ANNUAL REPORT APRIL 30, 1997
[Logo Omitted] ARK FUNDS
[GRAPHIC OMITTED] ARK LOGO
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TABLE OF CONTENTS
Letter to Shareholders 1
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Money Market Overview 2
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Management's Discussion & Analysis 5
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Independent Auditor's Report 24
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Statement of Net Assets 25
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Statement of Assets and Liabilities 65
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Statement of Operations 66
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Statement of Changes in Net Assets 68
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Financial Highlights 72
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Notes to Financial Statements 75
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This report and the financial statements contained herein are submitted for the
general information of the shareholders of the ARK Funds. The report is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus for each of the Portfolios included.
Shares in the Portfolios are not deposits or obligations of, or guaranteed or
endorsed by The FMB Trust Co., N.A. or any depositary institution, are not
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board,
or any other government agency. Investing in the shares involves investment
risks including the possible loss of principal amount invested.
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APRIL 30, 1997 [ARK FUND LOGO OMITTED]
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Letter to Shareholders
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Dear Shareholder:
Both the economy and the financial markets have continued to confound skeptics
over the last year. Now in its seventh consecutive year of expansion
(the third longest since the end of WWII), the U.S. economy has demonstrated
remarkable resilience, and as of this date, there are few signs that a recession
is imminent. With the expansion continuing at a moderate pace, benign inflation,
corporate earnings growing, and money flowing into mutual funds, the investment
stars have been almost perfectly aligned.
It is the U.S. stock market that has been the real winner in this
environment, with stocks of large multinationals providing the greatest reward
to investors. Despite a bumpy ride, the fixed income markets have also generated
solid "real" rates of return over the past year, although certainly much more
modest than those achieved by equities.
Recently, the Federal Reserve's concern that the economy might be too
strong prompted them to launch a "preemptive strike" against inflation by
raising the target rate on Federal Funds by 25 basis points. This latest action
has produced quite a bit of uncertainty within the markets, and has fueled
debate as to how much more rates will have to rise to ward off higher inflation
and a "boom-bust" scenario.
If further Fed tightening is modest, as we expect, the economic
expansion should continue, and the risk of a severe decline in stocks would be
reduced, although corrections are certainly to be expected. We do believe we
will begin to see signs of slower growth during the latter part of 1997, and
therefore expect interest rates to level off or even decline as we enter 1998.
Looking forward, an environment of moderate economic growth, relatively low
interest rates and benign inflation remains an excellent one for U.S. financial
markets.
The ARK Funds family continued to grow this fiscal year as a number of
new Portfolios were introduced. The conversion of seven common trust funds to
ARK mutual funds in November of 1996 substantially enhanced the portfolio
lineup. New Institutional Class ARK Funds include: the Equity Income Portfolio,
Mid-Cap Equity Portfolio, Stock Portfolio, Intermediate Fixed Income Portfolio,
Maryland Tax-Free Portfolio and Pennsylvania Tax-Free Portfolio. The Equity
Income, Maryland Tax-Free and Pennsylvania Tax-Free Portfolios are also
available in the Retail Class. We are looking forward to the introduction of the
ARK Equity Index Portfolio which will be available in both the Institutional and
Retail Class later this year.
In closing, I would like to take this opportunity to thank you for
investing in the ARK Funds. We look forward to helping you meet your financial
goals in the years ahead.
Sincerely,
[Signature Omitted]
JENNIFER W. LAMBDIN, CFA
PRESIDENT AND CHIEF INVESTMENT OFFICER
ALLIED INVESTMENT ADVISORS
[PHOTO OF JENNIFER W. LAMBDIN OMITTED]
JENNIFER W. LAMBDIN IS PRESIDENT AND CHIEF INVESTMENT OFFICER OF ALLIED
INVESTMENT ADVISORS AND ITS PREDECESSOR SINCE 1991. SHE HAS OVER 20 YEARS
OF INVESTMENT MANAGEMENT EXPERIENCE.
1
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Money Market Overview
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[PHOTO OF JAMES M. HANNAN OMITTED]
James M. Hannan
Portfolio Manager
JAMES M. HANNAN HAS BEEN A PRINCIPAL OF ALLIED INVESTMENT ADVISORS AND ITS
PREDECESSOR SINCE 1987 AND MANAGES OVER 2 BILLION DOLLARS OF MONEY MARKET
ASSETS.
Finally, after eight months of voting for a bias toward tightening
monetary policy, the Federal Reserve raised short-term interest rates by 25
basis points at its March 25, 1997 Federal Open Market Committee (F.O.M.C.)
meeting. This move marked the first change of monetary policy since January 31,
1996 when the Federal Reserve lowered the Federal Funds rate to 5.25%. The last
tightening of monetary policy occurred on January 31, 1995. The Federal Reserve
stated, "this action was taken in light of persisting strength in demand, which
is progressively increasing the risk of inflationary imbalances developing in
the economy which would eventually undermine the long expansion." Given the
Federal Reserve's desire to be preemptive, we expect a further tightening of
monetary policy if economic growth does not slow by early summer.
Throughout the year, the ARK Funds money market portfolios continued to
meet their investment objectives of providing preservation of principal, daily
liquidity and current income. Each portfolio continued to outperform the
appropriate IBC/ Donoghues' average yield as displayed in the respective
performance charts.
Our investment approach is to actively manage the Portfolios. The
appropriate average maturity for each Portfolio is determined by considering our
shareholders' liquidity needs, expected monetary policy, the slope of the yield
curve, and implied forward interest rate analysis. Commercial paper and
corporate securities are purchased from only those issuers that meet our
stringent credit evaluation standards. The credit quality of each issuer on our
approved list is monitored to ensure that high credit quality is maintained.
Individual securities are then selected after the completion of a relative value
analysis. We also seek to take advantage of short-lived market inefficiencies
and trading opportunities.
One example of our active management style with respect to average
maturity decisions is very apparent when reviewing the ARK Funds U.S. Treasury
Money Market Portfolio. This Portfolio's average maturity was reduced from 83
days on February 27th to 43 days on March 25th as we correctly anticipated the
Federal Reserve raising short-term interest rates. Once the Federal Reserve
tightened monetary policy, the average maturity of the Portfolio was lengthened
to 62 days. This strategy allowed the Portfolio to purchase longer-dated
securities at higher yields than were available prior to the Federal Reserve's
tightening of monetary policy.
We expect the Federal Reserve to tighten monetary policy at least once
more in an attempt to slow economic growth and maintain the benign inflation
environment. Given our outlook, our strategy is to be cautious while selectively
purchasing longer-dated higher-yielding securities. Exposure to floating and
variable rate instruments has also been increased. We will continue to actively
manage the money market portfolios utilizing our conservative and highly
disciplined relative value approach.
2
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APRIL 30, 1997 [ARK FUND LOGO OMITTED]
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Money Market Portfolio
Investment Objective:
The Money Market Portfolio seeks 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. The Portfolio seeks to
maintain a constant net asset value of $1.00 per share, although there is no
guarantee that it will be able to do so.
