total operating expenses of such Portfolios. Any such
voluntary waiver, which can be discontinued at any time, will
increase such Portfolio's yield for the period during which the
waiver is in effect.

Distribution and Servicing of the Shares

SEI Financial Services Company, 680 East Swedesford Road,
Wayne, Pennsylvania 19087, acts as distributor (the
"Distributor") of the Shares pursuant to a Distribution Agreement
dated November 1, 1995 between the Distributor and the Fund. The
Distributor is the principal underwriter of the Fund. First
Maryland neither participates in nor is responsible for the
underwriting of the Shares.

The Board has adopted a Distribution Plan on behalf of the
Institutional II Class of each Portfolio pursuant to Rule 12b-1
under the 1940 Act ("Distribution Plan"). The Distribution Plan
provides for payment of a fee to the Distributor of up to .75% of
average daily net assets of the Institutional II Class of each
Portfolio. The Board has approved the distribution fee rate of
.10% of the average net assets of the Institutional II Class of
each of the ARK Money Market Funds. All or any portion of the 12b-
1 fee for any Portfolio may be waived at any time. Any such
voluntary waiver can be discontinued at any time.

The Distributor and/or Investment Professionals that receive
portions of the distribution fees from the Distributor pay for
the cost of printing (but not typesetting) and mailing to
prospective investors prospectuses and other materials relating
to the Institutional II Class, as well as for related direct
mail, advertising and promotional expenses.

The Distribution Plan does not obligate the Portfolios to
reimburse the Distributor for the actual expenses that it may
incur in fulfilling its obligations under the Distribution Plan
on behalf of the Institutional II Class. Thus, under the
Distribution Plan, even if the Distributor's actual expenses
exceed the fee payable to the Distributor thereunder at any given
time, the Portfolios will not be obligated to pay more than that
fee. If the Distributor's expenses are less than the
distribution fee it receives, it will retain the full amount of
the fee.

Custodian

The First National Bank of Maryland, 25 South Charles
Street, Baltimore, Maryland 21201 is custodian (the "Custodian")
for the securities and cash of the Fund. Under the Custody
Agreement between the Fund and the Custodian, the Custodian holds
the Fund's portfolio securities in safekeeping and keeps all
necessary records and documents relating to its duties. For the
services provided to the Fund pursuant to the Custody Agreement,
the Fund pays the Custodian a monthly fee at the annual rate of
.015% of the average daily net assets of the Fund. The Custodian
also charges the Fund transaction fees ranging from $5 to $75 per
transaction and receives reimbursement for out-of-pocket
expenses.

BANKING LAW MATTERS

Banking laws and regulations generally permit a bank or bank
affiliate to act as an investment adviser and to purchase shares
of an investment company as agent for and upon the order of a
customer. However, banking laws and regulations, including the
Glass-Steagall Act as currently interpreted by the Board of
Governors of the Federal Reserve System, prohibit a bank holding
company registered under the Federal Bank Holding Company Act of
1956 or any affiliate thereof from sponsoring, organizing,
controlling, or distributing the shares of a registered, open-end
investment company continuously engaged in the issuance of its
shares, and prohibit banks generally from issuing, underwriting,
selling or distributing securities. Upon advice of counsel, the
Board believes that First Maryland may perform the advisory
services described in this Prospectus for each Portfolio and its
shareholders without violating applicable federal banking laws or
regulations.

However, judicial or administrative decisions or
interpretations of, as well as changes in, either federal or
state statutes or regulations relating to the activities of banks
and their affiliates could prevent a bank or bank affiliate from
continuing to perform all or a part of the activities
contemplated by this Prospectus. If banks or bank affiliates were
prohibited from so acting, changes in the operation of the Fund
might occur. It is not anticipated, however, that any such change
would affect the Shares' NAVs or result in any financial loss to
any shareholder.

TAX MATTERS

Tax-Free Money Market Portfolio intends to pay substantially
all of its dividends as "exempt interest dividends." Investors in
this Portfolio should note, however, that taxpayers are required
to report the receipt of tax-exempt interest and "exempt interest
dividends" in their federal income tax returns and that in two
circumstances such amounts, while exempt from regular federal
income tax, are taxable to persons subject to alternative minimum
tax. Alternative minimum tax is currently imposed at a maximum
marginal rate of 28% in the case of non-corporate taxpayers and
at the rate of 20% in the case of corporate taxpayers. First, tax-
exempt interest and "exempt interest dividends" derived from
certain private activity bonds issued after August 7, 1986, will
generally constitute an item of tax preference for corporate and
non-corporate taxpayers in determining alternative minimum tax
liability. Tax-Free Money Market Portfolio intends to avoid
investing its assets in such private activity bonds but may do so
if required by market conditions. Second, tax-exempt interest and
"exempt interest dividends" derived from all municipal securities
must be taken into account by corporate taxpayers in determining
their adjusted current earnings adjustments for alternative
minimum tax purposes. Realized market discount on tax-exempt
obligations purchased after April 30, 1993 is treated as ordinary
income and not as capital gain. Shareholders who are recipients
of Social Security Act or Railroad Retirement Act benefits should
further note that tax-exempt interest and "exempt interest
dividends" will be taken into account in determining the
taxability of their benefit payments.

Tax-Free Money Market Portfolio will determine annually the
percentage of its net investment income that is fully tax-exempt,
the percentage which constitutes an item of tax preference for
alternative minimum tax purposes and percentage that is fully
taxable, and will apply such percentages uniformly to all
distributions declared from net investment income during that
year. These percentages may differ significantly from the actual
percentages for any particular day.

To the extent that Tax-Free Money Market Portfolio income
dividends and capital gain distributions are derived from
Maryland state tax-free investments, they will be free from
Maryland state and county taxes (including city of Baltimore
local taxes).

Shareholders who are nonresident alien individuals, foreign
trusts or estates, foreign corporations or foreign partnerships
may be subject to different U.S. federal income tax treatment.

An investment in any one Portfolio is not intended to
constitute a balanced investment program. Shares of Tax-Free
Money Market Portfolio would not be suitable for tax-exempt
institutions, and may not be suitable for retirement plans
qualified under Section 401 of the Internal Revenue Code, H.R. 10
plans and individual retirement accounts because such plans and
accounts are generally tax-exempt. Therefore, such plans and
accounts would not gain any additional benefit from the Portfolio
dividends' tax-exempt status and, moreover, such dividends would
be taxable when distributed to the beneficiary.

Future legislative or administrative changes or court
decisions may materially affect the tax consequences of investing
in one or more Portfolios of the Fund. From time to time,
proposals have been introduced before Congress that would have
the effect of reducing or eliminating the federal tax exemption
on municipal obligations. If such a proposal were enacted, the
ability of Tax-Free Money Market Portfolio to pay exempt-interest
dividends might be adversely affected. Shareholders are also
urged to consult their tax advisers concerning the application of
state and local income taxes to investments in the Fund, which
may differ from the federal income tax consequences described
above.

GENERAL INFORMATION

ARK Funds is an open-end diversified management investment
company organized as a Massachusetts business trust pursuant to a
Declaration of Trust dated October 22, 1992 and amended and
restated on March 19, 1993. The Board supervises Fund activities
and reviews contractual arrangements with companies that provide
the Portfolios with services. The Fund may issue an unlimited
number of shares of each of its Portfolios. The shares of a
Portfolio have equal voting, liquidation and other rights. When
issued and paid for, Shares will be fully paid and non-assessable
by the Fund and will have no preference, conversion, exchange or
preemptive rights. The Board may authorize the Fund to offer
other portfolios which may differ in the types of securities in
which their assets may be invested.

The Fund offers three classes of shares of each ARK Money
Market Portfolio; two classes of shares of Short-Term Treasury
Portfolio, Income Portfolio, Growth and Income Portfolio, Blue
Chip Equity Portfolio, Capital Growth Portfolio, Special Equity
Portfolio and Maryland Tax-Free Portfolio; and one class of
shares of International Equity Portfolio. The classes of shares
of a Portfolio have a common investment objective and investment
limitations and policies. The classes of shares of a Portfolio
have different sales charges and other expenses that may affect
performance. The Institutional Class of Short-Term Treasury
Portfolio and Blue Chip Equity Portfolio are expected to
commence operations on or about the date of this Prospectus. The
Institutional Class of the Maryland Tax-Free Portfolio have not
yet commenced operations. The Retail Class of the U.S. Government
Money Market Portfolio, Short-Term Treasury Portfolio, Blue Chip Equity
Portfolio, Special Equity Portfolio and Maryland Tax-Free Portfolio
have not yet commenced operations. You may obtain more information
on the classes of shares not offered through this Prospectus
by calling 1-800-624-4116 or from your Investment Professional.

APPENDIX

Each Portfolio, except U.S. Treasury Money Market Portfolio
and U.S. Government Money Market Portfolio, may purchase asset-
backed securities which consist of undivided fractional interests
in pools of consumer loans (unrelated to mortgage loans) held in
a trust. Payments of principal and interest are passed through
to certificate holders and are typically supported by some form
of credit enhancement, such as a letter of credit, surety bond,
limited guaranty, or senior subordination. The degree of credit
enhancement varies, but generally amounts to only a fraction of
the asset-backed security's par value until exhausted. If the
credit enhancement is exhausted, certificate holders may
experience losses or delays in payment if the required payments
of principal and interest are not made to the trust with respect
to the underlying loans. The value of these securities also may
change because of changes in the market's perception of the
creditworthiness of the servicing agent for the loan pool, the
originator of the loans, or the financial institution providing
the credit enhancement. Asset-backed securities are ultimately
dependent upon payment of consumer loans by individuals, and the
certificate holder generally has no recourse to the entity that
originated the loans. The underlying loans are subject to
prepayments which shorten the securities' weighted average life
and may lower their return. (As prepayments flow through at par,
total returns would be affected by the prepayments: if a security
were trading at a premium, its total return would be lowered by
prepayments, and if a security were trading at a discount, its
total return would be increased by prepayments.)

Each Portfolio, except U.S. Treasury Money Market Portfolio
and U.S. Government Money Market Portfolio, may purchase bank
obligations. These include: bankers' acceptances which are
negotiable obligations of a bank to pay a draft which has been
drawn on it by a customer; certificates of deposit which are
negotiable certificates representing a commercial bank's
obligation to repay funds deposited with it, earning specified
rates of interest over given periods or issued at a discount; and
time deposits which are non-negotiable deposits in a banking
institution earning a specified interest rate over a given period
of time.

Each Portfolio, except U.S. Treasury Money Market Portfolio
and U.S. Government Money Market Portfolio, may purchase
commercial paper. Commercial paper is an obligation issued by a
bank, broker-dealer, corporation and other entities for purposes
such as financing its current operations.

Each Portfolio, except U.S. Treasury Money Market Portfolio
and U.S. Government Money Market Portfolio, may invest in
Eurodollars, Yankee dollars and foreign bank obligations which
involve risks that are different from investments in securities
of U.S. banks. These risks may include future unfavorable
political and economic developments, withholding taxes, seizures
of foreign deposits, currency controls, interest limitations, or
other governmental restrictions that might affect payment of
principal or interest. Additionally, there may be less public
information available about foreign banks and their branches and
agencies. Foreign branches of domestic banks are not regulated by
U.S. banking authorities and generally are not subject to
accounting, auditing, and financial reporting standards
comparable to those applicable to U.S. banks. For this purpose,
domestic banks include foreign branches of domestic banks for
which the domestic parent is unconditionally liable in the event
the foreign branch failed to pay on its instruments for any
reason.

Each Portfolio, except U.S Treasury Money Market Portfolio
and U.S. Government Money Market Portfolio, may invest in U.S.
dollar-denominated securities of foreign issuers.

Under currently applicable regulations, each ARK Money
Market Portfolio, except U.S. Treasury Money Market Portfolio,
may invest up to 10% of its net assets in illiquid securities.
Illiquid securities are securities that cannot be disposed of in
the usual course of business within seven days without taking a
reduced price. Generally, securities subject to restriction on
resale, variable rate demand notes, repurchase agreements with
more than seven days to maturity, and time deposits are
considered to be illiquid unless First Maryland determines, in
accordance with guidelines established by the Board, that certain
such securities are readily marketable. The absence of a trading
market can make it difficult to ascertain a market value for
illiquid securities, and it may be difficult or impossible for a
Portfolio to sell them promptly at an acceptable price. In
addition, unless securities are registered for sale, securities
can only be sold in privately negotiated transactions or pursuant
to an exemption from registration.

Each Portfolio, except U.S. Treasury Money Market Portfolio
and U.S. Government Money Market Portfolio, may purchase
municipal obligations which are issued to raise money for a
variety of public or private purposes, including general
financing for state and local governments, or financing for
specific projects or public facilities. They may be issued in
anticipation of future revenues, and may be backed by the full
taxing power of a municipality, the revenues from a specific
project, or the credit of a private organization. The value of
some or all municipal securities may be affected by uncertainties
in the municipal market related to legislation or litigation
involving the taxation of municipal securities or the rights on
municipal securities holders. A fund may own a municipal security
directly or through a participation interest.

Each Portfolio, except U.S. Treasury Money Market Portfolio
and Tax-Free Money Market Portfolio, may enter into repurchase
agreements and securities loans. In a repurchase agreement, the
Portfolio buys a security at one price and simultaneously commits
to resell that security back at a higher price. The Portfolios
may also make securities loans to broker-dealers and
institutional investors. In the event of bankruptcy of the other
party to either a repurchase agreement or a securities loan, a
Portfolio could experience delays in recovering its cash or the
securities it lent. To the extent, in the meantime, the value of
the securities purchased had decreased, or the value of the
securities lent had increased, the Portfolio could experience a
loss. In all cases, First Maryland must find the creditworthiness
of the other party to the transaction satisfactory.

Borrowing Money and Reverse Repurchase Agreements. Each
Portfolio may borrow money by engaging in reverse repurchase
agreements. In a reverse repurchase agreement a Portfolio sells a
portfolio instrument to another party, such as a bank, in return
for cash and agrees to repurchase the instrument at a particular
price and time. While a reverse repurchase agreement is
outstanding, a Portfolio will maintain appropriate liquid assets
in a segregated custodial account to cover its obligation under
the agreement. A Portfolio will enter into reverse repurchase
agreements only with parties whose creditworthiness is deemed
satisfactory by First Maryland.

Each Portfolio, except U.S. Treasury Money Market Portfolio,
may purchase U.S. Government Securities which are securities
issued or guaranteed by the U.S. government or its agencies or
instrumentalities. They may be backed by the full faith and
credit of the U.S government as a whole or only by the issuing
agency. For example, securities issued by the Federal Home Loan
Banks and the Federal Home Loan Mortgage Corporation are
supported only by the credit of the issuing agency, and not by
the U.S. government. Securities issued by the Federal Farm Credit
System, the Federal Land Banks and the Federal National Mortgage
Association are supported by the agency's right to borrow money
from the U.S. Treasury under certain circumstances. U.S. Treasury
securities and some agency securities, such as those issued by
the Federal Housing Administration and the Government National
Mortgage Association, are backed by the full faith and credit of
the U.S. government and are the highest quality government
securities.

Each Portfolio, except U.S. Treasury Money Market Portfolio,
may purchase variable or floating rate instruments. Variable or
floating rate instruments (including notes purchased directly
from issuers) bear variable or floating interest rates and may
carry rights that permit holders to demand full payment from
issuers or certain financial intermediaries. Floating rate
securities have interest rates that change whenever there is a
change in a designated base rate, while variable rate instruments
provide for a specified periodic adjustment in the interest rate.
These formulas are designed to result in a market value for the
instrument that approximates its par value. Many variable and
floating rate instruments also carry demand features that permit
a Portfolio to sell them at par value plus accrued interest on
short notice.

Each Portfolio may purchase zero coupon debt securities
which do not make regular interest payments. Instead, they are
sold at a deep discount from their face value. In calculating its
daily dividend, each Portfolio takes into account as income a
portion of the difference between these securities' purchase
prices and their face values. Because they do not pay current
income, the prices of zero coupon debt securities can be volatile
when interest rates change.

Additional Investments for Tax-Free Money Market Portfolio

Municipal Lease Obligations are issued by a state or local
government or authority to acquire land and a wide variety of
equipment and facilities. These obligations typically are not
fully backed by the municipality's credit, and their interest may
become taxable if the interest is assigned. If funds are not
appropriated for the following year's lease payments, the lease
may terminate, with the possibility of default on the lease
obligation and significant loss to the Portfolio. Certificates of
participation in municipal lease obligations or installment sales
contracts entitle the holder to a proportionate interest in the
lease-purchase payments made. The Portfolio will only purchase
rated municipal lease obligations.

Refunding Contracts. The Portfolio may purchase securities
on a when-issued basis in connection with the refinancing of an
issuer's outstanding indebtedness. Refunding contracts require
the issuer to sell and the Portfolio to buy refunded municipal
obligations at a stated price and yield on a settlement date that
may be several months or several years in the future. Although
the Portfolio may sell its rights under a refunding contract,
these contracts are relatively new and the secondary market for
them may be less liquid than the secondary market for other types
of municipal securities.

Resource Recovery Bonds are a type of revenue bond issued to
build facilities such as solid waste incinerators or waste-to-
energy plants. Typically, a private corporation will be involved,
at least during the construction phase, and the revenue stream
will be secured by fees or rents paid by municipalities for use
of the facilities. The viability of a resource recovery project,
environmental protection regulations, and project operator tax
incentives may affect the value and credit quality of resource
recovery bonds.

ARK FUNDS: INSTITUTIONAL CLASS AND INSTITUTIONAL II CLASS

CROSS REFERENCE SHEET

Form N-1A Item Number
Part B Statement of Additional Information

10,11................... Cover Page
12 ..................... Description of the Fund
13 a,b,c................ Investment Policies and Limitations
d.................... *
14 a,b.................. Trustees and Officers
c.................... *
15 a,b,c................. *
16 a(i,ii).............. The Advisors
a(iii),b,c,d......... Portfolio Transactions
e.................... *
f.................... Administrator and Distributor
g.................... *
h.................... Description of the Fund
i.................... Administrator and Distributor
17 a.................... Portfolio Transactions
b.................... *
c.................... Portfolio Transactions
d,e.................. *
18 a.................... Description of the Fund
b.................... *
19 a.................... Additional Purchase and Redemption Information
b.................... Valuation of Portfolio Securities
20 ..................... Taxes
21 a(i),(ii)............ Administrator and Distributor
a(iii),b,c........... *
22 .................... Performance
23 ..................... Financial statements for the fiscal year
ended April 30, 1995, for each Portfolio (with
the exception of Special Equity Portfolio and
Maryland Tax-Free Portfolio) were filed pursuant
to Rule 30b2-1. Financial statements for the
period ended October 31, 1995 will be filed by
subsequent amendment.

* Not Applicable

ARK FUNDS: INSTITUTIONAL CLASS and INSTITUTIONAL II CLASS
STATEMENT OF ADDITIONAL INFORMATION
________________, 1996

This Statement of Additional Information is not a prospectus
but should be read in conjunction with the current
Prospectus (dated _____________, 1996) for the Retail Class
of the ARK Funds (the "Fund"). Each money market Portfolio
of the Fund (ARK Money Market Portfolios) offers three
classes of shares: Institutional Class, Institutional II
Class and Retail Class. Short-Term Treasury Portfolio,
Income Portfolio, Growth and Income Portfolio, Blue Chip
Equity Portfolio, Capital Growth Portfolio, Special Equity
Portfolio and Maryland Tax Free Portfolio each offers two
classes of shares: Institutional Class and Retail Class.
Finally, International Equity Portfolio offers Institutional
Class shares, only (hereinafter, all ARK Funds Portfolios,
except the ARK Money Market Portfolios, are sometimes
called, collectively, ARK Non-Money Market Portfolios).
Please retain this document for future reference. The
Fund's financial statements and financial highlights,
included in the Annual Report for the fiscal period ended
April 30, 1995, and the Semi-Annual Report for the six month
period ended October 31, 1995, are incorporated herein by
reference. To obtain additional copies of the Institutional
Class Prospectus or Institutional II Class Prospectus, the
Annual Report dated April 30, 1995, the Semi-Annual Report
dated October 31, 1995, and this Statement of Additional
Information or the Retail Class Prospectus or Retail Class
Statement of Additional Information, please call 1-800-624-
4116.

TABLE OF CONTENTS PAGE

Investment Policies and Limitations
Investment Practices
Special Considerations for International Equity Portfolio
Special Considerations for Maryland Tax-Free Portfolio
Portfolio Transactions
Valuation of Portfolio Securities
Portfolio Performance
Additional Purchase and Redemption Information
Taxes
Trustees and Officers
The Advisors
Administrator and Distributor
Transfer Agent
Description of the Fund
Auditor
Financial Statements
Appendix

Advisors:
The First National Bank of Maryland (First Maryland)
AIB Investment Managers Limited (AIB I.M.)

Custodian:
The First National Bank of Maryland (the "Custodian")

Transfer Agent:
SEI Financial Management Corporation (the "Transfer Agent")

Administrator:
SEI Financial Management Corporation (the "Administrator")

Distributor:
SEI Financial Services Company (the "Distributor")

INVESTMENT POLICIES AND LIMITATIONS

The following policies and limitations supplement those
set forth in the Institutional Class Prospectus and the
Institutional II Class Prospectus. Unless otherwise
expressly noted, whenever an investment policy or limitation
states a maximum percentage of a Portfolio's assets that may
be invested in any security or other asset, or sets forth a
policy regarding quality standards, such percentage or
standard will be determined immediately after and as a
result of the Portfolio's acquisition of such security or
other asset. Accordingly, any subsequent change in values,
net assets, or other circumstances will not be considered
when determining whether the investment complies with the
Portfolio's investment policies and limitations.

Unless otherwise expressly noted, a Portfolio's policies
and limitations are non-fundamental. Fundamental investment
policies and limitations cannot be changed without approval
by a "majority of the outstanding voting securities" (as
defined in the Investment Company Act of 1940 (the 1940
Act)) of a Portfolio. The Portfolios' investment
limitations are as follows.

U.S. TREASURY MONEY MARKET PORTFOLIO

The Portfolio, as a matter of fundamental policy, may not:

(1) with respect to 75% of the Portfolio's total assets,
purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its
agencies or instrumentalities) if, as a result, (a) more
than 5% of the Portfolio's total assets would be invested in
the securities of that issuer, or (b) the Portfolio would
hold more than 10% of the outstanding voting securities of
that issuer;

(2) issue senior securities, except as permitted under the
Investment Company Act of 1940;

(3) borrow money, except that the Portfolio may (i) borrow
money from a bank for temporary or emergency purposes (not
for leveraging or investment) and (ii) engage in reverse
repurchase agreements for any purpose; provided that (i) and
(ii) in combination do not exceed 33 1/3% of the value of
the Portfolio's total assets (including the amount borrowed)
less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three
business days to the extent necessary to comply with the 33
1/3% limitation;

(4) underwrite securities issued by others, except to the
extent that the Portfolio may be considered an underwriter
within the meaning of the Securities Act of 1933 in the
disposition of portfolio securities;

(5) purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. government or
any of its agencies or instrumentalities) if, as a result,
more than 25% of the Portfolio's total assets would be
invested in the securities of companies whose principal
business activities are in the same industry;

(6) purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments (but this
shall not prevent the Portfolio from investing in securities
or other instruments backed by real estate or securities of
companies engaged in the real estate business);

(7) purchase or sell commodities unless acquired as a result
of ownership of securities or other instruments; or

(8) lend any security or make any other loan if, as a
result, more than 33 1/3% of its total assets would be lent
to other parties, but this limitation does not apply to
purchases of debt securities or to repurchase agreements.

The following investment limitations are not fundamental and
may be changed without shareholder approval.

(i) The Portfolio does not currently intend to sell
securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities
sold short.

(ii) The Portfolio will not purchase any security while
borrowings (including reverse repurchase agreements)
representing more than 5% of its total assets are
outstanding.

(iii) The Portfolio does not currently intend to purchase
securities on margin, except that the Portfolio may obtain
such short-term credits as are necessary for the clearance
of transactions.

(iv) The Portfolio does not currently intend to engage in
repurchase agreements or make loans, but this limitation
does not apply to purchases of debt securities.

(v) The Portfolio does not currently intend to purchase
securities of other investment companies, except to the
extent permitted by the Investment Company Act of 1940.

U.S. GOVERNMENT MONEY MARKET PORTFOLIO

The Portfolio, as a matter of fundamental policy, may not:

(2) issue senior securities, except as permitted under the
Investment Company Act of 1940;

(7) purchase or sell commodities unless acquired as a result
of ownership of securities or other instruments; or

The following investment limitations are not fundamental and
may be changed without shareholder approval.

(i) The Portfolio does not currently intend to purchase a
security (other than a security issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities)
if, as a result, more than 5% of its total assets would be
invested in the securities of a single issuer; provided that
the Portfolio may invest up to 25% of its total assets in
the first tier securities of a single issuer for up to three
business days.

(ii) The Portfolio does not currently intend to sell
securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities
sold short.

(iii) The Portfolio will not purchase any security while
borrowings (including reverse repurchase agreements)
representing more than 5% of its total assets are
outstanding.

(iv) The Portfolio does not currently intend to purchase
securities on margin, except that the Portfolio may obtain
such short-term credits as are necessary for the clearance
of transactions.

(v) The Portfolio does not currently intend to lend assets
other than securities to other parties. (This limitation
does not apply to purchases of debt securities or to
repurchase agreements.)

(vi) The Portfolio does not currently intend to purchase
securities of other investment companies, except to the
extent permitted by the Investment Company Act of 1940.

MONEY MARKET PORTFOLIO

The Portfolio, as a matter of fundamental policy, may not:

(2) issue senior securities, except as permitted under the
Investment Company Act of 1940;

(7) purchase or sell commodities unless acquired as a result
of ownership of securities or other instruments; or

The following investment limitations are not fundamental and
may be changed without shareholder approval.

(ii) The Portfolio does not currently intend to sell
securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities
sold short.

(iii) The Portfolio does not currently intend to purchase
securities on margin, except that the Portfolio may obtain
such short-term credits as are necessary for the clearance
of transactions

(iv) The Portfolio will not purchase any security while
borrowings (including reverse repurchase agreements)
representing more than 5% of its total assets are
outstanding.

(v) The Portfolio does not currently intend to lend assets
other than securities to other parties. (This limitation
does not apply to purchases of debt securities or to
repurchase agreements.)

(vi) The Portfolio does not currently intend to purchase
securities of other investment companies, except to the
extent permitted by the Investment Company Act of 1940.

TAX-FREE MONEY MARKET PORTFOLIO

The Portfolio, as a matter of fundamental policy, may not:

(2) issue senior securities, except as permitted under the
Investment Company Act of 1940;

(5) purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. government or
any of its agencies or instrumentalities, or tax-exempt
obligations issued or guaranteed by a U.S. territory or
possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more
than 25% of the Portfolio's total assets would be invested
in securities of companies whose principal business
activities are in the same industry;

(7) purchase or sell commodities unless acquired as a result
of ownership of securities or other instruments; or

The following investment limitations are not fundamental and
may be changed without shareholder approval.

(i) The Portfolio does not currently intend to sell
securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities
sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling
securities short.

(ii) The Portfolio does not currently intend to purchase
securities on margin, except that the Portfolio may obtain
such short-term credits as are necessary for the clearance
of transactions.

(iii) The Portfolio will not purchase any security while
borrowings (including reverse repurchase agreements)
representing more than 5% of its total assets are
outstanding

(iv) The Portfolio does not currently intend to engage in
repurchase agreements or make loans, but this limitation
does not apply to purchases of debt securities.

(v) The Portfolio does not currently intend to purchase
securities of other investment companies, except to the
extent permitted by the Investment Company Act of 1940.

SHORT-TERM TREASURY PORTFOLIO

The Portfolio, as a matter of fundamental policy, may not:

(2) issue senior securities, except as permitted under the
Investment Company Act of 1940;

(7) purchase or sell commodities unless acquired as a result
of ownership of securities or other instruments (but this
shall not prevent the Portfolio from purchasing or selling
futures contracts or options on such contracts for the
purpose of managing its exposure to changing interest rates,
security prices, and currency exchange rates); or

The following investment limitations are not fundamental and
may be changed without shareholder approval.

(ii) The Portfolio does not currently intend to purchase
securities on margin, except that the Portfolio may obtain
such short-term credits as are necessary for the clearance
of transactions, and provided that margin payments in
connection with futures contracts and options shall not
constitute purchasing securities on margin.

(iii) The Portfolio will not purchase any security while
borrowings (including reverse repurchase agreements)
representing more than 5% of its total assets are
outstanding.

(iv) The Portfolio does not currently intend to lend assets
other than securities to other parties. (This limitation
does not apply to purchases of debt securities or to
repurchase agreements.)

(v) The Portfolio does not currently intend to purchase
securities of other investment companies.

INCOME PORTFOLIO

The Portfolio, as a matter of fundamental policy, may not:

(2) issue senior securities, except as permitted under the
Investment Company Act of 1940;

The following investment limitations are not fundamental and
may be changed without shareholder approval.

(iii) The Portfolio will not purchase any security while
borrowings (including reverse repurchase agreements)
representing more than 5% of its total assets are
outstanding.

(iv) The Portfolio does not currently intend to lend assets
other than securities to other parties, except by acquiring
loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any
associated unfunded commitments of the sellers. (This
limitation does not apply to purchases of debt securities or
to repurchase agreements.)

(v) The Portfolio does not currently intend to purchase
securities of other investment companies, except to the
extent permitted by the Investment Company Act of 1940.

GROWTH AND INCOME PORTFOLIO

The Portfolio, as a matter of fundamental policy, may not:

(2) issue senior securities, except as permitted under the
Investment Company Act of 1940;

The following investment limitations are not fundamental and
may be changed without shareholder approval.

(iii) The Portfolio will not purchase any security while
borrowings (including reverse repurchase agreements)
representing more than 5% of its total assets are
outstanding.

(v) The Portfolio does not currently intend to purchase
securities of other investment companies, except to the
extent permitted by the Investment Company Act of 1940.

(vi) The Portfolio does not currently intend to invest in
securities of real estate investment trusts that are not
readily marketable, or to invest in securities of real
estate limited partnerships that are not listed on the New
York Stock Exchange or the American Stock Exchange or traded
on the NASDAQ National Market System.

(vii) The Portfolio does not currently intend to invest in
oil, gas or other mineral exploration or development
programs or leases.

(viii) The Portfolio does not currently intend to purchase
warrants, valued at the lower of cost or market, in excess
of 5% of the Portfolio's net assets. Included in that
amount, but not to exceed 2% of the Portfolio's net assets,
may be warrants that are not listed on the New York Stock
Exchange or the American Stock Exchange. Warrants acquired
by the Portfolio in units or attached to securities are not
subject to these restrictions.

(ix) The Portfolio does not currently intend to purchase the
securities of any issuer (other than securities issued or
guaranteed by domestic or foreign governments or political
subdivisions thereof) if, as a result, more than 5% of its
total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of
less than three years of continuous operation.

BLUE CHIP EQUITY PORTFOLIO

The Portfolio, as a matter of fundamental policy, may not:

(2) issue senior securities, except as permitted under the
Investment Company Act of 1940;

The following investment limitations are not fundamental and
may be changed without shareholder approval.

(iii) The Portfolio will not purchase any security while
borrowings (including reverse repurchase agreements)
representing more than 5% of its total assets are
outstanding.

(v) The Portfolio does not currently intend to purchase
securities of other investment companies, except to the
extent permitted by the Investment Company Act of 1940.

(vii) The Portfolio does not currently intend to invest in
oil, gas or other mineral exploration or development
programs or leases.

(ix) The Portfolio does not currently intend to purchase the
securities of any issuer (other than securities issued or
guaranteed by domestic or foreign governments or political
subdivisions thereof) if, as a result, more than 5% of its
total assets would be invested in the securities of business
enterprises, that, including predecessors, have a record of
less than three years of continuous operation.

CAPITAL GROWTH PORTFOLIO

The Portfolio, as a matter of fundamental policy, may not:

(2) issue senior securities, except as permitted under the
Investment Company Act of 1940;

The following investment limitations are not fundamental and
may be changed without shareholder approval.

(iii) The Portfolio will not purchase any security while
borrowings (including reverse repurchase agreements)
representing more than 5% of its total assets are
outstanding.

(v) The Portfolio does not currently intend to purchase
securities of other investment companies, except to the
extent permitted by the Investment Company Act of 1940.

(vii) The Portfolio does not currently intend to invest in
oil, gas or other mineral exploration or development
programs or leases.

(ix) The Portfolio does not currently intend to purchase the
securities of any issuer (other than securities issued or
guaranteed by domestic or foreign governments or political
subdivisions thereof) if, as a result, more than 5% of its
total assets would be invested in the securities of business
enterprises, that, including predecessors, have a record of
less than three years of continuous operation.

INTERNATIONAL EQUITY PORTFOLIO

The Portfolio, as a matter of fundamental policy, may not:

(2) issue senior securities, except as permitted under the
Investment Company Act of 1940;

(8) lend any security or make any other loan if, as a
result, more than 100% of its total assets would be lent to
other parties, but this limitation does not apply to
purchases of debt securities or to repurchase agreements.

The following investment limitations are not fundamental and
may be changed without shareholder approval.

(iii) The Portfolio will not purchase any security while
borrowings (including reverse repurchase agreements)
representing more than 5% of its total assets are
outstanding.

(iv) The Portfolio does not currently intend to lend any
security or make any other loan, but this limitation does
not apply to purchases of debt securities or to repurchase
agreements.

(v) The Portfolio does not currently intend to purchase any
security if, as a result, more than 15% of its net assets
would be invested in securities that are deemed to be
illiquid because they are subject to legal or contractual
restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at
approximately the prices at which they are valued.

(vi) The Portfolio does not currently intend to purchase
securities of other investment companies, except to the
extent permitted by the Investment Company Act of 1940.

(vii) The Portfolio does not currently intend to invest in
securities of real estate investment trusts that are not
readily marketable, or to invest in securities of real
estate limited partnerships that are not listed on the New
York Stock Exchange or the American Stock Exchange or traded
on the NASDAQ National Market System.

(viii) The Portfolio does not currently intend to invest in
oil, gas or other mineral exploration or development
programs or leases.

(ix) The Portfolio does not currently intend to purchase
warrants, valued at the lower of cost or market, in excess
of 10% of the Portfolio's net assets. Included in that
amount, but not to exceed 2% of the Portfolio's net assets,
are warrants whose underlying securities are not traded on
principal domestic or foreign exchanges. Warrants acquired
by the Portfolio in units or attached to securities are not
subject to these restrictions.

(x) The Portfolio does not currently intend to purchase the
securities of any issuer (other than securities issued or
guaranteed by domestic or foreign governments or political
subdivisions thereof) if, as a result, more than 5% of its
total assets would be invested in the securities of business
enterprises, that, including predecessors, have a record of
less than three years of continuous operation.

SPECIAL EQUITY PORTFOLIO

The Portfolio, as a matter of fundamental policy, may not:

(2) issue senior securities, except as permitted under the
Investment Company Act of 1940;

The following investment limitations are not fundamental and
may be changed without shareholder approval.

(i) The Portfolio does not currently intend to sell
securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities
sold short; and provided that transactions in futures
contracts and options are not deemed to constitute selling
securities short.

(iii) The Portfolio will not purchase any security while
borrowings (including reverse repurchase agreements)
representing more than 5% of its total assets are
outstanding.

(v) The Portfolio does not currently intend to invest in
securities of real estate investment trusts that are not
readily marketable, or to invest in securities of real
estate limited partnerships that are not listed on the New
York Stock Exchange or the American Stock Exchange or traded
on the NASDAQ National Market System.

(vi) The Portfolio does not currently intend to purchase
securities of other investment companies, except to the
extent permitted by the Investment Company Act of 1940.

(vii) The Portfolio does not currently intend to purchase
warrants, valued at the lower of cost or market, in excess
of 10% of the Portfolio's net assets. Included in that
amount, but not to exceed 2% of the Portfolio's net assets,
are warrants whose underlying securities are not traded on
principal domestic or foreign exchanges. Warrants acquired
by the Portfolio in units or attached to securities are not
subject to these restrictions.

(viii) The Portfolio does not currently intend to invest in
oil, gas or other mineral exploration or development
programs or leases.

(ix) The Portfolio does not currently intend to purchase the
securities of any issuer (other than securities issued or
guaranteed by domestic or foreign governments or political
subdivisions thereof) if, as a result, more than 5% of its
total assets would be invested in the securities of business
enterprises, that, including predecessors, have a record of
less than three years of continuous operation.

MARYLAND TAX-FREE PORTFOLIO

The Portfolio, as a matter of fundamental policy, may not:

(1) issue senior securities, except as permitted under the
Investment Company Act of 1940;

(2) borrow money, except that the Portfolio may (i) borrow
money from a bank for temporary or emergency purposes (not
for leveraging or investment) and (ii) engage in reverse
repurchase agreements for any purpose; provided that (i) and
(ii) in combination do not exceed 33 1/3% of the value of
the Portfolio's total assets (including the amount borrowed)
less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three
business days to the extent necessary to comply with the 33
1/3% limitation;

(3) underwrite securities issued by others, except to the
extent that the Portfolio may be considered an underwriter
within the meaning of the Securities Act of 1933 in the
disposition of restricted securities;

(4) purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. government or
any of its agencies or instrumentalities) if, as a result,
more than 25% of the Portfolio's total assets would be
invested in the securities of companies whose principal
business activities are in the same industry;

(5) purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments (but this
shall not prevent the Portfolio from investing in securities
or other instruments backed by real estate or securities of
companies engaged in the real estate business);

(6) purchase or sell commodities unless acquired as a result
of ownership of securities or other instruments (but this
shall not prevent the Portfolio from purchasing or selling
futures contracts or options on such contracts for the
purpose of managing its exposure to changing interest rates,
security prices, and currency exchange rates); or

(7) lend any security or make any other loan if, as a
result, more than 33 1/3% of its total assets would be lent
to other parties, but this limitation does not apply to
purchases of debt securities or to repurchase agreements.