Thirty-Day Yield Comparison
[Ark Funds Money Market Line Graph Omitted]
ARK INST IBC/DON INST ARK RETAIL IBC/DON RETAIL ARK INST II
5/31/96 5.16 5.03 4.86 4.67 5.07
6/30/96 5.19 5.04 4.88 4.7 5.09
7/31/96 5.21 5.08 4.91 4.73 5.12
8/31/96 5.19 5.08 4.88 4.74 5.09
9/30/96 5.2 5.1 4.9 4.75 5.11
10/31/96 5.19 5.1 4.89 4.75 5.1
11/30/96 5.19 5.11 4.89 4.75 5.1
12/31/96 5.25 5.12 4.94 4.78 5.15
01/31/97 5.24 5.13 4.93 4.77 5.14
2/28/97 5.19 5.11 4.89 4.75 5.1
3/31/97 5.26 5.12 4.96 4.75 5.17
4/30/97 5.4 5.22 5.09 4.85 5.3
- --Ark Funds Money Market Portfolio, Institutional Class
- --IBC/Donoghue's Money Fund Average: First Tier Institutional-Only
- --ARK Funds Money Market Portfolio, Retail Class
- --IBC/Donoghue's Money Fund Average: First Tier
- --ARK Funds Money Market Portfolio, Institutional II Class
Maturity Distribution as of April 30, 1997
[Ark Funds Money Market Bar Graph Omitted]
1-7 Days 38%
8-14 Days 18%
15-30 Days 24%
31-60 Days 2%
61-90 Days 2%
91-30 Days 1%
181-397 Days 13%
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Tax-Free Money Market Portfolio
Investment Objective:
The Tax-Free Money Market Portfolio seeks 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 seeks to maintain a constant net
asset value of $1.00 per share, although there is no guarantee that it will be
able to do so.
Thirty-Day Yield Comparison
[Ark Funds Tax Free Money Market Line Graph Omitted]
ARK INST IBC/DON INST ARK RETAIL IBC/DON RETAIL ARK INST II
5/31/96 3.48 3.4 3.22 3.09 3.38
6/30/96 3.15 3.07 2.9 2.82 3.06
7/31/96 2.9 2.86 2.65 2.64 2.81
8/31/96 3.28 3.17 3.02 2.92 3.18
9/30/96 3.29 3.21 3.03 2.95 3.19
10/31/96 3.25 3.17 2.99 2.91 3.15
11/30/96 3.28 3.17 3.03 2.92 3.19
12/31/96 3.38 3.24 3.12 3.01 3.28
1/31/97 3.12 3.13 2.87 2.84 3.03
2/28/97 3.16 3.06 2.86 2.82 3.06
3/31/97 3.08 2.96 2.77 2.71 2.98
4/30/97 3.49 3.35 3.18 3.11 3.39
- --ARK Funds Tax-Free Money Market Portfolio, Institutional Class
- --IBC/Donoghue's Tax-Free Money Fund Average: Institutional-Only
- --ARK Funds Tax-Free Money Market Portfolio, Retail Class
- --IBC/Donoghue's Tax-Free Money Fund Average: Stockbroker & General Purpose
- --ARK Funds Tax-Free Money Market Portfolio, Institutional II Class
Maturity Distribution as of April 30, 1997
[Ark Funds Tax-Free Money Market BarGraph Omitted]
1-7 Days 66%
8-14 Days 0%
15-30 Days 6%
31-60 Days 6%
61-90 Days 5%
91-30 Days 7%
181-397 Days 10%
3
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Money Market Overview (concluded)
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U.S. Government Money Market Portfolio
Investment Objective:
The U.S. Government Money Market Portfolio seeks to maximize current income and
provide liquidity and security of principal by investing in instruments that are
issued or guaranteed as to principal and interest by the U.S. government or any
of its agencies or instrumentalities, or in repurchase agreements backed by such
instruments. The Portfolio seeks to maintain a constant net asset value of $1.00
per share, although there is no guarantee that it will be able to do so.
Thirty-Day Yield Comparison
[Ark Funds U.S. Government Money Market Line Graph Omitted]
Ark Inst IBC/Don Inst Ark Inst II
5/31/96 5.02 4.87 4.92
6/30/96 5.07 4.92 4.98
7/31/96 5.08 4.93 4.98
8/31/96 5.05 4.93 4.95
9/30/96 5.07 4.94 4.97
10/31/96 5.06 4.92 4.96
11/30/96 5.12 4.98 5.02
12/31/96 5.13 4.97 5.03
1/31/97 5.1 4.97 5.01
2/28/97 5.07 4.95 4.98
3/31/97 5.12 4.99 5.03
4/30/97 5.23 5.08 5.14
- --ARK Funds U.S. Government Money Market Portfolio, Institutional Class
- --IBC/Donoghue's Money Fund Average: Government-Only Institutional-Only
- --ARK Funds U.S. Government Money Market Portfolio, Institutional II Class
Maturity Distribution as of April 30, 1997
[Ark Funds U.S. Government Money Market Bar Graph Omitted]
1-7 Days 52%
8-14 Days 0%
15-30 Days 6%
31-60 Days 15%
61-90 Days 12%
91-30 Days 12%
181-397 Days 3%
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U.S. Treasury Money Market Portfolio
Investment Objective:
The U.S. Treasury Money Market Portfolio seeks to maximize current income and
provide liquidity and security of principal by investing in instruments that are
issued or guaranteed as to principal and interest by the U.S. government, and
thus constitute direct obligations of the United States. The Portfolio seeks to
maintain a constant net asset value of $1.00 per share, although there is no
guarantee that it will be able to do so.
Thirty-Day Yield Comparison
[Ark Funds U.S. Treasury Money Market LineGraph Omitted]
Ark inst IBC/Don Ark Retail Ark Inst II
5/31/96 4.81 4.49 4.56 4.72
6/30/96 4.82 4.53 4.56 4.72
7/31/96 4.85 4.56 4.59 4.75
8/31/96 4.88 4.61 4.62 4.78
9/30/96 4.9 4.64 4.65 4.81
10/31/96 4.87 4.61 4.62 4.78
11/30/96 4.9 4.61 4.65 4.8
12/31/96 4.87 4.58 4.62 4.78
1/31/97 4.85 4.56 4.59 4.75
2/28/97 4.89 4.57 4.59 4.8
3/31/97 4.88 4.62 4.58 4.79
4/30/97 5.05 4.62 4.74 4.95
- --ARK Funds U.S. Treasury Money Market Portfolio, Institutional Class
- --IBC/Donoghue's Money Fund Average: 100% U.S. Treasury
- --ARK Funds U.S. Treasury Money Market Portfolio, Retail Class
- --ARK Funds U.S. Treasury Money Market Portfolio, Institutional II Class
[Ark Funds Treasury Money Market BarGraph Omitted]
Maturity Distribution as of April 30, 1997
1-7 Days 0%
8-14 Days 1%
15-30 Days 25%
31-60 Days 30%
61-90 Days 6%
91-30 Days 36%
181-397 Days 2%
4
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APRIL 30, 1997 [ARK FUND LOGO OMITTED]
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Management's Discussion & Analysis
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Short-Term Treasury Portfolio
Investment Objective:
The 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.
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Portfolio Review and Outlook
[PHOTO OF JAMES M. HANNAN OMITTED]
JAMES M. HANNAN
Portfolio Manager
JAMES M. HANNAN HAS BEEN A PRINCIPAL OF ALLIED INVESTMENT ADVISORS AND ITS
PREDECESSOR SINCE 1987 AND MANAGES OVER 2 BILLION DOLLARS OF MONEY MARKET
ASSETS.
The ARK Funds Short-Term Treasury Portfolio's Institutional Class commenced
operations on March 20, 1996. We also introduced a Retail Class of shares on
September 9, 1996.
During the fiscal year, two-year U.S. Treasury yields averaged 6%. The
low yield for two- year U.S. Treasury notes was 5.58% and occurred at the end of
November as the economy was showing signs of slowing and inflation remained well
under control. The high yield was 6.54% on April 25, 1997. Short-term interest
rates have generally been trending higher since early December as the economy
revealed renewed signs of strength. The Federal Reserve raised short-term
interest rates by 25 basis points at its March 25, 1997 F.O.M.C. meeting. This
marked the first change of monetary policy since January 31, 1996 when the
Federal Reserve lowered the Federal Funds rate to 5.25%. The last tightening of
monetary policy occurred on January 31, 1995. Given the Federal Reserve's desire
to be preemptive, we expect a further tightening of monetary policy if economic
growth does not slow by early summer.
Our approach is to actively manage the Portfolio. The average maturity
of the Portfolio is lengthened when we anticipate a decline in short-term
interest rates. Conversely, when we anticipate an upward movement in short-term
interest rates, as we have been experiencing since December 1996, we shorten the
average maturity of the Portfolio. We also seek to take advantage of short-lived
market inefficiencies and trading opportunities.
The Institutional Class of the Short-Term Treasury Portfolio returned
5.13% from May 1, 1996 to April 30, 1997, compared to 6.13% for the Lehman 1 - 3
Year Government Bond Index and 5.35% for the Lipper Short U.S. Treasury Funds
Average. During this same period, the net asset value ranged between $10.08 and
$9.93. As of April 30, 1997, the Portfolio had an average maturity of 1.5 years.
The 30 day S.E.C. yield was 5.75%.
The Retail Class of the Short-Term Treasury Portfolio returned 3.39%
from September 9, 1996 to April 30, 1997. As of April 30, 1997, the 30 day
S.E.C. yield was 5.50%.
Looking forward in light of our expectation for higher short-term
interest rates, we will maintain an average maturity of less than two years.
However, once we believe that the Federal Reserve has raised short-term interest
rates enough to allow us to assess the impact of the Fed's tighter monetary
policy, our strategy will be to extend our average maturity to take advantage of
longer-dated, higher-yielding securities.
5
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Management's Discussion & Analysis (continued)
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Short-Term Treasury Portfolio
Performance as of 4/30/97
Institutional Class: Value of a $100,000 Investment
[Line Graph Omitted]
Ark Lehman Lipper
3/31/96 100000 100000 100000
4/30/96 100110 100100 99830
4/30/97 105246 106236 105171
- --ARK Funds Short-Term Treasury Portfolio, Institutional Class
- --Lehman 1-3 Year Government Bond Index
- --Lipper Short U.S. Treasury Funds Average
Retail Class: Value of a $10,000 Investment
[Line Graph Omitted]
Ark Lehman Lipper
9/30/96 10000 10000 10000
4/30/97 10283 10339 10293
- --ARK Funds Short-Term Treasury Portfolio, Retail Class
- --Lehman 1-3 Year Government Bond Index
- --Lipper Short U.S. Treasury Funds Average
Institutional Class Retail Class
One Year Life of Portfolio One Year Life of Portfolio
Cumulative
Total Returns 5.13% 5.30% N/A 3.39%
Average Annual
Total Returns 5.13% 4.75% N/A N/A
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning March 20, 1996. Retail Class
shares were offered beginning September 9, 1996. The performance of the Lehman
1-3 Year Government Bond Index and the Lipper Short U.S. Treasury Funds Average
does not include annual operating expenses which are incurred by the Portfolio.
The performance reflected in the graphs begins at March 31, 1996 for the
Institutional Class and at September 30, 1996 for the Retail Class. The
performance reflected in the table begins at the inception dates.
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Maryland Tax-Free Portfolio
Investment Objective:
The Maryland Tax-Free Portfolio seeks to provide high current income that is
free from federal income tax and the Maryland state and county income taxes by
investing primarily in investment-grade municipal securities.
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Pennsylvania Tax-Free Portfolio
Investment Objective:
The Pennsylvania Tax-Free Portfolio seeks to provide high current income that is
free from federal and Pennsylvania state income taxes by investing primarily in
investment-grade municipal securities.
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Portfolio Review and Outlook
Maryland & Pennsylvania Tax-Free Portfolios
[PHOTO OF SUSAN L. SCHNAARS OMITTED]
Susan L. Schnaars,
CPA, CFA
Portfolio Manager
SUSAN L. SCHNAARS HAS OVER TEN YEARS OF FIXED INCOME ANALYSIS AND PORTFOLIO
MANAGEMENT EXPERIENCE. SHE IS A PRINCIPAL OF ALLIED INVESTMENT ADVISORS AND IS
RESPONSIBLE FOR MANAGING SEVERAL LARGE INSTITUTIONAL ACCOUNTS.
The Institutional Class of the Maryland Tax-Free Portfolio was established on
November 18, 1996 and for its fiscal period ended April 30, 1997 returned .89%.
The Retail Class of the Maryland Tax-Free Portfolio was established on January
2, 1997 and for its fiscal period ended April 30, 1997 returned .63%.
6
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APRIL 30, 1997 [ARK FUND LOGO OMITTED]
The Institutional Class of the Pennsylvania Tax-Free Portfolio was
established on November 18, 1996 and for its fiscal period ended April 30, 1997
returned 1.32%. The Retail Class of the Pennsylvania Tax-Free Portfolio was
established on January 2, 1997 and for its fiscal period ended April 30, 1997
returned .60%.
Over the past twelve months, municipal investments have only slightly
underperformed their taxable counterparts on an absolute basis; however, on an
after-tax basis they have substantially outperformed. Yields on municipal
securities, like taxables, have traded for the past twelve months in a narrow
range, with longer-term rates actually falling approximately 10 basis points.
After the issue of tax reform faded in early 1996, performance of the municipal
market has been aided by the narrowing of the trading relationship between
municipals and U.S. Treasuries. The market has recovered from trading at close
to 90% of the Treasury market just over a year ago to trading its "normal"
75-80% of U.S. Treasuries.