The following investment limitations are not fundamental and
may be changed without shareholder approval.

(i) To meet federal tax requirements for qualification as a
"regulated investment company," the Portfolio limits its
investments so that at the close of each quarter of its
taxable year: (a) with regard to at least 50% of total
assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of
total assets are invested in the securities of a single
issuer. Limitations (a) and (b) do not apply to "Government
securities" as defined for federal tax purposes.

(ii) The Portfolio does not currently intend to sell
securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities
sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling
securities short.

(iii) The Portfolio does not currently intend to purchase
securities on margin, except that the Portfolio may obtain
such short-term credits as are necessary for the clearance
of transactions, and provided that margin payments in
connection with futures contracts and options shall not
constitute purchasing securities on margin.

(iv) The Portfolio will not purchase any security while
borrowings (including reverse repurchase agreements)
representing more than 5% of its total assets are
outstanding.

(v) The Portfolio does not currently intend to lend assets
other than securities to other parties. (This limitation
does not apply to purchases of debt securities or to
repurchase agreements.)

(vi) The Portfolio currently does not intend to invest more
than 25% of its total assets in industrial revenue bonds
issued by entities whose principal business activities are
in the same industry.

(vii) The Portfolio currently does not intend to purchase
securities of other investment companies, except to the
extent permitted by the Investment Company Act of 1940.

For purposes of limitations (4) and (i) of the Maryland Tax-
Free Portfolio, First Maryland identifies the issuer of a
security depending on its terms and conditions. In
identifying the issuer, First Maryland will consider the
entity or entities responsible for payment and repayment of
principal and the source of such payments; the way in which
assets and revenues of an issuing political subdivision are
separated from those of other political entities; and
whether a governmental body is guaranteeing the security.

Each Portfolio's investments must be consistent with its
investment objective and policies. Accordingly, not all of
the security types and investment techniques discussed below
are eligible investments for each of the Portfolios.

INVESTMENT PRACTICES

American Depository Receipts and European Depository
Receipts (ADRs and EDRs) are certificates evidencing
ownership of shares of a foreign-based issuer held in trust
by a bank or similar financial institution. Designed for
use in U.S. and European securities markets, respectively,
ADRs and EDRs are alternatives to the purchase of the
underlying securities in their national markets and
currencies.

Delayed Delivery Transactions. Each Portfolio may buy
securities on a delayed delivery or when-issued basis and
sell securities on a delayed delivery basis. These
transactions involve a commitment by a Portfolio to purchase
or sell specific securities at a predetermined price and/or
yield, with payment and delivery taking place after the
customary settlement period for that type of security (and
more than seven days in the future). Typically, no interest
accrues to the purchaser until the security is delivered. A
Portfolio may receive fees for entering into delayed
delivery transactions.

When purchasing securities on a delayed delivery or when-
issued basis, a Portfolio assumes the rights and risks of
ownership, including the risk of price and yield
fluctuations. Because a Portfolio is not required to pay
for securities until the delivery date, these risks are in
addition to the risks associated with the Portfolio's other
investments. If a Portfolio remains substantially fully
invested at a time when delayed delivery or when-issued
purchases are outstanding, such purchases may result in a
form of leverage. When delayed delivery or when-issued
purchases are outstanding, a Portfolio will set aside
appropriate liquid assets in a segregated custodial account
to cover its purchase obligations. When a Portfolio has
sold a security on a delayed delivery basis, the Portfolio
does not participate in further gains or losses with respect
to the security. If the other party to a delayed delivery
transaction fails to deliver or pay for the securities, a
Portfolio could miss a favorable price or yield opportunity,
or could suffer a loss.

A Portfolio may renegotiate delayed delivery or when-issued
transactions after they are entered into, and may sell
underlying securities before they are delivered, which may
result in capital gains or losses.

Federally Taxable Obligations. Tax-Free Money Market
Portfolio and Maryland Tax-Free Portfolio do not generally
intend to invest in securities whose interest is taxable;
however, from time to time the Portfolios may invest on a
temporary basis in fixed-income obligations whose interest
is subject to federal income tax. For example, the
Portfolios may invest in obligations whose interest is
taxable pending the investment or reinvestment in municipal
securities of proceeds from the sale of its shares or sales
of portfolio securities.

Should the Portfolios invest in taxable obligations, it
would purchase securities that, in First Maryland's
judgment, are of high quality. This would include
obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities, obligations of domestic
banks, and repurchase agreements. The Portfolios' standards
for high quality taxable obligations are essentially the
same as those described by Moody's in rating corporate
obligations within its two highest ratings of Prime-1 and
Prime-2, and those described by S&P in rating corporate
obligations within its two highest ratings of A-1 and A-2.
The Portfolios may also acquire unrated securities
determined by First Maryland to be comparable in quality to
rated securities in accordance with guidelines adopted by
the Fund's Board.

The Supreme Court of the United States has held that
Congress may subject the interest on municipal obligations
to federal income tax. Proposals to restrict or eliminate
the federal income tax exemption for interest on municipal
obligations are introduced before Congress from time to
time. Proposals may also be introduced before state
legislatures that would affect the state tax treatment of
the Portfolios' distributions. If such proposals were
enacted, the availability of municipal obligations and the
value of the Portfolios' holdings would be affected and the
Board would reevaluate the Portfolios' investment objectives
and policies.

Tax-Free Money Market Portfolio and Maryland Tax-Free
Portfolio anticipate being as fully invested in municipal
securities as is practicable; however, there may be
occasions when as a result of maturities of portfolio
securities, or sales of portfolio shares, or in order to
meet redemption requests, the Portfolios may hold cash that
is not earning income. In addition, there may be occasions
when, in order to raise cash to meet redemptions or to
preserve credit quality, the Portfolios may be required to
sell securities at a loss.

Foreign Currency Exchange Transactions. International
Equity Portfolio may conduct foreign currency exchange
transactions on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market, or by
entering into forward contracts to purchase or sell foreign
currencies at a future date and price (i.e., a forward
foreign currency contract or forward contract). The
Portfolio will convert currency on a spot basis from time to
time, and investors should be aware of the costs of currency
conversion. Although foreign exchange dealers do not charge
a fee for conversion, they do realize a profit based on the
difference between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to
sell a foreign currency to the Portfolio at one rate, while
offering a lesser rate of exchange should the Portfolio
desire to resell that currency to the dealer. Forward
contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial
banks) and their customers. The parties to a forward
contract may agree to offset or terminate the contract
before maturity, or may hold the contract to maturity and
complete the contemplated currency exchange.

International Equity Portfolio may use currency forward
contracts for any purpose consistent with its investment
objective. The following discussion summarizes some, but
not all, of the possible currency management strategies
involving forward contracts that could be used by the
Portfolio. The Portfolio may also use options and futures
contracts relating to foreign currencies for the same
purposes.

When International Equity Portfolio agrees to buy or sell a
security denominated in a foreign currency, it may desire to
"lock in" the U.S. dollar price of the security. By
entering into a forward contract for the purchase or sale,
for a fixed amount of U.S. dollars, of the amount of foreign
currency involved in the underlying security transaction,
the Portfolio will be able to protect itself against an
adverse change in foreign currency values between the date
the security is purchased or sold and the date on which
payment on the underlying security is made or received. The
Portfolio may also enter into forward contracts to purchase
or sell a foreign currency in anticipation of future
purchases or sales of securities denominated in foreign
currency, even if the specific investments have not yet been
selected by AIB I.M.

International Equity Portfolio may also use forward
contracts to hedge against a decline in the value of
existing investments denominated in foreign currency. For
example, if the Portfolio owned securities denominated in
French Francs, the Portfolio could enter into a forward
contract to sell Francs in return for U.S. dollars to hedge
against possible declines in the value of the French Franc.
Such a hedge (sometimes referred to as a "position hedge")
will tend to offset both positive and negative currency
fluctuations, but will not offset changes in security values
caused by other factors. The Portfolio could also hedge the
position by selling another currency expected to perform
similarly to the Franc, for example, by entering into a
forward contract to sell Deutsche Marks in exchange for U.S.
dollars. This type of strategy, sometimes known as a "proxy
hedge," may offer advantages in terms of cost, yield or
efficiency, but generally will not hedge currency exposure
as effectively as a simple hedge into U.S. dollars. Proxy
hedges may result in losses to the Portfolio if the currency
used to hedge does not perform similarly to the currency in
which the hedged securities are denominated.

International Equity Portfolio may enter into forward
contracts to shift its investment exposure from one currency
into another currency that is expected to perform better
relative to the U.S. dollar. For example, if the Portfolio
held investments denominated in Deutsche Marks, the
Portfolio could enter into forward contracts to sell
Deutsche Marks and purchase Swiss Francs. This type of
strategy, sometimes known as a "cross-hedge," will tend to
reduce or eliminate exposure to the currency that is sold,
and increase exposure to the currency that is purchased,
much as if the Portfolio had sold a security denominated in
one currency and purchased an equivalent security
denominated in another. Cross-hedges protect against losses
resulting from a decline in the hedged currency, but will
cause the Portfolio to assume the risk of fluctuations in
the value of the currency it purchases.

Under certain conditions, SEC guidelines require mutual
funds to set aside appropriate liquid assets in a segregated
custodial account to cover forward contracts. As required
by SEC guidelines, International Equity Portfolio will
segregate assets to cover forward contracts, if any, whose
purpose is essentially speculative. The Portfolio will not
segregate assets to cover forward contracts entered into for
hedging purposes, including settlement hedges, position
hedges, and proxy hedges.

Successful use of forward contracts will depend on AIB
I.M.'s skill in analyzing and predicting currency values.
Forward contracts may substantially change International
Equity Portfolio's investment exposure to changes in
currency exchange rates, and could result in losses to the
Portfolio if currencies do not perform as AIB I.M.
anticipates. For example, if a currency's value rose at a
time when AIB I.M. had hedged the Portfolio by selling that
currency in exchange for dollars, the Portfolio would be
unable to participate in the currency's appreciation. If
AIB I.M. hedges currency exposure through proxy hedges, the
Portfolio could realize currency losses from the hedge and
the security position at the same time if the two currencies
do not move in tandem. Similarly, if AIB I.M. increases
International Equity Portfolio's exposure to a foreign
currency, and that currency's value declines, the Portfolio
will realize a loss. There is no assurance that AIB I.M.'s
use of forward contracts will be advantageous to the
Portfolio or that they will hedge at an appropriate time.

Foreign Investments. Each Portfolio, except U.S. Treasury
Money Market Portfolio, U.S. Government Money Market
Portfolio, Short-Term Treasury Portfolio and Maryland Tax-
Free Portfolio, may invest in U.S. dollar-denominated
securities of foreign issuers. Income Portfolio, Growth and
Income Portfolio, Blue Chip Equity Portfolio, Capital Growth
Portfolio, International Equity Portfolio and Special Equity
Portfolio each may invest in foreign securities denominated
in foreign currencies. Foreign investments can involve
significant risks in addition to the risks inherent in U.S.
investments. The value of securities denominated in or
indexed to foreign currencies, and of dividends and interest
from such securities, can change significantly when foreign
currencies strengthen or weaken relative to the U.S. dollar.
Foreign securities markets generally have less trading
volume and less liquidity than U.S. markets, and prices on
some foreign markets can be highly volatile. Many foreign
countries lack uniform accounting and disclosure standards
comparable to those applicable to U.S. companies, and it may
be more difficult to obtain reliable information regarding
an issuer's financial condition and operations. In
addition, the costs of foreign investing, including
withholding taxes, brokerage commissions, and custodial
costs, are generally higher than for U.S. investments.

Foreign markets may offer less protection to investors than
U.S. markets. Foreign issuers, brokers, and securities
markets may be subject to less government supervision.
Foreign security trading practices, including those
involving the release of assets in advance of payment, may
involve increased risks in the event of a failed trade or
the insolvency of a broker-dealer, and may involve
substantial delays. It may also be difficult to enforce
legal rights in foreign countries.

Investing abroad also involves different political and
economic risks. Foreign investments may be affected by
actions of foreign governments adverse to the interests of
U.S. investors, including the possibility of expropriation
or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to
repatriate assets or convert currency into U.S. dollars, or
other government intervention. There may be a greater
possibility of default by foreign governments or foreign
government-sponsored enterprises. Investments in foreign
countries also involve a risk of local political, economic,
or social instability, military action or unrest, or adverse
diplomatic developments. There is no assurance that First
Maryland or AIB I.M., as applicable, will be able to
anticipate these potential events or counter their effects.

The considerations noted above generally are intensified for
investments in developing countries. Developing countries
may have relatively unstable governments, economies based on
only a few industries, and securities markets that trade a
small number of securities.

Income Portfolio, Growth and Income Portfolio, Blue Chip
Equity Portfolio, Capital Growth Portfolio, International
Equity Portfolio and Special Equity Portfolio each may
invest in foreign securities that impose restrictions on
transfer within the United States or to U.S. persons.
Although securities subject to transfer restrictions may be
marketable abroad, they may be less liquid than foreign
securities of the same class that are not subject to such
restrictions.

Illiquid Investments. Each Portfolio, except U.S. Treasury
Money Market Portfolio, may invest in illiquid investments.
Illiquid investments cannot be sold or disposed of in the
ordinary course of business at approximately the prices at
which they are valued. Under the supervision of the Board,
First Maryland or AIB I.M., as applicable, determines the
liquidity of each Portfolio's investments, and, through
reports from First Maryland or AIB I.M., the Board monitors
investment in illiquid instruments. In determining the
liquidity of a Portfolio's investments, First Maryland or
AIB I.M., as applicable, may consider various factors
including (1) the frequency of trades and quotations, (2)
the number of dealers and prospective purchasers in the
marketplace, (3) dealer undertakings to make a market, (4)
the nature of the security (including any demand or tender
features), (5) the nature of the marketplace for trades
(including the ability to assign or offset a Portfolio's
rights and obligations relating to the investment) and (6)
general credit quality. Investments currently considered by
a Portfolio to be illiquid include repurchase agreements not
entitling the holder to payment of principal and interest
within seven days, non-government stripped fixed-rate
mortgage-backed securities and government stripped fixed-
rate mortgage-backed securities, loans and other direct debt
instruments, over-the-counter options and swap agreements.
Although restricted securities and municipal lease
obligations are sometimes considered illiquid, First
Maryland or AIB I.M., as applicable, may determine certain
restricted securities and municipal lease obligations to be
liquid. In the absence of market quotations, illiquid
investments are valued for purposes of monitoring amortized
cost valuation (ARK Money Market Portfolios) and priced (for
ARK Non-Money Market Portfolios) at fair value as determined
in good faith by a committee appointed by the Board. If, as
a result of a change in values, net assets or other
circumstances, a Portfolio were in a position where more
than 10% (ARK Money Market Portfolios) or 15% (ARK Non-Money
Market Portfolios) of its net assets were invested in
illiquid securities, it would seek to take appropriate steps
to protect liquidity.

Restricted Securities. Special Equity Portfolio may invest
in restricted securities which are securities that generally
can only be sold in privately negotiated transactions,
pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering.
Where registration is required, the Portfolio may be
obligated to pay all or part of the registration expense and
a considerable period may elapse between the time it decides
to seek registration and the time it may be permitted to
sell a security under an effective registration statement.
If, during such a period, adverse market conditions were to
develop, the Portfolio might obtain a less favorable price
than prevailed when it decided to seek registration of the
security.

Indexed Securities. Each ARK Non-Money Market Portfolio,
except Short-Term Treasury Portfolio, may purchase
securities whose prices are indexed to the prices of other
securities, securities indices, currencies, precious metals
or other commodities, or other financial indicators.
Indexed securities typically, but not always, are debt
securities or deposits whose value at maturity or coupon
rate is determined by reference to a specific instrument or
statistic. Gold-indexed securities, for example, typically
provide for a maturity value that depends on the price of
gold, resulting in a security whose price tends to rise and
fall together with gold prices. Currency-indexed securities
typically are short-term to intermediate-term debt
securities whose maturity values or interest rates are
determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields
than U.S. dollar-denominated securities of equivalent
issuers. Currency-indexed securities may be positively or
negatively indexed; that is, their maturity value may
increase when the specified currency value increases,
resulting in a security that performs similarly to a foreign-
denominated instrument, or their maturity value may decline
when foreign currencies increase, resulting in a security
whose price characteristics are similar to a put on the
underlying currency. Currency-indexed securities may also
have prices that depend on the values of a number of
different foreign currencies relative to each other.

The performance of indexed securities depends to a great
extent on the performance of the security, currency, or
other instrument to which they are indexed, and may also be
influenced by interest rate changes in the United States and
abroad. At the same time, indexed securities are subject to
the credit risks associated with the issuer of the security,
and their values may decline substantially if the issuer's
creditworthiness deteriorates. Recent issuers of indexed
securities have included banks, corporations, and certain
U.S. government agencies. Indexed securities may be more
volatile than the underlying instruments.

Loans and Other Direct Debt Instruments. The ARK Non-Money
Market Portfolios, except International Equity Portfolio and
Short-Term Treasury Portfolio, may invest in loans and other
direct debt instruments. Direct debt instruments are
interests in amounts owed by a corporate, governmental or
other borrower to lenders or lending syndicates (loans and
loan participations), to suppliers of goods or services
(trade claims or other receivables), or to other parties.
Direct debt instruments are subject to a Portfolio's
policies regarding the quality of debt securities.

Purchasers of loans and other forms of direct indebtedness
depend primarily upon the creditworthiness of the borrower
for payment of principal and interest. Direct debt
instruments may not be rated by any nationally recognized
rating service. If a Portfolio does not receive scheduled
interest or principal payments on such indebtedness, a
Portfolio's share price and yield could be adversely
affected. Loans that are fully secured offer a Portfolio
more protections than an unsecured loan in the event of non-
payment of scheduled interest or principal. However, there
is no assurance that the liquidation of collateral from a
secured loan would satisfy the borrower's obligation, or
that the collateral can be liquidated. Indebtedness of
borrowers whose creditworthiness is poor involves
substantially greater risks, and may be highly speculative.
Borrowers that are in bankruptcy or restructuring may never
pay off their indebtedness, or may pay only a small fraction
of the amount owed. Direct indebtedness of developing
countries also will involve a risk that the governmental
entities responsible for the repayment of the debt may be
unable, or unwilling, to pay interest and repay principal
when due.

Investments in loans through direct assignment of a
financial institution's interests with respect to a loan may
involve additional risks to a Portfolio. For example, if a
loan is foreclosed, a Portfolio could become part owner of
any collateral, and would bear the costs and liabilities
associated with owning and disposing of the collateral. In
addition, it is conceivable that under emerging legal
theories of lender liability, a Portfolio could be held
liable as a co-lender. Direct debt instruments also may
involve a risk of insolvency of the lending bank or other
intermediary. Direct debt instruments that are not in the
form of securities may offer less legal protection to a
Portfolio in the event of fraud or misrepresentation. In
the absence of definitive regulatory guidance, First
Maryland will provide a Portfolio with research and analysis
in an attempt to avoid situations where fraud or
misrepresentation could adversely affect such Portfolio.

A loan is often administered by a bank or other financial
institution which acts as agent for all holders. The agent
administers the terms of the loan, as specified in the loan
agreement. Unless, under the terms of the loan or other
indebtedness, a Portfolio has direct recourse against the
borrower, it may have to rely on the agent to apply
appropriate credit remedies against a borrower. If assets
held by the agent for the benefit of a Portfolio were
determined to be subject to the claims of the agent's
general creditors, a Portfolio might incur certain costs and
delays in realizing payment on the loan or loan
participation and could suffer a loss of principal or
interest.

A Portfolio limits the amount of total assets that it will
invest in any one issuer or in issuers within the same
industry (see fundamental limitations 1 and 5 for each of
the ARK Non-Money Market Portfolios). For purposes of these
limitations, a Portfolio generally will treat the borrower
as the "issuer" of indebtedness held by a Portfolio. In the
case of loan participations where a bank or other lending
institution serves as financial intermediary between a
Portfolio and the borrower, if the participation does not
shift the direct debtor-creditor relationship with the
borrower to the Portfolio, SEC interpretations require the
Portfolio, in appropriate circumstances, to treat both the
lending bank or other lending institution and the borrower
as "issuers" for the purposes of determining whether the
Portfolio has invested more than 5% of its total assets in a
single issuer. Treating a financial intermediary as an
issuer of indebtedness may restrict a Portfolio's ability to
invest in indebtedness related to a single financial
intermediary, or a group of intermediaries engaged in the
same industry, even if the underlying borrowers represent
many different companies and industries.

Lower-Quality Municipal Securities. The Maryland Tax-Free
Portfolio may invest a portion of its assets in lower-
quality municipal securities as described in the Prospectus.

While the market for Maryland municipal securities is
considered to be adequate, adverse publicity and changing
investor perceptions may affect the ability of outside
pricing services used by the Portfolio to value its
portfolio securities, and the Portfolio's ability to dispose
of lower-quality bonds. The outside pricing services are
monitored by First Maryland and reported to the Board to
determine whether the services are furnishing prices that
accurately reflect fair value. The impact of changing
investor perceptions may be especially pronounced in markets
where municipal securities are thinly traded.

The Portfolio may choose, at its expense or in conjunction
with others, to pursue litigation or otherwise exercise its
rights as a security holder to seek to protect the interest
of security holders if it determines this to be in the best
interest of Portfolio shareholders.

Lower-Rated Debt Securities. The ARK Non-Money Market
Portfolios, except Special Equity Portfolio, Short-Term
Treasury Portfolio, and International Equity Portfolio, each
may invest up to 5% of their respective assets in lower-
rated debt securities i.e., securities rated Ba or lower by
Moody's Investors Service Inc. (Moody's) or BB or lower by
Standard & Poor's Ratings Group (S&P), or other comparable
ratings by other nationally recognized statistical rating
organizations (NRSROs). Special Equity Portfolio may invest
up to 35% in such securities. International Equity
Portfolio and Short-Term Treasury Portfolio do not invest in
lower-rated debt securities. Such securities may have poor
protection with respect to the payment of interest and
repayment of principal. These securities are often
considered to be speculative and involve greater risk of
loss or price changes due to changes in the issuer's
capacity to pay. The market prices of lower-rated debt
securities may fluctuate more than those of higher-rated
debt securities and may decline significantly in periods of
general economic difficulty, which may follow periods of
rising interest rates.

While the market for lower-rated, high-yield corporate debt
securities has been in existence for many years and has
weathered previous economic downturns, the 1980s brought a
dramatic increase in the use of such securities to fund
highly leveraged corporate acquisitions and restructurings.
Past experience may not provide an accurate indication of
the future performance of the high-yield bond market,
especially during periods of economic recession. In fact,
from 1989 to 1991, the percentage of lower-rated debt
securities that defaulted rose significantly above prior
levels, although the default rate decreased in 1992.

The market for lower-rated debt securities may be thinner
and less active than that for higher-rated debt securities,
which can adversely affect the prices at which the former
are sold. If market quotations are not available, lower-
rated debt securities will be valued in accordance with
procedures established by the Board, including the use of
outside pricing services. Judgment plays a greater role in
valuing such debt securities than is the case for securities
for which more external sources for quotations and last-sale
information are available. Adverse publicity and changing
investor perceptions may affect the ability of outside
pricing services to value, and of the Portfolio to dispose
of, lower-rated debt securities.

Since the risk of default is higher for lower-rated debt
securities, First Maryland's research and credit analysis
are an especially important part of managing a Portfolio's
investment in securities of this type. In considering
investments in such securities on behalf of a Portfolio,
First Maryland will attempt to identify those issuers whose
financial condition is adequate to meet future obligations,
has improved, or is expected to improve in the future.
First Maryland's analysis focuses on relative values based
on such factors as interest or dividend coverage, asset
coverage, earnings prospects, and the experience and
managerial strength of the issuer.

A Portfolio may choose, at its own expense or in conjunction
with others, to pursue litigation or otherwise to exercise
its rights as a security holder to seek to protect the
interests of security holders if it determines such action
to be in the best interest of the Portfolio's shareholders.

Municipal Lease Obligations. Tax-Free Money Market
Portfolio and Maryland Tax-Free Fund each may invest in
municipal leases and participation interests therein. These
obligations, which may take the form of a lease, an
installment purchase, or a conditional sale contract, are
issued by state and local governments and authorities to
acquire land and a wide variety of equipment and facilities,
such as fire and sanitation vehicles, telecommunications
equipment, and other capital assets. Generally, the
Portfolios will not hold such obligations directly as a
lessor of the property, but will purchase a participation
interest in a municipal obligation from a bank or other
third party. A participation interest gives the Portfolios
a specified, undivided interest in the obligation in
proportion to its purchased interest in the total amount of
the obligation.

Market Disruption Risk. The value of municipal securities
may be affected by uncertainties in the municipal market
related to legislation or litigation involving the taxation
of municipal securities or the rights of municipal
securities holders in the event of a bankruptcy. Municipal
bankruptcies are relatively rare, and certain provisions of
the U.S. Bankruptcy Code governing such bankruptcies are
unclear and remain untested. Further, the application of
state law to municipal issuers could produce varying results
among the states or among municipal securities issuers
within a state. These legal uncertainties could affect the
municipal securities market generally, certain specific
segments of the market, or the relative credit quality of
particular securities. Any of these effects could have a
significant impact on the prices of some or all of the
municipal securities held by a Portfolio. For the Money
Market Portfolios, it is more difficult to maintain a stable
net asset value per share.

Municipal leases frequently have risks distinct from those
associated with general obligation or revenue bonds. State
constitutions and statutes set forth requirements that
states or municipalities must meet to incur debt. These may
include voter referenda, interest rate limits, or public
sale requirements. Leases, installment purchases, or
conditional sale contracts (which normally provide for title
to the leased asset to pass to the governmental issuer) have
evolved as a means for governmental issuers to acquire
property and equipment without meeting their constitutional
and statutory requirements for the issuance of debt. Many
leases and contracts include "non-appropriation" clauses
providing that the governmental issuer has no obligation to
make future payments under the lease or contract unless
money is appropriated for such purpose by the appropriate
legislative body on a yearly or other periodic basis. Non-
appropriation clauses free the issuer from debt issuance
obligations.

In determining the liquidity of a municipal lease
obligation, First Maryland will differentiate between direct
municipal leases and municipal lease-backed securities, the
latter of which may take the form of a lease-backed revenue
bond, a tax-exempt asset-backed security, or any other
investment structure using a municipal lease-purchase
agreement as its base. While the former may present
liquidity issues, the latter are based on a well-established
method of securing payment of a municipal lease obligation.

Portfolios' Rights As Shareholders. The Portfolios do not
intend to direct or administer the day-to-day operations of
any company whose shares they hold. A Portfolio, however,
may exercise its rights as a shareholder and may communicate
its views on important matters of policy to management, the
board of trustees or directors and the shareholders of a
company when First Maryland or AIB I.M., as applicable,
determines that such matters could have a significant effect
on the value of a Portfolio's investment in the company.
The activities that a Portfolio may engage in, either
individually or in conjunction with other shareholders, may
include, among others, supporting or opposing proposed
changes in a company's corporate structure or business
activities; seeking changes in a company's board of trustees
or directors or management; seeking changes in a company's
direction or policies; seeking the sale or reorganization of
the company or a portion of its assets; or supporting or
opposing third party takeover efforts. This area of
corporate activity is increasingly prone to litigation and
it is possible that a Portfolio could be involved in
lawsuits related to such activities. First Maryland or AIB
I.M., as applicable, will monitor such activities with a
view to mitigating, to the extent possible, the risk of
litigation against the Portfolio and the risk of actual
liability if a Portfolio is involved in litigation. There
is no guarantee, however, that litigation against a
Portfolio will not be undertaken or liabilities incurred.

Real Estate-Related Instruments. Special Equity Portfolio
may invest in real estate-related instruments, which include
real estate investment trusts (REITs), commercial and
residential mortgage-backed securities and real estate
financings. Real estate-related instruments are sensitive
to factors such as changes in real estate values and
property taxes, interest rates, cash flow of underlying real
assets, overbuilding and the management and creditworthiness
of the issuer. Real estate-related instruments may also be
affected by tax and regulatory requirements, such as those
relating to the environment.

Refunding Contracts. Maryland Tax-Free Fund may purchase
securities on a when-issued basis in connection with the
refinancing of an issuer's outstanding indebtedness.
Refunding obligations require the issuer to sell and the
Portfolio to buy refunded municipal obligations at a stated
price and yield on a settlement date that may be several
months or several years in the future. The Portfolio
generally will not be obligated to pay the full purchase
price if it fails to perform under a refunding contract.
Instead, refunding contracts generally provide for payment
of liquidated damages to the issuer (currently 15-20% of the
purchase price). The Portfolio may secure its obligations
under a refunding contract by depositing collateral or a
letter of credit equal to the liquidated damages provisions
of the refunding contract. When required by SEC guidelines,
the Portfolio will place liquid assets in a segregated
custodial account equal in amount to its obligations under
refunding contracts.

Repurchase Agreements. Each Portfolio, except U.S. Treasury
Money Market Portfolio and Tax-Free Money Market Portfolio,
may invest in repurchase agreements. In a repurchase
agreement, a Portfolio purchases a security and
simultaneously commits to resell that security to the seller
at an agreed upon price on an agreed upon date. The resale
price reflects the purchase price plus an agreed upon
incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon
price, which obligation is in effect secured by the value
(at least equal to the amount of the agreed upon resale
price and marked to market daily) of the underlying
security. (Money Market Portfolio and U.S. Government Money
Market Portfolio each may engage in repurchase agreements
with respect to any security in which it is authorized to
invest, even if the underlying security matures in more than
397 days.) The risk associated with repurchase agreements
is that a Portfolio may be unable to sell the collateral at
its full value in the event of the seller's default. While
it does not presently appear possible to eliminate all risks
from these transactions (particularly the possibility of a
decline in the market value of the underlying securities, as
well as delays and costs to a Portfolio in connection with
bankruptcy proceedings), it is the Portfolios' current
policy to limit repurchase agreements to those parties whose
creditworthiness has been reviewed and found satisfactory by
First Maryland or AIB I.M., as applicable, pursuant to
procedures established by the Board.

Reverse Repurchase Agreements. Each Portfolio may enter
into reverse repurchase agreements. In a reverse repurchase
agreement, a Portfolio sells a portfolio instrument to
another party, such as a bank or broker-dealer, in return
for cash and agrees to repurchase the instrument at a
particular price and time. While a reverse repurchase
agreement is outstanding, the Portfolio will maintain
appropriate liquid assets in a segregated custodial account
to cover its obligation under the agreement. The Portfolio
will enter into reverse repurchase agreements only with
parties whose creditworthiness has been found satisfactory
by First Maryland. Such transactions may increase
fluctuations in the market value of the Portfolio's assets
and may be viewed as a form of leverage.

Securities Lending. Each Portfolio, except U.S. Treasury
Money Market Portfolio, Tax-Free Money Market Portfolio and
International Equity Portfolio, may lend securities to
parties such as broker-dealers or institutional investors.
Securities lending allows a Portfolio to retain ownership of
the securities loaned and, at the same time, to earn
additional income. Since there may be delays in the
recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially,
loans will be made only to parties whose creditworthiness
has been reviewed and found satisfactory by First Maryland.
Furthermore, they will only be made if, in First Maryland's
judgment, the consideration to be earned from such loans
would justify the risk.

It is the current view of the SEC that a Portfolio may
engage in loan transactions only under the following
conditions: (1) the Portfolio must receive 100% collateral
in the form of cash or cash equivalents (e.g., U.S. Treasury
bills or notes) from the borrower; (2) the borrower must
increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above
the value of the collateral; (3) after giving notice, the
Portfolio must be able to terminate the loan at any time;
(4) the Portfolio must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts
equivalent to any dividends, interest, or other
distributions on the securities loaned and to any increase
in market value; (5) the Portfolio may pay only reasonable
custodian fees in connection with the loan; and (6) the
Board must be able to vote proxies on the securities loaned,
either by terminating the loan or by entering into an
alternative arrangement with the borrower. Cash received
through loan transactions may be invested in any security in
which the Portfolio is authorized to invest. Investing this
cash subjects that investment, as well as the security
loaned, to market forces (i.e., capital appreciation or
depreciation).

Sovereign Debt Obligations. Growth and Income Portfolio,
Blue Chip Equity Portfolio and Capital Growth Portfolio each
may purchase sovereign debt instruments issued or guaranteed
by foreign governments or their agencies, including debt of
Latin American nations or other developing countries.
Sovereign debt may be in the form of conventional securities
or other types of debt instruments, such as loans or loan
participations. Sovereign debt of developing countries may
involve a high degree of risk, and may be in default or
present the risk of default. Governmental entities
responsible for repayment of the debt may be unable or
unwilling to repay principal and interest when due, and
repayment may require negotiations or rescheduling of debt
payments. In addition, prospects for repayment of principal
and interest may depend on political as well as economic
factors. Although some sovereign debt, such as Brady Bonds,
is collateralized by U.S. government securities, repayment
of principal and interest is not guaranteed by the U.S.
government.

Standby Commitments. Tax-Free Money Market Portfolio and
Maryland Tax-Free Portfolio may invest in standby
commitments. These obligations are puts that entitle
holders to same day settlement at an exercise price equal to
the amortized cost of the underlying security plus accrued
interest, if any, at the time of exercise. The Portfolios
may acquire standby commitments to enhance the liquidity of
portfolio securities only when the issuers of the
commitments present minimal risk of default.

Ordinarily the Portfolios will not transfer a standby
commitment to a third party, although each could sell the
underlying municipal security to a third party at any time.
The Portfolios may purchase standby commitments separate
from or in conjunction with the purchase of securities
subject to such commitments. In the latter case, the
Portfolios would pay a higher price for the securities
acquired, thus reducing their yield to maturity. Standby
commitments will not affect the dollar-weighted average
maturity of the Portfolios, or the valuation of the
securities underlying the commitments.

Standby commitments are subject to certain risks, including
the ability of issuers of standby commitments to pay for
securities at the time the commitments are exercised; the
fact that standby commitments are not marketable by the
Portfolios; and the possibility that the maturities of the
underlying securities may be different from those of the
commitments.

Swap Agreements. Each ARK Non-Money Market Portfolio,
except Short-Term Treasury Portfolio, may invest in swap
agreements. Swap agreements can be individually negotiated
and structured to include exposure to a variety of different
types of investments or market factors. Depending on their
structure, swap agreements may increase or decrease a
Portfolio's exposure to long- or short-term interest rates
(in the U.S. or abroad), foreign currency values, mortgage
securities, corporate borrowing rates, or other factors such
as security prices or inflation rates. Swap agreements can
take many different forms and are known by a variety of
names. A Portfolio is not limited to any particular form of
swap agreement if First Maryland or (AIB I.M. in the case of
International Equity Portfolio) determines it is consistent
with a Portfolio's investment objective and policies.

In a typical cap or floor agreement, one party agrees to
make payments only under specified circumstances, usually in
return for payment of a fee by the other party. For
example, the buyer of an interest rate cap obtains the
rights to receive payments to the extent that a specified
interest rate exceeds an agreed-upon level, while the seller
of an interest rate floor is obligated to make payments to
the extent that a specified interest rate falls below an
agreed-upon level. An interest rate collar combines
elements of buying a cap and selling a floor.

Swap agreements will tend to shift a Portfolio's investment
exposure from one type of investment to another. For
example, if the Portfolio agreed to exchange payments in
dollars for payments in foreign currency, the swap agreement
would tend to decrease the Portfolio's exposure to U.S.
interest rates and increase its exposure to foreign currency
and interest rates. Caps and floors have an effect similar
to buying or writing options. Depending on how they are
used, swap agreements may increase or decrease the overall
volatility of the Portfolio's investments and its share
price and yield.

The most significant factor in the performance of swap
agreements is the change in the specific interest rate,
currency, or other factors that determine the amounts of
payments due to and from a Portfolio. If a swap agreement
calls for payments by a Portfolio, the Portfolio must be
prepared to make such payments when due. In addition, if
the counterparty's creditworthiness declined, the value of a
swap agreement would be likely to decline, potentially
resulting in losses. A Portfolio expects to be able to
reduce its exposure under swap agreements either by
assignment or other disposition, or by entering into an
offsetting swap agreement with the same party or a similarly
creditworthy party.

The Portfolios will each maintain appropriate liquid assets
in segregated custodial accounts to cover their current
obligations under swap agreements. If a Portfolio enters
into a swap agreement on a net basis, it will segregate
assets with a daily value at least equal to the excess, if
any, of the Portfolio's accrued obligations under the swap
agreement over the accrued amount the Portfolio is entitled
to receive under the agreement. If a Portfolio enters into
a swap agreement on other than a net basis, it will
segregate assets with a value equal to the full amount of
the Portfolio's accrued obligations under the agreement.

Tender Option Bonds. Tax-Free Money Market Portfolio and
Maryland Tax-Free Portfolio may invest in tender option
bonds. These bonds are created by coupling an intermediate
or long-term fixed-rate tax-exempt bond (generally held
pursuant to a custodial agreement) with a tender agreement
that gives the holder the option to tender the bond at its
face value. As consideration for providing the tender
option, the sponsor (usually a bank, broker-dealer, or other
financial institution) receives periodic fees equal to the
difference between the bond's fixed coupon rate and the rate
(determined by a remarketing or similar agent) that would
cause the bond, coupled with the tender option to trade at
par on the date of such determination. After payment of the
tender option fee, the Portfolios effectively hold a demand
obligation that bears interest at the prevailing short-term
tax-exempt rate. Subject to applicable regulatory
requirements, Tax-Free Money Market Portfolio may buy tender
option bonds if the agreement gives the Portfolio the right
to tender the bond to its sponsor no less frequently than
once every 397 days. In selecting tender option bonds for
the Portfolios, First Maryland will, pursuant to procedures
established by the Board, consider the creditworthiness of
the issuer of the underlying bond, the custodian, and the
third-party provider of the tender option. In certain
instances, a sponsor may terminate a tender option if, for
example, the issuer of the underlying bond defaults on
interest payments.