With the back-up in municipal rates due to tax reform concerns early
last year, we lengthened the duration of the Portfolios, taking advantage of the
situation on an after-tax basis. The two Portfolios continue to focus on issues
specific to their respective states, with little to no exposure to the AMT
sector. As the market has traded in a narrow range over the past year and with
our near-term expectation for higher interest rates, our primary focus in the
Portfolios has been to gain call protection where appropriate. This has been
accomplished by purchasing high coupon bonds that have a reduced likelihood of
being called, and by purchasing somewhat higher yielding issues with special
situations. The maturity focus of the Portfolios continues to be in the 15-20
year sector.
We are closely watching the effects that reform will begin to have on
the state and local governments as responsibilities, such as welfare reform, are
shifted away from the federal government. Healthcare reform, although dead for
most of 1996, will most likely come into play again in 1997. The surge in
hospital mergers that has occurred over the past several years should continue
to prove positive for some select hospitals and healthcare organizations. In
Pennsylvania, we will be watching to see what the impact on county budgets will
be due to recent court decisions declaring unconstitutional the personal
property tax that is levied by many counties. We continue to expect the
municipal market to perform well relative to taxable bonds, as demand from
insurance companies and retail investors alike will most likely continue to
outweigh new issuance supply.
7
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Management's Discussion & Analysis (continued)
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Maryland Tax-Free Portfolio
Performance as of 4/30/97
Institutional Class: Value of a $100,000 Investment
[Line Graph Omitted]
Ark Lehman 7 yr Lehman 10 yr Lipper
11/30/96 100000 100000 100000 100000
4/30/97 100115 100106 100262 99926
- --ARK Funds Maryland Tax-Free Portfolio, Institutional Class
- --Lehman 10 Year Municipal Bond Index
- --Lehman 7 Year Municipal Bond Index
- --Lipper Maryland Municipal Debt Funds Average
Retail Class: Value of a $10,000 Investment
[Line Graph Omitted]
Ark Lehman 7 yr Lehman 10 yr Lipper
1/31/97 10000 10000 10000 10000
4/30/97 10021 10004 10032 10034
- --ARK Funds Pennsylvania Tax-Free Portfolio, Retail Class
- --Lehman 10 Year Municipal Bond Index
- --Lehman 7 Year Municipal Bond Index
- --Lipper Maryland Municipal Debt Funds Average
Institutional Class Retail Class
One Year Life of Portfolio One Year Life of Portfolio
Cumulative
Total Returns N/A 0.89% N/A 0.63%
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning November 18, 1996. Retail
Class shares were offered beginning January 2, 1997. Performance for the Retail
Class excludes the maximum 4.50% sales charge which has been waived since
inception. The performance of the Lehman 7 and 10 Year Municipal Bond Indexes
and the Lipper Maryland Municipal Debt Funds Average does not include annual
operating expenses which are incurred by the Portfolio. The performance
reflected in the graphs begins at November 30, 1996 for the Institutional Class
and at January 31, 1997 for the Retail Class. The performance reflected in the
table begins at the inception dates.
================================================================================
Pennsylvania Tax-Free Portfolio
Performance as of 4/30/97
Institutional Class: Value of a $100,000 Investment
[Graphic Omitted]
Ark Lehman 7 yr Lehman 10 yr Lipper
11/30/96 100000 100000 100000 100000
4/30/97 100145 100106 100262 100056
- --ARK Funds Pennsylvania Tax-Free Portfolio, Institutional Class
- --Lehman 10 Year Municipal Bond Index
- --Lehman 7 Year Municipal Bond Index
- --Lipper Pennsylvania Municipal Debt Funds Average
Retail Class: Value of a $10,000 Investment
[Line Graph Omitted]
Ark Lehman 7 yr Lehman 10 yr Lipper
11/30/96 10000 10000 10000 10000
4/30/97 10011 10004 10032 10038
- --ARK Funds Pennsylvania Tax-Free Portfolio, Retail Class
- --Lehman 10 Year Municipal Bond Index
- --Lehman 7 Year Municipal Bond Index
- --Lipper Pennsylvania Municipal Debt Funds Average
Institutional Class Retail Class
One Year Life of Portfolio One Year Life of Portfolio
Cumulative
Total Returns N/A 1.32% N/A 0.60%
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning November 18, 1996. Retail
Class shares were offered beginning January 2, 1997. Performance for the Retail
Class excludes the maximum 4.50% sales charge which has been waived since
inception. The performance of the Lehman 7 and 10 Year Municipal Bond Indexes
and the Lipper Pennsylvania Municipal Debt Funds Average Debt Funds Average does
not include annual operating expenses which are incurred by the Portfolio. The
performance reflected in the graphs begins at November 30, 1996 for the
Institutional Class and at January 31, 1997 for the Retail Class. The
performance reflected in the table begins at the inception dates.
8
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APRIL 30, 1997 [ARK FUND LOGO OMITTED]
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Income Portfolio
Investment Objective:
The 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.
================================================================================
Portfolio Review and Outlook
[PHOTO OF STEVEN M. GRADOW OMITTED]
Steven M. Gradow
Co-Portfolio Manager
STEVEN M. GRADOW HAS OVER FOURTEEN YEARS OF FIXED INCOME PORTFOLIO MANAGEMENT
EXPERIENCE. HE IS A MANAGING DIRECTOR OF ALLIED INVESTMENT ADVISORS.
[PHOTO OF SUSAN L. SCHNAARS OMITTED]
Susan L. Schnaars,
CPA, CFA
Co-Portfolio Manager
SUSAN L. SCHNAARS HAS OVER TEN YEARS OF FIXED INCOME ANALYSIS AND PORTFOLIO
MANAGEMENT EXPERIENCE. SHE IS A PRINCIPAL OF ALLIED INVESTMENT ADVISORS AND IS
RESPONSIBLE FOR MANAGING SEVERAL LARGE INSTITUTIONAL ACCOUNTS.
Over the past twelve months, interest rates followed a roller coaster ride. From
a low of 6% at the beginning of the fiscal year, the 30-year Treasury hit a high
of 7.2% in July, fell to 6.3% in November, and then rose to 7.1% in April of
this year. As a result, bond prices, which move in the opposite direction of
interest rates, showed little change in price at the end of the period, and
investment return basically came from the coupon income.
During the period May 1, 1996 to April 30, 1997, the Institutional
Class of the Income Portfolio returned 6.51% and the Retail Class returned
6.32%. This compares with a return of 6.46% for the Lipper Corporate Debt
A-Rated Funds Average and 7.08% for the Lehman Aggregate Bond Index. Since
inception on July 16, 1993, the Institutional Class has had a cumulative total
return of 22.97% versus 22.79% for the Lehman Aggregate Bond Index. Since
inception on April 12, 1994, the Retail Class has had a cumulative total return
of 21.89%.
With the economy entering its seventh year of expansion and inflation
under 3%, Federal Reserve monetary policy was unchanged until March 1997 when
the F.O.M.C. decided on a slight increase in the overnight Federal Funds target
rate. This was the first increase in over two years and might be considered an
insurance policy to keep the economy from over-heating. Preliminary data for the
first quarter indicate continuing strength above the 2-21/2% trendline, with
consumer spending and inventory replenishment important contributors to that
growth. At the same time, unemployment of 4.9% is the lowest rate experienced
since the early 1970's.
In the absence of any sign of an economic slowdown, the Fed could take
additional action to increase interest rates. History shows that the Fed usually
moves in two or three steps rather than the one step taken in March. Our outlook
is for the long Treasury bond rates to rise to the 7.3% level in the near term
and for the Federal Funds rate to be near 6% by year-end. A slowdown in economic
growth during the second half of 1997 could keep a lid on long-term rates.
We have maintained a somewhat defensive position in the Portfolio, with
an emphasis on securities with shorter maturities and higher coupons. We
continue to overweight medium-grade corporate bonds with a bias towards less
cyclical industries. Over the next six to twelve months, we expect to reduce our
exposure to this sector and upgrade overall quality. The mortgage market appears
neutral at this time. We expect volatility to increase and will look to add
mortgages once volatility stabilizes.
Based upon our economic and interest rate outlook, price appreciation
in bonds is not expected to occur until the second half of 1997. As interest
rates remain in a band between 6.75% and 7.30%, we expect our selective credit
decisions and sector weightings to provide the greatest contribution to
Portfolio returns.
9
<PAGE>
- --------------------------------------------------------------------------------
Management's Discussion & Analysis (continued)
- --------------------------------------------------------------------------------
================================================================================
Income Portfolio
Performance as of 4/30/97
Institutional Class: Value of a $100,000 Investment
[Line Graph Omitted]
Ark Inst Lehman Lipper
7/31/93 100000 100000 100000
4/30/94 99836 98354 97801
4/30/95 106355 105563 103728
4/30/96 115353 114673 111829
4/30/97 122862 122792 119053
- --ARK Funds Income Portfolio, Institutional Class
- --Lehman Aggregate Bond Index
- --Lipper Corporate Debt A-Rated Debt Funds Average
Retail Class: Value of a $10,000 Investment
[Line Graph Omitted]
Ark Retail Ark with load Lehman Lipper
4/30/94 100000 95500 100000 100000
4/30/95 106230 101450 107330 106060
4/30/96 114877 109708 116593 114343
4/30/97 122137 116641 124847 121730
- --ARK Funds Income Portfolio, Retail Class
- --Lehman Aggregate Bond Index
- --Lipper Corporate Debt A-Rated Funds Average
Institutional Class Retail Class
One Year Life of Portfolio One Year Life of Portfolio
Cumulative
Total Returns 6.51% 22.97% 6.32% 21.89%
Average Annual
Total Returns 6.51% 5.61% 6.32% 6.71%
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning July 16, 1993. Retail Class
shares were offered beginning April 12, 1994. Performance for the Retail Class
excludes the maximum 4.50% sales charge which has been waived since inception.
The performance of the Lehman Aggregate Bond Index and the Lipper Corporate Debt
A-Rated Funds Average does not include annual operating expenses which are
incurred by the Portfolio. The performance reflected in the graphs begins at
July 31, 1993 for the Institutional Class and at April 30, 1994 for the Retail
Class. The performance reflected in the table begins at the inception dates.
================================================================================
Intermediate Fixed Income Portfolio
Investment Objective:
The Intermediate Fixed Income Portfolio seeks to provide current income
consistent with preservation of capital by investing primarily in
intermediate-term fixed income securities.
================================================================================
Portfolio Review and Outlook
[PHOTO OF SUSAN L. SCHNAARS OMITTED]
Susan L. Schnaars,
CPA, CFA
Co-Portfolio Manager
SUSAN L. SCHNAARS HAS OVER TEN YEARS OF FIXED INCOME ANALYSIS AND PORTFOLIO
MANAGEMENT EXPERIENCE. SHE IS A PRINCIPAL OF ALLIED INVESTMENT ADVISORS AND IS
RESPONSIBLE FOR MANAGING SEVERAL LARGE INSTITUTIONAL ACCOUNTS.
[PHOTO OF STEVEN M. GRADOW OMITTED]
Steven M. Gradow
Co-Portfolio Manager
STEVEN M. GRADOW HAS OVER FOURTEEN YEARS OF FIXED INCOME PORTFOLIO MANAGEMENT
EXPERIENCE. HE IS A MANAGING DIRECTOR OF ALLIED INVESTMENT ADVISORS.
The Institutional Class of the Intermediate Fixed Income Portfolio was
established on November 18, 1996 and for its fiscal period ended April 30, 1997
returned .78%. For the first four months of 1997, the Portfolio returned 0.95%
versus 0.75% for the Lipper Intermediate Investment Grade Debt Funds Average.
It was beginning to appear that the Fed's soft-landing scenario was coming to
an end last year,
10
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
as growth during 1996 and the early part of 1997 was reported to be stronger
than expected. An extremely tight labor market and intermittent hints of
potential inflation gave rise to higher interest rates, first forced by the
bond market alone in 1996, and finally by the Federal Reserve in late March
1997, with a 25 basis point short-term rate hike. Although long-term rates (10
and 30 year) are relatively unchanged from where they stood one year ago,
short-term rates are at least a 1/4 of a point higher, causing the yield curve
to flatten to 68 basis points. Ten-year rates traded in a range of 6.05 to
7.10%, ending the period unchanged from a year ago at 6.70%.
For the near term, we believe that the Federal Reserve will most likely
increase short-term rates by another 25 basis points in an effort to curb
inflation and cool the economy. During the second half of the year, we expect to
see some signs of an economic slowdown due to higher rates, a strong dollar, and
continued weakness among our foreign trading partners. At that point, we
anticipate that short-term rates will stabilize and that longer-term rates will
fall to the lower end of their 1996 trading range. As the stock market struggles
with higher interest rates and the Federal Reserve appears to be interested in
the excesses of the markets, we may also see higher demand for fixed income
securities, fueling the rally even further.
The performance of the Portfolio over the past months has been enhanced
by its overweighting in select corporate issues, as well as exposure to the
asset- and mortgage-backed sectors. A defensive posture helped in times of
volatile rates and a slightly longer duration stance supported returns during
sporadic market rallies.
At this time, we continue to remain defensive in the Portfolio with a
bias toward shorter securities and higher coupons to mitigate principal declines
as interest rates rise. Focus in the corporate sector continues to be in
specific issuers as opposed to general industries. Longer-term we expect to
lower our corporate exposure if higher interest rates and a strong dollar begin
to challenge corporate profits. Exposure to the mortgage market continues to be
in well-structured CMO products, as well as current coupon 15-year pass-through
securities.