Variable or Floating Rate Instruments. Each Money Market
Portfolio, except U.S. Treasury Money Market Portfolio, may
invest in variable or floating rate instruments that
ultimately mature in more than 397 days, if a Portfolio
acquires a right to sell the securities that meet certain
requirements set forth in Rule 2a-7 under the 1940 Act.
Variable rate instruments (including instruments subject to
a demand feature) that mature in 397 days or less may be
deemed to have maturities equal to the period remaining
until the next readjustment of the interest rate. Other
variable rate instruments with demand features may be deemed
to have a maturity equal to the longer of the period
remaining until the next readjustment of the interest rate
or the period remaining until the principal amount can be
recovered through demand. A floating rate instrument
subject to a demand feature may be deemed to have a maturity
equal to the period remaining until the principal amount can
be recovered through demand. The Non-Money Market
Portfolios, except Short-Term Treasury Portfolio, may invest
in variable or floating rate instruments.

Variable or Floating Rate Demand Obligations (VRDOs/FRDOs).
Each Money Market Portfolio, except U.S. Treasury Money
Market Portfolio may invest in variable or floating rate\
demand obligations (VRDOs/FRDOs). These obligations are
tax-exempt obligations that bear variable or floating
interest rates and carry rights that permit holders to
demand payment of the unpaid principal balance plus
accrued interest from the issuers or certain financial
intermediaries. Floating rate obligations have interest
rates that change whenever there is a change in a designated
base rate, while variable rate obligations provide for a
specified periodic adjustment in the interest rate. These
formulas are designed to result in a market value for the
VRDO or FRDO that approximates its par value.

A demand obligation with a conditional demand feature must
have received both a short-term and a long-term high quality
rating from a NRSRO or, if unrated, have been determined to
be of comparable quality pursuant to procedures adopted by
the Board. A demand obligation with an unconditional demand
feature may be acquired solely in reliance upon a short-term
high quality rating or, if unrated, upon finding of
comparable short-term quality pursuant to procedures adopted
by the Board.

A Portfolio may invest in fixed-rate bonds that are subject
to third party puts and in participation interests in such
bonds held by a bank in trust or otherwise. These bonds and
participation interests have tender options or demand
features that permit a Portfolio to tender (or put) their
bonds to an institution at periodic intervals of up to one
year and to receive the principal amount thereof. A
Portfolio considers variable rate obligations structured in
this way (participating VRDOs) to be essentially equivalent
to other VRDOs that it may purchase. The Internal Revenue
Service (IRS) has not ruled whether or not the interest on
participating VRDOs is tax-exempt, and accordingly, the
Portfolios intend to purchase these obligations based on
opinions of bond counsel.

A variable rate obligation that matures in 397 days or fewer
may be deemed to have a maturity equal to the period
remaining until the next readjustment of the interest rate.
A variable rate obligation that matures in more than 397
days but that is subject to a demand feature that is 397
days or fewer may be deemed to have a maturity equal to the
longer of the period remaining until the next readjustment
of the interest rate or the period remaining until the
principal amount can be recovered through demand. A
floating rate obligation that is subject to a demand feature
may be deemed to have a maturity equal to the period
remaining until the principal amount may be recovered
through demand. The ARK Money Market Portfolios may
purchase a demand obligation with a remaining final maturity
in excess of 397 days only if the demand feature can be
exercised on no more than 30 days' notice (a) at any time or
(b) at specific intervals not exceeding 397 days.

Warrants. Warrants are securities that give International
Equity Portfolio or Special Equity Portfolio the right to
purchase equity securities from an issuer at a specific
price (the strike price) for a limited period of time. The
strike price of a warrant is typically much lower than the
current market price of the underlying securities, yet a
warrant is subject to greater price fluctuations. As a
result, warrants may be more volatile investments than the
underlying securities and may offer greater potential for
capital appreciation as well as capital loss.

Warrants do not entitle a holder to dividends or voting
rights with respect to the underlying securities and do not
represent any rights in the assets of the issuing company.
Also, the value of the warrant does not necessarily change
with the value of the underlying securities and a warrant
ceases to have value if it is not exercised prior to the
expiration date. These factors can make warrants more
speculative than other types of investments.

Hedging Strategies: Futures Transactions. The ARK Non-Money
Market Portfolios, except Short-Term Treasury Portfolio,
may each use futures contracts and options on such contracts
for bona fide hedging purposes within the meaning of
regulations promulgated by the Commodities Futures Trading
Commission (CFTC). Each Portfolio may also establish
positions for other purposes provided that the aggregate
initial margin and premiums required to establish such
positions will not exceed 5% of the liquidation value of the
Portfolio after taking into account unrealized profits and
unrealized losses on any such instruments.

Futures Contracts. When a Portfolio purchases a futures
contract, it agrees to purchase a specified underlying
instrument at a specified future date. When a Portfolio
sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which
the purchase and sale will take place is fixed when a
Portfolio enters into a contract. Some currently available
futures contracts are based on specific securities, such as
U.S. Treasury bonds or notes, and some are based on indices
of securities prices, such as the Standard & Poor's
Composite Index of 500 Stocks (S&P 500). A futures contract
can be held until its delivery date, or can be closed out
prior to its delivery date if a liquid secondary market is
available.

The value of a futures contract tends to increase and
decrease in tandem with the value of its underlying
instrument. Therefore, purchasing futures contracts will
tend to increase a Portfolio's exposure to positive and
negative price fluctuations in the underlying instrument,
much as if it had purchased the underlying instrument
directly. When a Portfolio sells a futures contract, by
contrast, the value of its futures position will tend to
move in a direction contrary to the market. Selling futures
contracts, therefore, will tend to offset both positive and
negative market price changes, much as if the underlying
instrument had been sold.

Futures Margin Payments. The purchaser or seller of a
futures contract is not required to deliver or pay for the
underlying instrument unless the contract is held until the
delivery date. However, both the purchaser and seller are
required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the
contract is entered into. Initial margin deposits are
typically equal to a percentage of the contract's value. If
the value of either party's position declines, that party
will be required to make additional "variation margin"
payments to settle the change in value on a daily basis.
The party that has a gain may be entitled to receive all or
a portion of this amount. Initial and variation margin
payments do not constitute purchasing securities on margin
for purposes of a Portfolio's investment limitations. In
the event of the bankruptcy of an FCM that holds margin on
behalf of a Portfolio, the Portfolio may be entitled to
return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting
in losses to a Portfolio.

Purchasing Put and Call Options Relating to Securities or
Futures Contracts. By purchasing a put option, a Portfolio
obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed price (strike
price). In return for this right, a Portfolio pays the
current market price for the option (known as the option
premium). Options have various types of underlying
instruments, including specific securities, indices of
securities prices, and futures contracts. A Portfolio may
terminate its position in a put option it has purchased by
allowing it to expire or by exercising the option. If the
option is allowed to expire, the Portfolio will lose the
entire premium it paid. If a Portfolio exercises the
option, it completes the sale of the underlying instrument
at the strike price. A Portfolio may also terminate a put
option position by closing it out in the secondary market at
its current price, if a liquid secondary market exists.

The buyer of a typical put option can expect to realize a
gain if the price of the underlying security falls
substantially. However, if the underlying instrument's
price does not fall enough to offset the cost of purchasing
the option, a put buyer can expect to suffer a loss (limited
to the amount of the premium paid, plus related transaction
costs).

The features of call options are essentially the same as
those of put options, except that the purchaser of a call
option obtains the right to purchase, rather than sell, the
underlying instrument at the option's strike price. A call
buyer typically attempts to participate in potential price
increases of the underlying instrument with risk limited to
the cost of the option if security prices fall. At the same
time, the buyer can expect to suffer a loss if the price of
the underlying instrument does not rise sufficiently to
offset the cost of the option.

Writing Put and Call Options. When a Portfolio writes a put
option, it takes the opposite side of the transaction from
the option's purchaser. In return for receipt of the
premium, the Portfolio assumes the obligation to pay the
strike price for the option's underlying instrument if the
other party to the option chooses to exercise it. When
writing an option on a futures contract, a Portfolio will be
required to make margin payments to an FCM as described
above for futures contracts. A Portfolio may seek to
terminate its position in a put option it writes before
exercise by closing out the option in the secondary market
at its current price. If the secondary market is not liquid
for a put option a Portfolio has written, however, the
Portfolio must continue to be prepared to pay the strike
price while the option is outstanding, regardless of price
changes, and must continue to set aside assets to cover its
position.

If the price of the underlying instrument rises, a put
writer would generally expect to profit, although its gain
would be limited to the amount of the premium it received.
If the price of the underlying instrument remains the same
over time, it is likely that the writer will also profit,
because it should be able to close out the option at a lower
price. If the price of the underlying instrument falls, the
put writer would expect to suffer a loss. This loss should
be less than the loss from purchasing the underlying
instrument directly, however, because the premium received
for writing the option should mitigate the effects of the
decline.

Writing a call option obligates a Portfolio to sell or
deliver the option's underlying instrument in return for the
strike price, upon exercise of the option. The
characteristics of writing call options are similar to those
of writing put options, except that writing a call option is
generally a profitable strategy if prices remain the same or
fall. Through receipt of the option premium, a call writer
mitigates the effects of a price decline. At the same time,
because a call writer must be prepared to deliver the
underlying instrument in return for the strike price, even
if its current value is greater, a call writer gives up some
ability to participate in security price increases.

Combined Positions. A Portfolio may purchase and write
options in combination with each other, or in combination
with futures contracts or forward contracts, to adjust the
risk and return characteristics of the overall position.
For example, a Portfolio may purchase a put option and write
a call option on the same underlying instrument, in order to
construct a combined position whose risk and return
characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a
call option at one strike price and buying a call option at
a lower strike price, in order to reduce the risk of the
written call option in the event of a substantial price
increase. Because combined options positions involve
multiple trades, they result in higher transaction costs and
may be more difficult to open and close out.

Correlation of Price Changes. Because there are a limited
number of types of exchange-traded options and futures
contracts, it is likely that the standardized contracts
available will not match a Portfolio's current or
anticipated investments exactly. A Portfolio may invest in
options and futures contracts based on securities with
different issuers, maturities, or other characteristics than
those of the securities in which it typically invests -- for
example, by hedging intermediate-term securities with a
futures contract based on an index of long-term bond prices,
or by hedging stock holdings with futures contracts on a
broad-based stock index such as the S&P 500 -- which
involves a risk that the options or futures position will
not track the performance of the Portfolio's other
investments.

Options and futures prices can also diverge from the prices
of their underlying instruments, even if the underlying
instruments match the Portfolio's investments well. Options
and futures prices are affected by such factors as current
and anticipated short-term interest rates, changes in
volatility of the underlying instrument, and the time
remaining until expiration of the contract, which may not
affect the price of the underlying security the same way.
Imperfect correlation may also result from differing levels
of demand in the options and futures markets and the
securities markets, from structural differences in the
trading of options, futures and securities, or from
imposition of daily price fluctuation limits or trading
halts. A Portfolio may purchase or sell options and futures
contracts with a greater or lesser value than the securities
it wishes to hedge or intends to purchase in order to
attempt to compensate for differences in volatility between
the contract and the securities, although this may not be
successful in all cases. If price changes in a Portfolio's
options or futures positions are poorly correlated with its
other investments, the positions may fail to produce
anticipated gains or may result in losses that are not
offset by gains in other investments.

Liquidity of Options and Futures Contracts. There is no
assurance a liquid secondary market will exist for any
particular option or futures contract at any particular
time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the
underlying instrument's current price. In addition,
exchanges may establish daily price fluctuation limits for
options and futures contracts, and may halt trading if the
price of an option or futures contract moves upward or
downward more than the limit in a given day. On volatile
trading days when the price fluctuation limit is reached or
a trading halt is imposed, it may be impossible for a
Portfolio to enter into new positions or close out existing
positions. If the secondary market for a contract is not
liquid because of price fluctuation limits or otherwise, it
could prevent prompt liquidation of unfavorable positions,
and potentially could require the Portfolio to continue to
hold a position until delivery or expiration regardless of
changes in its value. As a result, the Portfolio's access
to other assets held to cover its options or futures
positions could also be impaired.

OTC Options. Unlike exchange-traded options, which are
standardized with respect to the underlying instrument,
expiration date, contract size, and strike price, the terms
of over-the-counter (OTC) options (options not traded on
exchanges) generally are established through negotiation
with the other party to the option. While this type of
arrangement allows a Portfolio greater flexibility to tailor
an option to its needs, OTC options generally involve
greater credit risk than exchange-traded options, which are
guaranteed by the clearing organization of the exchanges
upon which they are traded.

Options and Futures Contracts Relating to Foreign
Currencies. Currency futures contracts are similar to
forward contracts, except that they are traded on exchanges
(and have margin requirements) and are standardized as to
contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The
underlying instrument of a currency option may be a foreign
currency, which generally is purchased or delivered in
exchange for U.S. dollars, or may be a futures contract.
The purchaser of a currency call option obtains the right to
purchase the underlying currency, and the purchaser of a
currency put option obtains the right to sell the underlying
currency.

The uses and risks of currency options and futures contracts
are similar to options and futures contracts relating to
securities or securities indices, as discussed above. A
Portfolio may purchase and sell currency futures and may
purchase and write currency options to increase or decrease
its exposure to different foreign currencies. A Portfolio
may also purchase and write currency options in conjunction
with each other or with currency futures or forward
contracts. Currency futures and option values can be
expected to correlate with exchange rates, but may not
reflect other factors that affect the value of the
Portfolio's investments. A currency hedge, for example,
should protect a Yen-denominated security from a decline in
the Yen, but will not protect the Portfolio against a price
decline resulting from deterioration in the issuer's
creditworthiness. Because the value of the Portfolio's
foreign-denominated investments changes in response to many
factors other than exchange rates, it may not be possible to
match exactly the amount of currency options and futures
held by the Portfolio to the value of the Portfolio's
investments over time.

Asset Coverage for Futures and Options Positions. The
Portfolios will comply with guidelines established by the
SEC with respect to coverage of options and futures
strategies by mutual funds and, if the guidelines so
require, will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed.
Securities held in a segregated account cannot be sold while
the futures or option position is outstanding, unless they
are replaced with other appropriate liquid assets. As a
result, there is a possibility that segregation of a large
percentage of a Portfolio's assets could impede portfolio
management or the Portfolio's ability to meet redemption
requests or other current obligations.

Short Sales. Each Portfolio, except U.S. Treasury Money
Market Portfolio, U.S. Government Money Market Portfolio and
Short-Term Treasury Portfolio, may enter into short sales
with respect to securities it owns, or with respect to
stocks underlying its convertible bond holdings (short sales
"against the box"). For example, if First Maryland (or AIB
I.M., if applicable) anticipates a decline in the price of
the stock underlying a convertible security the Portfolio
holds, the Portfolio may sell the stock short. If the stock
price substantially declines, the proceeds of the short sale
or an increase in the value of the put option could be
expected to offset all or a portion of the effect of the
stock's decline on the value of the convertible security.

When a Portfolio enters into a short sale against the box,
it will be required to set aside securities equivalent in
kind and amount to those sold short (or securities
convertible or exchangeable into such securities) and will
be required to continue to hold them while the short sale is
outstanding. A Portfolio will incur transaction costs,
including interest expense, in connection with opening,
maintaining and closing short sales against the box.

Heath Care Industry. The health care industry is subject to
regulatory action by a number of private and governmental
agencies, including federal, state, and local governmental
agencies. A major source of revenues for the health care
industry is payments from Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative
changes and reductions in governmental spending for such
programs. Numerous other factors may affect the industry,
such as general and local economic conditions; demands for
services; expenses (including malpractice insurance
premiums); and competition among health care providers. In
the future, the following elements may adversely affect
health care facility operations: adoption of legislation
proposing a national health insurance program; medical and
technological advances that dramatically alter the need for
health services or the way in which such services are
delivered; and efforts by employers, insurers, and
governmental agencies to reduce the costs of health
insurance and healthcare services.

Transportation. Transportation debt may be issued to
finance the construction of airports, toll roads, and
highways. Airport bonds are dependent on the general
stability of the airline industry and stability of a
specific carrier who uses the airport as a hub. Air traffic
generally follows broader economic trends and is also
affected by the price and availability of fuel. Toll road
bonds are also affected by the cost and availability of fuel
as well as toll levels, the presence of competing roads and
the general economic health of an area. Fuel costs and
availability also affect other transportation-related
services, as do the presence of alternate forms of
transportation, such as public transportation.

SPECIAL CONSIDERATIONS FOR INTERNATIONAL EQUITY PORTFOLIO

Special Considerations Affecting Latin America

Latin America is a region rich in natural resources such
as oil, copper, tin, silver, iron ore, forestry, fishing,
livestock, and agriculture. The region has a large
population (roughly 300 million) representing a large number
of markets. Economic growth was strong in the 1960s and
1970s, but slowed dramatically in the 1980s as a result of
poor economic policies, higher international interest rates
and the denial of access to new foreign capital. Capital
flight has proven a persistent problem and external debt has
been forcibly rescheduled. High inflation and low economic
growth have begun to give way to stable, manageable
inflation rates and higher economic growth, although
political turmoil (including assassinations) continues in
some countries. Changes in political leadership and the
implementation of market oriented economic policies, such as
privatization, trade reform, and fiscal and monetary reform
are among the recent steps taken to renew economic growth.
External debt is being restructured and flight capital
(domestic capital that has left the home country) has begun
to return.

Various trade agreements have also been formed within the
region, including the Andean Pact, Mercosur, and NAFTA.
NAFTA, which was implemented on January 1, 1994, is the
largest of these agreements.

Latin American equity markets can be extremely volatile
and in the past have shown little correlation with the
United States market. Currencies have typically been weak,
given high inflation rates, but have stabilized more
recently. Most currencies are not free floating, but wide
fluctuations in value over relatively short periods of time
can still occur due to changes in the market.

Mexico's economy is a mixture of state-owned industrial
plants (notably oil), private manufacturing and services,
and both large-scale and traditional agriculture. Mexico's
economy has been transformed significantly over the last six
to seven years. Large budget deficits and a high level of
state ownership in many productive and service areas have
given way to balanced budgets and privatization. In the last
few years, the government has sold the telephone company,
the major steel companies, the banks, and many others. The
major state ownership remaining is in the oil sector and the
electricity sector. Economic policy transformation has led
to much reduced inflation and more stable economic growth in
the last few years. The recently implemented NAFTA will
further cement the economic ties between Mexico, Canada, and
the United States.

Continued political unrest, particularly in southern
Mexico, and uncertainty as to the effectiveness of reforms
have recently had an adverse impact on economic development.
In December 1994, Mexico reversed a long-held currency
policy by devaluing the Mexican peso and allowing it to
float freely. The value of the peso against the U.S. dollar
and other currencies declined sharply. As a result, Mexican
stocks plunged while interest rates soared, and other Latin
America securities markets were also adversely affected.
Extension and continuance of financial aid to Mexico from
the U.S., including loan guarantees, is uncertain at this
time.

Brazil is the sixth largest country in the world in
population, with about 155 million people, and represents a
huge domestic market. Brazil entered the 1990s with
declining real growth, runaway inflation, an unserviceable
foreign debt of $122 billion, and a lack of policy
direction. Brazil's rate of consumer price inflation
continues to accelerate while gross domestic product (GDP)
remains depressed. A major long run strength is Brazil's
natural resources. Iron ore, bauxite, tin, gold, and
forestry products make up some of Brazil's natural resource
base, which includes some of the largest mineral reserves in
the world. The private sector has remained efficient, mainly
through export promotion. The government has recently
embarked on an ambitious reform program that seeks to
modernize and reinvigorate the economy by stabilizing
prices, deregulating the economy, and opening the economy to
increased foreign competition. Privatization of certain
industries is proceeding slowly.

Chile, like Brazil, is endowed with considerable mineral
resources, particularly copper, which accounts for 40% of
total exports. Export production (especially in the forestry
and mining sectors) continues to be the main long-term
engine of economic growth and modernization. Economic reform
has been ongoing in Chile for over 15 years, but political
democracy has only recently returned to Chile. Privatization
of the public sector beginning in the early 1980s has
bolstered the equity market. A well-organized pension system
has created a long-term domestic investor base.

Argentina is strong in wheat production and other
foodstuffs and in livestock ranching. A well-educated and
skilled population boasts one of the highest literacy rates
in the region. The country has been ravaged by decades of
extremely high inflation and political instability. Like
Mexico, however, Argentina has had a dramatic transformation
in its economy in the last several years. Extremely high
inflation rates and stagnant economic growth have been
replaced by low inflation and strong economic growth.
Massive privatization has occurred and continues, which
should reduce the amount of external debt outstanding.

Venezuela has substantial oil reserves. External debt is
being renegotiated, and the government is implementing
economic reform in order to reduce the size of the public
sector, although these reform attempts have recently met
with political opposition. Internal gasoline prices, which
are one-third those of international prices, are being
increased in order to reduce subsidies. Price controls did
not prevent annual inflation from reaching at least 75% in
1994, compared to 45.9% in 1993. The official target of
25-30% inflation for 1995 is improbable, with a continuation
of higher levels more likely. The failure of major banks
adversely affected the Venezuelan economy in 1994 and could
continue to have a negative impact. Plans for privatization
and exchange and interest rate liberalization are examples
of recently introduced reforms. It is not clear when the
economic situation in Venezuela will improve and the country
remains extremely dependent on oil.

Special Considerations Affecting Japan, The Pacific Basin, and Southeast Asia

Many Asian countries may be subject to a greater degree of
social, political and economic instability than is the case
in the United States and Western European countries. Such
instability may result from (i) authoritarian governments or
military involvement in political and economic
decision-making; (ii) popular unrest associated with demands
for improved political, economic and social conditions;
(iii) internal insurgencies; (iv) hostile relations with
neighboring countries; and (v) ethnic, religious and racial
disaffection.

The economies of most of the Asian countries are heavily
dependent upon international trade and are accordingly
affected by protective trade barriers and the economic
conditions of their trading partners, principally, the
United States, Japan, China and the European Community. The
enactment by the United States or other principal trading
partners of protectionist trade legislation, reduction of
foreign investment in the local economies and general
declines in the international securities markets could have
a significant adverse effect upon the securities markets of
the Asian countries.

Thailand has one of the fastest growing stock markets in
the world. The manufacturing sector is becoming increasingly
sophisticated and is benefiting from export-oriented
investing. The manufacturing and service sectors continue to
account for the bulk of Thailand's economic growth. The
agricultural sector continues to become less important. The
government has followed fairly sound fiscal and monetary
policies, aided by increased tax receipts from a fast moving
economy. The government also continues to move ahead with
new projects - especially telecommunications, roads and port
facilities - needed to refurbish the country's overtaxed
infrastructure. Nonetheless, political unrest has caused
many international businesses to question Thailand's
political stability.

Hong Kong's economic growth which was vigorous in the
1980s has not been positively affected by its impending
return to Chinese dominion in 1997. Although China has
committed by treaty to preserve the economic and social
freedoms enjoyed in Hong Kong for 50 years after regaining
control of Hong Kong, the continuation of the current form
of the economic system in Hong Kong after the reversion will
depend on the actions of the government of China. Business
confidence in Hong Kong, therefore, can be significantly
affected by developments, which in turn can affect markets
and business performance. In preparation for 1997, Hong Kong
has continued to develop trade with China, while also
maintaining its long-standing export relationship with the
United States. Spending on infrastructure improvements is a
significant priority of the colonial government while the
private sector continues to diversify abroad based on its
position as an established international trade center in the
Far East.

In terms of GDP, industrial standards and level of
education, South Korea is second only to Japan in Asia. It
enjoys the benefits of a diversified economy with well
developed sectors in electronics, automobiles, textiles and
shoe manufacture, steel and shipbuilding among others. The
driving force behind the economy's dynamic growth has been
the planned development of an export-oriented economy in a
vigorously entrepreneurial society. Inflation rates,
however, began to challenge South Korea's strong economic
performance in the early 1990s. Moreover, the international
situation between South Korea and North Korea continues to
be uncertain.

Indonesia is a mixed economy with many socialist
institutions and central planning but with a recent emphasis
on deregulation and private enterprise. Like Thailand,
Indonesia has extensive natural wealth, yet with a large and
rapidly increasingly population, it remains a poor country.
Indonesia's dependence on commodity exports makes it
vulnerable to a fall in world commodity prices. Malaysia
has one of the fastest growing economies in the
Asian-Pacific region.

Malaysia has become the world's third-largest producer of
semiconductor devices (after the United States and Japan)
and the world's largest exporter of semiconductor devices.
More remarkable is the country's ability to achieve rapid
economic growth with relative price stability as the
government followed prudent fiscal and monetary policies.
Malaysia's high export dependence level leaves it vulnerable
to recession in the countries with which it trades or to a
fall in world commodity prices.

India is one of the world's top fifteen industrial nations
and has considerable natural resources. The government
exercises significant influence over many aspects of the
economy. Accordingly, future government actions could have a
significant effect on private sector companies, market
conditions, and prices and yields of securities of Indian
issuers held by a fund. Policymakers in India actively
encourage foreign direct investment, particularly in labor
intensive industries. In addition, Indian stock exchanges
rely entirely on delivery of physical share certificates and
have experienced operational difficulties. These problems
have included the existence of fraudulent shares in the
market, failed trades, and delays in the settlement and
registration of securities transactions. Indian stock
exchanges have in the past been forced to close for
political reasons; for example, a brokers' strike closed the
exchange for ten days in December 1993, and there is no
assurance that the exchanges will not be forced to close
again.

Singapore has an open entrepreneurial economy with strong
service and manufacturing sectors and excellent
international trading links derived from its history. During
the 1970s and the early 1980s, the economy expanded rapidly,
achieving an average annual growth rate of 9%. Per capita
GDP is among the highest in Asia. Singapore holds a position
as a major oil refining and services center.

Japan currently has the second largest GDP in the world.
The Japanese economy has grown substantially over the last
three decades. Its growth rate averaged over 5% in the 1970s
and 1980s. However, in the 1990s, the growth rate in Japan
has slowed. Despite small rallies and market gains, Japan
has been plagued with economic sluggishness. Economic
conditions have weakened considerably in Japan since October
1992. The boom in Japan's equity and property markets during
the expansion of the late 1980's supported high rates of
investment and consumer spending on durable goods, but both
of these components of demand have now retreated sharply
following the decline in asset prices. Profits have fallen
sharply, the previously tight labor market conditions have
eased considerably, and consumer confidence has waned. The
banking sector has experienced a sharp rise in
non-performing loans, and strains in the financial system
may continue. Continued political uncertainty has resulted
from numerous changes in government, shifting government
coalitions and the political and economic problems
associated with a large trade imbalance.

Although Japan's economic growth has declined
significantly since 1990, many Japanese companies seem
capable of rebounding due to increased investments, smaller
borrowings, increased product development and continued
government support. Growth recovered slightly in 1994.
Japan's economic growth in the early 1980s was due in part
to government borrowings. Japan is heavily dependent upon
international trade and, accordingly, has been and may
continue to be adversely affected by trade barriers, and
other protectionist or retaliatory measures of, as well as
economic conditions in, the United States and other
countries with which it trades. Industry, the most important
sector of the economy, is heavily dependent on imported raw
materials and fuels. Japan's major industries are in the
engineering, electrical, textile, chemical, automobile,
fishing, and telecommunication fields. Japan imports iron
ore, copper, and many forest products. Only 19% of its land
is suitable for cultivation. Japan's agricultural economy is
subsidized and protected. It is about 50% self-sufficient in
food production. Even though Japan produces a minute rice
surplus, it is dependent upon large imports of wheat,
sorghum, and soybeans from other countries. Japan's high
volume of exports such as automobiles, machine tools, and
semiconductors have caused trade tensions with other
countries, particularly the United States. Attempts to
approve trading agreements between the countries may reduce
the friction caused by the current trade imbalance. In
recent months, the Japanese markets have also been adversely
affected by the earthquake in Kobe, Japan, and the
bankruptcy of Barings Bank, Ltd., although the long-term
effects of these events are difficult to predict.

Australia has a prosperous Western-style capitalist
economy, with a per capita GDP comparable to levels in
industrialized West European countries. It is rich in
natural resources and is the world's largest exporter of
beef and wool, second-largest exporter of mutton, and among
the top wheat exporters. Australia is also a major exporter
of minerals, metals and fossil fuels. Due to the nature of
its exports, a downturn in world commodity prices could have
a significant negative impact on its economy.

Special Considerations Affecting Europe

New developments surrounding the creation of a unified
common market in Europe have helped to reduce physical and
economic barriers promoting the free flow of goods and
services throughout Western Europe. These new developments
could make this new unified market one of the largest in the
world.

The European Community (EC) consists of Belgium, Denmark,
France, Germany, Greece, Ireland, Italy, Luxembourg,
Netherlands, Portugal, Spain, and the United Kingdom (the
member states). In 1986, the member states of the EC signed
the "Single European Act," an agreement committing these
countries to the establishment of a market among themselves,
unimpeded by internal barriers or hindrances to the free
movement of goods, persons, services, or capital. To meet
this goal, a series of directives have been issued to the
member states. Compliance with these directives is designed
to eliminate three principal categories of barriers: 1)
physical frontiers, such as customs posts and border
controls; 2) technical barriers (which include restrictions
operating within national territories) such as regulations
and norms for goods and services (product standards);
discrimination against foreign bids (bids by other EC
members) on public purchases; or restrictions on foreign
requests to establish subsidiaries; and 3) fiscal frontiers,
notably the need to levy value-added taxes, tariffs, or
excise taxes on goods or services imported from other EC
states.

The ultimate goal of this project is to achieve a large
unified domestic European market in which available
resources would be more efficiently allocated through the
elimination of the above-mentioned barriers and the added
costs associated with those barriers. Elimination of these
barriers would simplify product distribution networks, allow
economies of scale to be more readily achieved, and free the
flow of capital and other resources. The Maastricht Treaty
on economic and monetary union (EMU) attempts to provide its
members with a stable monetary framework consistent with the
EC's broad economic goals. But until the EMU takes effect,
which is intended to occur between 1997 and 1999, the
community will face the need to reinforce monetary
cooperation in order to reduce the risk of a recurrence of
tensions between domestic and external policy objectives.

The total European market, as represented by both EC and
non-EC countries, consists of over 328 million consumers,
making it larger currently than either the United States or
Japanese markets. European businesses compete nationally and
internationally in a wide range of industries including:
telecommunications and information services, roads and
transportation, building materials, food and beverages,
broadcast and media, financial services, electronics, and
textiles. Actual and anticipated actions on the part of
member states to conform to the unified Europe directives
has prompted interest and activity not only by European
firms, but also by foreign entities anxious to establish a
presence in Europe that will result from these changes.
Indications of the effect of this response to a unified
Europe can be seen in the areas of mergers and acquisitions,
corporate expansion and development, GDP growth, and
national stock market activity.

The early experience of the former centrally planned
economies has already demonstrated the crucially important
link between structural reforms, macroeconomic
stabilization, and successful economic transformation. Among
the central European countries, the Czech Republic, Hungary,
and Poland have made the greatest progress in structural
reform; inflationary pressures in those countries have
abated following price liberalization, and output has begun
to recover. These achievements will be difficult to sustain,
however, in the absence of strong efforts to contain the
large fiscal deficits that have accompanied the considerable
losses of output and tax revenue since the start of the
reform process.

In the Baltic countries there are encouraging signs that
reforms are taking hold and are being supported by strong
stabilization efforts. In most other countries of the former
Soviet Union, in contrast, inadequate stabilization efforts
now threaten to lead to hyper-inflation, which could derail
the reform process. Inflation, which had abated following
the immediate impact of price liberalization in early 1992,
surged to extremely high levels. The main reason for this
development has been excessive credit expansion to the
government and to state enterprises. The transformation
process is being seriously hampered by the widespread
subsidization of inefficient enterprises and the resulting
misallocation of resources. The lack of effective economic
and monetary cooperation among the countries of the former
Soviet Union exacerbates other problems by severely
constraining trade flows and impeding inflation control.
Partly as a result of these difficulties, some countries
have decided that the introduction of separate currencies
offers the best scope for avoiding hyper-inflation and for
improving economic conditions. This development can
facilitate the implementation of stronger stabilization
programs.

Economic conditions appear to have improved for some of
the transition economies of central Europe. Following three
successive years of output declines, there are preliminary
indications of a turnaround in the Czech Republic and the
Slovak Republic, Hungary and Poland; growth in private
sector activity and strong exports, especially to Western
Europe, now appear to have contained the fall in output.
Most central European countries in transition, however, are
expected to achieve positive real growth in 1995 as market
reforms deepen. The strength of the projected output gains
will depend crucially on the ability of the reforming
countries to contain fiscal deficits and inflation and on
their continued access to, and success in, export markets.
Economic conditions in the former Soviet Union have
continued to deteriorate. Real GDP in Russia is estimated to
have fallen 19 percent in 1992, after a 9 percent decline in
1991. In many other countries of the region, output losses
have been even larger. These declines reflect the adjustment
difficulties during the early stages of the transition, high
rates of inflation, the compression of imports, disruption
in trade among the countries of the former Soviet Union, and
uncertainties about the reform process itself. Large-scale
subsidies are delaying industrial restructuring and are
exacerbating the fiscal situation. A reversal of these
adverse factors is not anticipated in the near term, and
output is expected to decline further in most of these
countries. A number of their governments, including those of
Hungary and Poland, are currently implementing or
considering reforms directed at political and economic
liberalization, including efforts to foster multi-party
political systems, decentralize economic planning, and move
toward free market economies. At present, no Eastern
European country has a developed stock market, but Poland,
Hungary and the Czech Republic have small securities markets
in operation. Ethnic and civil conflicts currently rage
throughout the former Yugoslavia. The outcome is uncertain.

Both the EC and Japan, among others, have made overtures
to establish trading arrangements and assist in the economic
development of the Eastern European nations. There is also
an urgent need for positive steps to resist protectionist
pressures, especially by bringing the multilateral trade
negotiations under the Uruguay Round of the General
Agreement on Trade and Tariffs to a successful conclusion.
Determined action to alleviate short-term difficulties and
to achieve key medium-term objectives would unquestionably
strengthen consumer and business confidence. Interest rates
generally have declined somewhat with the easing of tensions
in the Exchange Rate Mechanism, but for most countries tight
monetary conditions remain an obstacle to stronger growth
and a threat to exchange market stability. However, in the
long-term, reunification could prove to be an engine for
domestic and international growth.

The conditions that have given rise to these developments
are changeable, and there is no assurance that reforms will
continue or that their goals will be achieved.

Portugal is a genuinely emerging market which has
experienced rapid growth since the mid-1980s, except for a
brief period of stagnation over 1990-91. Portugal's
government remains committed to privatization of the
financial system away from one dependent upon the banking
system to a more balanced structure appropriate for the
requirements of a modern economy.

Economic reforms launched in the 1980s continue to benefit
Turkey in the 1990s. Turkey's economy has grown since the
1980s. Agriculture remains the most important economic
sector, employing over half of the labor force, and
accounting for significant portions of GDP and exports.
Inflation and interest rates remain high, and a large budget
deficit will continue to cause difficulties in Turkey's
continuing transformation from a centrally controlled to a
free market economy.

Like many other Western economies, Greece suffered
severely from the global oil price hikes of the 1970s, with
annual GDP growth plunging from 8% to 2% in the 1980s, and
inflation, unemployment, and budget deficits rising sharply.
The fall of the socialist government in 1989 and the
inability of the conservative opposition to obtain a clear
majority led to business uncertainty and the prospect for
continued flat economic performance. Once Greece has sorted
out its political situation, it will have to face the
challenges posed by the steadily increasing integration of
the EU, including the progressive lowering of trade and
investment barriers. Tourism continues as a major industry,
providing a vital offset to a sizable commodity trade
deficit.

REAL GDP ANNUAL RATE OF GROWTH
1993

Denmark 1.2%
France -1.0%
Germany -1.1%
Italy -0.7%
Netherlands -1.0%
Spain -0.6%
Switzerland 2.0%
United Kingdom

Source: World Economic Outlook October 1994 (Figures are
quoted based on each country's domestic currency.)

NATIONAL INDICES (WITHOUT DIVIDENDS) OCTOBER 1994
GROWTH IN U.S. DOLLARS
EUROPE

6 Months 12 Months 5 Years
Greece -10.22 5.56 2.71
Portugal .65 7.68 -5.53
Turkey 48.77 -45.261 -7.386

SPECIAL CONSIDERATIONS FOR MARYLAND TAX - FREE PORTFOLIO

According to 1990 Census reports, Maryland's population in
that year was 4,797,893, reflecting an increase of 13.8%
from the 1980 Census. Maryland's population is concentrated
in urban areas: the eight counties and Baltimore City
located in the Baltimore - Washington Corridor contain 37.4%
of the State's land area and 83.3% of its population. The
estimated 1990 population for the Baltimore Standard
Metropolitan Statistical Area was 2,355,197 and for the
Maryland portion of the Washington Standard Metropolitan
Statistical Area, 1,642,348. Overall, Maryland's population
per square mile in 1990 was 487.7.

Personal income in Maryland grew at annual rates between
8.1% and 9.2% in each of the years 1986 through 1988, but
fell from a rate of 9.3% in 1989 to 3.1% in 1991.
Commencing in 1992, however, personal income growth
rebounded, increasing by 4.3% in 1992, 4.0% in 1993 and 4.7%
in 1994. Similarly, per capita personal income, which had
grown at rates no lower than 6.2% for the period from 1972
to 1989, grew at a rate of 4.7% in 1990 and only 1.8% in
1991. The annual rate increased by 3.2% in 1992, 3.0% in
1993 and additional 3.9% in 1994. Unemployment in Maryland
peaked in 1982 at 8.5%, then decreased steadily to a low of
3.7% in 1989. In 1990, unemployment increased to 4.7%, and
increased further to 5.9% in 1991, 6.6% in 1992 and 6.2% in
1993, before dropping to 5.4% in 1994.

Retail sales in Maryland dropped by 2.1% in 1991, but
rebounded and grew by 0.3% in 1992, 6.2% in 1993 and 9.6% in
1994, versus nationwide growth of 0.6%, 5.2%, 6.3% and 7.8%
in such years, respectively.

Services (including mining), wholesale and retail trade,
government and manufacturing (primarily printing and
publishing, food and kindred products, instruments and
related products, industrial machinery, electronic equipment
and chemical and allied products) are the leading areas of
employment in the State of Maryland. In contrast to the
nation as a whole, more people in Maryland are employed in
government than in manufacturing (19.6% versus 8.3% in
1994). Between 1974 and 1994, manufacturing wages decreased
by 29.7%, while non-manufacturing wages increased by 58.6%

The State's total expenditures for the fiscal years ending
June 30, 1992, June 30, 1993, June 30, 1994 and June 30,
1995 were $11.6 billion, $11.8 billion, $12.4 billion and
$13.5 billion, respectively. The State's General Fund,
representing approximately 55%-60% of each year's total
budget, had a surplus on a budgetary basis of $55,000 in
fiscal year 1991 and a deficit of $56.4 million in fiscal
year 1992. These results were due primarily to revenue
collections which fell short of anticipations, and increases
in expenditures for public assistance. The Governor of
Maryland reduced fiscal year 1993 appropriations by
approximately $56 million to offset the fiscal year 1992
deficit. On a budgetary basis, the State's General Fund
surplus rose to $10.5 million in fiscal year 1993, $60
million in 1994 and $26.5 million in 1995 (after budgeting
$106 million for 1996 expenses). The State Constitution
mandates a balanced budget. Balances in the Revenue
Stabilization Account of the State Reserve Fund have also
risen from $300,000 in 1992 to $50.9 million in 1993, $161.8
million in 1994 and $286.1 million in 1995.

In April, 1995, the General Assembly approved a $14.4
billion 1996 fiscal year budget. The budget as enacted
includes a $270 million appropriation to the State Reserve
Fund, including $200 million appropriated to the Revenue
Stabilization Account. When this budget was enacted, the
State estimated that the General Fund surplus on a budgetary
basis at June 30, 1996 would be approximately $7.8 million;
the State now projects a General Fund Surplus on a budgetary
basis of $34.3 million, in addition to which there will be
$518 million in the Revenue Stabilization Account balance in
the Revenue Stabilization Account of the State Reserve Fund.

The State of Maryland and its various political subdivisions
issue a number of different kinds of municipal obligations,
including general obligation bonds supported by tax
collections, revenue bonds payable from certain identified
tax levies or revenue streams, conduit revenue bonds payable
from the repayment of certain loans to authorized entities
such as hospitals and universities, and certificates of
participation in tax-exempt municipal leases.

The State of Maryland issues general obligation bonds, which
are payable from ad valorem property taxes. The State
Constitution prohibits the contracting of State debt unless
the debt is authorized by law levying an annual tax or taxes
sufficient to pay the debt service within 15 years and
prohibiting the repeal of the tax or taxes or their use for
another purpose until the debt has been paid. The State
also enters into lease-purchase agreements, in which
participation interests are often sold publicly as
individual securities.

As of October 1995, the State's general obligation bonds
were rated "Aaa" by Moody's Investors Service, Inc.
(Moody's), "AAA" by Standard & Poor's Ratings Group (S&P),
and "AAA" by Fitch Investors Service, Inc. (Fitch).

The Maryland Department of Transportation issues
Consolidated Transportation Bonds, which are payable out of
specific excise taxes, motor vehicle taxes, and corporate
income taxes, and from the general revenues of the
Department. Issued to finance highway, port, transit, rail
or aviation facilities, as of September 1994, these bonds
were rated "Aa" by Moody's, "AA" by S&P, and "AA" by Fitch.
The Maryland Transportation Authority, a unit of the
Department, issues its own revenue bonds for transportation
facilities, which are payable from certain highway, bridge
and tunnel tolls. These bonds were rated "Aa" by Moody's as
of October 1994.

Other State agencies which issue municipal obligations
include the Maryland Stadium Authority, which has issued
bonds payable from sports facility lease revenues and
certain lottery revenues and convention center lease revenue
bonds, the Maryland Water Quality Financing Administration,
which issues bonds to provide loans to local governments for
wastewater control projects, the Community Development
Administration of the Department of Housing and Community
Development, which issues mortgage revenue bonds for
housing, the Maryland Environmental Service, which issues
bonds secured by the revenues from its various water supply,
wastewater treatment and waste management projects, and the
various public institutions of higher education in Maryland
(which include the University of Maryland System, Morgan
State University, and State University, and St. Mary's
College of Maryland) which issue their own revenue bonds.
None of these bonds constitute debts or pledges of the full
faith and credit of the State of Maryland. The issuers of
these obligations are subject to various economic risks and
uncertainties, and the credit quality of the securities
issued by them may vary considerably from the quality of
obligations backed by the full faith and credit of the
State.

In addition, the Maryland Health and Higher Educational
Facilities Authority and the Maryland Industrial Development
Financing Authority issue conduit revenue bonds, the
proceeds of which are lent to borrowers eligible under
relevant state and federal law. These bonds are payable
solely from the loan payments made by borrowers, and their
credit quality varies with the financial strengths of the
respective borrowers.

Maryland has 24 geographical subdivisions, composed of 23
counties plus the independent City of Baltimore, which
functions much like a county. Some of the counties and the
City of Baltimore operate pursuant to the provisions of
codes of their own adoption, while others operate pursuant
to State-approved charters and State statutes.

Maryland counties and municipalities and the City of
Baltimore receive most of their revenues from ad valorem
taxes on real and personal property, individual income
taxes, transfer taxes, miscellaneous taxes and aid from the
State. Their expenditures include public safety, public
works, health, public welfare, court and correctional
services, education and general governmental costs.

The economic factors affecting the State, as discussed
above, also have affected the counties, municipalities and
the City of Baltimore. In addition, reductions in State aid
caused by State budget deficits have caused the local
governments to trim expenditures and, in some cases, raise
taxes.

According to recent available ratings, general obligation
bonds of Montgomery County (abutting Washington, D.C.) are
rated "Aaa" by Moody's and "AAA" by S&P. Prince George's
County, also in the Washington, D.C. suburbs, issues general
obligation bonds rated "A1" by Moody's and "AA-" by S&P,
while Baltimore County, a separate political subdivision
surrounding the City of Baltimore, issues general obligation
bonds rated "Aaa" by Moody's and "AA+" by S&P. The City of
Baltimore's general obligation bonds are rated "A1" by
Moody's and "A" by S&P. The other counties in Maryland all
have general obligation bond ratings of "A": or better,
except for Allegany County, the bonds of which are rated
"Baa" by Moody's. The Washington Suburban Sanitary
District, a bi-county agency providing water and sewerage
services in Montgomery and Prince George's counties, issues
general obligation bonds rated "Aa1" by Moody's and "AA" by
S&P as of June 1995. Additionally, some of the large
municipal corporations in Maryland (such as the cities of
Rockville, Annapolis and Frederick) have issued general
obligation bonds. There can be no assurance that these
ratings will continue.

Many of Maryland's counties and the City of Baltimore have
established subsidiary agencies with bond issuing powers,
such as housing authorities, parking revenue authorities,
and industrial development authorities. In addition, all
Maryland municipalities have the authority under State law
to issue conduit revenue bonds. These entities are subject
to various economic risks and uncertainties and the credit
quality of the securities issued by them may vary
considerably from the credit quality of obligations backed
by the full faith and credit of the State.

PORTFOLIO TRANSACTIONS

First Maryland and AIB I.M. always seek the most favorable
portfolio execution result with respect to transactions. In
seeking the most favorable execution, First Maryland or AIB
I.M., as applicable, having in mind a Portfolio's best
interest, considers all factors it deems relevant,
including, by way of illustration: price; the size of the
transaction; the nature of the market for the security; the
amount of the commission; the timing of the transaction,
taking into account market process and trends; the
reputation, experience and financial stability of the broker-
dealer involved; and the quality of service rendered by the
broker-dealer in other transactions. Certain investments
may be appropriate for a Portfolio and for other clients
advised by First Maryland or AIB I.M., in the case of
International Equity Portfolio. Investment decisions for
the Portfolios and other clients are made with a view to
achieving their respective investment objectives and after
consideration of such factors as their current holdings,
availability of cash for investment, and the size of their
investments generally. A particular security may be bought
or sold for only one client or in different amounts and at
different times for more than one but fewer than all
clients. Likewise, a particular security may be bought for
one or more clients when one or more other clients are
selling the security. In addition, purchases or sales of
the same security may be made for two or more clients of
First Maryland or AIB I.M. on the same day. In each of
these situations, the transactions will be allocated among
the clients in a manner believed by First Maryland or AIB
I.M., as applicable, to be equitable to each. In some
cases, this procedure could have an adverse effect on the
price or amount of the securities purchased or sold by a
Portfolio. Purchase and sale orders for a Portfolio may be
combined with those of other clients of First Maryland or
AIB I.M., in the case of International Equity Portfolio, in
the interest of achieving the most favorable execution for
the Portfolio.

Transactions on U.S. stock exchanges and other agency
transactions involve the payment by a Portfolio of
negotiated brokerage commissions. Such commissions vary by
the price and the size of the transaction along with the
quality of service. Transactions in foreign securities
often involve the payment of fixed brokerage commissions,
that are generally higher than those in the United States.
There is generally no stated commission in the case of
securities traded in the OTC markets, but the price paid by
a Portfolio usually includes an undisclosed dealer
commission or mark-up. In underwritten offerings, the price
paid by a Portfolio includes a disclosed, fixed commission
or discount retained by the underwriter or dealer.

For each Portfolio, First Maryland or AIB I.M., as
applicable, places all orders for the purchase and sale of
portfolio securities and buys and sells securities for a
Portfolio through a substantial number of brokers and
dealers.

It has for many years been a common practice in the
investment advisory business for advisers of investment
companies and other institutional investors to receive
research, statistical, and quotation services from broker-
dealers that execute portfolio transactions for the clients
of such advisers. Consistent with this practice, First
Maryland or AIB I.M., in the case of International Equity
Portfolio, may receive research, statistical, and quotation
services from many broker-dealers with which it places a
Portfolio's portfolio transactions. These services, which
in some cases may also be purchased for cash, include such
matters as general economic and security market reviews,
industry and company reviews, evaluations of securities, and
recommendations as to the purchase and sale of securities.
Some of these services are of value to First Maryland or AIB
I.M. and its affiliates in advising various of their clients
(including the Portfolios), although not all of these
services are necessarily useful and of value in managing the
Portfolios. The fee paid by a Portfolio to First Maryland
or AIB I.M., as applicable, is not reduced because First
Maryland or AIB I.M. and its affiliates receive such
services.

As permitted by Section 28(e) of the Securities Exchange Act
of 1934, as amended, First Maryland or AIB I.M. may cause a
Portfolio to pay a broker-dealer that provides brokerage and
research services to First Maryland or AIB I.M. a commission
in excess of the commission charged by another broker-dealer
for effecting a particular transaction. To cause a
Portfolio to pay any such greater commissions, First
Maryland or AIB I.M., as applicable, must determine in good
faith that such commissions are reasonable in relation to
the value of the brokerage or research service provided by
such executing broker-dealers viewed in terms of a
particular transaction or First Maryland or AIB I.M.'s
overall responsibilities to the Portfolio or its other
clients. In reaching this determination, First Maryland or
AIB I.M. will not attempt to place a specific dollar value
on the brokerage or research services provided or to
determine what portion of the compensation should be related
to those services. For the fiscal year ended April 30, 1995
and from April 13, 1994 to April 30, 1994, respectively, the
Income Portfolio paid the following commissions on brokerage
transactions: $_____ and $_____. For the fiscal year ended
April 30, 1995 and from March 9, 1994 to April 30, 1994,
respectively, the Growth and Income Portfolio paid the
following commissions on brokerage transactions: $_____ and
$_____. For the fiscal year ended April 30, 1995 and from
March 9, 1994 to April 30, 1994, respectively, the Capital
Growth Portfolio paid the following commissions on brokerage
transactions: $_____ and $_____. For the fiscal year ended
April 30, 1995 and from December 30, 1994 to April 30, 1994,
respectively, the International Equity Portfolio paid the
following commissions on brokerage transactions: $_____ and
$_____.

VALUATION OF PORTFOLIO SECURITIES

ARK Money Market Portfolios. Each Portfolio values its
investments on the basis of amortized cost. This technique
involves valuing an instrument at its cost as adjusted for
amortization of premium or accretion of discount rather than
its value based on current market quotations or appropriate
substitutes which reflect current market conditions. The
amortized cost value of an instrument may be higher or lower
than the price the Portfolio would receive if it sold the
instrument.

Valuing a Portfolio's instruments on the basis of amortized
cost and use of the term "money market portfolio" are
permitted by Rule 2a-7 under the 1940 Act. Each Portfolio
must adhere to certain conditions under Rule 2a-7.

The Board oversees First Maryland's adherence to SEC rules
concerning money market portfolios, and has established
procedures designed to stabilize each Portfolio's net asset
value per share (NAV) at $1.00. At such intervals as they
deem appropriate, the Board considers the extent to which
NAV calculated by using market valuations would deviate from
$1.00 per share. If the Board believes that a deviation
from the Portfolio's amortized cost per share may result in
material dilution or other unfair result to shareholders,
the Board has agreed to take such corrective action, if any,
as they deem appropriate to eliminate or reduce, to the
extent reasonably practicable, such dilution or other unfair
result. Such corrective action could include selling
portfolio instruments prior to maturity to realize capital
gains or losses or to shorten average portfolio maturity;
withholding dividends; redeeming shares in kind;
establishing NAV by using available market quotations; and
such other measures as the Board may deem appropriate.

During periods of declining interest rates, a Portfolio's
yield based on amortized cost may be higher than the yield
based on market valuations. Under these circumstances, a
shareholder in the Portfolio would be able to obtain a
somewhat higher yield than would result if the Portfolio
utilized market valuations to determine its NAV. The
converse would apply in a period of rising interest rates.

Short-Term Treasury Portfolio, Income Portfolio and Maryland
Tax-Free Portfolio. Valuation of portfolio securities
furnished by the pricing service employed by the Portfolios
are based upon a computerized matrix system and/or
appraisals by the pricing service, in each case in reliance
upon information concerning market transactions and
quotations from recognized securities dealers. The methods
used by the pricing service and the quality of valuations so
established are reviewed by officers of the Fund and each
Portfolio's respective pricing agent under general
supervision of the Board. There are a number of pricing
services available, and the Trustees, on the basis of
evaluation of these services, may use other pricing services
or discontinue the use of any pricing service in whole or in
part.

Growth and Income Portfolio, Blue Chip Equity Portfolio,
Capital Growth Portfolio, International Equity Portfolio and
Special Equity Portfolio. Securities owned by each of these
Portfolios are appraised by various methods depending on the
market or exchange on which they trade. Securities traded
on the New York Stock Exchange (NYSE) or the American Stock
Exchange are appraised at the last sale price, or if no sale
has occurred, at the closing bid price. Securities traded
on other exchanges are appraised as nearly as possible in
the same manner. Securities and other assets for which
exchange quotations are not readily available are valued on
the basis of closing OTC bid prices, if available, or at
their fair value as determined in good faith under
consistently applied procedures under the general
supervision of the Board.

Generally, the valuation of foreign and domestic equity
securities, as well as corporate bonds, U.S. government
securities, money market instruments, and repurchase
agreements, is substantially completed each day at the close
of the NYSE. The values of any such securities held by a
Portfolio are determined as of such time for the purpose of
computing a Portfolio's NAV. Foreign security prices are
furnished by independent brokers or quotation services which
express the value of securities in their local currency.
The pricing agent gathers all exchange rates daily at 2:00
p.m. Eastern Time, and using the last quoted price of the
security in the local currency, translates the value of
foreign securities from their local currency into U.S.
dollars. Any changes in the value of forward contracts due
to exchange rate fluctuations and days to maturity are
included in the calculation of NAV. If an extraordinary
event that is expected to materially affect the value of a
portfolio security occurs after the close of an exchange on
which that security is traded, then the security will be
valued as determined in good faith by the Board.

PORTFOLIO PERFORMANCE

Yield Calculations. In computing the yield of shares of an
ARK Money Market Portfolio for a period, the net change in
value of a hypothetical account containing one share
reflects the value of additional shares purchased with
dividends from the one original share and dividends declared
on both the original share and any additional shares. The
net change is then divided by the value of the account at
the beginning of the period to obtain a base period return.
This base period return is annualized to obtain a current
annualized yield. The Portfolio may also calculate a
compounded effective yield for shares of the ARK Money
Market Portfolios by compounding the base period return over
a one year period. In addition to the current yield, the
ARK Money Market Portfolios may quote yields in advertising
based on any historical seven day period. Yields for the
shares of ARK Money Market Portfolios are calculated on the
same basis as other money market portfolios, as required by
regulation.

For shares of Income Portfolio, Short-Term Treasury
Portfolio and Maryland Tax-Free Portfolio, yields used in
advertising are computed by dividing the interest income for
a given 30-day or one-month period, net of its expenses, by
the average number of shares entitled to receive dividends
during the period, dividing this figure by the Portfolios'
respective NAV per share at the end of the period and
annualizing the result (assuming compounding of income) in
order to arrive at an annual percentage rate. Income is
calculated for purposes of the yield quotations in
accordance with standardized methods applicable to all stock
and bond funds. In general, interest income is reduced with
respect to bonds trading at a premium over their par value
by subtracting a portion of the premium from income on a
daily basis, and is increased with respect to bonds trading
at a discount by adding a portion of the discount to daily
income. Capital gains and losses generally are excluded
from the calculation.

Income calculated for the purposes of determining yield
differs from income as determined for other accounting
purposes. Because of the different accounting methods used,
and because of the compounding of income assumed in yield
calculations, a Portfolio's yield may not equal its
distribution rate, the income paid to your account, or
income reported in that Portfolio's financial statements.

For Tax-Free Money Market Portfolio and Maryland Tax-Free
Portfolio, a tax-equivalent yield is the rate an investor
would have to earn from a fully taxable investment before
taxes to equal each Portfolio's Tax-Free yield. Tax-
equivalent yields are calculated by dividing a Portfolio's
yield by the result of one minus a stated federal or
combined federal, state, and city tax rate. (If only a
portion of a Portfolio's yield was tax-exempt, only that
portion is adjusted in the calculation.) If any portion of
a Portfolio's income is derived from obligations subject to
state or federal income taxes, its tax-equivalent yield will
generally be lower.

The following tables show the effect of a shareholder's tax
status on effective yield under the federal income tax laws
for 1995. The second table shows the approximate yield a
taxable security must provide at various income brackets to
produce after-tax yields equivalent to those of hypothetical
tax-exempt obligations yielding from 3% to 7%. Of course,
no assurance can be given that a Portfolio will achieve any
specific tax-exempt yield. While the Portfolios invest
principally in obligations whose interest is exempt from
federal income tax (and, in the case of Maryland Tax-Free
Portfolio, from Maryland state income tax, as well) other
income received by a Portfolio may be taxable. The tables
do not take into account local taxes, if any, payable on a
Portfolio's distributions.

Use the first table to find your approximate effective tax
bracket taking into account federal and state taxes for
1995.

1995 TAX RATES

Combined
Maryland and
Single Return Joint Return Federal Income Maryland Federal Effective
Taxable Income* Taxable Income Tax Bracket Marginal Rate Tax Bracket**

23,351 56,550 39,001 94,250 28.00% 5.00% 33.76% ***
56,551 117,950 94,251 143,600 31.00% 5.00% 36.52% ***
117,951 256,500 143,601 256,500 36.00% 5.00% 41.12% ***
256,501 + 256,501 + 39.60% 5.00% 44.43% ***

* Net amount subject to federal income tax after deductions and exemptions.
Assumes ordinary income only.

** Excludes the impact of the phaseout of personal exemptions, limitations
on itemized deductions, and other credits, exclusions, and adjustments
which may increase a taxpayer's marginal tax rate. An increase in a
shareholder's marginal tax rate would increase that shareholder's
tax-equivalent yield.

*** Combined Maryland and federal effective tax brackets take into account
the highest combined Maryland state and county income tax rate of 8.00%
(applicable to residents of Allegany, Montgomery, Talbot, Somerset,
St. Mary's and Wicomico counties). For Allegany, Montgomery,
Talbot, Somerset, St. Mary's and Wicomico, the county income tax
rate is equal to 60% of Maryland state taxes. For Prince George's,
the county income tax rate is 58% of the state tax. For Baltimore
county, the county income tax rate is 55% of the state tax. For
Worcester county, the county income tax rate is 30% of the state tax.
The county income tax rate for the remaining counties of the
State of Maryland, as well as the City of Baltimore, is 50% of the
state tax. Figures are tax-effected to reflect the federal tax benefit
for persons who itemized deductions.

Having determined your effective tax bracket above, use the
following table to determine the tax equivalent yield for a
given tax-free yield.

If your combined effective federal, state and county
personal income tax rate in 1995 is:

33.76% 36.52% 41.12% 44.43%
To match
these tax
free rates: Your taxable investment would have to earn the following yield:

3% 4.53% 4.73% 5.10% 5.40%
4% 6.04% 6.30% 6.79% 7.20%
5% 7.55% 7.88% 8.49% 9.00%
6% 9.06% 9.45% 10.19% 10.80%
7% 10.57% 11.03% 11.89% 12.60%

A Portfolio may invest a portion of its assets in
obligations that are subject to federal, state, or county
(or City of Baltimore) income taxes. When the Portfolio
invests in these obligations, its tax-equivalent yield will
be lower. In the table above, tax-equivalent yields are
calculated assuming investments are 100% federal- and state-
tax-free.

Yield information may be useful in reviewing a Portfolio's
performance and in providing a basis for comparison with
other investment alternatives. However, each Portfolio's
yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing
investment alternatives, investors should also note the
quality and maturity of the portfolio securities of the
respective investment companies that they have chosen to
consider.

Investors should recognize that in periods of declining
interest rates a Portfolio's yield will tend to be somewhat
higher than prevailing market rates, and in periods of
rising interest rates a Portfolio's yield will tend to be
somewhat lower. Also, when interest rates are falling, the
inflow of net new money to a Portfolio from the continuous
sale of its shares will likely be invested in instruments
producing lower yields than the balance of the Portfolio's
holdings, thereby reducing the Portfolio's current yield.
In periods of rising interest rates, the opposite can be
expected to occur. The yields of the Institutional Class
and Institutional II Class of the same Portfolio are each
calculated separately. The yields of the Institutional II
Class of a Portfolio will be lower than those of the
Institutional Class of the same Portfolio, due to higher
expenses in general.

Total Return Calculations. Total returns quoted in
advertising reflect all aspects of a Portfolio's return,
including the effect of reinvesting dividends and capital
gain distributions (if any), and any change in the
Portfolio's NAV over the period. Average annual total
returns are calculated by determining the growth or decline
in value of a hypothetical historical investment in a
Portfolio over a stated period, and then calculating the
annually compounded percentage rate that would have produced
the same result if the rate of growth or decline in value
had been constant over the period. For example, a
cumulative total return of 100% over ten years would produce
an average annual total return of 7.18%, which is the steady
annual rate of return that would equal 100% growth on a
compounded basis in ten years. Average annual returns
covering periods of less than one year are calculated by
determining a Portfolio's total return for the period,
extending that return for a full year (assuming that
performance remains constant over the year), and quoting the
result as an annual return. While average annual total
returns are a convenient means of comparing investment
alternatives, investors should realize that performance is
not constant over time, but changes from year to year, and
that average annual total returns represent averaged figures
as opposed to the actual year-to-year performance of the
Portfolio.

In addition to average annual total returns, a Portfolio may
quote un-averaged or cumulative total returns reflecting the
simple change in value of an investment over a stated
period. Average annual and cumulative total returns may be
quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments,
or a series of redemptions, over any time period. Total
returns may be broken down into their components of income
and capital (including capital gains and changes in share
price) in order to illustrate the relationship of these
factors and their contributions to total return. The total
returns of the Institutional Class and Institutional II
Class of a Portfolio are each calculated separately. The
total returns of the Institutional II Class of a Portfolio
will be lower than those of the Institutional Class of the
same Portfolio, due to higher expenses in general. Total
returns, yields, and other performance information may be
quoted numerically or in a table, graph, or similar
illustration.

A Portfolio's performance may be compared in advertising to
the performance of other mutual funds in general or to the
performance of particular types of mutual funds, especially
those with similar objectives. This performance may be
expressed as a ranking prepared by Lipper Analytical
Services, Inc. (Lipper or Lipper Analytical Services), an
independent service located in Summit, New Jersey, that
monitors the performance of mutual funds. The Lipper
performance analysis ranks funds on the basis of total
return, assuming reinvestment of all distributions, but does
not take sales charges or redemption fees into consideration
and is prepared without regard to tax consequences. In
addition, Tax-Free Money Market Portfolio's performance and
Maryland Tax-Free Portfolio's performance each may be
compared in advertising to the performance of representative
individual municipal securities and unit investment trusts
comprised of municipal securities.

The Lipper General Equity Portfolios Average can be used to
show how a Portfolio's performance compares to a broad-based
set of equity mutual funds. The Lipper General Equity
Portfolios Average is an average of the total returns of all
equity mutual funds (excluding international funds and funds
that specialize in particular industries or types of
investments) tracked by Lipper.

Ibbotson Associates of Chicago, Illinois (Ibbotson) provides
historical returns of the capital markets in the United
States. Each Portfolio may compare its performance to the
long-term performance of the U.S. capital markets in order
to demonstrate general long-term risk versus reward
investment scenarios. Performance comparisons could also
include the value of a hypothetical investment in common
stocks, long-term bonds, or U.S. Treasury securities.

Each of the ARK Money Market Portfolios and Income Portfolio
also may compare its performance or the performance of
securities in which it may invest to averages published by
IBC USA (Publications), Inc. of Ashland, Massachusetts.
These are average yields of various types of money market
funds that include the effect of compounding distributions,
and assume reinvestment of distributions. The
IBC/Donoghue's Money Fund Averages, which is reported in the
MONEY FUND REPORT, covers over 200 taxable and tax-free
money market funds. The BOND FUND REPORT AVERAGES, which is
reported in the BOND FUND REPORT, covers over 400 taxable
bond funds.

A Portfolio may compare its performance to the Lehman
Brothers Aggregate Bond Index, an unmanaged index, and is a
broad measure of bond performance and includes reinvestment
of dividends. It is comprised of securities from the Lehman
Brothers Government/Corporate Bond Index, Mortgage-Backed
Securities Index, and Yankee Bond Index.

International Equity Portfolio may compare its performance
to the Morgan Stanley Capital International Europe,
Australia, Far East Index (EAFE Index) and the Morgan
Stanley Capital International World Index (World Index).
The EAFE Index is an unmanaged index of over 1,000 foreign
securities in Europe, Australia and the Far East, and the
World Index is an unmanaged index of over 1,500 foreign
securities.

The Portfolios also may quote in advertising the performance
of various unmanaged indices as may be selected from time to
time, and may compare the price volatility of these indices
to the price volatility of the S&P 500. These indices may
include, but are not limited to, the examples shown in the
Appendix to this Statement of Additional Information.

Market Capitalization. Companies outside the United States
now make up nearly two-thirds of the world's stock market
capitalization. According to Morgan Stanley Capital
International World Index, the size of the markets, as
measured in U.S. dollars, grew from $2,011 billion in 1982
to $7.659 billion in 1994.

The following table measures the total market capitalization
of certain countries according to the Morgan Stanley Capital
International Indices database. The value of the markets
are measured in billions of U.S. dollars as of December
31, 1994.

Total Market Capitalization

Australia $125.10 Japan $2,145.70
Austria 18.00 Netherlands 167.90
Belgium 49.30 Norway 19.90
Canada 171.10 Singapore/Malaysia 175.00
Denmark 35.30 Spain 74.30
France 265.60 Sweden 76.10
Germany 300.10 Switzerland 215.00
Hong Kong 196.50 United Kingdom 731.00
Italy 102.90 United States 2,784.70

National Stock Market Performance. Certain national stock
markets have outperformed the U.S. stock market. The first
table below represents the performance of national stock
markets, as measured in U.S. dollars, by the Morgan Stanley
Capital International stock market indices for the twelve
month period ended October 31, 1994. The second table shows
the same performance as measured in local currency. Each
table measures total return based on the period's change in
price, assuming any dividends are reinvested monthly and net
of any applicable foreign taxes. These are unmanaged
indices composed of a sampling of selected companies
representing an approximation of the market structure of the
designated country.

Stock Market Performance (Cumulative Total Returns)
Measured in U.S. Dollars

Australia 2.932% Japan 8.122%
Austria -5.91 Netherlands 14.089
Belgium 13.47 Norway 15.120
Canada 1.173 Singapore/Malaysia 33.750/7.946
Denmark 7.285 Spain -1.426
France 2.592 Sweden 19.165
Germany 8.752 Switzerland 11.086
Hong Kong 2.047 United Kingdom 7.843
Italy 17.332 United States 1.679

Stock Market Performance (Cumulative Total Returns)
Measured in Local Currency

Australia -2.232% Japan -3.213%
Austria -15.340 Netherlands 2.517
Belgium -3.057 Norway 3.208
Canada 3.599 Singapore/Malaysia 23.794/7.963
Denmark -6.058 Spain -7.860
France -9.690 Sweden 5.680
Germany -2.090 Switzerland 5.573
Hong Kong 2.034 United Kingdom -1.884
Italy 11.405 United States 1.679

Of course, these results do not indicate future stock market
performance or future International Equity Portfolio's
performance. Market conditions during the period measured
fluctuated widely. Brokerage commissions and other fees
were not factored into the values of the indices.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Each Portfolio is open for business and its NAV is
calculated each day that the Federal Reserve Bank of New
York (FRB) and the New York Stock Exchange (NYSE) are open
for trading (a Business Day). The NAV of Short-Term
Treasury Portfolio, Income Portfolio, Growth and Income
Portfolio, Blue Chip Equity Portfolio, Capital Growth
Portfolio, International Equity Portfolio, Special Equity
Portfolio and Maryland Tax-Free Portfolio is determined at
the close of business of the NYSE, normally 4:00 p.m.
Eastern Time (4:00 p.m.). Shares purchased at 4:00 p.m.
begin to earn dividends on the following Business Day.

The NAV of U.S. Treasury Money Market Portfolio and Tax-Free
Money Market Portfolio is determined at 12:00 noon Eastern
Time (12:00 noon) and the close of business of the NYSE,
normally 4:00 p.m. The NAV of U.S. Government Money Market
Portfolio and Money Market Portfolio is determined at 1:30
p.m. Eastern Time (1:30 p.m.) and the close of business of
the NYSE, normally 4:00 p.m.. Shares purchased at 12:00
noon and 1:30 p.m. begin to earn dividends that Business
Day. Shares purchased at 4:00 p.m. begin to earn dividends
on the following Business Day.

The following holiday closings have been scheduled for 1996
and the Fund expects the schedule to be the same in the
future: Dr. Martin Luther King, Jr. Day (observed),
Presidents' Day, Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Columbus Day (observed),
Veterans Day (observed), Thanksgiving Day and Christmas Day.
Although the schedule is expected to remain the same in the
future, with the addition of New Year's Day, the NYSE may
change the schedule. When the NYSE or the FRB is closed, or
when trading is restricted for any reason other than its
customary weekend or holiday closings, or under emergency
circumstances as determined by the SEC to merit such action,
each Portfolio will determine its NAV at the close of
business, the time of which will coincide with the closing
of the NYSE. To the extent that securities held by a
Portfolio are traded in other markets on days the NYSE or
FRB is closed (when investors do not have access to the
Portfolio to purchase or redeem shares), the Portfolio's NAV
may be significantly affected.

If, in the opinion of the Board, conditions exist which make
cash payment undesirable, redemption payments may be made in
whole or in part in securities or other property, valued for
this purpose as they are valued in computing the NAV of each
Portfolio. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax
purposes and will incur any costs of sale as well as the
associated inconveniences.

Pursuant to Rule 11a-3 under the 1940 Act, a Portfolio is
required to give shareholders at least 60 days' notice prior
to terminating or modifying a Portfolio's exchange
privilege. Under the Rule, the 60-day notification
requirement may be waived if (i) the only effect of a
modification would be to reduce or eliminate an
administrative fee, redemption fee or deferred sales charge
ordinarily payable at the time of exchange or (ii) a
Portfolio temporarily suspends the offering of shares as
permitted under the 1940 Act or by the SEC or because it is
unable to invest amounts effectively in accordance with its
investment objective and policies.

As is set forth in the Prospectus, the Portfolios reserve
the right at any time without prior notice to shareholders
to refuse exchanges by any person or group if, in First
Maryland's judgment (or AIB I.M's judgment if applicable) a
Portfolio would be unable to invest effectively in
accordance with its investment objective and policies, or
would otherwise potentially be adversely affected.

TAXES

Each of the ARK Money Market Portfolios declares dividends
equal to its entire net investment income (including, in the
case of each taxable ARK Money Market Portfolio, net
realized short-term capital gains and losses, if any) on
each Business Day, and pays dividends after the close of
business on the first Business Day of the following month.
Short-Term Treasury Portfolio, Income Portfolio and Maryland
Tax-Free Portfolio each declares and pays dividends monthly,
Growth and Income Portfolio and Blue Chip Equity Portfolio
each declares and pays dividends quarterly, and Capital
Growth Portfolio, International Equity Portfolio and Special
Equity Portfolio each declares and pays dividends annually.
Net long-term capital gains (and, in the case of Tax-Free
Money Market Portfolio and Maryland Tax-Free Portfolio, net
short-term capital gains), if any, are declared and
distributed annually by all Portfolios. The ARK Money
Market Portfolios, Income Portfolio and Maryland Tax-Free
Portfolio declare dividends for Saturdays, Sundays and
holidays on the previous Business Day. If a shareholder
elects to redeem all the shares of a Portfolio, all
dividends credited to the shareholder up to the date of
redemption are paid to the shareholder at the end of the
month. Unless the transfer agent is otherwise instructed,
all dividends and distributions of capital gains are
automatically re-invested into additional shares of that
Portfolio immediately upon payment thereof.

Each Portfolio intends to qualify for tax treatment as a
"regulated investment company" under the Internal Revenue
Code of 1986, as amended (the Code). By distributing all of
its net investment income and any net realized short-term
and long-term capital gains for a taxable year in accordance
with the timing requirements imposed by the Code, and by
meeting certain other requirements relating to the sources
of its income and diversification of its assets, a Portfolio
should not be liable for federal income or excise taxes.

Tax-Free Money Market Portfolio and Maryland Tax-Free
Portfolio. Dividends paid by these Portfolios to
shareholders out of tax-exempt interest income earned by the
Portfolios (exempt-interest dividends) generally will not be
subject to federal income tax paid by the Portfolios'
shareholders. However, persons who are "substantial users"
or "related persons" of facilities financed by private
activity bonds held by the Portfolios may be subject to tax
on their pro-rata share of the interest income from such
bonds and should consult their tax advisers before
purchasing shares of the Portfolios. Realized market
discount on tax-exempt obligations purchased after April 30,
1993, is treated as ordinary income and not as a capital
gain. Dividends paid by the Portfolios out of its taxable
net investment income (including realized net short-term
capital gains, if any) are taxable to shareholders as
ordinary income notwithstanding that such dividends are
reinvested in additional shares of the Portfolios. The
"exempt interest dividend" portion of a distribution is
determined by the ratio of the tax-exempt income to total
income realized by a Portfolio for the entire year and,
thus, is an annual average, rather than a day-to-day
determination for each shareholder. Distributions of long-
term capital gains, if any, are taxable as long-term capital
gains to the shareholder receiving them regardless of the
length of time he or she may have held his or her shares.
Under current tax law (1) interest on certain private
activity bonds is treated as an item of tax preference for
purposes of the federal alternative minimum tax imposed on
individuals and corporations, although for regular federal
income tax purposes such interest remains fully tax-exempt,
and (2) interest on all tax-exempt obligations is included
in "adjusted current earnings" of corporations for federal
alternative minimum tax purposes. Because the Portfolios
expect to purchase private activity bonds, a portion (not
expected to exceed 20%) of each Portfolio's exempt-interest
dividends may constitute an item of tax preference for those
shareholders subject to the federal alternative minimum tax.

Interest on indebtedness incurred by shareholders to
purchase or carry shares of the Portfolios generally is not
deductible for federal income tax purposes. Under IRS rules
for determining when borrowed funds are used for purchasing
or carrying particular assets, shares of the Portfolios may
be considered to have been purchased or carried with
borrowed funds even though those funds are not directly
linked to the shares.

The exemption for federal income tax purposes of dividends
derived from interest on municipal securities does not
necessarily result in an exemption under the income or other
tax laws of any state or local taxing authority.
Shareholders of the Portfolio may be exempt from state and
local taxes on distributions of tax-exempt interest income
derived from obligations of the state and/or municipalities
of the state in which they reside but may be subject to tax
on income derived from the municipal securities of other
jurisdictions. Shareholders are advised to consult with
their tax advisers concerning the application of state and
local taxes to investments in the Portfolio which may differ
from the federal income tax consequences described above.

Shareholders are required to report tax-exempt income on
their federal tax returns. Shareholders who earn other
income, such as Social Security benefits, may be subject to
federal income tax on up to 85% of such benefits to the
extent that their income, including tax-exempt income,
exceeds certain base amounts.

The Portfolios purchase municipal obligations based on
opinions of bond counsel regarding the federal income tax
status of the obligations. These opinions generally will be
based upon covenants by the issuers regarding continuing
compliance with federal tax requirements. If the issuer of
an obligation fails to comply with its covenant at any time,
interest on the obligation could become federally taxable
retroactive to the date the obligation was issued.