================================================================================
Intermediate Fixed Income Portfolio
Performance as of 4/30/97
Institutional Class: Value of a $100,000 Investment
[Line Graph Omitted]
Ark Lehman Lipper
11/30/96 100000 100000 100000
4/30/97 100267 100551 99842
- --ARK Funds Intermediate Fixed Income Portfolio, Institutional Class
- --Lehman Intermediate Government Bond Index
- --Lipper Intermediate Investment Grade Debt Funds Average
Institutional Class
One Year Life of Portfolio
Cumulative
Total Returns N/A 0.78%
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning November 18, 1996. The
performance of the Lehman Intermediate Government Bond Index and the Lipper
Intermediate Investment Grade Debt Funds Average do not include annual operating
expenses which are incurred by the Portfolio. The performance reflected in the
graph begins at November 30, 1996. The performance reflected in the table begins
at the inception date.
11
<PAGE>
- --------------------------------------------------------------------------------
Management's Discussion & Analysis (continued)
- --------------------------------------------------------------------------------
================================================================================
Balanced Portfolio
Investment Objective:
The Balanced Portfolio seeks to provide long-term total returns from both
capital appreciation and current income by investing in a diversified portfolio
of stocks, debt securities and cash equivalents.
================================================================================
[PHOTO OF CHARLES E. KNUDSEN III OMITTED]
Charles E. Knudsen III,
CFA
Co-Portfolio Manager
CHARLES E. KNUDSEN III HAS BEEN A PRINCIPAL OF ALLIED INVESTMENT ADVISORS AND
ITS PREDECESSOR SINCE 1987. HE PROVIDES EQUITY RESEARCH FOR SEVERAL INDUSTRY
GROUPS.
[PHOTO OF CHRISTOPHER E. BAGGINI OMITTED]
Christopher E. Baggini,
CFA
Co-Portfolio Manager
CHRISTOPHER E. BAGGINI HAS OVER TWELVE YEARS OF INVESTMENT MANAGEMENT
EXPERIENCE. HE IS A PRINCIPAL OF ALLIED INVESTMENT ADVISORS.
The stock markets continued to confound the naysayers during the fiscal year
ended April 30, 1997. Every week a new warning was issued declaring the end of
the bull market. And there were times when it felt like the end might be near.
In fact, the stock market experienced two 10%+ declines during the past twelve
months. But each correction seemed to spawn new buying interest just when the
mood was darkest. While the popular indexes, like the S&P 500 and Dow Jones
Industrial Average, surged higher, they were driven by a relatively narrow group
of larger companies. The average stock experienced a more modest advance, and
small stocks were generally lower. Bond yields suffered several turns up and
then down, but ended the period about where they started, which provided a
return about equal to the interest income.
The Balanced Portfolio's investment results reflected the volatile
nature of the markets. Although the Portfolio's return for the full year lagged
its benchmark, almost all of the damage occurred during last summer, when we
experienced the first market correction. However, over the past six months, the
Portfolio has outperformed the Lipper Flexible Portfolio Funds Average.
Perhaps the biggest issue facing investors today is the uncertainty
surrounding the Federal Reserve and its recent hike in interest rates. The fear
is that higher rates are on the horizon which will kill the economic expansion
and the bull market. We expect any future Fed action to be modest at worst,
meaning we expect them to increase rates by no more than 1%. If we are correct,
then the economy and the capital markets should be fine. Regardless, we view the
Fed's explicit preemptive attack on inflation as very positive long-term for
financial assets, although it does increase the near term uncertainty.
Looking forward, the Portfolio will continue to seek superior returns
while controlling risk by investing in a balance of stocks and bonds. We see
nothing that would prompt us to change our allocation strategy that favors
stocks over bonds and cash. Certainly the economic slowdown that we expect in
the second half will put pressure on corporate earnings. In addition, valuations
are not particularly attractive, although neither are they overly rich. However,
we feel the combination of slow growth, stable inflation, low interest rates and
continued cash flows into mutual funds will all support equities. And perhaps
most important, U.S. companies have regained the lead internationally in a
variety of industries and are benefitting from the development of many emerging
countries.
As we search for potential investments in the Portfolio, we are most
keenly interested in the underlying trend of a company's profits. Although the
technology sector has suffered its own mini-bear market recently, we still
believe that the secular forces are positive for the leaders in that group. In
addition, a large portion of the Portfolio is invested in companies that have
well-known brands which are being expanded globally. This should help
12
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
insulate some of their earnings should an economic slowdown develop in
the United States. During this time of uncertainty, our focus on quality
companies with quality managements will be critical.
================================================================================
Balanced Portfolio
Performance as of 4/30/97
Institutional Class: Value of a $100,000 Investment
[Line Graph Omitted]
Ark S&P Lehman Lipper
7/31/93 100000 100000 100000 100000
4/30/94 103771 102680 98354 102162
4/30/95 107663 120587 105563 111203
4/30/96 130164 156992 114673 133966
4/30/97 140382 196429 122792 149587
- --ARK Funds Balanced Portfolio, Institutional Class
- --S&P 500 Composite Index
- --Lehman Aggregate Bond Index
- --Lipper Flexible Portfolio Funds Average
Retail Class: Value of a $10,000 Investment
[Line Graph Omitted]
Ark Retail S&P Lehman Lipper
3/31/94 100000 100000 100000 100000
4/30/94 100590 101280 99200 100180
4/30/95 103940 118943 106471 109046
4/30/96 124967 154852 115660 131368
4/30/97 134539 193751 123849 146685
- --ARK Funds Balanced Portfolio, Retail Class
- --S&P 500 Composite Index
- --Lehman Aggregate Bond Index
- --Lipper Flexible Portfolio Funds Average
Institutional Class Retail Class
One Year Life of Portfolio One Year Life of Portfolio
Cumulative
Total Returns 7.85% 40.10% 7.66% 28.46%
Average Annual
Total Returns 7.85% 9.31% 7.66% 8.30%
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning July 16, 1993. Retail Class
shares were offered beginning March 9, 1994. Performance for the Retail Class
excludes the maximum 4.75% sales charge which has been waived since inception.
The performance of the S&P 500 Composite Index, Lehman Aggregate Bond Index and
the Lipper Flexible Portfolio Funds Average does not include annual operating
expenses which are incurred by the Portfolio. The performance reflected in the
graphs begins at July 31, 1993 for the Institutional Class and at March 31, 1994
for the Retail Class. The performance reflected in the table begins at the
inception dates.
================================================================================
Equity Income Portfolio
Investment Objective:
The Equity Income Portfolio seeks to provide a moderate level of current income
and growth of capital by investing primarily in high-quality, income-producing
common stocks.
================================================================================
Portfolio Review and Outlook
[PHOTO OF CLYDE L. RANDALL OMITTED]
Clyde L. Randall, CFA
Co-Portfolio Manager
CLYDE L. RANDALL HAS OVER 14 YEARS OF INVESTMENT MANAGEMENT EXPERIENCE. HE IS A
PRINCIPAL OF ALLIED INVESTMENT ADVISORS.