Corporate investors should note that a tax preference item
for purposes of the corporate Alternative Minimum Tax is 75%
of the amount by which adjusted current earnings (which
includes tax-exempt interest) exceeds the alternative
minimum taxable income of the corporation. If a shareholder
receives an exempt-interest dividend and sells shares at a
loss after holding them for a period of six months or less,
the loss will be disallowed to the extent of the amount of
exempt-interest dividend.

Maryland Tax Matters. To the extent that dividends paid
by the Portfolios qualify as exempt-interest dividends of a
regulated investment company, the portion of exempt-interest
dividends that represents interest received by the
Portfolios on obligations (a) of Maryland or its political
subdivisions and authorities, or (b) of the United States or
an authority, commission, instrumentality, possession or
territory of the United States, will be exempt from Maryland
state and local income taxes when allocated or distributed
to a shareholder of the Portfolios.

In addition, gains realized by the Portfolios from the
sale or exchange of a bond issued by Maryland or a political
subdivision of Maryland, or by the United States or an
authority, commission or instrumentality of the United
States, will not be subject to Maryland state and local
income taxes. To the extent that distributions of the
Portfolios are attributable to sources other than those
described in the preceding sentences, such as interest
received by the Portfolios on obligations issued by states
other than Maryland or capital gains realized on obligations
issued by U.S. territories and possessions and from states
other than Maryland, and income earned on repurchase
agreements, such distributions will be subject to Maryland
state and local income taxes. Income earned on certain
private activity bonds which the Portfolios might hold will
constitute a Maryland tax preference for individual
shareholders. In addition, capital gains realized by a
shareholder upon a redemption or exchange of Portfolio
shares will be subject to Maryland state and local income
taxes.

Federal Taxes. Distributions from each Portfolio's
taxable net investment income and short-term capital gain
are taxed as dividends, and long-term capital gain
distributions are taxed as long-term capital gain. A
portion of the dividends may qualify for the dividends
received deduction for corporations. The Portfolios'
distributions are taxable when they are paid, whether taken
in cash or reinvested in additional shares, except that
distributions declared in October, November or December and
payable to shareholders of record in such month, if paid in
January of the following year, will be taxed as though paid
on December 31. The Portfolios will send non-corporate
shareholders a tax statement by January 31 showing the tax
status of the distributions received in the prior year.
Shareholders also will be notified as to the portion of
distributions from the Tax-Free Money Market Portfolio and
Maryland Tax-Free Portfolio that are exempt from federal
income taxes. It is suggested that shareholders keep all
statements received to assist in personal record keeping.

Capital Gains. Shareholders may realize a capital gain or
loss when they redeem (sell) or exchange shares of the
Portfolios. For most types of accounts, the Portfolios will
report the proceeds of a shareholder's redemptions to the
shareholder and the IRS annually. However, because the tax
treatment also depends on the purchase price and the
shareholder's personal tax position, shareholders should
keep their regular account statements for use in determining
their tax. Long-term capital gains earned by the Portfolios
on the sale of securities and distributed to shareholders
are federally taxable as long-term capital gains, regardless
of the length of time that shareholders have held their
shares. If a shareholder receives a long-term capital gain
distribution on shares of the Portfolios, and such shares
are held six months or less and are sold at a loss, the
portion of the loss equal to the amount of the long-term
capital gain distribution will be considered a long-term
loss for tax purposes. Short-term capital gains distributed
by the Portfolios are taxable to shareholders as dividends,
not as capital gains.

"Buying a Dividend." On the record date for a
distribution or dividend, the applicable Portfolio's share
value is reduced by the amount of the distribution. If a
shareholder were to buy shares just before the record date
("buying a dividend"), they would pay the full price for the
shares and then receive a portion of the price back as a
taxable distribution.

Other Tax Information. In addition to federal taxes,
shareholders may be subject to state or local taxes on their
investment, depending on state law.

When an investor signs his account application, he or she
will be asked to certify that his or her social security or
taxpayer identification number is correct and that he or she
is not subject to 31% backup withholding for failing to
report income to the IRS. If an investor violates IRS
regulations, the IRS can require a Portfolio to withhold 31%
of that investor's taxable distributions and redemptions.

Each Portfolio calculates dividend and capital gain
distributions separately, and is treated as a separate
entity in all respects for tax purposes. There is a risk
that any of the ARK Non-Money Market Portfolios may be
unable to meet the Code requirement that requires a
Portfolio to derive less than 30% of its gross income from
gains realized upon the sale or other disposition of
securities held less than three months. If this were to
occur, the affected Portfolio would be required to pay
federal as well as Maryland state income taxes from its
assets.

If a Portfolio purchases shares in certain foreign
investment entities, defined as passive foreign investment
companies (PFICs under the Code), it may be subject to U.S.
federal income taxes on a portion of any excess distribution
or gain from the disposition of such shares. Interest
charges may also be imposed on a Portfolio with respect to
deferred taxes arising from such distributions or gains.

TRUSTEES AND OFFICERS

The Trustees and officers of the Fund and their principal
occupations during the past five years are set forth below.
Each Trustee who is an "interested person" (as defined in
the 1940 Act) is indicated by an asterisk (*).

William H. Cowie, Jr., 1408 Ruxton Road, Baltimore, MD,
Trustee (1993). Prior to retiring, Mr. Cowie was Chief
Financial Officer (1991-1995) of Pencor, Inc. (developers of
environmental projects). Prior to 1991, Mr. Cowie was Vice
Chairman of Signet Banking Corporation and President and
Chief Executive Officer of Signet Bank of Maryland.

Charlotte R. Kerr, 10227 Wincopin Circle, Suite 108,
Columbia, MD, Trustee (1993). Ms. Kerr is Practitioner of
Centre for Traditional Acupuncture and Faculty for
Traditional Acupuncture Institute.

*David D. Downes, 5 Bird Hill Court, Timonium, MD,
President and Trustee (1995). Mr. Downes is Of Counsel to
Venable, Baetjer & Howard (law). Prior to 1995, Mr. Downes
was a Partner (1989) of Venable, Baetjer & Howard (law).
Prior to 1989, he served as a Principal of Cook, Howard,
Downes & Tracy (law).

George K. Reynolds, III, 233 East Redwood Street,
Baltimore, MD, Trustee (1993). Mr. Reynolds is Chairman of
the Trusts & Estates Department at, and a Partner of,
Gordon, Feinblatt, Rothman, Hoffberger & Hollander (law).
Prior to 1991, Mr. Reynolds was a Partner of Venable,
Baetjer & Howard (law). From 1989 to 1991, he served as a
Principal of Cook, Howard, Downes & Tracy (law).

Thomas Schweizer, 6 Betty Bush Lane, Baltimore, MD,
Trustee (1993). Prior to his retirement in 1987, Mr.
Schweizer was self-employed. He currently is a board member
of various charity organizations and hospitals.

Stephen G. Meyer, 680 East Swedesford Road, Wayne, PA
19087, Controller, Treasurer and Chief Financial Officer
(November 1995). Mr. Meyer is Vice President and Controller
- - Fund Resources, a division of SEI Corporation from 1992 to
March 1995, Mr. Meyer was Director - Internal Audit and Risk
Management - SEI Corporation (1992). Prior to 1992, Mr.
Meyer was a Senior Associate with Coopers & Lybrand LLP.

Richard J. Shoch, 680 East Swedesford Road, Wayne, PA
19087, Vice President and Secretary (November 1995). Mr.
Shoch is Vice President and Assistant Secretary of SEI
Corporation (1995). From 1990 to June 1995, Mr. Shoch was
Regulatory Manager of SEI Corporation.

Kathryn L. Stanton, 680 East Swedesford Road, Wayne, PA
19087, Vice President and Assistant Secretary (November
1995). Ms. Stanton is Vice President and Assistant
Secretary of SEI Corporation, since 1994. Prior to 1994,
Ms. Stanton was an Associate with Morgan, Lewis & Bockius
(1989).

Sandra K. Orlow, 680 East Swedesford Road, Wayne, PA
19087, Vice President and Assistant Secretary (November
1995). Ms. Orlow is Vice President and Assistant Secretary
of SEI Corporation (1983).

Robert B. Carroll, 680 East Swedesford Road, Wayne, PA
19087, Vice President and Assistant Secretary (November
1995). Mr. Carroll is Vice President and Assistant
Secretary of SEI Corporation (1994). From 1990 to 1994, Mr.
Carroll was an attorney with the Securities and Exchange
Commission, Division of Investment Management.

Kevin P. Robins, 680 East Swedesford Road, Wayne, PA
19087, Vice President and Assistant Secretary (November
1995). Mr. Robins is Senior Vice President, General Counsel
and Secretary of SEI Corporation since 1994. Prior to 1994,
Mr. Robins was Vice President and Assistant Secretary of SEI
Corporation. Prior to 1992, Mr. Robins was an
Associate with Morgan, Lewis & Bockius (1988).

Todd Cipperman, 680 East Swedesford Road, Wayne, PA 19087,
Vice President and Assistant Secretary (November 1995). Mr.
Cipperman is Vice President and Assistant Secretary of SEI
Corporation (1995). From 1994 to May 1995, Mr. Cipperman
was an Associate with Dewey Ballantine. Prior to 1994, Mr.
Cipperman was an Associate with Winston & Strawn (1991).

Joseph M. Lydon, 680 East Swedesford Road, Wayne, PA
19087, Vice President and Assistant Secretary (November
1995). Mr. Lydon is Director of Business Administration -
Fund Resources, a division of SEI Corporation (1995). From
1989 to April 1995, Mr. Lydon was Vice President of Fund
Group, Vice President of the Advisor - Dreman Value
Management, LP and President of Dreman Financial Services,
Inc.

The following table sets forth information describing the
compensation of each current Trustee of ARK Funds for his or
her services as trustee for the fiscal year ended April 30,
1995.

<TABLE>
<CAPTION>
Trustee Compensation Table
<S> <C> <C> <C> <C>
Pension or Estimated
Aggregate Retirement Annual Benefits Total
Compensation Benefits Upon Retirement Compensation
from Accrued from the from the Fund from the Fund
Name of Trustee the Fund* Complex* Complex Complex*
William H. Cowie, (64) $8,500 $0 $0 $8,500
David D. Downes (59) 1,750 0 0 1,750
Charlotte Kerr (48) 8,000 0 0 8,000
George K. Reynolds, III (49) 8,000 0 0 8,000
Thomas Schweizer (72) 8,000 0 0 8,000
James K. McManus (73)
(resigned September 20, 1994) 3,500 0 0 3,500

* The Fund's Trustees do not receive any pension or retirement benefits
from the Fund as compensation for their services as Trustees of the Fund.
ARK Funds, a Massachusetts business trust, is the sole investment company
in the fund complex.

</TABLE>

THE ADVISORS

Pursuant to an Investment Advisory Contract with the Fund
dated April 12, 1993 (Advisory Contract), First Maryland
furnishes at its own expense, all services, facilities and
personnel necessary to manage the investments of each
Portfolio (with the exception of International Equity
Portfolio) and effect portfolio transactions on behalf of
each Portfolio. The Advisory Contract has been approved by
the Board and will continue in effect with respect to a
Portfolio only if such continuance is specifically approved
at least annually by the Board or by vote of the
shareholders of such Portfolio, and in either case by a
majority of the Trustees who are not parties to the Advisory
Contract or interested persons of any such party, at a
meeting called for the purpose of voting on the Advisory
Contract. Pursuant to an Advisory Contract with the Fund
dated June 7, 1994 on behalf of International Equity
Portfolio, AIB I.M. furnishes at its own expense, all
services, facilities and personnel necessary to manage the
Portfolio's investments and effect portfolio transactions on
behalf of the Portfolio. The Advisory Contract with AIB
I.M. has been approved by the Board and will continue in
effect only if specifically approved at least annually by
the Board or by vote of the shareholders of International
Equity Portfolio of the Fund, and in either case by a
majority of the Trustees who are not parties to the Advisory
Contract or interested persons of any such party, at a
meeting called for the purpose of voting on the Advisory
Contract.

Each Advisory Contract is terminable with respect to a
Portfolio without penalty on 60 days' written notice when
authorized either by vote of the Fund's shareholders of such
Portfolio, or by a vote of a majority of the Trustees, or by
First Maryland or AIB I.M., as applicable, on 60 days'
written notice, and will automatically terminate in the
event of its assignment. The Advisory Contracts also
provide that, with respect to each Portfolio, neither First
Maryland or AIB I.M., as applicable, nor its personnel shall
be liable for any error of judgment or mistake of law or for
any act or omission in the performance of its duties to a
Portfolio, except for willful misfeasance, bad faith or
gross negligence in the performance by First Maryland or AIB
I.M. of its duties or by reason of reckless disregard of its
obligations and duties under the applicable Advisory
Contract. The Advisory Contracts provide that First
Maryland and AIB I.M. may render services to others.

The fees paid pursuant to each Advisory Contract are
accrued daily and paid monthly. For its services, First
Maryland is entitled to receive fees with respect to the
following Portfolios at the annual rates set forth below:

ARK Money Market Portfolios: .25% of each Portfolio's average net assets.
Short-Term Treasury Portfolio: .35% of the Portfolio's average net assets.
Income Portfolio: .50% of the Portfolio's average net assets.
Growth and Income Portfolio: .55% of the Portfolio's average net assets.
Blue Chip Equity Portfolio: .60% of the Portfolio's average net assets.
Capital Growth Portfolio: .60% of the Portfolio's average net assets.
Special Equity Portfolio: .60% of the Portfolio's average net assets.
Maryland Tax-Free Portfolio: .50% of the Portfolio's average net assets.

For its services, AIB I.M. is entitled to receive fees with
respect to International Equity Portfolio at the annual rate
of .80% of the Portfolio's average net assets.

For the fiscal year ended April 30, 1995, the advisory fee
payable to the Advisor under the Advisory Contract with
respect to U.S. Treasury Money Market Portfolio was $433,206
of which $155, 954 was waived. For the fiscal year ended
April 30, 1995, the advisory fee payable to the Advisor
under the Advisory Contract with respect to U.S. Government
Money Market Portfolio was $1,211,814 of which $745,803 was
waived. For the fiscal year ended April 30, 1995, the
advisory fee payable to the Advisor under the Advisory
Contract with respect to Money Market Portfolio was $675,922
of which $497,923 was waived. For the fiscal year ended
April 30, 1995, the advisory fee payable to the Advisor
under the Advisory Contract with respect to Tax-Free Money
Market Portfolio was $168,405 of which $114,525 was waived.
For the fiscal year ended April 30, 1995, the advisory fee
payable to the Advisor under the Advisory Contract with
respect to Income Portfolio was $273,599. For the fiscal
year ended April 30, 1995, the advisory fee payable to the
Advisor under the Advisory Contract with respect to Growth
and Income Portfolio was $488,695. For the fiscal year
ended April 30, 1995, the advisory fee payable to the
Advisor under the Advisory Contract with respect to Capital
Growth Portfolio was $269,990 of which $50,934 was waived
from February 13, 1995 to April 30, 1995. For the fiscal
year ended April 30, 1995, the advisory fee payable to the
Advisor under the Advisory Contract with respect to
International Equity Portfolio was $6, 904 of which $6,904
was waived.

In addition to receiving its advisory fee from each
Portfolio, First Maryland or AIB I.M., in the case of
International Equity Portfolio, may also act and be
compensated as investment manager for its clients with
respect to assets which are invested in a Portfolio. In
some instances First Maryland or AIB I.M. may elect to
credit against any investment management fee received from a
client who is also a shareholder in a Portfolio an amount
equal to all or a portion of the fee received by First
Maryland or AIB I.M., as applicable, or its affiliate, from
a Portfolio with respect to the client's assets invested in
the Portfolio. AIB I.M. has reserved the right to reimburse
a portion of its fee in order to keep International Equity
Portfolio's total operating expenses from exceeding 1.55% of
average net assets, subject to annual review by AIB I.M.

Subject to the obligations of First Maryland or AIB I.M. to
reimburse each Portfolio for its excess expenses as
described below, each Portfolio, has under its Advisory
Contract, confirmed its obligation to pay all other
expenses, including interest charges, taxes, brokerage fees
and commissions; certain insurance premiums; fees, interest
charges and expenses of the custodian, transfer agent and
dividend disbursing agent; telecommunications expenses;
auditing, legal and compliance expenses; costs of forming
the corporation and maintaining corporate existence; costs
of preparing and printing the Portfolios' prospectuses,
statements of additional information, subscription order
forms and shareholder reports and delivering them to
existing and prospective shareholders; costs of maintaining
books of original entry for portfolio accounting and other
required books and accounts of calculating the NAV of shares
of the Portfolio(s); costs of reproduction, stationery and
supplies; compensation of directors and officers and
employees of the Portfolio(s) and costs of other personnel
performing services for the Portfolio(s) who are not
officers of First Maryland or AIB I.M., in the case of
International Equity Portfolio, Distributors, or their
respective affiliates; costs of shareholder meetings; SEC
registration fees and related expenses; state securities
laws registration fees and related expenses; fees payable
under the Advisory Contract and under the Administration
Agreement and all other fees and expenses paid by the
Portfolio(s).

To comply with the California Code of Regulations, First
Maryland or AIB I.M., as applicable, will reimburse a
Portfolio if and to the extent such Portfolio's aggregate
annual operating expenses exceed specified percentages of
its average net assets. The applicable percentages are 2
1/2% of the first $30 million, 2% of the next 70 million,
and 1 1/2% of average net assets in excess of $100 million.
When calculating the Portfolios' expenses for purposes of
this regulation, the Portfolios may exclude interest, taxes,
brokerage commissions, and extraordinary expenses, as well
as a portion of their distribution plan expenses and
custodian fees attributable to investments in foreign
securities.

ADMINISTRATOR AND DISTRIBUTOR

SEI Financial Management Corporation, a wholly-owned
subsidiary of SEI Corporation ("SEI") serves as
administrator (the "Administrator") to the Fund. The
Administrator assists in supervising all operations of each
Portfolio, except those performed by the Advisor under the
Advisory Agreement, by the Distributor under the
Distribution Agreement and by First National Bank of
Maryland or Bankers Trust Company under their respective
Custodian Agreements.

Under the Administration Agreement, the Administrator has
agreed to maintain office facilities for the Fund. The
Administrator prepares annual and semi-annual reports to the
Securities and Exchange Commission, prepares Federal and
state tax returns, prepares filing with state securities
commissions, and generally assists in all aspects of the
Fund's operations other than those discussed above. Under
the Administration Agreement, the Administrator also
provides fund accounting and related accounting services.
The Administrator may delegate its responsibilities under
the Administration Agreement with the Fund's written
approval.

The Administrator was organized as a Delaware corporation in
1969 and has its principal business offices at 680 East
Swedesford Road, Wayne, PA 19087-1658. Alfred P. West,
Jr., Henry H. Greer, Carmen V. Romeo, and Richard B. Lieb
constitute the Board of Directors of the Administrator and
the Distributor. Mr. West is the Chairman of the Board and
Chief Executive Officer of SEI, the Administrator and the
Distributor. Mr. Greer serves as the President and Chief
Operating Officer of SEI, the Administrator and the
Distributor. SEI and its subsidiaries are leading providers
of funds evaluation services, trust accounting systems, and
brokerage and information services to financial
institutions, institutional investors and money managers.
The Administrator also serves as administrator to the
following other mutual funds: SEI Liquid Asset Trust; SEI
Tax Exempt Trust; SEI Index Funds; SEI Institutional Managed
Trust; SEI Daily Income Trust; SEI International Trust; The
Compass Capital Group; FFB Lexicon Funds; The Advisers'
Inner Circle Fund; the PBHG Funds, Inc.; Pillar Funds;
CUFUND; STI Classic Funds; CoreFunds, Inc.; First American
Funds, Inc.; First American Investment Funds Inc.; Rembrandt
Funds'; The Arbor Fund; The Stepstone Funds; 1784 Funds;
Marquis Funds; Morgan Grenfell Investment Trust; Insurance
Investment Products Trust; Bishop Street Funds; Conestoga
Family of Funds; The Achievement Funds Trust; and
CrestFunds, Inc.

SEI Financial Services Company serves as the distributor
(the "Distributor") of the Fund. The Distributor offers
shares continuously and has agreed to use its best efforts
to solicit purchase orders.

Distribution Plan. The Board has adopted a Distribution
Plan (the Plan) on behalf of the Institutional II Class of
each ARK Money Market Portfolio pursuant to Rule 12b-1
under the 1940 Act (the Rule). The Plan allows the
Institutional II Class of each Portfolio to pay the
Distributor up to .75% of the average net assets of such
class or such lesser amount as approved from time to time by
the Board. The Distributor may use fees and other resources
to pay expenses associated with the promotion and
administration of activities primarily intended to result in
the sale of Institutional II Class shares. These
distribution-related services include, but are not limited
to: advertising the availability of services and products;
designing material to send to customers and developing
methods of making such materials accessible to customers;
providing information about the product needs of customers;
providing facilities to solicit sales and to answer
questions from prospective and existing investors about the
Institutional II Class of the ARK Money Market Portfolios;
receiving and answering correspondence from prospective
investors, including requests for sales literature,
prospectuses and statements of additional information;
displaying and making sales literature and prospectuses
available on the service organization's premises; and acting
as liaison between Institutional II Class shareholders and
the ARK Money Market Portfolios, including obtaining
information from the ARK Money Market Portfolios regarding
the Institutional II Class and providing Institutional II
Class performance and other information about the ARK Money
Market Portfolios; and providing additional distribution-
related services.

The Plan has been approved by the Board, including the
majority of disinterested Trustees and the sole shareholder
of the Institutional II Class of each ARK Money Market
Portfolio. As required by the Rule, the Board carefully
considered all pertinent factors relating to the
implementation of the Plan prior to its approval, and have
determined that there is a reasonable likelihood that the
Plan will benefit the Institutional II Class of each ARK
Money Market Portfolio and its shareholders. To the extent
that the Plan gives the Distributor greater flexibility in
connection with the distribution of Institutional II Class
shares, additional sales of Institutional II Class shares
may result.

The Board has approved a monthly distribution fee based on
the following percentages of the average net assets of the
Institutional II Class of the Portfolios as follows: .10%
for each of the ARK Money Market Portfolios.

The Plan is a compensation plan because the Distributor is
paid a fixed fee and is given discretion concerning what
expenses are payable under the Plan. The Distributor may
spend more for marketing and distribution than it receives
in fees from the Institutional II Class of each ARK Money
Market Portfolio. However, to the extent fees received
exceed expenses, including indirect expenses such as
overhead, the Distributor could be said to have received a
profit. For example, if the Distributor pays $1 for
distribution-related expenses and receives $2 under the
Plan, the $1 difference could be said to be a profit for the
Distributor. If after payments by the Distributor for
marketing and distribution there are any remaining fees
which have been paid under the Plan, they may be used as the
Distributor may elect. Since the amounts payable under the
Plan will be commingled with the Distributor's general
funds, including the revenues it receives in the conduct of
its business, it is possible that certain of the
Distributor's overhead expenses will be paid out of
distribution fees and that these expenses may include the
costs of leases, depreciation, communications, salaries,
training and supplies.

Banking laws and regulations, including the Glass-Steagall
Act as currently interpreted by the Board of Governors of
the Federal Reserve System, prohibit a bank holding company
registered under the Bank Holding Company Act of 1956 or any
affiliate thereof from sponsoring, organizing, controlling,
or distributing the shares of a registered, open-end
investment company continuously engaged in the issuance of
its shares and prohibit banks generally from issuing,
underwriting, selling or distributing securities. The same
laws and regulations generally permit a bank or bank
affiliate to act as an investment adviser and to purchase
shares of the investment company as agent for and upon the
order of a customer. In the Fund's and First Maryland's
opinion, banks or their affiliates may be paid for
investment advisory, shareholder, servicing and record
keeping functions. Changes in federal or state statutes and
regulations pertaining to the permissible activities of
banks and their affiliates or subsidiaries, as well as
further judicial or administrative decisions or
interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a
bank or its affiliates were prohibited from so acting, the
Board would consider what actions, if any, would be
necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the
operation of the Portfolios might occur, including possible
termination of any automatic investment or redemption or
other services then being provided by any bank. It is not
expected that shareholders would suffer any adverse
financial consequences as a result of any of these
occurrences. State securities laws on this issue may differ
from the interpretations of federal law expressed herein,
and banks and other financial institutions may be required
to register as dealers pursuant to state law.

TRANSFER AGENT

The Fund has a Transfer Agency and Services Agreement,
dated November 1, 1995, with SEI Financial Management
Corporation. SEI Financial Management Corporation has
subcontracted transfer agency services to State Street Bank
and Trust Company ("State Street Bank"). State Street Bank
maintains an account for each shareholder, provides tax
reporting for each Portfolio, performs other transfer agency
functions and acts as dividend disbursing agent for each
Portfolio.

DESCRIPTION OF THE FUND

Trust Organization. Money Market Portfolio, U.S.
Government Money Market Portfolio, U.S. Treasury Money
Market Portfolio, Tax-Free Money Market Portfolio, Short-
Term Treasury Portfolio, Income Portfolio, Growth and Income
Portfolio, Blue Chip Equity Portfolio, Capital Growth
Portfolio, International Equity Portfolio, Special Equity
Portfolio and Maryland Tax-Free Portfolio are series of the
ARK Funds, an open-end management investment company
organized as a Massachusetts business trust by Declaration
of Trust dated October 22, 1992 and Amended and Restated on
March 19, 1993. A supplement to the Declaration of Trust
was executed and filed on March 23, 1993. The Declaration
of Trust permits the Board to create additional series.

In the event that First Maryland or AIB I.M. ceases to be
the investment advisor to the Fund or a Portfolio, the right
of the Fund or Portfolio to use the identifying name "ARK"
may be withdrawn.

The assets of the Fund received for the issue or sale of
shares of each Portfolio and all income, earnings, profits,
and proceeds thereof, subject only to the rights of
creditors, are allocated to such Portfolio, and constitute
the underlying assets thereof. The underlying assets of
each Portfolio are segregated on the books of account, and
are to be charged with the liabilities with respect to such
Portfolio and with a share of the general expenses of the
Fund. Expenses with respect to the Fund are to be allocated
in proportion to the asset value of the respective
Portfolios, except where allocations of direct expense can
otherwise fairly be made. The officers of the Fund, subject
to the general supervision of the Board, have the power to
determine which expenses are allocable to a given Portfolio,
or which are general or allocable to all of the Portfolios.
In the event of the dissolution or liquidation of the Fund,
shareholders of each Portfolio are entitled to receive as a
class the underlying assets of such Portfolio available for
distribution.

Shareholder and Trustee Liability. The Fund is an entity
of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a
trust may, under certain circumstances, be held personally
liable for the obligations of the trust. The Declaration of
Trust provides that the Fund shall not have any claim
against shareholders except for the payment of the purchase
price of shares and requires that each agreement,
obligation, or instrument entered into or executed by the
Fund or the Board shall include a provision limiting the
obligations created thereby to the Fund and its assets. The
Declaration of Trust provides for indemnification out of
each Portfolio's property of any shareholders held
personally liable for the obligations of the Portfolio. The
Declaration of Trust also provides that each Portfolio
shall, upon request, assume the defense of any claim made
against any shareholder for any act or obligation of the
Portfolio and satisfy any judgment thereon. Thus, the risk
of a shareholder incurring financial loss because of
shareholder liability is limited to circumstances in which
the Portfolio itself would be unable to meet its
obligations. First Maryland and AIB I.M. believe that, in
view of the above, the risk of personal liability to
shareholders is remote.

The Declaration of Trust further provides that the
Trustees, if they have exercised reasonable care, will not
be liable for any neglect or wrongdoing, but nothing in the
Declaration of Trust protects a Trustee against any
liability to which he or she would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct
of his or her office.

Voting Rights. Each ARK Money Market Portfolio offers
three classes of shares: Institutional Class, Institutional
II Class and Retail Class. Short-Term Treasury Portfolio,
Income Portfolio, Growth and Income Portfolio, Blue Chip
Equity Portfolio, Capital Growth Portfolio, Special Equity
Portfolio and Maryland Tax-Free Portfolio each offers two
classes of shares: Institutional Class and Retail Class.
Finally, International Equity Portfolio offers Institutional
Class shares only. The shares have no preemptive or
conversion rights; the voting and dividend rights, the right
of redemption, and the privilege of exchange are described
in the Prospectus. Shares are fully paid and non-
assessable, except as set forth under the heading
"Shareholder and Trustee Liability" above. Shareholders of
the Fund, a Portfolio or a class may, as set forth in the
Declaration of Trust, call meetings for any purpose related
to the Fund, Portfolio or class, respectively, including, in
the case of a meeting of the entire Fund, the purpose of
voting on removal of one or more Trustees. The Fund or any
Portfolio may be terminated upon the sale of its assets to
another open-end management investment company, or upon
liquidation and distribution of its assets, if approved by
vote of the holders of a majority of the outstanding shares
of the Fund or the Portfolio. If not so terminated, the
Fund and the Portfolios will continue indefinitely.

As of May 31, 1995, the officers and directors of the Fund
owned less than 1% of the outstanding shares of any
Portfolio.

The following owned beneficially more than 5% of the
outstanding shares of the of U.S. Government Money Market
Portfolio: First National Bank of Maryland F.I.L.M.
Investment Account, Baltimore, Maryland (22.9%); Maryland
State Retirement & Pension System, Baltimore, Maryland
(24.0%);

The following owned beneficially more than 5% of the
outstanding shares of U.S. Treasury Money Market Portfolio:
First National Bank of Maryland F.I.L.M. Investment Account,
Baltimore, Maryland (32.0%); York Bank F.I.L.M. Investment
Account (8.3%) .

The following owned beneficially more than 5% of the
outstanding shares of of Growth and Income Portfolio:
University of First Maryland Bancorp Thrift Plan, Baltimore,
Maryland (19.9%); University of Maryland Medical System,
Baltimore, Maryland (10.1%); and Maryland General Hospital,
Baltimore, Maryland (5.7%).

The following owned beneficially more than 5% of the
outstanding shares of Capital Growth Portfolio: First
Maryland Bancorp Thrift Plan, Baltimore, Maryland (23.9%).

The following owned beneficially more than 5% of the
outstanding shares of Income Portfolio: First Maryland
Bancorp Thrift Plan, Baltimore, Maryland (21.4%); First
Maryland Bancorp Pension Plan, Baltimore, Maryland (6.2%);

The following owned beneficially more than 5% of the
outstanding shares of International Equity Portfolio: AIB-
IM FBO Sisters of St. Joseph of Orange, Dublin, Ireland
(50.1%); AIB-IM FBO Sisters of St. Joseph of Peace, Dublin,
Ireland (49.0%);

A shareholder owning beneficially more than 25% of a
particular Portfolio's shares may be considered to be a
"controlling person" of that Portfolio. Accordingly, its
vote could have a more significant effect on matters
presented at shareholder meetings than the votes of the
Portfolio's other shareholders. First Maryland or its
affiliates, however, may receive voting instructions from
certain underlying customers or fiduciary accounts and will
vote the shares in accordance with those instructions. In
the absence of such instructions, First Maryland or its
affiliates will vote those shares in the same proportion as
it votes the shares for which it has received instructions
from its customers and fiduciary accounts.

AUDITOR

KPMG Peat Marwick LLP, 99 High Street, Boston, MA,
independent auditors, has been selected as the auditor for
the Fund. KPMG Peat Marwick LLP will examine financial
statements for the Portfolios and will provide other audit,
tax and related services.

FINANCIAL STATEMENTS

The Fund's financial statements and financial highlights
for the fiscal year ended April 30, 1995 and for the six
month period ended October 31, 1995 are included in the
Annual Report and Semi-Annual Report respectively, which are
separate reports with this Statement of Additional
Information. The Fund's financial statements and financial
highlights are incorporated herein by reference.

APPENDIX

Description of selected indices:

Dow Jones Industrial Average is an unmanaged index of
common stock prices representing stocks of major industrial
companies and includes reinvestment of dividends.

Standard & Poor's 500 Composite Stock Price Index is an
unmanaged index of common stock prices and includes
reinvestment of dividends.

NASDAQ Composite Index is an unmanaged index of over-the-
counter stock prices and does not assume reinvestment of
dividends.

Russell 2000 Index is an unmanaged index of small
capitalization stocks that includes reinvestment of
dividends.

Morgan Stanley Capital International Europe, Australia,
Far East (EAFE) Index is an unmanaged index of over 1,000
foreign securities in Europe, Australia and the Far East,
and includes reinvestment of dividends.

Morgan Stanley Capital World Index is an unmanaged index
of over 1,500 foreign securities, and includes reinvestment
of dividends.

Lehman Brothers Aggregate Bond Index, an unmanaged index,
is a broad measure of bond performance and includes
reinvestment of dividends. It is comprised of securities
from the Lehman Brothers Government/Corporate Bond Index,
Mortgage-Backed Securities Index, and Yankee Bond Index.

Lehman Brothers Government Bond Index is an index
comprised of all public obligations of the U.S. Treasury,
U.S. government agencies, quasi-federal corporations, and of
corporate debt guaranteed by the U.S. government. The index
excludes flower bonds, foreign targeted issues, and mortgage-
backed securities.

Lehman Brothers Corporate Bond Index is an index comprised
of all public, fixed-rate, non-convertible investment-grade
domestic corporate debt. Issues included in this index are
rated at least Baa by Moody's or BBB by S&P or, in the case
of unrated bonds, BBB by Fitch Investors Service.
Collateralized mortgage obligations are not included in the
Corporate Bond Index.

The Government Bond Index and the Corporate Bond Index
combine to form the Government/Corporate Bond Index.

Lehman Brothers Intermediate Corporate Bond Index is an
index comprised of all public, fixed-rate, non-convertible
investment-grade domestic corporate debt. Issues included
in this index have remaining maturities of one to ten years
and are rated at least Baa by Moody's or BBB by S&P or, in
the case of unrated bonds, BBB by Fitch Investors Service.

Lehman Brothers Long-Term Corporate Bond Index is an index
comprised of all public, fixed-rate, non-convertible
investment-grade domestic corporate debt. Issues included
in this index have remaining maturities greater than ten
years and are rated at least Baa by Moody's or BBB by S&P
or, in the case of unrated bonds, BBB by Fitch Investors
Service.

Salomon Brothers High Grade Corporate Bond Index is an
index of high quality corporate bonds with a minimum
maturity of at least ten years and with total debt
outstanding of at least $50 million. Issues included in the
index are rated AA or better by Moody's or AA or better by
S&P.

Merrill Lynch High and Medium Quality Intermediate-Term
Corporate Index is an index comprised of all public, fixed-
rate, non-convertible corporate debt. Issues included in
this index have remaining maturities of between one year and
9.99 years. Issues included in the index are rated at least
BBB by S&P.

Description of Moody's Investors Service, Inc.'s ratings
of state and municipal notes:

Moody's ratings for state and municipal and other short-
term obligations are designated Moody's Investment Grade
("MIG," or "VMIG" for variable rate obligations). This
distinction is in recognition of the difference between
short-term credit risk and long-term credit risk. Factors
affecting the liquidity of the borrower and short-term
cyclical elements are critical in short-term ratings, while
other factors of major importance in bond risk, long-term
secular trends for example, may be less important over the
short run. Symbols used will be as follows:

MIG-1/VMIG-1 - This designation denotes best quality.
There is present strong protection by established cash
flows, superior liquidity support or demonstrated broad-
based access to the market for refinancing.

MIG-2/VMIG-2 - This designation denotes high quality.
Margins of protection are ample although not so large as in
the preceding group.

Description of Standard & Poor's Ratings Group's ratings
of state and municipal notes:

SP-1 - Very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming
safety characteristics will be given a plus (+) designation.

SP-2 - Satisfactory capacity to pay principal and
interest.

Description of Moody's Investors Service, Inc.'s municipal
bond ratings:

Aaa - Bonds which are rated Aaa are judged to be of the
best quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various
protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa - Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They
are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than Aaa
securities.

A - Bonds which are rated A possess many favorable
investment attributes and are to be considered as upper
medium grade obligations. Factors giving security to
principal and interest may be present which suggest a
susceptibility to impairment sometime in the future.

Baa - Bonds which are rated Baa are considered as medium
grade obligations, i.e., they are neither highly protected
nor poorly secured. Interest payments and principal
security appear adequate for the present but certain
protective elements may be lacking or may be
characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and
in fact have speculative characteristics as well.

Moody's applies numerical modifiers, 1, 2, and 3, in each
generic rating classification from Aa through B in its
corporate bond rating system. The modifier 1 indicates that
the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower
end of its generic rating category.

Description of Standard & Poor's Ratings Group's municipal
bond ratings:

AAA - Debt rated AAA has the highest rating assigned by
S&P. Capacity to pay interest and repay principal is
extremely strong.

AA - Debt rated AA has a very strong capacity to pay
interest and repay principal and differs from the highest
rated debt issues only in small degree.

A - Debt rated A has a strong capacity to pay interest and
repay principal, although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic
conditions.

BBB - Debt rated BBB is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher
categories.

The ratings from AA to BBB may be modified by the addition
of a plus or minus to show relative standing within the
major rating categories.

Description of Moody's Investors Service, Inc.'s
commercial paper ratings:

Issuers rated Prime-1 (or related supporting institutions)
have a superior capacity for repayment of short-term
promissory obligations. Prime-1 repayment capacity will
normally be evidenced by the following characteristics:

Leading market positions in well-established industries.
High rates of return on funds employed.
Conservative capitalization structures with moderate reliance on
debt and ample asset protection.
Broad margins in earnings coverage of fixed financial charges and
with high internal cash generation.
Well established access to a range of financial markets and assured
sources of alternate liquidity.

Issuers rated Prime-2 (or related supporting institutions)
have a strong capacity for repayment of short-term
promissory obligations. This will normally be evidenced by
many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound,
will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity
is maintained.