[PHOTO OF ALLEN J. ASHCROFT OMITTED]
Allen J. Ashcroft
Co-Portfolio Manager
ALLEN J. ASHCROFT HAS OVER 18 YEARS OF INVESTMENT MANAGEMENT EXPERIENCE. HE IS A
PRINCIPAL OF ALLIED INVESTMENT ADVISORS.
The ARK Funds Equity Income Portfolio was introduced on November 18, 1996 after
more than ten years as a common trust fund. The Portfolio invests primarily in
income-producing common stocks and seeks a combination of above-average current
yield and long-term capital appreciation. From its inception date to the end of
the fiscal year, the Portfolio returned 7.88% versus 7.0% for the Lipper Equity
Income Funds Average.
On April 30th, the Portfolio was almost fully invested, with 91% in common
stocks, 8% in convertibles and 1% in cash equivalents. It has significant
investments in financials, utilities and energy sectors
13
<PAGE>
- --------------------------------------------------------------------------------
Management's Discussion & Analysis (continued)
- --------------------------------------------------------------------------------
================================================================================
Equity Income Portfolio (continued)
- -- areas which have above-average payout ratios and current yields.
However, we seek broad representation among the major sectors of the stock
market. In most areas, we can find a group of stocks which meet our criteria. An
exception is technology, where we have only a small position. During the
Portfolio's initial period, we have not made significant reallocations among our
sectors.
The largest contributors to the Portfolio's performance have come from
the financial and consumer growth sectors. Great Western, Norwest, Hartford,
Abbott Labs and Aetna (convertible) have been our strongest stocks. Another
significant contributor has been Telefonica de Espana, which is having great
success growing its core business in Spain and investing in Latin America.
Laggards in the Portfolio, all for company-specific reasons, have
included Enron Oil & Gas (convertible), Lockheed Martin, EDS and Allegheny
Power. We continue to review each of these situations.
Our security selection process seeks stocks which have a combination of
above-average current yield and dividend growth rate, or which have an
above-average yield and appear undervalued by other criteria as well. We want to
own stocks which have high yields for the right reasons: they have generous,
sustainable payouts and are undervalued, rather than having burdensome,
unsustainable payouts and average or high valuations. We sell stocks when their
prospects change or if their yields fall to a point where they are a source of
funds for a higher-yielding substitute (thereby raising the Portfolio's yield).
Investing in stocks with higher yields has become increasingly
difficult over this long stock market cycle. The S&P 500 yielded 5.4% at the end
of 1981 and reached a low of 2.2% at the end of 1995. The index's payout ratio
averaged about 50% through 1993, but has fallen to 37% over the past three
years. The stock market's complexion has changed during the cycle as energy and
utilities have underperformed, and technology and other growth industries have
excelled. The consumer growth industries are now the largest contributors to the
market's yield, while financials have doubled their share to 15%. Another factor
in the market's falling payout has been the trend towards using free cash flow
to repurchase stock rather than raising dividends. As stock valuations increase,
and the returns on buybacks thereby diminish, we hope to see dividend increases
resume as an alternative.
We are pleased with the character and returns of the Portfolio to date
and believe that it can provide a strong core holding for investors seeking a
more conservative equity position.
================================================================================
Equity Income Portfolio
Performance as of 4/30/97
Institutional Class: Value of a $100,000 Investment
[Line Graph Omitted]
Ark S&P Lipper
11/30/96 100000 100000 100000
4/30/97 104419 106644 104192
- --ARK Funds Equity Income Portfolio, Institutional Class
- --S&P 500 Composite Index
- --Lipper Growth Funds Average
Institutional Class
One Year Life of Portfolio
Cumulative
Total Returns N/A 7.88%
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning November 18, 1996. The
performance of the S&P 500 Composite Index and Lipper Equity Income Funds
Average do not include annual operating expenses which are incurred by the
Portfolio. The performance reflected in the graph begins at November 30, 1996.
The performance reflected in the table begins at the inception date.
14
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
================================================================================
Blue Chip Equity Portfolio
Investment Objective:
The Blue Chip Equity Portfolio seeks to provide long-term capital appreciation
by investing primarily in equity securities of established, large capitalization
companies.
================================================================================
Portfolio Review and Outlook
[PHOTO OF CLYDE L. RANDALL OMITTED]
Clyde L. Randall, CFA
Co-Portfolio Manager
CLYDE L. RANDALL HAS OVER 14 YEARS OF INVESTMENT MANAGEMENT EXPERIENCE. HE IS A
PRINCIPAL OF ALLIED INVESTMENT ADVISORS.
[PHOTO OF Allen J. Ashcroft OMITTED]
Allen J. Ashcroft
Co-Portfolio Manager
ALLEN J. ASHCROFT HAS OVER 18 YEARS OF INVESTMENT MANAGEMENT EXPERIENCE. HE IS A
PRINCIPAL OF ALLIED INVESTMENT ADVISORS.
The Institutional Class of the Blue Chip Equity Portfolio was established on
April 1, 1996. Over this thirteen-month period, the Portfolio has been a
consistent performer. The Portfolio appreciated 24.41% in its first full fiscal
year ended April 30, 1997. This performance bettered the Lipper Growth Funds
Average which was up 12.5%, and was slightly behind the S&P 500, which
appreciated 25.1%.
The Portfolio's investments were particularly aided by a strong U.S.
equity market, which for a second fiscal year in a row generated better than a
20% total return, and which favored the larger capitalization companies in the
Portfolio's universe. While significant daily swings in the market's value have
become common over the past several months, we continue to be comfortable
holding these securities. Our strategy is to own a broad spread (by industry) of
major companies. We have added to this group a few non-U.S. companies which meet
our criteria. Broadly, we are long-term investors with a growth orientation but
we remain conscious of valuation, particularly after the market's high returns
over the past two years. Our primary criteria remains a strong business
franchise, broad market reach and financial staying power.
At April 30th, the Portfolio's largest contributors have been
Microsoft, Philips Electronics, Procter & Gamble, Coca-Cola and Abbott Labs.
While there are always temporary rotations of interest among the major sectors
of the stock market, we find that over longer periods, our best performers
always come from a diverse group of industries. We carefully review holdings
which have underperformed over a significant period but will retain stocks where
the business fundamentals are intact and where there are good prospects for
better performance.
As we write, the S&P 500 has reached a new high and is trading at 19
times estimated earnings. Our most expensive stocks are now considerably above
that level but remain extraordinary business franchises. "Big" no longer means
slow or declining. More innovative managements are using the scale of large
companies to give them access to world markets. And while new technologies are
often created by small companies, it is the larger ones who can leverage them
into higher productivity and global market share.
We face difficult decisions in the months ahead -- we wish to stay
invested in these companies long term but in a few cases will have to step aside
when valuations create excessive risk. We continue to review new candidates for
the Portfolio, particularly where valuation risks appear lower.