Description of Standard & Poor's Ratings Group's commercial
paper ratings:

A - Issues assigned this highest rating are regarded as
having the greatest capacity for timely payment. Issues in
this category are delineated with the numbers 1, 2, and 3 to
indicate the relative degree of safety.

A-1 - This designation indicates that the degree of safety
regarding timely payment is either overwhelming or very
strong. Those issues determined to possess overwhelming
safety characteristics will be denoted with a plus (+) sign
designation.

A-2 - Capacity for timely payment on issues with this
designation is strong. However, the relative degree of
safety is not as high as for issues designated A-1.

Description of Moody's Investors Service, Inc.'s corporate
bond ratings:

Aaa - Bonds rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are
generally referred to as "gilt edge." Interest payments are
protected by a large or exceptionally stable margin and
principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of
such issues.

Aa - Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what
are generally known as high-grade bonds. They are rated
lower than the best bonds because margins of protection may
not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.

A - Bonds rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and
interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the
future.

Baa - Bonds rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security
appear adequate for the present but certain protective
elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have
speculative characteristics as well.

Ba - Bonds rated Ba are judged to have speculative elements.
Their future cannot be considered as well assured. Often
the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both
good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B - Bonds rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal
payments or maintenance of other terms of the contract over
any long period of time may be small.

Caa - Bonds rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger
with respect to principal or interest.

Ca - Bonds rated Ca represent obligations which are
speculative to a high degree. Such issues are often in
default or have other marked short-comings.

C - Bonds rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each
generic rating classification from Aa through B in its
corporate bond rating system. The modifier 1 indicates that
the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower
end of its generic rating category.

Description of Standard & Poor's Ratings Group's corporate bond ratings:

AAA - Debt rated AAA has the highest rating assigned by S&P
to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.

AA - Debt rated AA has a very strong capacity to pay
interest and repay principal and differs from the highest-
rated issues only to a small degree.

A - Debt rated A has a strong capacity to pay interest and
repay principal, although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic
conditions.

BB - Debt rate BB has less near-term vulnerability to
default than other speculative issues. However, it faces
major ongoing uncertainties or exposure to adverse business,
financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal
payments.

B - Debt rated B has a greater vulnerability to default but
currently has the capacity to meet interest payments and
principal repayments. Adverse business, financial, or
economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied BB- rating.

CCC - Debt rated CCC has a currently identifiable
vulnerability to default, and is dependent upon favorable
business, financial, and economic conditions to meet timely
payment of interest and repayment of principal. In the
event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay
interest and repay principal.

CC - Debt rated CC is typically applied to debt subordinated
to senior debt which is assigned an actual or implied CCC
debt rating.

C - The rating C is typically applied to debt subordinated
to senior debt which is assigned an actual or implied CCC-
debt rating. The C rating may be used to cover a situation
where a bankruptcy petition has been filed but debt service
payments are continued.

CI - The rating CI is reserved for income bonds on which no
interest is being paid.

D - Debt rated D is in payment default. The D rating
category is used when interest payments or principal
payments are not made on the date due even if the applicable
grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The D
rating will also be used upon the filing of a bankruptcy
petition if debt service payments are jeopardized.

The ratings from AA to CCC may be modified by the addition
of a plus or minus to show relative standing within the
major rating categories.

ARK FUNDS: RETAIL CLASS

U.S. TREASURY MONEY MARKET PORTFOLIO
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
MONEY MARKET PORTFOLIO
TAX-FREE MONEY MARKET PORTFOLIO
SHORT-TERM TREASURY PORTFOLIO
INCOME PORTFOLIO
GROWTH AND INCOME PORTFOLIO
BLUE CHIP EQUITY PORTFOLIO
CAPITAL GROWTH PORTFOLIO
SPECIAL EQUITY PORTFOLIO
MARYLAND TAX-FREE PORTFOLIO

CROSS REFERENCE SHEET

Form N-1A Item Number

Part A Prospectus Caption

* Not Applicable

ARK Funds -- Retail Class

Prospectus
_________, 1996

Each of the investment portfolios listed below (the "Portfolios")
offers a Retail Class of shares. The First National Bank of
Maryland ("First Maryland") serves as investment advisor to the
Portfolios. Shares of the Retail Class of each of the Portfolios
(the "Shares") are offered through this Prospectus. The Shares are
offered to all investors seeking professionally managed mutual
funds investing through an investment professional. A brief
description of each Portfolio whose shares are offered through this
Prospectus follows.

U.S. Treasury Money Market Portfolio, U.S. Government Money Market
Portfolio, and Money Market Portfolio each seek to maximize current
income and provide liquidity and security of principal. Each of
these money market Portfolios seeks to maintain a constant net
asset value per share of $1.00.

Tax-Free Money Market Portfolio seeks to provide a high level of
interest income, exempt from federal income taxes, as is consistent
with a portfolio of high quality, short-term municipal obligations
selected on the basis of liquidity and stability of principal.
This Portfolio seeks to maintain a constant net asset value per
share of $1.00.

An investment in a money market Portfolio is neither insured nor
guaranteed by the U.S. government. There can be no assurance that
any money market Portfolio will maintain a stable net asset value
per share of $1.00.

Growth and Income Portfolio seeks to achieve long-term total
returns from both capital appreciation and current income by
investing in a broad range of stocks, bonds, and cash equivalents.

Blue Chip Equity Portfolio seeks to achieve long-term capital
appreciation by investing primarily in equity securities of large
capitalization companies which are recognized market leaders.

Capital Growth Portfolio seeks to achieve long-term capital
appreciation by investing primarily in common stock and securities
convertible into common stock.

Special Equity Portfolio seeks to achieve capital appreciation by
investing primarily in securities of companies believed by First
Maryland to be "special equities." "Special equities" include
equity securities of: (1) a company with a market capitalization of
$1.2 billion or less at the time of the Portfolio's investment and
deemed by the Portfolio manager to have above average growth
potential; or (2) a company experiencing a "special situation";
that is, an unusual and possibly non-repetitive development taking
place in that company.

Maryland Tax-Free Portfolio seeks to achieve high current income
that is free from federal income tax and the Maryland state and
county income taxes by investing primarily in municipal securities.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

This Prospectus is designed to provide you with information that
you should know before investing. Please read and retain this
document for future reference. A Statement of Additional
Information (SAI) (dated ________, 1996) and the Financial
Statements (including portfolio listing) for the fiscal period
ended _______, 1995 have been filed with the Securities and
Exchange Commission ("SEC") and are incorporated herein by
reference. This Statement and the Annual Report are available upon
request without charge by calling 1-800-ARK-FUND.

Table of Contents

Summary of Portfolio Expenses....... Purchases, Exchanges and Redemptions...
Financial Highlights................ Management of the Fund.................
Investment Objectives, Policies Tax Matters............................
and Risk Considerations........... General Information....................
Performance......................... Appendix...............................
Portfolio Transactions and
Valuation.........................

SUMMARY OF PORTFOLIO EXPENSES

The expense summary format below was developed for use by all
mutual funds to help you make your investment decisions. You
should consider this expense information along with other important
information, including each Portfolio's investment objectives,
performance (if any) and financial highlights.

A. SHAREHOLDER TRANSACTION EXPENSES -- RETAIL CLASS

Maximum Sales Load Imposed on Purchases
(as a percentage of the offering price)

Money Market Portfolios...............................................None
Short-Term Treasury Portfolio.........................................0.00%*
Income Portfolio and Maryland Tax-Free Portfolio......................0.00%*
Blue Chip Equity Portfolio............................................0.00%*
Growth and Income Portfolio, Capital Growth Portfolio and Special
Equity Portfolio....................................................0.00%*
Sales Load Imposed on Reinvested Dividends -- all Portfolios..........None
Deferred Sales Load Imposed on Redemption -- all Portfolios...........None
Redemption Fee -- all Portfolios......................................None
Exchange Fee -- all Portfolios........................................None

* Sales loads are being waived for all purchases of Retail Class
shares of Short-Term Treasury Portfolio (at 4.50%), Income
Portfolio (at 4.50%), Maryland Tax-Free Portfolio (at 4.50%),
Growth and Income Portfolio (at 4.75%), Blue Chip Equity Portfolio
(at 4.75%), Capital Growth Portfolio (at 4.75%) and Special Equity
Portfolio (at 4.75%). These sales load waivers will be in effect
at least through the end of 1996.

B. ANNUAL RETAIL CLASS OPERATING EXPENSES (AS A PERCENTAGE OF
AVERAGE NET ASSETS):

Total
Advisory 12b-1 Other Operating
Fee Fee** Expenses Expenses
U.S. Treasury Money Market
Portfolio...................... .16%* .06%* .22%* 0.44%*
U.S. Government Money Market
Portfolio(1)................... .13%* .06%* .18%* 0.37%*
Money Market Portfolio.......... .10%* .31%* .15%* 0.56%*
Tax-Free Money Market
Portfolio...................... .08%* .06%* .14%* 0.28%*
Short-Term Treasury
Portfolio(1)................... .30%* .00%* .25% 0.55%*
Income Portfolio................ .50% .00%* .45%* 0.95%*
Growth and Income Portfolio..... .55% .00%* .53% 1.08%*
Blue Chip Equity Portfolio(1)... .00* .00%* .65%* 0.65%*
Capital Growth Portfolio........ .00%*** .00%* .44%* 0.44%*
Special Equity Portfolio(1)..... .60% .55%* .30%* 1.45%*
Maryland Tax-Free Portfolio(1).. .50% .45%* .24%* 1.19%*

* After applicable waivers.
** Includes Distribution Fee and Shareholder Service Fee.
*** The .60% advisory fee for Capital Growth Portfolio has been waived
through the end of 1996.
(1) The Retail Class of this Portfolio has not commenced operations as
of the date of this Prospectus.

C. Example: You would pay the following expenses on a $1,000 investment in
the Shares assuming (1) 5% annual return, (2) redemption at the end of
each time period, and (3) fee waivers continue at the same levels for
each time period.

1 Year 3 Years 5 Years 10 Years
U.S. Treasury Money Market
Portfolio........................ $5 $14 $25 $55
U.S. Government Money
Market Portfolio................. 4 12 21 47
Money Market Portfolio........... 6 18 31 70
Tax-Free Money Market
Portfolio........................ 3 9 16 36
Short-Term Treasury Portfolio.... 6 18 31 69
Income Portfolio................. 10 30 53 117
Growth and Income Portfolio...... 11 34 60 132
Blue Chip Equity Portfolio....... 7 21 36 81
Capital Growth Portfolio......... 5 14 25 55
Special Equity Portfolio......... 15 46 79 174
Maryland Tax-Free Portfolio...... 12 38 65 144

Explanation of Table: The purpose of the table is to assist
you in understanding the various costs and expenses that you would
bear directly or indirectly as a result of an investment in the
Shares. (For a more complete discussion of the various costs and
expenses, see "Management of the Fund"). As more fully described
under the heading "Purchases, Exchanges and Redemptions," the
Shares are currently available exclusively through qualified
securities brokers or financial institutions ("Investment
Professionals"). You should also consider the effects of any
charges imposed by Investment Professionals.

A. Shareholder Transaction Expenses represent charges paid
when you purchase, redeem or exchange Shares. If you exchange
Shares of one Portfolio for Shares of another Portfolio that
charges a higher sales charge, a differential sales charge may
apply.

B. Annual Operating Expenses are based on the Retail Class'
projected expenses for the year. Advisory Fees are paid by each
Portfolio to First Maryland for managing its investments.
Rule 12b-1 Fees are comprised of distribution fees and shareholder
servicing fees. Distribution fees are paid to SEI Financial Services
Company (the "Distributor") for services and expenses in
connection with the distribution of the Shares. Shareholder
servicing fees are paid to Investment Professionals for
services and expenses in connection with providing individual
assistance to Retail Class shareholders. Long-term shareholders
may pay more than the economic equivalent of the maximum front-end
sales charge permitted by the National Association of Securities
Dealers, Inc. ("NASD") due to 12b-1 fees. The Retail Class of each
Portfolio incurs Other Expenses for certain administrative services
such as maintaining shareholder records, furnishing shareholder
statements and reports, and for other services.

First Maryland has voluntarily agreed to waive .09% of its
advisory fee for U.S. Treasury Money Market Portfolio, .12% of its
advisory fee for U.S. Government Money Market Portfolio, .15% of
its advisory fee for Money Market Portfolio and .17% of its
advisory fee for Tax-Free Money Market Portfolio and .60% of its
advisory fee for Capital Growth Portfolio. SEI Financial
Management Corporation has voluntarily agreed to waive .018% of its
administration fee for Money Market Portfolio and .033% of its
administration fee for Tax-Free Money Market Portfolio. All
distribution fees and shareholder servicing fees are being waived
for Short-Term Treasury Portfolio, Income Portfolio, Growth and
Income Portfolio, Blue Chip Equity Portfolio and Capital Growth
Portfolio. For the Retail Class of each of the ARK Money Market
Funds, .09% of the .15% shareholder servicing fee is waived. For
the Retail Class of each of U.S. Treasury Money Market Portfolio,
U.S. Government Money Market Portfolio and Tax-Free Money Market
Portfolio, all .25% of its distribution fees are waived.

The Fund's Board of Trustees (the "Board") has adopted a Distribution
Plan (the "Plan") on behalf of the Retail Class of each Portfolio pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act").
The Plan allows the Retail Class of each Portfolio to pay the Distributor
up to .75% of the average net assets of such class or such lesser amount
as approved from time to time by the Board. The Board has approved a
monthly distribution fee based on the following percentages of the average
net assets of the Retail Class of the Portfolios as follows: .25% for each
of the ARK Money Market Portfolios, .30% for Short-Term Treasury Portfolio
and Income Portfolio, and .40% for each of Growth and Income Portfolio,
Blue Chip Equity Portfolio and Capital Growth Portfolio. In addition,
the Board has adopted a Shareholder Services Plan on behalf of the Retail
Class of the Portfolios to compensate qualified recipients for individual
shareholder services and account maintenance. The recipients are paid a
service fee at the annual rate of up to .25% of average net assets of the
Retail Class of each Portfolio or such lesser amount as may be approved by
the Board. Currently, the Board has approved a fee for shareholder
services of .15% of average net assets of the Retail Class of each Portfolio.

There can be no assurance that waivers will continue at the stated
levels or otherwise throughout the entire current fiscal year. Expenses
eligible for waiver do not include interest, taxes, brokerage
commissions (if any), or extraordinary expenses. Absent such waivers,
Advisory Fees, 12b-1 Fees, Other Expenses and Total Operating Expenses
would be: .25%, 1.00%, .22% and 1.47% (U.S. Treasury Money Market
Portfolio); .25%, 1.00%, .18% and 1.43% (U.S. Government Money Market
Portfolio); .25%, 1.00%, .17% and 1.42% (Money Market Portfolio); .25%,
1.00%, .21% and 1.46% (Tax-Free Money Market Portfolio); .35%, 1.00%,
.25% and 1.60% (Short-Term Treasury Portfolio); .50%, 1.00%, .45% and
1.95% (Income Portfolio); .55%, 1.00%, .53% and 2.08% (Growth and Income
Portfolio); .60%, 1.00%, .78%, and 2.38% (Blue Chip Equity Portfolio);
.60%, 1.00%, .44% and 2.04% (Capital Growth Portfolio); .60%, 1.00%,
.30% and 1.90% (Special Equity Portfolio); and .50%, 1.00%, .24%
and 1.74% (Maryland Tax-Free Portfolio). Advisory Fees, 12b-1 Fees,
and Other Expenses are reflected in the Retail Class share price or
dividends and are not charged directly to individual shareholder
accounts. Please refer to the section entitled "Management of the
Fund" for further information.

Advisory Fees, 12b-1 Fees, and Other Expenses are reflected in
the Retail Class' share price or dividends and are not charged
directly to individual shareholder accounts. Please refer to the
section entitled "Management of the Fund" for further information.

C. Example. The Example assumes that all dividends and
distributions are reinvested and that the amounts listed under
"Annual Retail Class Operating Expenses" remain the same in the
years shown. The example should not be considered a representation
of past or future expenses and actual expenses may be greater or
less than shown.

FINANCIAL HIGHLIGHTS

The following tables provide information about the financial
history of the Retail Class of each Portfolio, except for U.S.
Treasury Money Market Portfolio, U.S. Government Money Market
Portfolio, Short-Term Treasury Portfolio, Blue Chip Equity
Portfolio, Special Equity Portfolio and Maryland Tax-Free
Portfolio, the Retail Classes of which have not commenced
operations as of the date of this Prospectus. These tables express
the information in terms of a single share outstanding throughout
the period. The data is for the fiscal period ended October 31,
1995 and is unaudited.

[Table to be completed by Amendment]

INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS

The Fund currently consists of twelve investment Portfolios
with a variety of investment objectives and policies. One of the
twelve portfolios, International Equity Portfolio is not offered to
Retail Class investors. As the investment advisor to each of the
Portfolios whose Shares are offered through this Prospectus, First
Maryland is responsible for providing a continuous investment
program in accordance with each Portfolio's investment objective
and policies. Except for each Portfolio's investment objective and
those policies identified as fundamental, each Portfolio's policies
are not fundamental. Non-fundamental policies may be changed
without shareholder approval. Further information relating to the
types of securities in which each Portfolio may invest and the
investment policies of each Portfolio in general is set forth in
the Appendix to this Prospectus. As is the case with any
investment in securities, an investment in a Portfolio involves
certain risks and there can be no assurance a Portfolio will
achieve its investment objective. Each Portfolio can use various
techniques to manage its investment expense. These techniques may
involve derivative transactions. By itself, no one Portfolio
constitutes a balanced investment plan. From time to time, a
Portfolio, to the extent consistent with its investment objective,
policies, restrictions and applicable law, may invest in securities
of companies with which First Maryland and/or its affiliates has a
lending relationship. The lending relationship will not be a
factor in the selection of securities.

U.S. Treasury Money Market Portfolio, U.S. Government Money
Market Portfolio, Money Market Portfolio and Tax-Free Money Market
Portfolio (the "ARK Money Market Portfolios") each seek to maximize
current income and provide liquidity and security of principal by
investing in high-quality, short-term, U.S. dollar-denominated
instruments determined by First Maryland to present minimal credit
risks in accordance with guidelines adopted by the Fund's Board.
The ARK Money Market Portfolios each will seek to maintain a net
asset value per share ("NAV") of $1.00, will limit their investments
to securities with remaining maturities of 397 days or less,
and will maintain a dollar-weighted average maturity of 90 days or
less. In determining a security's maturity for purposes of calculating
the Portfolios' average maturity, estimates of the expected time for
principal to be paid may be used. An estimated maturity can be
substantially shorter than its stated final maturity.

Although the ARK Money Market Portfolios' policies are
designed to help maintain a stable $1.00 share price, all money
market instruments can change in value when interest rates or
issuers' creditworthiness change, or if an issuer or guarantor of a
security fails to pay interest or principal when due. If these
changes in value were large enough, a Portfolio's share price could
fall below $1.00. In general, securities with longer maturities
are more vulnerable to price changes, although they may provide
higher yields.

U.S. TREASURY MONEY MARKET PORTFOLIO

The investment objective of U.S. Treasury Money Market
Portfolio is to maximize current income and provide liquidity and
security of principal by investing in instruments which are issued
or guaranteed as to principal and interest by the U.S. government
and thus constitute direct obligations of the United States. As a
non-fundamental operating policy, the Portfolio intends to invest
100% of its total assets in U.S. Treasury bills, notes, and bonds
and will limit its investments to U.S. Treasury obligations that
pay interest that is specifically exempt from state and local taxes
under federal law.

U.S. GOVERNMENT MONEY MARKET PORTFOLIO

The investment objective of U.S. Government Money Market
Portfolio is to maximize current income and provide security of
principal by investing in instruments which are issued or
guaranteed as to principal and interest by the U.S. government or
any of its agencies or instrumentalities ("U.S. Government
Securities"), or in repurchase agreements backed by such
instruments. As a non-fundamental policy, 100% of the Portfolio's
assets will be invested in U.S. Government Securities, and in
repurchase agreements collateralized by such securities. U.S.
Government Securities include U.S. Treasury bills, notes and bonds,
and obligations issued by federal agencies such as the Export-
Import Bank of the United States, the General Services
Administration, the Government National Mortgage Association, and
the Small Business Administration. Obligations issued or
guaranteed as to principal and interest by U.S. government agencies
or instrumentalities include instruments issued by the Federal Home
Loan Bank, Federal Farm Credit Bank and Federal National Mortgage
Association. The Portfolio may enter into when-issued or delayed-
delivery transactions. The Portfolio normally may not invest more
than 5% of its total assets in the securities (other than U.S.
Government Securities) of any single issuer. Under certain
conditions, however, the Portfolio may invest up to 25% of its
total assets in first tier securities of a single issuer for up to
three days.

MONEY MARKET PORTFOLIO

The investment objective of Money Market Portfolio is to
maximize current income and provide liquidity and security of
principal by investing in a broad range of short-term, high-quality
U.S. dollar-denominated debt securities ("Money Market
Instruments"). Such Money Market Instruments include, but are not
limited to: U.S. Government Securities; custodial receipts
evidencing future interest or principal payments on U.S. Government
Securities; obligations of domestic or foreign banks including
bankers' acceptances, time deposits and certificates of deposit
("CDs"); commercial paper (including variable and floating rate
instruments); corporate obligations; and asset-backed securities
and indexed securities -- each with 397 days or less remaining to
maturity. Money Market Portfolio may invest more than 25% of its
total assets in certain obligations of domestic banks. Money Market
Portfolio may engage in repurchase and reverse repurchase
agreements and may enter into when-issued or delayed-delivery
transactions. The Portfolio normally may not invest more than 5%
of its total assets in the securities (other than U.S. Government
Securities) of any single issuer. Under certain conditions,
however, the Portfolio may invest up to 25% of its total assets in
first tier securities of a single issuer for up to three days.

At least 95% of the assets of Money Market Portfolio will be
invested in securities that have received the highest rating
assigned by any two nationally recognized statistical rating
organizations ("NRSROs") or, if only one such rating organization
has assigned a rating, such single organization. Up to 5% of the
Portfolio's assets may be invested in securities that have received
ratings in the second highest category by any two NRSROs or, if
only one such rating organization has assigned a rating, such
single organization. The Portfolio may also acquire unrated
securities determined by First Maryland to be comparable in quality
to rated securities in accordance with guidelines adopted by the
Fund's Board.

TAX-FREE MONEY MARKET PORTFOLIO

The investment objective of Tax-Free Money Market Portfolio is
to provide a high level of interest income by investing primarily
in high-quality municipal obligations that are exempt from federal
income taxes. The Portfolio attempts to invest 100% of its assets
in securities exempt from federal income tax (not including the
alternative minimum tax), and maintains a fundamental policy that
at least 80% of its income will, under normal market conditions, be
exempt from federal income tax, including the federal alternative
minimum tax.

The Portfolio invests in high quality, short-term municipal
securities but also may invest in high quality, long-term fixed,
variable, or floating rate instruments (including tender option
bonds) that have demand features or interest rate adjustment
features that result in interest rates, maturities, and prices
similar to short-term instruments. The Portfolio's investments in
municipal securities may include tax, revenue, or bond anticipation
notes; tax-exempt commercial paper; general obligation or revenue
bonds (including municipal lease obligations and resource recovery
bonds); and zero coupon bonds. The Portfolio may enter into when-
issued and delayed-delivery transactions and may purchase
securities that are subject to restrictions on resale.

Municipal securities are issued to raise money for various
public purposes, including general purpose financing for state and
local governments as well as financing for specific projects or
public facilities. Municipal securities may be backed by the full
taxing power of a municipality or by the revenues from a specific
project or the credit of a private organization. Some municipal
securities are insured by private insurance companies, while others
may be supported by letters of credit furnished by domestic or
foreign banks. First Maryland monitors the financial condition of
parties (including insurance companies, banks, and corporations)
whose creditworthiness is relied upon in determining the credit
quality of securities the Portfolio may purchase.

A demand feature is a put that entitles the security holder to
repayment of the principal amount of the underlying security on no
more than 30 days' notice at any time or at specified intervals. A
standby commitment is a put that entitles the security holder to
same-day settlement at amortized cost plus accrued interest.

Issuers or financial intermediaries who provide demand
features or standby commitments often support their ability to buy
securities on demand by obtaining letters of credit ("LOCs") or
other guarantees from banks. LOCs also may be used as credit
supports for other types of municipal instruments. First Maryland
may rely upon its evaluation of a bank's credit in determining
whether to purchase an instrument supported by an LOC. In
evaluating a foreign bank's credit, First Maryland will consider
whether adequate public information about the bank is available and
whether the bank may be subject to unfavorable political or
economic developments, currency controls, or other governmental
restrictions that might affect the bank's ability to honor its
credit commitment.

First Maryland anticipates that the Portfolio will be as fully
invested as is practicable in municipal obligations. However, the
Portfolio reserves the right for temporary defensive purposes to
invest without limitation in taxable Money Market Instruments.
There may be occasions when, as a result of maturities of portfolio
securities or sales of Portfolio shares, or in order to meet
anticipated redemption requests, the Portfolio may hold cash which
is not earning income.

At least 95% of the assets of Tax-Free Money Market Portfolio
will be invested in securities that have received the highest
rating assigned by any two NRSROs or, if only one such rating
organization has assigned a rating, such single organization. The
Portfolio may also acquire unrated securities determined by First
Maryland to be comparable in quality to rated securities in
accordance with guidelines adopted by the Board.

The Portfolio may invest up to 25% of its net assets in a
single issuer's securities. The Portfolio may invest any portion
of its assets in industrial revenue bonds ("IRBs") backed by
private companies, and may invest up to 25% of its total assets in
IRBs related to a single industry. The Portfolio also may invest
25% or more of its total assets in tax-exempt securities whose
revenue sources are from similar types of projects, e.g.,
education, electric utilities, health care, housing,
transportation, water, sewer, and gas utilities. There may be
economic, business or political developments or changes that affect
all securities of a similar type. Therefore, developments
affecting a single issuer or industry, or securities financing
similar types of projects, could have a significant effect on the
Portfolio's performance.

Yields on municipal obligations depend on a variety of
factors, including the general conditions of the money markets and
of the municipal bond and municipal note markets, the size of a
particular offering, the maturity of the obligation, and the rating
of the issue. Municipal obligations with longer maturities tend to
produce higher yields and generally are subject to potentially
greater price fluctuations than obligations with shorter
maturities.

INVESTMENT LIMITATIONS FOR THE ARK MONEY MARKET PORTFOLIOS

The following summarizes the principal investment limitations
of each of the ARK Money Market Portfolios. A complete listing is
contained in the Statement of Additional Information. With the
exception of limitations 3(b) and 4(b), these limitations are
fundamental and may only be changed with shareholder approval.

1. Each ARK Money Market Portfolio may not, with respect to
75% of its assets, invest more than 5% of the total market value of
its assets in the securities of any one issuer, other than U.S.
Government Securities.

2. Each ARK Money Market Portfolio may not purchase the
securities of one issuer (other than U.S. Government Securities) if
more than 25% of its total assets would be invested in the same
industry. Money Market Portfolio may, however, invest 25% or more
of its assets in obligations of domestic banks.

3. Each ARK Money Market Portfolio (a) may borrow money from
a bank for temporary or emergency purposes or by engaging in
reverse repurchase agreements, but not in an amount exceeding 33
1/3% of its total assets; and (b) will not purchase securities when
borrowings (including reverse repurchase agreements) exceed 5% of
its total assets.

4. Each ARK Money Market Portfolio (a) may not make a loan
if more than 33 1/3% of its total assets would be lent to other
parties; and (b) each of U.S. Treasury Money Market Portfolio, U.S.
Government Money Market Portfolio and Tax-Free Money Market
Portfolio do not currently intend to lend portfolio securities.

SHORT-TERM TREASURY PORTFOLIO

The investment objective of Short-Term Treasury Portfolio is
to provide current income, with a secondary objective of
stability of principal, by investing in instruments which are
issued or guaranteed as to principal and interest by the U.S.
government. The Portfolio will invest 100% of its total assets in
instruments which are issued or guaranteed by the U.S. government
and thus constitute direct obligations of the United States and
repurchase agreements fully collateralized by the U.S. government.
As a non-fundamental policy, the Portfolio will invest 100% of its
total assets in U.S. Treasury bills, notes and bonds and will limit
its investments to U.S. Treasury obligations that pay interest that
is specifically exempt from state and local taxes under federal
law. The Portfolio has no restrictions on maturity but generally
will maintain a dollar-weighted average maturity of approximately
two years.

In making investment decisions for the Short-Term Treasury
Portfolio, First Maryland will consider factors in addition to
current yield, including preservation of capital, the potential for
realizing capital appreciation, maturity and yield to maturity.
First Maryland will monitor the Portfolio's investments in
particular securities in response to its appraisal of changing
economic conditions and trends, and may sell securities in
anticipation of a market decline or purchase securities in
anticipation of a market rise.

Fixed-income securities (except for securities with floating
or variable interest rates) are generally considered to be interest
rate sensitive, which means that their value (and the Portfolio's
share price) will tend to decrease when interest rates rise and
increase when interest rates fall. Securities with shorter
maturities, while offering lower yields, generally provide greater
price stability than longer-term securities and are less affected
by changes in interest rates. The average maturity of the
Portfolio's debt obligations will vary depending on market
conditions.

INCOME PORTFOLIO

The investment objective of Income Portfolio is to seek a high
level of current income, with a secondary objective of capital
growth, consistent with reasonable risk, by investing primarily in
a broad range of fixed-income securities. As a non-fundamental
policy, the Portfolio will invest 65% of its total assets in fixed-
income securities. Fixed-income securities acquired by the
Portfolio may include income-producing securities of all types,
including bonds, notes, mortgage securities, government and
government agency obligations, zero coupon securities, convertible
securities, foreign securities, indexed securities, and asset-
backed securities. The Portfolio may engage in short sales
"against the box" and may buy and sell futures contracts and
options. The Portfolio may also invest in the shares of other
investment companies, as permitted by the Investment Company Act
of 1940 (the "1940 Act").

Income Portfolio normally will invest in investment grade debt
securities (including convertible securities) rated Baa or higher
by Moody's Investors Service, Inc. ("Moody's"), those securities
rated BBB or higher by Standard & Poor's Ratings Group ("S&P"), or
those securities with equivalent ratings by other NRSROs. Bonds
rated Baa or BBB may have speculative characteristics, and changes
in economic conditions or other circumstances are more likely to
lead to a weakened capacity to make principal and interest payments
than is the case with higher grade bonds. The Portfolio also may
purchase unrated securities that are deemed by First Maryland to be
of comparable quality to rated issues. The Portfolio may, however,
invest up to 5% of its total assets in lower quality debt
securities. First Maryland believes that holdings in such
securities, sometimes referred to as junk bonds, may offer
worthwhile investment opportunities. See the Statement of
Additional Information for a more complete discussion of such
investments.

Common stocks acquired through exercise of conversion rights
or warrants or acceptance of exchange or similar offers ordinarily
will not be retained by the Portfolio. Orderly disposition of such
common stocks will be made consistent with the judgment of First
Maryland as to the best price available.

In making investment decisions for Income Portfolio, First
Maryland will consider factors in addition to current yield,
including preservation of capital, the potential for realizing
capital appreciation, maturity and yield to maturity. First
Maryland will monitor the Portfolio's investments in particular
securities or in types of debt securities in response to its
appraisal of changing economic conditions and trends, and may sell
securities in anticipation of a market decline or purchase
securities in anticipation of a market rise.

Fixed-income securities (except for securities with floating
or variable interest rates) are generally considered to be interest
rate sensitive, which means that their value (and the Portfolio's
share price) will tend to decrease when interest rates rise and
increase when interest rates fall. Securities with shorter
maturities, while offering lower yields, generally provide greater
price stability than longer-term securities and are less affected
by changes in interest rates. The average maturity of the
Portfolio's debt obligations will vary depending on market
conditions.

Changes in the values of the Portfolio's investments will
generally not affect the income derived from such investments, but
will affect the Portfolio's share price. Income Portfolio's share
price, yield and total return will fluctuate, and you may have a
gain or loss when redeeming Shares.

GROWTH AND INCOME PORTFOLIO

The investment objective of Growth and Income Portfolio is to
seek long-term total returns from both capital appreciation and
current income by investing in a diversified portfolio of stocks,
debt securities, and cash equivalents.

The Portfolio's common stock investments may include foreign
and domestic issues of larger, well-established companies, as well
as medium-sized and smaller companies. The prices of small company
stocks may fluctuate more than those of large company stocks due to
risks related to more limited product lines, markets or financial
resources. These conditions may make smaller companies more
susceptible to setbacks and reversals and, therefore, their
securities may have limited marketability and may be subject to
more abrupt or erratic market movements than securities of larger
companies. The Portfolio may also invest in preferred stock,
convertible securities, may engage in short sales "against the
box," and may buy and sell futures contracts and options. The
Portfolio may also invest in the shares of other
investment companies, as permitted by the 1940 Act.

Debt securities acquired by the Portfolio may include mortgage
or asset-backed securities, corporate issues, indexed securities,
and U.S. Government Securities. The Portfolio normally will invest
in investment grade debt securities (including convertible
securities) rated Baa or higher by Moody's, those securities rated
BBB or higher by S&P, or those securities with equivalent ratings
by other NRSROs. Bonds rated Baa or BBB may have speculative
characteristics, and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to
make principal and interest payments than is the case with higher
grade bonds. The Portfolio also may purchase unrated securities
that are deemed by First Maryland to be of comparable quality to
rated issues. The Portfolio may, however, invest up to 5% of its
total assets in lower quality debt securities. First Maryland
believes that holdings in such securities, sometimes referred to as
junk bonds, may offer worthwhile investment opportunities. See the
Statement of Additional Information for a more complete discussion
of such investments. The average maturity of the Portfolio's debt
obligations will vary depending on market conditions.

Growth and Income Portfolio emphasizes long-term total return
from capital appreciation and current income. Although it is not a
policy of the Portfolio to engage in short-term trading, First
Maryland may dispose of securities without regard to the length of
time held if First Maryland believes such action will benefit the
Portfolio. Although First Maryland will consider the potential for
income in selecting investments for the Portfolio, the Portfolio is
generally not intended to achieve a high level of income at a rate
comparable to fixed income portfolios. The Portfolio may adjust
its investments based on First Maryland's interpretation of
underlying economic, financial, and security trends; however, the
Portfolio's ability to make such adjustments successfully will
depend on First Maryland's ability to predict such market trends.
Growth and Income Portfolio's share price, yield and total return
will fluctuate, and you may have a gain or loss when redeeming
Shares.

BLUE CHIP EQUITY PORTFOLIO

Blue Chip Equity Portfolio seeks capital appreciation from a
broadly diversified portfolio of common stocks of large capitalization
companies. First Maryland may also seek capital
appreciation on behalf of the Portfolio by investing up to 35% of
its assets in other types of securities, including preferred stock
and debt securities, securities convertible into common stock,
asset-backed securities, and indexed securities, and may, on behalf of
the Portfolio, engage in short sales "against the box" and buy and
sell futures contracts and options. Debt securities (including
convertible securities) in which the Portfolio invests will
normally be rated Baa or higher by Moody's or BBB or higher by S&P,
or will receive equivalent ratings by other NRSROs. Bonds rated
Baa or BBB may have speculative characteristics and changes in
economic conditions or other circumstances are more likely to lead
to a weakened capacity to make principal and interest payments than
is the case with higher grade bonds. The Portfolio may also
purchase unrated securities that are deemed by First Maryland to be
of comparable quality to rated issues. The Portfolio may, however,
invest up to 5% of its total assets in lower quality debt
securities. First Maryland believes that holdings in such
securities, sometimes referred to as junk bonds, may offer
worthwhile investment opportunities. See the Statement of
Additional Information for a more complete discussion of such
investments. The Portfolio is expected to produce current
investment income, consistent with the primary objective.

It is the Portfolio's policy, under normal circumstances, to
invest at least 65% of the value of its total assest in securities
of established companies, based primarily in the United States, with
significant operating histories and strong financial positions.
The Portfolio will invest in securities that First Maryland
believes offer above-average growth potential based on their
fundamental strength. First Maryland considers many factors when
evaluating the overall quality of a security for investment by the
Portfolio, including a company's current financial strength and
relative value. The Portfolio may also invest in the shares of
other investment companies, as permitted by the 1940 Act.

Blue Chip Equity Portfolio's share price and return will tend
to fluctuate in response to changes in the stock market and
investors may have a gain or loss when redeeming Shares. While
First Maryland purchases securities for the Portfolio that it
believes present the greatest opportunity for growth, some
securities held by the Portfolio may not perform well during
certain market cycles and may not respond to general market
movements to the same extent as other securities.

CAPITAL GROWTH PORTFOLIO

The investment objective of Capital Growth Portfolio is to
seek long-term capital appreciation by investing primarily in
common stock and securities convertible into common stock.

Capital Growth Portfolio seeks capital appreciation from a
broadly diversified portfolio of common stocks, and securities
convertible into common stock. First Maryland may also seek
capital appreciation on behalf of the Portfolio by investing up to
35% of its assets in other types of securities, including preferred
stock, debt securities, asset-backed securities, indexed
securities, and may, on behalf of the Portfolio, engage in short
sales "against the box" and buy and sell futures contracts and options.
Debt securities (including convertible securities) in which the
Portfolio invests will normally be rated Baa or higher by Moody's
or BBB or higher by S&P, or will receive equivalent ratings by
other NRSROs. Bonds rated Baa or BBB may have speculative
characteristics and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to
make principal and interest payments than is the case with higher
grade bonds. The Portfolio may also purchase unrated securities
that are deemed by First Maryland to be of comparable quality to
rated issues. The Portfolio may, however, invest up to 5% of
its total assets in lower quality debt securities. First
Maryland believes that holdings in such securities, sometimes
referred to as junk bonds, may offer worthwhile investment
opportunities. See the Statement of Additional Information
for a more complete discussion of such investments. The Portfolio
is expected to produce modest dividend or interest income. This
income will be incidental to the Portfolio's primary objective.

It is the Portfolio's policy to invest in the securities of
both well-known, established companies and smaller, less well-known
companies. The prices of small company stocks may fluctuate more
than those of larger companies due to risks related to more limited
product lines, markets or financial resources. These conditions
may make smaller companies more susceptible to setbacks and
reversals and, therefore, their securities may have limited
marketability and may be subject to more abrupt or erratic market
movements than securities of larger companies. The Portfolio will
invest in securities that First Maryland believes offer above-
average growth potential based on their fundamental strength.
First Maryland considers many factors when evaluating the overall
quality of a security for investment by the Portfolio, including a
company's current financial strength, earnings momentum, and
relative value. The Portfolio may also invest in the shares of
other investment companies, as permitted by the 1940 Act.

Capital Growth Portfolio's share price and return will tend to
fluctuate in response to changes in the stock market and investors
may have a gain or loss when redeeming Shares. While First
Maryland purchases securities for the Portfolio that it believes
present the greatest opportunity for growth, some securities held
by the Portfolio may not perform well during certain market cycles
and may not respond to general market movements to the same extent
as other securities.

SPECIAL EQUITY PORTFOLIO

The investment objective of Special Equity Portfolio is to
achieve capital appreciation by investing primarily in securities
of companies believed by First Maryland to be "special equities."
As used in this Prospectus, "special equities" include equity
securities of: (1) a company with a market capitalization of $1.2
billion or less at the time of the Portfolio's investment and
deemed by the Portfolio manager to have above average growth
potential; or (2) a company experiencing a "special situation";
that is, an unusual and possibly non-repetitive development taking
place in that company. The Portfolio will invest in securities
that First Maryland believes offer above-average growth potential
based on their fundamental strength.

A "special situation" may involve one or more of the following
characteristics:

a technological advance or discovery, the offering of a
new or unique product or service, or changes in consumer
demand or consumption forecasts.

changes in the competitive outlook or growth potential of
an industry or a company within an industry, including
changes in the scope or nature of foreign competition or
the development of an emerging industry.

new or changed management or material changes in
management policies or corporate structure.

significant economic or political occurrences abroad,
including changes in foreign or domestic import and tax
laws or other regulations.

other events, including natural disasters, favorable
litigation settlements, or a major change in demographic
patterns.

In seeking capital appreciation, the Portfolio also may invest
in securities of companies that are not special equities, but which
are companies with valuable fixed assets and whose securities are
believed by First Maryland to be undervalued in relation to the
companies' assets, earnings, or growth potentials. As a non-
fundamental policy, the Portfolio normally will invest at least 65%
of its total assets in special equities, as defined above.

First Maryland intends to invest primarily in common stocks
and securities that are convertible into common stocks; however,
under normal market conditions, the Portfolio also may invest up to
35% of its total assets in debt securities of all types and quality
if First Maryland believes that investing in these securities will
result in capital appreciation. As a non-fundamental investment
policy, the Portfolio may invest in lower rated, high-yielding debt
securities (sometimes referred to as "junk bonds"), although it
intends to limit its investments in these securities to 35% of its
total assets. The Portfolio also may invest in unrated securities.
Unrated securities are not necessarily of lower quality than rated
securities, but they may not be attractive to as many buyers. The
Portfolio may invest up to 35% of its total assets in foreign
securities of all types and may enter into forward currency
contracts for the purpose of managing exchange rate risks and to
facilitate transactions in foreign securities. The Portfolio may
purchase or engage in indexed securities, illiquid instruments,
loans and other direct debt instruments, options and futures
contracts, repurchase agreements, securities loans, restricted
securities, swap agreements, warrants, real estate-related
instruments and zero coupon bonds. Further information about the
Portfolio's investment policies can be found in the Statement of
Additional Information.

Foreign securities, foreign currencies and securities issued
by U.S. entities with substantial foreign operations may involve
additional risks and considerations. These include risks relating
to political or economic conditions in foreign countries,
fluctuations in foreign currencies, withholding or other taxes,
operational risks, increased regulatory burdens and the potentially
less stringent investor protection and disclosure standards of
foreign markets. Additionally, governmental issuers of foreign
securities may be unwilling to repay principal and interest when
due, and may require that the conditions for repayment be
renegotiated. All these factors can make foreign investments,
especially those in developing countries, more volatile.

The Portfolio spreads investment risk by limiting its holdings
in any one company or industry. First Maryland may use various
investment techniques to hedge the Portfolio's risks, but there is
no guarantee that these strategies will work as First Maryland
intends. When you sell your shares, they may be worth more or less
than what you paid for them.

First Maryland normally invests the Portfolio's assets
according to its investment strategy. The Portfolio expects to be
fully invested under most market conditions. The Portfolio also
reserves the right to invest without limitation in preferred stocks
and investment-grade debt instruments for temporary, defensive
purposes when, in First Maryland's judgment, a more conservative
approach to investment is desirable.

MARYLAND TAX-FREE PORTFOLIO

The investment objective of Maryland Tax-Free Portfolio is to
achieve high current income that is free from federal income tax
and the Maryland state and county income taxes by investing
primarily in municipal securities judged by First Maryland to be of
investment-grade quality, although it can also invest in lower-
quality securities. The Portfolio has no restrictions on maturity,
but it generally invests in medium- and long-term bonds and
maintains a dollar-weighted average maturity of 7-10 years. In
determining a security's maturity for purposes of calculating the
Portfolio's average maturity, estimates of the expected time for
its principal to be paid may be used. This can be substantially
shorter than its stated final maturity. First Maryland normally
invests at least 65% of the Portfolio's total assets in Maryland
municipal securities, and normally invests, as a matter of
fundamental policy, so that at least 80% of the Portfolio's income
is free from federal income tax, including the federal alternative
minimum tax.

The Portfolio's performance is affected by the economic and
political conditions within the state of Maryland. The ability of
issuers to repay their debt can be affected by many factors that
impact the economic vitality of either the state or a region within
the state. Maryland's rate of economic growth has been slower in
the early 1990's than it had been during the 1980's. State
revenues in recent years have been less than expected and, because
Maryland's constitution requires a balanced budget, expenditures
were cut.

The Portfolio's yield and share price change daily and are
based on changes in interest rates, market conditions, and other
economic and political news and on the quality and maturity of its
investments. In general, bond prices rise when interest rates
fall, and vice versa. This effect is usually more pronounced for
longer-term securities. Lower-quality securities offer higher
yields, but also carry more risk. The Portfolio may invest up to
5% of its total assets in lower-quality debt securities. First
Maryland may use various investment techniques to hedge the
Portfolio's risks, but there is no guarantee that these strategies
will work as intended. When you sell your Shares of the Portfolio,
they may be worth more or less than what you paid for them.

If you are subject to the federal alternative minimum tax, you
should note that the Portfolio may invest some of its assets in
municipal securities issued to finance private activities. The
interest from these investments is a tax-preference item for
purposes of the tax.

First Maryland normally invests the Portfolio's assets
according to its investment strategy and does not expect to invest
in federally or state taxable obligations. The Portfolio also
reserves the right to invest without limitation in short-term
instruments, to hold a substantial amount of uninvested cash, or to
invest more than normally permitted in taxable obligations for
temporary, defensive purposes.

ADDITIONAL INVESTMENT POLICIES OF SHORT-TERM TREASURY PORTFOLIO,
INCOME PORTFOLIO, GROWTH AND INCOME PORTFOLIO, BLUE CHIP EQUITY
PORTFOLIO, CAPITAL GROWTH PORTFOLIO, SPECIAL EQUITY PORTFOLIO AND
MARYLAND TAX-FREE PORTFOLIO

For temporary defensive purposes, Short-Term Treasury
Portfolio, Income Portfolio, Growth and Income Portfolio, Blue Chip
Equity Portfolio, Capital Growth Portfolio, Special Equity
Portfolio and Maryland Tax-Free Portfolio (the "ARK Non-Money
Market Portfolios") may invest all or a portion of their respective
assets in Money Market Instruments. In addition, for temporary
defensive purposes, Maryland Tax-Free Portfolio may invest more
than normally permitted in taxable obligations.

The ARK Non-Money Market Portfolios, except Maryland Tax-Free
Portfolio and Short-Term Treasury Portfolio, may invest up to 25%
of their respective assets in American Depository Receipts
("ADRs"), European Depository Receipts ("EDRs"), and securities
issued by foreign companies and foreign governments. Short-Term
Treasury Portfolio and Maryland Tax-Free Portfolio may not invest
in assets in these securities. Foreign investments may be less
liquid or more volatile than domestic investments, and may be
denominated in foreign currencies. The value of these investments
will fluctuate with changes in exchange rates between those
currencies and the U.S. dollar. See the Appendix for further
information on investing in foreign securities.

The value of each Portfolio's securities will fluctuate in
response to market conditions and the value of a Share in each ARK
Non-Money Market Portfolio may vary. Investors should review the
investment objective and policies of each Portfolio and carefully
consider their ability to assume any risk involved in purchasing
Shares of each Portfolio.

INVESTMENT LIMITATIONS FOR THE ARK NON-MONEY MARKET PORTFOLIOS

The following summarizes each of the ARK Non-Money Market
Portfolios' principal investment limitations. A complete listing
is contained in the Statement of Additional Information. With the
exception of limitation 3(b), these limitations are fundamental and
may only be changed with shareholder approval.

1. Except Maryland Tax-Free Portfolio, the ARK Non-Money
Market Portfolios may not, with respect to 75% of a Portfolio's
total assets, purchase the securities of any issuer (other than
U.S. Government Securities) if as a result, (a) more than 5% of a
Portfolio's total assets would be invested in the securities of
that issuer, or (b) a Portfolio would hold more than 10% of the
outstanding voting securities of that issuer.

2. The ARK Non-Money Market Portfolios may not purchase a
security if, as a result, more than 25% of a Portfolio's total
assets would be invested in securities of a particular industry
(other than securities issued or guaranteed by the U.S. government
or any of its agencies or instrumentalities).

3. Each ARK Non-Money Market Portfolio (a) may borrow money
from a bank for temporary or emergency purposes or by engaging in
reverse repurchase agreements, but not in an amount exceeding 33
1/3% of its total assets; and (b) will not purchase securities when
borrowings (including reverse repurchase agreements) exceed 5% of
its total assets.

4. Each ARK Non-Money Market Portfolio may not make a loan
if more than 33 1/3% of its assets would be lent to other parties.

PERFORMANCE

The performance of each class of shares of each Portfolio may
be quoted in advertising in terms of yield, effective yield or
total return. In addition, the tax-equivalent yield may be quoted
for shares of Tax-Free Money Market Portfolio and for shares of
Maryland Tax-Free Portfolio. All types of performance are based on
historical results and are not intended to indicate future
performance.

The yield of shares of the ARK Money Market Portfolios, Short-
Term Treasury Portfolio, Income Portfolio and Maryland Tax-Free
Portfolio is calculated by dividing the net investment income
earned by the shares over a 7-day period (for the ARK Money Market
Portfolios) and a 30-day period (for Short-Term Treasury Portfolio,
Income Portfolio and Maryland Tax-Free Portfolio), by the average
number of shares entitled to receive dividends and expressing the
result as an annualized percentage rate based on each share price
at the end of the 7- and 30-day periods, respectively. The
effective yield is calculated similarly, but assumes that the
income earned from the investment is reinvested. The effective
yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment. Because yield
accounting methods differ from the methods used for other
accounting purposes, the yields of shares of the ARK Money Market
Portfolios, Income Portfolio and Maryland Tax-Free Portfolio may
not equal their respective distribution rates, the income paid to
your account or the income reported in the financial statements of
the Retail Class of the relevant Portfolio.

A tax-equivalent yield shows the approximate taxable yield
that would have to be earned before taxes to equal a tax-free
yield. A tax-equivalent yield is calculated by dividing the
shares' tax-exempt yield by the result of one minus a stated
federal and/or state tax rate. If only a portion of a Portfolio's
income was tax-exempt, only that portion is adjusted in the
calculation.

Total returns are based on the overall dollar or percentage
change in value of a hypothetical investment in a class and assumes
that all distributions are reinvested. A cumulative total return
reflects a class' performance over a stated period of time. An
average annual total return reflects the hypothetical annually
compounded return that would have produced the same cumulative
total return if a class' performance had been constant over the
entire period. Because average annual total returns tend to smooth
out variations in a class' return, it should be recognized that
they are not the same as actual year-by-year results. When a class
of a Portfolio quotes an average annual return covering a period of
less than one year, the calculation assumes that the performance
will remain constant for the rest of the year. Since this may or
may not occur, average annual returns should be viewed as
hypothetical rather than actual performance figures.

For additional performance information, please contact your
Investment Professional or the Distributor for a free Annual
Report, Semi-Annual Report and Statement of Additional Information.

PORTFOLIO TRANSACTIONS AND VALUATION

Subject to the general supervision of the Board, First
Maryland is responsible for placing orders for securities
transactions for each Portfolio. Transactions for the ARK Money
Market Portfolios, Short-Term Treasury Portfolio, Income Portfolio
and Maryland Tax-Free Portfolio, as well as purchases of debt
securities for Growth and Income Portfolio and Capital Growth
Portfolio, are expected to occur primarily with issuers,
underwriters or major dealers acting as principals. Such
transactions are normally effected on a net basis and do not
involve payment of brokerage commissions. Securities transactions
for Blue Chip Equity Portfolio, Capital Growth Portfolio and
Special Equity Portfolio, and transactions involving equity
securities for Growth and Income Portfolio will normally be
conducted through brokerage firms entitled to receive commissions
for effecting such transactions. The Portfolios have no obligation
to enter into securities transactions with any particular dealer,
issuer, underwriter or other entity. In placing orders for the
Portfolios, it is the policy of First Maryland to obtain the most
favorable execution. Where such execution may be obtained from
more than one broker or dealer, securities transactions may be
directed at higher commission rates to those who provide research,
statistical and other information to First Maryland. If more than
one Portfolio or another account managed by First Maryland are
purchasing or selling the same security, such orders may be
aggregated in the interest of achieving the most favorable
execution.

The Portfolios have authorized First Maryland to allocate
transactions to some broker-dealers who help distribute the
Portfolios' shares. First Maryland may make such allocations if
commissions are comparable to those charged by non-affiliated,
qualified broker-dealers for similar services.

The frequency of portfolio transactions, the portfolio
turnover rate, will vary from year to year depending on market
conditions. The annual portfolio turnover rate is estimated to be
200% for Special Equity Portfolio, ____ for Short-Term Treasury
Portfolio, 75% for Blue Chip Equity Portfolio, and 20% for Maryland
Tax-Free Portfolio. Because a higher turnover rate increases
transaction costs and may increase taxable capital gains, First
Maryland carefully weighs the anticipated benefits of short-term
investing against these consequences.

Money market obligations are generally traded in the over-the-
counter market through dealers. A dealer is a securities firm or
bank which makes a market for such securities by offering to buy at
one price and sell at a slightly higher price. The difference
between the prices is known as a spread. The selection of such
dealers is generally made based upon the price, quality of
execution services and research provided. Money market securities
purchased and sold by each ARK Money Market Portfolio will be
traded on a net basis (i.e., without commission) through dealers
acting for their own account and not as agents or will involve
transactions directly with the issuer of the instrument.

Valuation. The NAV of the Shares of each Portfolio is
calculated by adding the Retail Class's pro rata share of the value
of all securities and other assets attributable to a Portfolio,
deducting the Retail Class's pro rata share of Portfolio-level
liabilities, deducting Retail Class-specific liabilities, and
dividing the result by the number of Shares outstanding. Those
assets that are traded on an exchange or in the over-the-counter
market are valued based upon market quotations. Short-term
obligations with maturities of 60 days or less are valued at
amortized cost. Other assets for which market quotations are not
readily available are valued at their fair value as determined in
good faith by or under the supervision of the Board. Assets in the
ARK Money Market Portfolios are valued based upon the amortized
cost method. Although each ARK Money Market Portfolio seeks to
maintain an NAV of $1.00 for the Shares, there can be no assurance
that this NAV will not vary.

Non-money market securities are valued on the basis of market
quotations or, if quotations are not readily available, by a method
that the Board believes accurately reflects fair value. Fair value
of these portfolio securities is determined by an independent
pricing service approved by the Board based primarily upon
information concerning market transactions and dealer quotations
for similar securities. Foreign securities held by a Portfolio are
valued on the basis of quotations from the primary U.S. market in
which they are traded or, if not traded on a U.S. market, then
their primary foreign market and are translated from foreign market
quotations into U.S. dollars using current exchange rates.

Pricing of Shares. The Portfolios are open for business and
their NAVs are calculated each day that the New York Stock Exchange
("NYSE") and the Federal Reserve Bank of New York are open
("Business Day"). Your purchase of shares of an ARK Money Market
Portfolio must be made in federal funds or other readily available
funds and will be processed at the NAV next calculated after your
order is received and accepted by the Transfer Agent. Your
purchase of an ARK Non-Money Market Portfolio will be processed at
the public offering price next calculated after your order is
received and accepted by the Transfer Agent. The NAVs of the ARK
Non-Money Market Portfolios are determined at the close of business
of the NYSE, normally 4:00 p.m. Eastern Time ("4:00 p.m."). The
NAVs of U.S. Treasury Money Market Portfolio and Tax-Free Money
Market Portfolio are determined at 12:00 noon Eastern Time ("12:00
noon") and the close of business of the NYSE, normally 4:00 p.m.
The NAVs of U.S. Government Money Market Portfolio and Money Market
Portfolio are determined at 1:30 p.m. Eastern Time ("1:30 p.m.")
and the close of business of the NYSE, normally 4:00 p.m. Shares
purchased at 12:00 noon and 1:30 p.m. begin to earn dividends that
Business Day. Shares purchased at 4:00 p.m. are eligible to earn
dividends on the following Business Day.

PURCHASES, EXCHANGES AND REDEMPTIONS

WHO MAY INVEST?

Retail Class Shares are designed for all investors seeking
professionally managed mutual funds. All investors in the Shares
will be required to establish a brokerage account with an
Investment Professional, such as First Maryland Brokerage
Corporation, that has a clearing brokerage arrangement with
National Financial Services Corporation.

HOW DO I SET UP AN ACCOUNT?

You may set up an account through your Investment
Professional. Please visit your nearby First Maryland Brokerage
Corporation office or call 1-800-842-2265 for information on
opening a brokerage account to invest in Shares of a Portfolio.
The program materials/brokerage account application from your
Investment Professional should be read in conjunction with this
Prospectus. An Investment Professional may impose additional
charges for its services and limitations may apply.

HOW DO I INVEST?

To invest in any Portfolio of the Fund, please visit with a
First Maryland brokerage representative located in most First
National Bank and York Bank Trust offices, or call your investment
professional. Payments for Shares of each ARK Money Market
Portfolio must be made in federal funds or other funds immediately
available to each Portfolio. An order for the purchase of Shares
paid for in such available funds will become effective on the day
of receipt of the order by the transfer agent and are entitled to
that day's dividend if received prior to 12:00 noon for U.S.
Treasury Money Market Portfolio and Tax-Free Money Market
Portfolio, or 1:30 p.m. for Money Market Portfolio and U.S.
Government Money Market Portfolio. If a purchase order, together
with such available funds, is received after 12:00 noon for U.S.
Treasury Money Market Portfolio and Tax-Free Money Market
Portfolio, or 1:30 p.m. for Money Market Portfolio and U.S.
Government Money Market Portfolio, but before 4:00 p.m., such
purchases will receive the NAV determined at 4:00 p.m. and will
begin earning dividends the following Business Day. If an order or
payment is received after 4:00 p.m., an investor will receive the
next determined NAV the following Business Day. Each Portfolio
reserves the right to reject any purchase order.

Purchase orders for Short-Term Treasury Portfolio, Income
Portfolio, Growth and Income Portfolio, Blue Chip Equity Portfolio,
Capital Growth Portfolio, Special Equity Portfolio and Maryland Tax-
Free Portfolio received by the transfer agent prior to 4:00 p.m.
will receive that day's public offering price (NAV plus a sales
charge). Shares of Income Portfolio will begin to earn dividends
on the Business Day following the date the purchase is accepted.
It is the responsibility of your Investment Professional to
transmit your order to purchase and redeem Shares to the transfer
agent before the next-determined NAV calculation on a Business Day
in order for you to receive the next-determined share price. Each
Portfolio reserves the right to reject any purchase order.

ADDITIONAL INVESTMENT REQUIREMENTS

The minimum initial investment is $1,000 per Portfolio.
Subsequent investments may be in any amount of $100 or more. If
your total investment in a Portfolio falls below $500 due to
redemption and you do not increase your total investment, your
account may be closed and the proceeds mailed to you at the address
on record. You will be given 30 days' notice to reestablish the
minimum investment. Shares will be redeemed at the last calculated
NAV on the day the account is closed.

You may initiate any transaction by telephoning your
Investment Professional. No Portfolio or its agents will be
responsible for any losses resulting from unauthorized transactions
if such Portfolio or agents follow reasonable procedures designed
to verify the identity of the caller. Your Investment Professional
may request personalized security codes or other information, and
may also record calls. You should verify the accuracy of your
confirmation statements immediately after you receive them. No
certificates representing shares will be issued.

SALES CHARGES

There are no sales charges imposed on the ARK Money Market
Portfolios. For the ARK Non-Money Market Portfolios, the following
table shows total sales charges:

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Growth & Income, Blue Chip Equity,
Short-Term Treasury, Income, Capital Growth, and Special
and Maryland Tax-Free Portfolios Equity Portfolios

Professional Professional
Sales Charge Concession Sales Charge Concession
as of % of as a % of as a % of as a % of
Offering Price Offering Price Offering Price Offering Price

Less than $50,000..................... 4.50% 4.05% 4.75% 4.28%

$50,000 to less than $100,000......... 4.00% 3.60% 4.50% 4.05%

$100,000 to less than $250,000........ 3.00% 2.70% 3.50% 3.15%

$250,000 to less than $500,000........ 2.50% 2.25% 2.50% 2.25%

$500,000 to less than $1,000,000...... 2.00% 1.80% 2.00% 1.80%

$1,000,000 to less than $3,000,000.... 1.00% 0.90% 1.00% 0.90%

$3,000,000 to less than $5,000,000.... 0.50% 0.45% 0.50% 0.45%

$5,000,000 and above.................. 0.00% None 0.00% None

</TABLE>

Reduced sales charges are applicable to purchases of Shares in
amounts of $50,000 or more. To obtain the applicable reduction of
the sales charge, please consult your Investment Professional at
the time of purchase. Sales charges do not apply to Shares
purchased by directors, officers, employees or retirees of First
Maryland or of any of its bank-holding-company affiliates.

Sales loads are being waived for all purchases of Retail Class
shares of Short-Term Treasury Portfolio, Income Portfolio, Growth
and Income Portfolio, Blue Chip Equity Portfolio, Capital Growth
Portfolio, Special Equity Portfolio, and Maryland Tax-Free
Portfolio. This sales load waiver will be in effect at least
through end of 1996.

HOW DO I EXCHANGE SHARES?

An exchange is a convenient way to buy and sell Shares of
another Portfolio registered in your state. Retail Class Shares
may be exchanged for Retail Class Shares of another Portfolio. The
redemption will be made at the next determined NAV of the Shares to
be redeemed after the exchange request is received by the transfer
agent. In order to exchange into another Portfolio, the $1,000
minimum initial investment must be met.

Each exchange between Portfolios actually represents the sale
of Shares of one Portfolio and the purchase of Shares in another,
which may produce a gain or loss for tax purposes. In order to
protect each Portfolio's performance and its shareholders, First
Maryland discourages frequent exchange activity in response to
short-term market fluctuations. Each Portfolio reserves the right
to modify or withdraw the exchange privilege or to suspend the
offering of shares in any class without notice to shareholders if,
in First Maryland's judgment, a Portfolio would be unable to invest
effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
Each Portfolio also reserves the right to reject any specific
purchase order, including certain purchases by exchange.

If Shares are exchanged for Shares of another Portfolio with a
higher sales charge than that paid for the Shares being exchanged,
you will pay a sales charge equal to the difference between those
sales charges.

An exchange between the Retail Class and the Institutional and
Institutional II Classes of any Portfolio is generally not
permitted, except that exchanges between the classes will be
permitted should a Retail Class shareholder become eligible to
purchase Institutional Class shares. For example, a Retail Class
shareholder may establish a trust account that is eligible to
purchase shares of the Institutional Class. In this case, an
exchange will be permitted between the Retail Class of a Portfolio
and the Institutional Class of that same Portfolio at NAV, without
the imposition of a sales load (if any), fee or other charge. An
exchange from the Institutional Class of a Portfolio to the Retail
Class of that same Portfolio will occur automatically when an
Institutional Class shareholder becomes ineligible to invest in the
Institutional Class. The Fund will provide at least thirty days'
notice of any such exchange at NAV, without the imposition of a
sales load (if any), fee, or other charge. After the exchange, the
exchanged shares will be subject to all fees applicable to the
Retail Class. In the event that a shareholder declines to accept
an automatic exchange, and if the shareholder does not meet the
requirements for investing in Institutional Class shares, each
Portfolio and the Fund reserves the right to redeem the shares upon
expiration of the thirty-day period. Each Portfolio reserves the
right to require shareholders to complete an application or other
documentation in connection with the exchange. The Fund has
received a tax private letter ruling from the Internal Revenue
Service that certain exchanges will occur as non-taxable events.
See your Investment Professional for additional information.

HOW DO I REDEEM SHARES?

You may redeem all or a portion of your Shares on any Business
Day. Call your Investment Professional with redemption requests.
Shares will be redeemed at the NAV next calculated after the
transfer agent has received the redemption request from your
Investment Professional. It is the responsibility of your
Investment Professional to transmit promptly your order to redeem
Shares to the transfer agent. Shares redeemed on any Business Day
for each Portfolio will receive the dividends declared, if any,
through the time of redemption. If a Portfolio account is closed,
any declared but unpaid dividends will be paid at the beginning of
the following month.

Additional Requirements: When the NYSE is closed (or when
trading is restricted) for any reason other than its customary
weekend or holiday closings, or when any emergency circumstances
exist that the SEC determines merit such action, the right of
redemption may be suspended or the date of payment postponed for a
period of time that may exceed seven days. When the NYSE or the
Federal Reserve Bank of New York closes early, the Portfolios
reserve the right to advance the time on any such day by which
purchase and redemption orders must be received. To the extent
portfolio securities are traded in other markets on days which are
not Business Days of the Fund, the NAV of the Shares of a Portfolio
may be affected on days when investors do not have access to such
Portfolio to purchase or redeem Shares. If a shareholder redeems
all the Shares of a Portfolio in an account, the shareholder will
receive, in addition to the value thereof, any declared but unpaid
distributions thereon at the beginning of the following month.

ADDITIONAL INFORMATION

Tax-Sheltered Retirement Plans: Retirement plans may offer
some of the best tax breaks available to individuals. Call your
Investment Professional for more information on the plans and their
benefits, provisions and fees. Your Investment Professional can
set up your new account in any of the Portfolios (with the
exception of Tax-Free Money Market Portfolio and Maryland Tax-Free
Portfolio) under one of several tax-sheltered plans. These plans
let you invest for retirement and shelter your investment income
from current taxes. Minimums may differ from those listed on page
___. Plans include Individual Retirement Accounts ("IRAs"),
Rollover IRAs, Keogh Plans, and Simplified Employee Pension Plans.

Distribution Options: Each ARK Money Market Portfolio earns
interest from its investments. This interest, after payment of
expenses, is passed along to shareholders as income dividends.
Income dividends for each such Portfolio are declared daily and
paid monthly. Each ARK Non-Money Market Portfolio earns dividends
from stocks and interest from bond, money market, and other
investments. These dividends and interest, after payment of
expenses, are passed along as income dividends. Income dividends
for Short-Term Treasury Portfolio, Income Portfolio and Maryland
Tax-Free Portfolio are declared and paid monthly; for Growth and
Income Portfolio and Blue Chip Equity Portfolio are declared and
paid quarterly; and for Capital Growth Portfolio and Special Equity
Portfolio are declared and paid annually. Net realized capital
gains, if any, for any Portfolio, are declared and paid annually.

When you fill out your brokerage account application, you can
specify how you want to receive your distributions. Currently,
there are three available options:

1. The Share Option reinvests income dividends and capital
gain distributions, if any, in additional Shares of the same
Portfolio. Reinvestment of income and capital gain distributions
will be made at the NAV after the next payment. If you do not
indicate a choice on your application, you will be assigned this
option.

2. The Cash Option. Each dividend and capital gain
distribution, if any, will be credited to your account in the
manner specified for settlement on your account application.

3. The Income-Earned Option. For the ARK Non-Money Market
Portfolios, your capital gain distributions will be automatically
reinvested in Shares of the same Portfolio, and your dividend, if
any, will be credited to your account in the manner specified for
settlement on your account application.

Automatic Asset Builder: This program offers a simple way to
maintain a regular investment program. You may arrange automatic
transfers (minimum $100 per transaction) from your bank account to
your brokerage account on a periodic basis. When you participate
in the Automatic Asset Builder, the minimum initial investment in
each Portfolio is $1,000. This program is unavailable for the ARK
Money Market Portfolios. You will receive written confirmation
when you set up your program participation, or any time you make a
change to your participation. You may change the amount of your
automatic investment, skip an investment, or stop your Automatic
Asset Builder investment by calling your Investment Professional at
least three business days prior to your next scheduled investment
date.

Statements and Reports: You will receive a quarterly (or, if
there has been account activity, monthly) statement. You will also
receive a statement after each trading transaction in your account.
A consolidated IRS Form 1099-DIV with federal tax information will
be mailed to you by January 31 of each tax year and also will be
filed with the IRS. At least twice a year, you will receive
financial reports of any Portfolio in which you are invested.

MANAGEMENT OF THE FUND

INVESTMENT ADVISOR

First Maryland, 25 South Charles Street, Baltimore, MD 21203,
provides investment advisory services to each Portfolio subject to
the general supervision of the Board. Pursuant to an Investment
Advisory Contract ("Advisory Agreement") dated April 12, 1993,
First Maryland is entitled to receive for its advisory services
payment at an annual rate based on the following fee schedule: ARK
Money Market Portfolios: .25% of each such Portfolio's average
daily net assets; Short-Term Treasury Portfolio: .35% of average
daily net assets; Income Portfolio: .50% of average daily net
assets; Growth and Income Portfolio: .55% of average daily net
assets; Blue Chip Equity Portfolio: .60% of average daily net
assets; Capital Growth Portfolio: .60% of average daily net assets;
Special Equity Portfolio: .60% of average daily net assets; and
Maryland Tax-Free Portfolio: .50% of average daily assets. First
Maryland, in its sole discretion, may waive all or any portion of
its advisory fee for any Portfolio. Any such voluntary waiver will
increase such Portfolio's yield for the period during which the
waiver is in effect.

First Maryland, established in 1806, had total assets of
approximately $10 billion as of September 30, 1995, and is a wholly-
owned subsidiary of First Maryland Bancorp, which is a subsidiary
of Allied Irish Banks, p.l.c. First Maryland Bancorp was organized
in 1974 as a bank holding company registered under the Federal Bank
Holding Company Act of 1956 and files annual and periodic reports
with the SEC under the Securities Exchange Act of 1934. (See
"Banking Law Matters".) First Maryland has experience as an
investment advisor to individual, corporate, and institutional
advisory clients, pension plans and collective investment funds,
with approximately $32.7 million in assets under administration,
$5.3 million of which were assets under investment management as of
September 30, 1995. First Maryland has managed mutual funds since
June 1993.

PORTFOLIO MANAGEMENT

James M. Hannan is a vice president of First Maryland and has
been the portfolio manager for the ARK Money Market Portfolios
since June 1993. He is also responsible for the management of
several separately managed institutional portfolios which he has
managed since 1992. Prior to 1987 he served as the Treasurer for
the City of Hyattsville, Maryland.

Susan S. Schnaars, vice president of First Maryland, has been
the portfolio manager for Income Portfolio since September 1994 and
is the portfolio manager for Maryland Tax-Free Portfolio and Short-
Term Treasury Portfolio. Ms. Schnaars is also responsible for
managing several commingled funds (taxable and tax-free) and several
large institutional accounts. Prior to 1992, Ms. Schnaars managed
institutional and commingled fixed-income portfolios, including
the RAF Fixed Income Fund for PNC Investment Management and Research
(formerly known as Provident National Bank). Ms. Schnaars is
a Chartered Financial Analyst and a Certified Public Accountant.

Charles E. Knudsen is a vice president of First Maryland and
has been the portfolio manager for Growth and Income Portfolio
since July 1993. He follows several equity industry groups. In
addition, he is a senior portfolio manager for key, tax-free
institutional accounts, including pension and profit sharing plans,
foundations, and endowments. Mr. Knudsen has eight years of
investment management experience. Mr. Knudsen is a Chartered
Financial Analyst.

Clyde L. Randall is a Vice President of First Maryland and
serves as the co-portfolio manager for Blue Chip Equity Portfolio
with Allen J. Ashcroft, Jr. Prior to March 1995, Mr. Randall was
an equity analyst and portfolio manager for more than five years at
Mercantile Safe Deposit and Trust Company, Baltimore, Maryland.
Mr. Randall is a Chartered Financial Analyst.

Allen J. Ashcroft, Jr. is a Vice President of First Maryland
and serves as the co-portfolio manager for Blue Chip Equity
Portfolio with Clyde L. Randall. Prior to joining First Maryland,
Mr. Ashcroft was an equity analyst and portfolio manager for
McGlinn Capital Management, Wyomissing, Pennsylvania, for 12 years.
Mr. Ashcroft has over 17 years experience in investment research
and equity analysis.

H. Giles Knight, senior vice president of First Maryland, has
been the portfolio manager of Capital Growth Portfolio since
January 1995 and is the co-portfolio manager of Special Equity
Portfolio with Christopher E. Baggini. He also serves as Director
of Equity Research of First Maryland. Prior to joining First
Maryland, Mr. Knight was with ASB Capital Management, a subsidiary
of NationsBank from 1990 to 1994. He was the Director of Special
Equity Investments, Capital Markets Division where he was
responsible for one mutual fund and six employee benefit and
personal trust common stock funds.

Christopher E. Baggini is a Vice President of First Maryland
and serves as the co-portfolio manager of Special Equity Portfolio
with H. Giles Knight. Prior to joining First Maryland, Mr. Baggini
served as portfolio manager and research analyst for First
Metropolitan Development Corporation. Mr. Baggini has over nine
years experience in investment management, including over four years
at Salomon Brothers with responsibilities in equity research, sales
and trading.

Investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures
for personal investing and restricts certain transactions.

TRANSFER AGENT

SEI Financial Management Corporation, 680 East Swedesford
Road, Wayne, Pennsylvania 19087, provides transfer agent and
related services for the Portfolios. SEI Financial Management
Corporation is a wholly-owned subsidiary of SEI Corporation
("SEI"). SEI Financial Management Corporation has subcontracted
the transfer agency services to State Street Bank and Trust Company
("State Street Bank"). State Street Bank maintains shareholder
accounts and records for the Portfolios.

ADMINISTRATOR

SEI Financial Management Corporation, 680 East Swedesford
Road, Wayne, Pennsylvania 19087, serves as the Portfolios'
administrator (the "Administrator") under the Administration
Agreement dated November 1, 1995 between the Administrator and the
Fund.

The Administrator assists in each Portfolio's administration
and operation, including providing facilities for maintaining each
Portfolio's organization, supervising relations with the custodian,
transfer and pricing agents, accountants, underwriters, and other
persons dealing with each Portfolio, preparing all general
shareholder communications and conducting shareholder relations,
maintaining (or providing for the maintenance of) the Fund's
records and the registration of each Portfolio's shares under
federal and state law, developing management services for the
Portfolios and furnishing reports, evaluation and analyses on a
variety of subjects to the Board. The Administrator is entitled to
receive an annual fee of .13% of the aggregate average daily net
assets of the Fund, paid monthly, for services performed under the
Administration Agreement. Except that the Blue Chip Equity and
Short-Term Treasury Portfolios shall pay the Administrator a fee at
an annual rate equal to the greater of (i) .13% of the aggregate
daily net assets or (ii) a minimum of $62,000. This minimum is
waivable by the Administrator at its discretion. The Administrator
has voluntarily agreed to waive a portion of its administration fee
on certain Portfolios of the Fund in order to limit total
operating expenses of such Portfolios. Any such voluntary
waiver, which can be discontinued at any time, will increase such
Portfolio's yield for the period during which the waiver is in effect.

DISTRIBUTION AND SERVICING OF THE SHARES

SEI Financial Services Company, 680 East Swedesford Road,
Wayne, Pennsylvania 19087, a wholly-owned subsidiary of SEI, serves
as the distributor (the "Distributor") for the Fund pursuant to a
Distribution Agreement dated November 1, 1995 between the
Distributor and the Fund. The Distributor, a Pennsylvania
corporation incorporated on July 20, 1981, is a broker-dealer
registered under the Securities Exchange Act of 1934 and a member
of the National Association of Securities Dealers. Inc. The
Distributor is the principal underwriter of the Fund. First
Maryland neither participates in nor is responsible for the
underwriting of the Shares.

The Board has adopted a Distribution Plan on behalf of the
Retail Class of each Portfolio pursuant to Rule 12b-1 under the
1940 Act ("Distribution Plan"). The Distribution Plan provides for
payment of a fee to the Distributor of up to .75% of average daily
net assets of the Retail Class of each Portfolio. The Board has
approved the following distribution fee rates: .25% of the average
net assets of the Retail Class of each of the ARK Money Market
Portfolios, .30% of the average net assets of the Retail Class of
Income Portfolio and the Maryland Tax-Free Portfolio, .40% of the
average net assets of the Retail Class of each of Growth and Income
Portfolio, Short-Term Treasury Portfolio, Special Equity Portfolio
and Capital Growth Portfolio and .55% of the average net assets
of the Retail Class of Blue Chip Equity Portfolio.

Under a Shareholder Services Plan in effect with respect to
the Retail Class of each Portfolio, the Retail Class of each
Portfolio may pay shareholder servicing fees to Investment
Professionals at an annual rate of up to .25% of the average daily
net assets of the Shares attributable to their customers for
providing ongoing shareholder support services to their customers
with accounts in such class, including responding to shareholder
communications, account balance maintenance and dividend posting.
The Board has approved an annual shareholder servicing fee rate of
.15% of the average net assets of the Retail Class of each
Portfolio, except for Short-Term Treasury Portfolio and Blue Chip
Equity Portfolio for which the Board has approved an annual rate of .06%
of the average net assets of each Portfolio. All or any portion
of the 12b-1 fee and/or the shareholder service fee for any Portfolio
may be waived at any time. Any such voluntary waiver, which can be
discontinued at any time, will increase such Portfolio's yield for the
period during which the waiver is in effect.

The Distributor and/or investment professionals that receive
portions of the distribution fees from the Distributor, pay for the
cost of printing (but not typesetting) and mailing to prospective
investors prospectuses and other materials relating to the Retail
Class, as well as for related direct mail, advertising and
promotional expenses.

The Distribution Plan does not obligate the Portfolios to
reimburse the Distributor for the actual expenses the Distributor
may incur in fulfilling its obligations under the Distribution Plan
on behalf of the Retail Class. Thus, under the Distribution Plan,
even if the Distributor's actual expenses exceed the fee payable to
the Distributor thereunder at any given time, the Portfolios will
not be obligated to pay more than that fee. If the Distributor's
expenses are less than the distribution fee it receives, the
Distributor will retain the full amount of the fee.

CUSTODIAN

The First National Bank of Maryland, 25 South Charles Street,
Baltimore, Maryland 21201, is custodian (the "Custodian") for the
securities and cash of the Fund. Under the Custody Agreement
between the Fund and the Custodian, the Custodian holds the Fund's
portfolio securities in safekeeping and keeps all necessary records
and documents relating to its duties. For the services provided to
the Fund pursuant to the Custody Agreement, the Fund pays the
Custodian a monthly fee at the annual rate of .015% of the average
daily net assets of the Fund. The Custodian also charges the Fund
transaction handling fees ranging from $5 to $75 per transaction
and receives reimbursement for out-of-pocket expenses.

BANKING LAW MATTERS

Banking laws and regulations generally permit a bank or bank
affiliate to act as an investment adviser and to purchase shares of
an investment company as agent for and upon the order of a
customer. However, banking laws and regulations, including the
Glass-Steagall Act as currently interpreted by the Board of
Governors of the Federal Reserve System, prohibit a bank holding
company registered under the Federal Bank Holding Company Act of
1956 or any affiliate thereof from sponsoring, organizing,
controlling, or distributing the shares of a registered, open-end
investment company continuously engaged in the issuance of its
shares, and prohibit banks generally from issuing, underwriting,
selling or distributing securities. Upon advice of counsel, the
Board believes that First Maryland may perform the advisory
services described in this Prospectus for each Portfolio and its
shareholders without violating applicable federal banking laws or
regulations.

However, judicial or administrative decisions or
interpretations of, as well as changes in, either federal or state
statutes or regulations relating to the activities of banks and
their affiliates could prevent a bank or bank affiliate from
continuing to perform all or a part of the activities contemplated
by this Prospectus. If banks or bank affiliates were prohibited
from so acting, changes in the operation of the Fund might occur.
It is not anticipated, however, that any such change would affect
the Shares' NAVs or result in any financial loss to any
shareholder.

TAX MATTERS

The following discussion is only a brief summary of some of
the important tax considerations generally affecting the Portfolios
and their shareholders and is not intended as a substitute for
careful tax planning. Accordingly, investors in the Portfolios
should consult their tax advisers with specific reference to their
own tax situation.

Each Portfolio has elected to be taxed as a regulated
investment company under Subchapter M of the Internal Revenue Code
of 1986, as amended. So long as a Portfolio qualifies for this tax
treatment, it will be relieved of federal income tax on amounts
distributed to shareholders, but shareholders, unless otherwise
exempt, will pay income or capital gains taxes on amounts so
distributed (except distributions that constitute "exempt interest
dividends" or that are treated as a return of capital) regardless
of whether such distributions are paid in cash or reinvested in
additional shares.

Distributions out of the "net capital gain" (the excess of net
long-term capital gain over net short-term capital loss), if any,
of any Portfolio will be taxed to shareholders as long-term capital
gains at a maximum marginal rate of 28%, regardless of the length
of time a shareholder has held shares, whether such gain was
reflected in the price paid for the shares, or whether such gain
was attributable to bonds bearing tax-exempt interest. All other
distributions, to the extent they are taxable, are taxed as
ordinary income at a maximum marginal rate of 39.6%. Corporate
taxpayers are currently taxed at the same maximum marginal rates on
both ordinary income and capital gains.

Tax-Free Money Market Portfolio and Maryland Tax-Free
Portfolio intend to pay substantially all of their respective
dividends as "exempt interest dividends." Investors in these
Portfolios should note, however, that taxpayers are required to
report the receipt of tax-exempt interest and "exempt interest
dividends" in their federal income tax returns and that in two
circumstances such amounts, while exempt from regular federal
income tax, are taxable to persons subject to alternative minimum
tax. Alternative minimum tax is currently imposed at a maximum
marginal rate of 28% in the case of non-corporate taxpayers and at
the rate of 20% in the case of corporate taxpayers. First, tax-
exempt interest and "exempt interest dividends" derived from
certain private activity bonds issued after August 7, 1986, will
generally constitute an item of tax preference for corporate and
non-corporate taxpayers in determining alternative minimum tax
liability. Tax-Free Money Market Portfolio and Maryland Tax-Free
Portfolio intend to avoid investing their assets in such private
activity bonds but may do so if required by market conditions.
Second, tax-exempt interest and "exempt interest dividends" derived
from all municipal securities must be taken into account by
corporate taxpayers in determining their adjusted current earnings
adjustments for alternative minimum tax purposes. Realized market
discount on tax-exempt obligations purchased after April 30, 1993,
is treated as ordinary income and not as capital gain.
Shareholders who are recipients of Social Security Act or Railroad
Retirement Act benefits should further note that tax-exempt
interest and "exempt interest dividends" will be taken into account
in determining the taxability of their benefit payments.

Tax-Free Money Market Portfolio and Maryland Tax-Free
Portfolio will determine annually the percentage of their
respective net investment incomes that is fully tax-exempt, the
percentage which constitutes an item of tax preference for
alternative minimum tax purposes and the percentage which is fully
taxable, and will apply such percentages uniformly to all
distributions declared from net investment income during that year.
These percentages may differ significantly from the actual
percentages for any particular day.

To the extent that Tax-Free Money Market Portfolio and
Maryland Tax-Free Portfolio income dividends and capital gain
distributions are derived from Maryland state tax-free investments,
they will be free from Maryland state and county taxes (including
City of Baltimore local taxes).

The Fund anticipates that a substantial portion of dividends
paid by Blue Chip Equity Portfolio, Capital Growth Portfolio,
Growth and Income Portfolio and Special Equity Portfolio will be
eligible for the 70% dividends received deduction allowed to
certain corporations to the extent of the gross amount of qualified
dividends received, respectively, by each Portfolio for the year.
However, corporate shareholders will have to take into account the
entire amount of any dividend received in determining their
adjusted current earnings adjustment for alternative minimum tax
purposes. The dividends received deduction is not available for
capital gain dividends.

Many state income tax laws exempt from taxation dividends paid
by a regulated investment company to the extent such dividends are
derived from interest paid on U.S. Treasury obligations. The Fund
will advise shareholders annually of the percentage of the ordinary
income dividends paid by each Portfolio that is attributable to
interest earned on U.S. Treasury obligations.

The Fund will send written notices to shareholders annually
regarding the tax status of distributions made by each Portfolio.
Dividends declared in October, November or December of any year
payable to shareholders of record on a specified date in such a
month will be deemed to have been received by the shareholders on
December 31, provided such dividends are paid during January of the
following year. Each Portfolio intends to make sufficient actual
or deemed distributions prior to the end of each calendar year to
avoid liability for federal excise tax.

Investors should be careful to consider the tax implications
of buying Shares just prior to a distribution. The price of Shares
purchased at that time will reflect the amount of the forthcoming
distribution. Those investors purchasing just prior to a
distribution will nevertheless be taxed on the entire amount of the
distribution received. The foregoing considerations do not apply
to the purchase of Shares of the ARK Money Market Portfolios, which
are offered at the constant NAV of $1.00.

Shareholders who exchange shares representing interests in one
Portfolio for Shares representing interests in another Portfolio
will generally recognize capital gain or loss for federal income
tax purposes.

To avoid being subject to federal income tax withholding at
the rate of 31% on taxable dividends, distributions and redemption
payments, shareholders must furnish the Fund with their taxpayer
identification numbers and certify under penalties of perjury that
the number provided is correct and that they are not subject to
backup withholding for any reason. Redemptions of Shares are
reported annually on information returns that are filed with the
IRS with respect to each shareholder that is not otherwise exempt.

Shareholders who are nonresident alien individuals, foreign
trusts or estates, foreign corporations or foreign partnerships may
be subject to different U.S. federal income tax treatment.

* * *

An investment in any one Portfolio is not intended to
constitute a balanced investment program. Shares of Tax-Free Money
Market Portfolio and Maryland Tax-Free Portfolio would not be
suitable for tax-exempt institutions and may not be suitable for
retirement plans qualified under Section 401 of the Internal
Revenue Code, H.R. 10 plans and individual retirement accounts
because such plans and accounts are generally tax-exempt.
Therefore, such plans and accounts would not gain any additional
benefit from the Portfolios dividends' tax-exempt status and,
moreover, such dividends would be taxable when distributed to the
beneficiary.

Future legislative or administrative changes or court
decisions may materially affect the tax consequences of investing
in one or more Portfolios of the Fund. From time to time,
proposals have been introduced before Congress that would have the
effect of reducing or eliminating the federal tax exemption on
municipal obligations. If such a proposal were enacted, the
ability of Tax-Free Money Market Portfolio and Maryland Tax-Free
Portfolio to pay exempt-interest dividends might be adversely
affected. Shareholders are also urged to consult their tax
advisers concerning the application of state and local income taxes
to investments in the Fund, which may differ from the Federal
income tax consequences described above.

GENERAL INFORMATION

ARK Funds is an open-end diversified management investment
company organized as a Massachusetts business trust pursuant to a
Declaration of Trust dated October 22, 1992 and amended and
restated on March 19, 1993. The Board supervises Fund activities
and reviews contractual arrangements with companies that provide
the Portfolios with services. The Fund may issue an unlimited
number of shares of each of its portfolios. The Shares of a
Portfolio have equal voting, liquidation and other rights. When
issued and paid for, Shares will be fully paid and non-assessable
by the Fund and will have no preference, conversion, exchange or
preemptive rights. The Board may authorize the Fund to offer other
portfolios which may differ in the types of securities in which
their assets may be invested.

As a Massachusetts business trust, the Fund is not required to
hold annual shareholder meetings, although special meetings may be
called for a specific Portfolio or class of shares with respect to
issues affecting that Portfolio or class, for the Fund as a whole
for purposes such as electing or removing Trustees. Shareholders
are entitled to one vote for each full share owned and fractional
votes for fractional shares owned. Separate votes are taken by a
class of shares, Portfolio, or the Fund if a matter affects just
that class, portfolio or the Fund, respectively.

The Fund offers three classes of shares of each ARK Money
Market Portfolio; two classes of shares of Short-Term Treasury
Portfolio, Income Portfolio, Growth and Income Portfolio, Blue Chip
Equity Portfolio, Capital Growth Portfolio, Special Equity
Portfolio and Maryland Tax-Free Portfolio; and one class of shares
of International Equity Portfolio. The classes of shares of a
Portfolio have a common investment objective and investment
limitations and policies. The classes of shares of a Portfolio
have different sales charges and other expenses that may affect
performance. The Institutional Class of Short-Term Treasury
Portfolio and Blue Chip Equity Portfolio are expected to
commence operations on or about the date of this Prospectus. The
Institutional Class of Maryland Tax-Free Portfolio has not yet commenced
operations. The Retail Classes of the U.S. Government Money Market
Portfolio, Short-Term Treasury Portfolio, Blue Chip Equity Portfolio,
Special Equity Portfolio and Maryland Tax-Free Portfolio have not yet
commenced operations. You may obtain more information on the classes
of shares not offered through this Prospectus by calling
1-800-624-4116 or from your Investment Professional.

APPENDIX

The following paragraphs provide a brief description of the
securities in which Portfolios may invest and the transactions they
may make. A Portfolio's investments are not limited by this
discussion, however, and a Portfolio may include other types of
securities and other types of transactions consistent with its
investment objective.

A complete listing of the Portfolios' policies and limitations
and more detailed information about the Portfolios' investments are
contained in the Portfolios' SAI. Current holdings and recent
investment strategies are described in the Portfolios' financial
reports, which are sent to shareholders twice a year.

The ARK Non-Money Market Portfolios, except Short-Term
Treasury Portfolio and Maryland Tax-Free Portfolio, may invest in
American Depository Receipts and European Depository Receipts
("ADRs" and "EDRs"). ADRs and EDRs are certificates evidencing
ownership of shares of a foreign-based issuer held in trust by a
bank or similar financial institution. Designed for use in U.S.
and European securities markets, respectively, ADRs and EDRs are
alternatives to the purchase of the underlying securities in their
national markets and currencies.

Each Portfolio, except U.S. Treasury Money Market Portfolio,
U.S. Government Money Market Portfolio and Short-Term Treasury
Portfolio may purchase asset-backed securities which consist of
undivided fractional interests in pools of consumer loans
(unrelated to mortgage loans) held in a trust. Payments of
principal and interest are passed through to certificate holders
and are typically supported by some form of credit enhancement,
such as a letter of credit, surety bond, limited guaranty, or
senior subordination. The degree of credit enhancement varies, but
generally amounts to only a fraction of the asset-backed security's
par value until exhausted. If the credit enhancement is exhausted,
certificate holders may experience losses or delays in payment if
the required payments of principal and interest are not made to the
trust with respect to the underlying loans. The value of these
securities also may change because of changes in the market's
perception of the creditworthiness of the servicing agent for the
loan pool, the originator of the loans, or the financial
institution providing the credit enhancement. Asset-backed
securities are ultimately dependent upon payment of consumer loans
by individuals, and the certificate holder generally has no
recourse to the entity that originated the loans. The underlying
loans are subject to prepayments which shorten the securities'
weighted average life and may lower their return. (As prepayments
flow through at par, total returns would be affected by the
prepayments: if a security were trading at a premium, its total
return would be lowered by prepayments, and if a security were
trading at a discount, its total return would be increased by
prepayments.)

Each Portfolio, except U.S. Treasury Money Market Portfolio,
U.S. Government Money Market Portfolio and Short-Term Treasury
Portfolio may purchase bank obligations. These include: bankers'
acceptances which are negotiable obligations of a bank to pay a
draft which has been drawn on it by a customer; certificates of
deposit which are negotiable certificates representing a commercial
bank's obligation to repay funds deposited with it, earning
specified rates of interest over given periods or issued at a
discount: and time deposits which are non-negotiable deposits in a
banking institution earning a specified interest rate over a given
period of time.

The ARK Non-Money Market Portfolios, except Short-Term
Treasury Portfolio, may purchase convertible securities.
Convertible securities are usually preferred stock or bond issues
that may be converted or exchanged by the holder into shares of the
underlying common stock at a stated exchange ratio. A convertible
security may also be subject to redemption by the issuer but only
after a particular date and under certain circumstances (including
a specified price) established upon issue. If a convertible
security held by a Portfolio is called for redemption, that
Portfolio could be required to tender it for redemption, convert it
to the underlying common stock, or sell it to a third party.

Each Portfolio, except U.S. Treasury Money Market Portfolio,
U.S. Government Money Market Portfolio, Short-Term Treasury
Portfolio and Maryland Tax-Free Portfolio, may invest in
Eurodollars, Yankee dollars and foreign bank obligations which
involve risks that are different from investments in securities of
U.S. banks. These risks may include future unfavorable political
and economic developments, withholding taxes, seizures of foreign
deposits, currency controls, interest limitations, or other
governmental restrictions that might affect payment of principal or
interest. Additionally, there may be less public information
available about foreign banks and their branches and agencies.
Foreign branches of domestic banks are not regulated by U.S.
banking authorities and generally are not subject to accounting,
auditing, and financial reporting standards comparable to those
applicable to U.S. banks. For this purpose, domestic banks include
foreign branches of domestic banks for which the domestic parent is
unconditionally liable in the event the foreign branch failed to
pay on its instruments for any reason.

Each Portfolio, except U.S Treasury Money Market Portfolio,
U.S. Government Money Market Portfolio, Short-Term Treasury
Portfolio and Maryland Tax-Free Portfolio, may invest in U.S.
dollar-denominated securities of foreign issuers. Each ARK Non-
Money Market Portfolio, except Short-Term Treasury Portfolio and
Maryland Tax-Free Portfolio, may invest in foreign securities
denominated in foreign currencies. Foreign investments involve
risks in addition to the risks inherent in domestic investments. A
Portfolio's foreign securities and securities denominated in or
indexed to foreign currencies may be affected by the strength of
foreign currencies relative to the U.S. dollar, or by political or
economic developments in foreign countries. Foreign companies may
not be subject to accounting standards or governmental supervision
comparable to U.S. companies, and there may be less public
information about their operations. Foreign markets may be less
liquid or more volatile than U.S. markets, and may offer less
protection to investors. In addition to the political and economic
factors that can affect foreign securities, a governmental issuer
may be unwilling to repay principal and interest when due, and may
require that the conditions for payment be renegotiated. These
factors could make foreign investments, especially those in
developing countries, more volatile. First Maryland considers
these factors in making investments in foreign securities for a
Portfolio. There is no direct limitation specifically intended to
limit the amount of each Portfolio's assets that may be invested in
foreign securities or in any one country or currency.

Foreign securities, foreign currencies and securities issued
by U.S. entities with substantial foreign operations may involve
additional risks and considerations. These include risks relating
to political or economic conditions in foreign countries,
fluctuations in foreign currencies, withholding or other taxes,
operational risks, increased regulatory burdens and the potentially
less stringent investor protection and disclosure standards of
foreign markets. Additionally, governmental issuers of foreign
securities may be unwilling to re-pay principal and interest when
due, and may require that the conditions for re-payment be
renegotiated. All these factors can make foreign investments,
especially those in developing countries, more volatile.

The ARK Non-Money Market Portfolios, except Short-Term
Treasury Portfolio and Maryland Tax-Free Portfolio, may enter into
forward currency contracts (agreements to exchange one currency for
another at a future date) to manage currency risks and to
facilitate transactions in foreign securities. Although forward
currency contracts can be used to protect a Portfolio from adverse
exchange rate changes, they involve a risk of loss if First
Maryland fails to predict foreign currency values correctly.

Hedging Strategies. The ARK Non-Money Market Portfolios,
except Short-Term Treasury Portfolio, may buy and sell options on
securities, currencies, futures contracts and options on such
contracts ("Hedging Instruments") to manage their exposure to
changing interest rates, security prices, and currency exchange
rates. Some strategies using these instruments, including selling
futures, buying puts and writing calls, tend to hedge the
Portfolio's investments against price fluctuations. Other
strategies, including buying futures, writing puts and buying
calls, tend to increase market exposure. Hedging Instruments may
be used in combination with each other or with forward currency
contracts in order to adjust the risk and return characteristics of
the overall strategy. A Portfolio may invest in Hedging
Instruments based on any type of security, index, or currency,
including options and futures traded on foreign exchanges and
options not traded on exchanges. These strategies may increase the
volatility of the Portfolios and may involve a small investment of
cash relative to the magnitude of the risk assumed. In addition,
these strategies could result in a loss to a Portfolio if the
counterparty to the transaction does not perform as promised.

Hedging Instruments can be volatile investments, and involve
certain risks. If First Maryland applies a hedge at an
inappropriate time or judges market conditions incorrectly, use of
Hedging Instruments may lower a Portfolio's return. A Portfolio
could also experience a loss if the prices of its options and
futures positions were poorly correlated with its other
investments, or if it could not close out its positions because of
an illiquid secondary market.

No Portfolio will hedge more than 25% of its total assets by
selling futures, writing calls, and buying puts under normal
conditions. In addition, a Portfolio will not buy futures or write
puts where the value of the underlying investment exceeds 25% of
its total assets, and will not buy calls with a value exceeding 5%
of its total assets.

Under currently applicable regulations, each ARK Money Market
Portfolio, except U.S. Treasury Money Market Portfolio, may invest
up to 10% of its net assets in illiquid securities; the ARK Non-
Money Market Portfolios may invest up to 15% of their respective
net assets in illiquid securities. Illiquid securities are
securities that cannot be disposed of in the usual course of
business within seven days of the usual course of business without
taking a reduced price. Generally, securities subject to
restriction on resale, variable rate demand notes, repurchase
agreements with more than seven days to maturity, and time deposits
are considered to be illiquid unless First Maryland determines, in
accordance with guidelines established by the Board, that such
securities are readily marketable. The absence of a trading market
can make it difficult to ascertain a market value for illiquid
securities, and it may be difficult or impossible for a Portfolio
to sell them promptly at an acceptable price. In addition, unless
securities are registered for sale, securities can only be sold in
privately negotiated transactions or pursuant to an exemption from
registration.

The ARK Non-Money Market Portfolios, except Short-Term
Treasury Portfolio, may invest in indexed securities whose value
depends on the price of securities indices, or other financial
indicators. These include commercial paper and certificates of
deposit. These securities may be positively or negatively indexed;
that is, their value may increase or decrease if the underlying
instrument appreciates. Some indexed securities may be based on
underlying instruments whose total value is greater than the value
of the indexed security itself. Some indexed securities may be
based on underlying instruments whose total value is greater than
the value of the indexed instrument itself.

Special Equity Portfolio may purchase lower-rated debt
securities which are high-yielding debt securities, or junk bonds,
(those rated Ba or lower by Moody's or BB or lower by S&P) that
have poor protection against default in the payment of principal
and interest. These securities are often considered to be
speculative and involve greater risk of loss or price changes due
to changes in the issuer's capacity to pay. The market prices of
lower-rated debt securities may fluctuate more than those of higher-
rated debt securities, and may decline significantly in periods of
general economic difficulty which may follow periods of rising
interest rates. The table below provides a summary of ratings
assigned to debt securities (not including money market
instruments) that may be included in a Portfolio.

Moody's S&P
Rating Rating Description

Investment Grade

Aaa/Aa/A AAA/AA/A Highest quality/high quality/
upper medium grade

Baa BBB Medium grade

Non-Investment Grade

Ba BB Moderately speculative

B B Speculative

Caa CCC Highly speculative

Ca/C CC/C Poor quality/lowest quality
no interest

-- D In default, in arrears

Income Portfolio, Growth and Income Portfolio and Special
Equity Portfolio may purchase mortgage-backed securities issued by
government and non-government entities such as banks, mortgage
lenders, or other financial institutions. Mortgage-backed
securities include mortgage pass-through securities, mortgage-
backed securities, and mortgage pay-through securities. A mortgage
pass-through security is a pro-rata interest in a pool of mortgages
where the cash flow generated from the mortgage collateral is
passed through to the security holder. Mortgage-backed bonds are
general obligations of their issuers, payable out of the issuers'
general funds and additionally secured by a first lien on a pool of
mortgages. Mortgage pay-through securities exhibit characteristics
of both pass-throughs and mortgage-backed bonds. Mortgage-backed
securities also include other debt obligations secured by mortgages
on commercial real estate or residential properties. The value of
mortgage-backed securities may change due to shifts in the market's
perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Non-
government mortgage-backed securities may offer higher yields than
those issued by government entities, but also may be subject to
greater price changes than government issues. Because mortgage
securities pay both principal and interest as their underlying
mortgages are paid off, they are subject to pre-payment risk. Pre-
payment, which occurs when unscheduled or early payments are made
on the underlying mortgages, may shorten the effective maturities
of these securities and may lower their total returns. Finally,
the value of a mortgage security may be affected by changes in
market interest rates.

Each Portfolio, except U.S. Treasury Money Market Portfolio,
U.S. Government Money Market Portfolio and Short-Term Treasury
Portfolio, may purchase municipal obligations which are issued to
raise money for a variety of public or private purposes, including
general financing for state and local governments, or financing for
specific projects or public facilities. They may be issued in
anticipation of future revenues, and may be backed by the full
taxing power of a municipality, the revenues from a specific
project, or the credit of a private organization. The value of
some or all municipal securities may be affected by uncertainties
in the municipal market related to legislation or litigation
involving the taxation of municipal securities or the rights on
municipal securities holders. A Portfolio may own a municipal
security directly or through a participation interest.

Each Portfolio, except U.S. Treasury Money Market Portfolio
and Tax-Free Money Market Portfolio, may enter into repurchase
agreements. In a repurchase agreement, the Portfolio buys a
security at one price and simultaneously commits to resell that
security back at a higher price. Each Portfolio, except U.S.
Treasury Money Market Portfolio and Tax-Free Money Market
Portfolio, may also make securities loans to parties such as broker-
dealers and institutional investors. In the event of bankruptcy of
the other party to either a repurchase agreement or a securities
loan, a Portfolio could experience delays in recovering its cash or
the securities it lent. To the extent, in the meantime, the value
of the securities purchased had decreased, or the value of the
securities lent had increased, the Portfolio could experience a
loss. In all cases, First Maryland must find the creditworthiness
of the other party to the transaction satisfactory.

Borrowing Money and Reverse Repurchase Agreements. Each
Portfolio may borrow money by engaging in reverse repurchase
agreements. In a reverse repurchase agreement a Portfolio sells a
portfolio instrument to another party, such as a bank, in return
for cash and agrees to repurchase the instrument at a particular
price and time. While a reverse repurchase agreement is
outstanding, a Portfolio will maintain appropriate liquid assets in
a segregated custodial account to cover its obligation under the
agreement. A Portfolio will enter into reverse repurchase
agreements only with parties whose creditworthiness is deemed
satisfactory.

The ARK Non-Money Market Portfolios, except Short-Term
Treasury Portfolio, may enter into short sales with respect to
securities owned ("short sales against the box"). These
transactions may help to hedge against the effect of price
declines, but may result in losses if the price of the underlying
securities increases.

Each Portfolio, except U.S. Treasury Money Market Portfolio
and Short-Term Treasury Portfolio, may purchase U.S. Government
Securities which are securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities. They may be
backed by the full faith and credit of the U.S government as a
whole or only by the issuing agency. For example, securities
issued by the Federal Home Loan Banks and the Federal Home Loan
Mortgage Corporation are supported only by the credit of the
issuing agency, and not by the U.S. government. Securities issued
by the Federal Farm Credit System, the Federal Land Banks and the
Federal National Mortgage Association are supported by the agency's
right to borrow money from the U.S. Treasury under certain
circumstances. U.S. Treasury securities and some agency securities,
such as those issued by the Federal Housing Administration and the
Government National Mortgage Association, are backed by the full
faith and credit of the U.S. government and are the highest quality
government securities.

Each Portfolio, except U.S. Treasury Money Market Portfolio
and Short-Term Treasury Portfolio, may purchase variable or
floating rate instruments. Variable or floating rate instruments
(including notes purchased directly from issuers) bear variable or
floating interest rates and may carry rights that permit holders to
demand full payment from issuers or certain financial
intermediaries. Floating rate securities have interest rates that
change whenever there is a change in a designated base rate, while
variable rate instruments provide for a specified periodic
adjustment in the interest rate. These formulas are designed to
result in a market value for the instrument that approximates its
par value. Many variable and floating rate instruments also carry
demand features that permit a Portfolio to sell them at par value
plus accrued interest on short notice.

Special Equity Portfolio may invest in warrants which entitle
the holder to buy equity securities at a specific price for a
specific period of time. Warrants may be considered more
speculative than certain other types of investments because they do
not entitle a holder to dividends or voting rights with respect to
the securities which may be purchased, nor do they represent any
rights in the assets of the issuing company. The value of a
warrant may be more volatile than the value of the securities
underlying the warrants. Also, the value of the warrant does not
necessarily change with the value of the underlying securities and
a warrant ceases to have value if it is not exercised prior to the
expiration date.

Each Portfolio may engage in transactions on a when-issued or
delayed-delivery basis. The market value of securities purchased
in this way may change before the delivery date, which could affect
the market value of the assets and could increase fluctuations in a
Portfolio's share price, yield and return. Ordinarily, the
Portfolios will not earn interest on the securities purchased until
they are delivered.

Each Portfolio may purchase zero coupon debt securities which
do not make regular interest payments. Instead, they are sold at a
deep discount from their face value. In calculating its daily
dividend, each Portfolio takes into account as income a portion of
the difference between these securities' purchase prices and their
face values. Because they do not pay current income, the prices of
zero coupon debt securities can be volatile when interest rates
change.

ADDITIONAL INVESTMENTS FOR TAX-FREE MONEY MARKET PORTFOLIO AND
MARYLAND TAX-FREE PORTFOLIO

Municipal Lease Obligations are issued by a state or local
government or authority to acquire land and a wide variety of
equipment and facilities. These obligations typically are not
fully backed by the municipality's credit, and their interest may
become taxable if the interest is assigned. If funds are not
appropriated for the following year's lease payments, the lease may
terminate, with the possibility of default on the lease obligation
and significant loss to the Portfolio. Certificates of
participation in municipal lease obligations or installment sales
contracts entitle the holder to a proportionate interest in the
lease-purchase payments made. Each Portfolio will only purchase
rated municipal lease obligations.

Municipal Securities include general obligation securities,
which are backed by the full taxing power of a municipality, and
revenue securities, which are backed by the revenues of a specific
tax, project, or facility. Industrial development bonds are a type
of revenue bond backed by the credit and security of a private
issuer and may involve greater risk.

Refunding Contracts. The Portfolios may purchase securities
on a when-issued basis in connection with the refinancing of an
issuer's outstanding indebtedness. Refunding contracts require the
issuer to sell and the Portfolio to buy refunded municipal
obligations at a stated price and yield on a settlement date that
may be several months or several years in the future. Although a
Portfolio may sell its rights under a refunding contract, these
contracts are relatively new and the secondary market for them may
be less liquid than the secondary market for other types of
municipal securities.

Resource Recovery Bonds are a type of revenue bond issued to
build facilities such as solid waste incinerators or waste-to-
energy plants. Typically, a private corporation will be involved,
at least during the construction phase, and the revenue stream will
be secured by fees or rents paid by municipalities for use of the
facilities. The viability of a resource recovery project,
environmental protection regulations, and project operator tax
incentives may affect the value and credit quality of resource
recovery bonds.

Tax and Revenue Anticipation Notes are issued by
municipalities in expectation of future tax or other revenues, and
are payable from those specific taxes or revenues. Bond
anticipation notes normally provide interim financing in advance of
an issue of bonds or notes, the proceeds of which are used to repay
the anticipation notes. Tax-exempt commercial paper is issued by
municipalities to help finance short-term capital or operating
needs.

ARK FUNDS: RETAIL CLASS

U.S. TREASURY MONEY MARKET PORTFOLIO
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
MONEY MARKET PORTFOLIO
TAX-FREE MONEY MARKET PORTFOLIO
SHORT-TERM TREASURY PORTFOLIO
INCOME PORTFOLIO
GROWTH AND INCOME PORTFOLIO
BLUE CHIP EQUITY PORTFOLIO
CAPITAL GROWTH PORTFOLIO
SPECIAL EQUITY PORTFOLIO
MARYLAND TAX-FREE PORTFOLIO

CROSS REFERENCE SHEET

Form N-1A Item Number
Part B Statement of Additional Information

10,11................... Cover Page
12 ..................... Description of the Fund
13 a,b,c................ Investment Policies and Limitations
d.................... *
14 a,b.................. Trustees and Officers
c.................... *
15 a,b,c................. *
16 a(i,ii).............. The Advisor
a(iii),b,c,d......... Portfolio Transactions
e.................... *
f.................... Administrator and Distributor
g.................... *
h.................... Description of the Fund
i.................... Administrator and Distributor
17 a.................... Portfolio Transactions
b.................... *
c.................... Portfolio Transactions
d,e.................. *
18 a.................... Description of the Fund
b.................... *
19 a.................... Additional Purchase and Redemption Information
b.................... Valuation of Portfolio Securities
20 ..................... Taxes
21 a(i),(ii)............ Administrator and Distributor
a(iii),b,c........... *
22 .................... Performance
23 ..................... Financial statements for the fiscal year ended
April 30, 1995, for each Portfolio (with the
exception of U.S. Treasury Money Market Portfolio,
U.S. Government Money Market Portfolio, Short-
Term Treasury Portfolio, Blue Chip Equity
Portfolio, Special Equity Portfolio and Maryland
Tax-Free Portfolio) were filed pursuant to Rule
30b2-1. Financial statements for the period
ended October 31, 1995 will be filed by subsequent
amendment.

* Not Applicable

ARK FUNDS: RETAIL CLASS
STATEMENT OF ADDITIONAL INFORMATION
______________, 1996

This Statement of Additional Information is not a prospectus but
should be read in conjunction with the current Prospectus (dated
_____________, 1996) for the Retail Class of the ARK Funds (the
"Fund"). Each money market Portfolio of the Fund (ARK Money Market
Portfolios) offers three classes of shares: Institutional Class,
Institutional II Class and Retail Class. Short-Term Treasury
Portfolio, Income Portfolio, Growth and Income Portfolio, Blue Chip
Equity Portfolio, Capital Growth Portfolio, Special Equity Portfolio
and Maryland Tax Free Portfolio each offers two classes of shares:
Institutional Class and Retail Class. Finally, International Equity
Portfolio offers Institutional Class shares, only (hereinafter, all
ARK Funds Portfolios, except the ARK Money Market Portfolios, are
sometimes called, collectively, ARK Non-Money Market Portfolios).
Please retain this document for future reference. The Fund's
financial statements and financial highlights, included in the Annual
Report for the fiscal period ended April 30, 1995, and the Semi-Annual
Report for the six month period ended October 31, 1995, are
incorporated herein by reference. To obtain additional copies of the
Retail Class Prospectus, the Annual Report dated April 30, 1995, the
Semi-Annual Report dated October 31, 1995, and this Statement of
Additional Information or the Institutional Class Prospectus, the
Institutional II Class Prospectus or the Institutional Class and
Institutional II Class Statement of Additional Information, please
call 1-800-842-2265.

TABLE OF CONTENTS PAGE

Investment Policies and Limitations
Investment Practices
Special Considerations for Maryland Tax - Free Portfolio
Portfolio Transactions
Valuation of Portfolio Securities
Additional Purchase and Redemption Information
Taxes
The Advisor
Administrator and Distributor
Transfer Agent
Description of the Fund
Auditor
Financial Statements
Appendix

Advisor:
The First National Bank of Maryland ("First Maryland" or the "Advisor")

Custodian:
The First National Bank of Maryland (the "Custodian")

Transfer Agent:
SEI Financial Management Corporation (the "Transfer Agent")

Administrator;
SEI Financial Management Corporation (the "Administrator")

Distributor:
SEI Financial Services Company (the "Distributor")

INVESTMENT POLICIES AND LIMITATIONS

The following policies and limitations supplement those set forth
in the Retail Class Prospectus. Unless otherwise expressly noted,
whenever an investment policy or limitation states a maximum
percentage of a Portfolio's assets that may be invested in any
security or other asset, or sets forth a policy regarding quality
standards, such percentage or standard will be determined immediately
after and as a result of the Portfolio's acquisition of such security
or other asset. Accordingly, any subsequent change in values, net
assets, or other circumstances will not be considered when determining
whether the investment complies with the Portfolio's investment
policies and limitations.

Unless otherwise expressly noted, a Portfolio's policies and
limitations are non-fundamental. Fundamental investment policies and
limitations cannot be changed without approval by a "majority of the
outstanding voting securities" (as defined in the Investment Company
Act of 1940 (the 1940 Act)) of a Portfolio. The Portfolios'
investment limitations are as follows.

U.S. TREASURY MONEY MARKET PORTFOLIO

The Portfolio, as a matter of fundamental policy, may not:

(1) with respect to 75% of the Portfolio's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of the Portfolio's total assets
would be invested in the securities of that issuer, or (b) the
Portfolio would hold more than 10% of the outstanding voting
securities of that issuer;

(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;

(3) borrow money, except that the Portfolio may (i) borrow money from
a bank for temporary or emergency purposes (not for leveraging or
investment) and (ii) engage in reverse repurchase agreements for any
purpose; provided that (i) and (ii) in combination do not exceed 33
1/3% of the value of the Portfolio's total assets (including the
amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within
three business days to the extent necessary to comply with the 33 1/3%
limitation;

(4) underwrite securities issued by others, except to the extent that
the Portfolio may be considered an underwriter within the meaning of
the Securities Act of 1933 in the disposition of portfolio securities;

(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the Portfolio's
total assets would be invested in the securities of companies whose
principal business activities are in the same industry;

(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the Portfolio from investing in securities or other
instruments backed by real estate or securities of companies engaged
in the real estate business);

(7) purchase or sell commodities unless acquired as a result of
ownership of securities or other instruments; or

(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.

The following investment limitations are not fundamental and may be
changed without shareholder approval.

(i) The Portfolio does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short.

(ii) The Portfolio will not purchase any security while borrowings
(including reverse repurchase agreements) representing more than 5% of
its total assets are outstanding.

(iii) The Portfolio does not currently intend to purchase securities
on margin, except that the Portfolio may obtain such short-term
credits as are necessary for the clearance of transactions.

(iv) The Portfolio does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.

(v) The Portfolio does not currently intend to purchase securities of
other investment companies, except to the extent permitted by the
Investment Company Act of 1940.