15
<PAGE>
- --------------------------------------------------------------------------------
Management's Discussion & Analysis (continued)
- --------------------------------------------------------------------------------
================================================================================
Blue Chip Equity Portfolio
Performance as of 4/30/97
Institutional Class: Value of a $100,000 Investment
[Line Graph Omitted]
Ark S&P Lipper
4/30/96 100000 100000 100000
4/30/97 124410 125120 112480
- --ARK Funds Blue Chip Equity Portfolio, Institutional Class
- --S&P 500 Composite Index
- --Lipper Growth Funds Average
- --Retail Class: Value of a $10,000 Investment
[Line Graph Omitted]
Ark Retail S&P Lipper
5/31/96 100000 100000 100000
4/30/97 119561 121955 109477
- --ARK Funds Blue Chip Equity Portfolio, Retail Class
- --S&P 500 Composite Index
- --Lipper Growth Funds Average
Institutional Class Retail Class
One Year Life of Portfolio One Year Life of Portfolio
Cumulative
Total Returns 24.41% 25.90% N/A 21.74%
Average Annual
Total Returns 24.41% 23.79% N/A N/A
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning April 1, 1996. Retail Class
shares were offered beginning May 16, 1996. Performance for the Retail Class
excludes the maximum 4.75% sales charge which has been waived since inception.
The performance of the S&P 500 Composite Index and the Lipper Growth Funds
Average does not include annual operating expenses which are incurred by the
Portfolio. The performance reflected in the graphs begins at April 30, 1996 for
the Institutional Class and at May 31, 1996 for the Retail Class. The
performance reflected in the table begins at the inception dates.
================================================================================
Stock Portfolio
Investment Objective:
The Stock Portfolio seeks to provide long-term capital appreciation by investing
primarily in common stocks.
================================================================================
Portfolio Review and Outlook
[PHOTO OF H. GILES KNIGHT OMITTED]
H. Giles Knight
Portfolio Manager
H. GILES KNIGHT HAS OVER 25 YEARS OF INVESTMENT MANAGEMENT EXPERIENCE.
HE IS A PRINCIPAL OF ALLIED INVESTMENT ADVISORS.
Since inception on November 18, 1996 through April 30, 1997, the Stock Portfolio
provided strong equity returns due to continued investor interest in large
capitalization, quality "growth" stocks. The S&P 500 generated a total return of
9.55% for the five and one half months ended April 30, 1997. The Stock Portfolio
gained 8.04% below the S&P 500 figure, but substantially better than the 4.37%
return posted by the Lipper Growth Funds Average. Industry diversification for
the Portfolio is broad, although energy, electric and telephone utilities are
underweighted, while the healthcare and financial sectors are modestly
overweighted. The Portfolio will continue to search for high quality "growth
stocks" with reasonable price/earnings multiples. Dividend
16
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
income can be expected to gradually increase as quarterly stock payments grow
with higher corporate profits. The Portfolio's characteristics are expected to
exceed those of the S&P 500 in terms of sales growth, earnings growth and return
on equity. We expect our companies to have debt levels lower than the average
company in the S&P 500. We believe the Portfolio is very well positioned in
companies with excellent long-term prospects both here in the U.S. as well as
overseas.
================================================================================
Stock Portfolio
Performance as of 4/30/97
Institutional Class: Value of a $100,000 Investment
[Line Graph Omitted]
Ark S&P Lipper
11/30/96 100000 100000 100000
4/30/97 104700 106644 100894
- --ARK Funds Stock Portfolio, Institutional Class
- --S&P 500 Composite Index
- -Lipper Growth Funds Average
Institutional Class
One Year Life of Portfolio
Cumulative
Total Returns N/A 8.04%
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning November 18, 1996. The
performance of the S&P 500 Composite Index and Lipper Growth Funds Average does
not include annual operating expenses which are incurred by the Portfolio. The
performance reflected in the graph begins at November 30, 1996. The performance
reflected in the table begins at the inception date.
================================================================================
Capital Growth Portfolio
Investment Objective:
The Capital Growth Portfolio seeks to provide long-term capital appreciation by
investing primarily in common stock and securities convertible into common
stock.
================================================================================
Portfolio Review and Outlook
[PHOTO OF CHRISTOPHER E. BAGGINI OMITTED]
Christopher E. Baggini,
CFA
Co-Portfolio Manager
CHRISTOPHER E. BAGGINI HAS OVER TWELVE YEARS OF INVESTMENT MANAGEMENT
EXPERIENCE. HE IS A PRINCIPAL OF ALLIED INVESTMENT ADVISORS.
The fiscal year ended April 30, 1997 was volatile, difficult and rewarding for
investors as the equity market's six year bull run continued.
Despite the increase in volatility, we believe the current backdrop for
stock investors remains quite positive. Steady earnings growth, low interest
rates and tempered inflation are the underpinnings of this market as it reaches
new heights. As we enter a period of uncertainty regarding the direction of
interest rates, we believe that the broad market's volatility will most likely
continue.
Based on these beliefs, we believe it important to restate our
investment philosophies. The objective of
17
<PAGE>
- --------------------------------------------------------------------------------
Management's Discussion & Analysis (continued)
- --------------------------------------------------------------------------------
================================================================================
Capital Growth Portfolio (continued)
growth through capital appreciation continues unabated. The primary
focus is on individual stock selection that uses a bottom up analysis. No doubt
this type of selection process leads to emphasis of traditional growth companies
in sectors such as technology, healthcare, finance and business services as well
as certain consumer areas. Particular attention is paid to valuation parameters
for each selection in determining purchase and sale.
The Portfolio will remain as close to fully invested as possible with
cash levels typically below four or five percent with the remaining amount
invested in 50 to 60 companies we believe to offer compelling and above market
return possibilities. Some of the Portfolio's largest holdings were also some of
the strongest performers from 1996--Federal Home Loan Mortgage, American
Express, and General Electric. Laggards in the Portfolio varied throughout the
year and many times could be attributed to the increased amount of sector
rotation within the market. For example, the technology sector has continued to
experience large price swings for "the wrong reasons" in many cases. This allows
us to buy into companies whose growth prospects remain intact at very attractive
prices. We recently added to positions in Cisco Systems and Computer Associates
International for this very reason.
As the market digests its most recent gains, we believe that the
Portfolio is well positioned to take advantage of the market's increased
volatility. We are pleased at what the Portfolio has accomplished and look
forward to the months ahead.
================================================================================
Capital Growth Portfolio
Performance as of 4/30/97
Institutional Class: Value of a $100,000 Investment
[Line Graph Omitted]
Ark S&P Lipper
7/31/93 100000 100000 100000
4/30/94 102876 102680 104679
4/30/95 106219 120587 116016
4/30/96 131308 156992 150798
4/30/97 148982 196429 169617
- --ARK Funds Capital Growth Portfolio, Institutional Class
- --S&P 500 Composite Index
- --Lipper Growth Funds Average
Retail Class: Value of a $10,000 Investment
[Line Graph Omitted]
Ark Retail Ark with load S&P Lipper
3/31/94 100000 95250 100000 100000
4/30/94 99510 94783 101280 100370
4/30/95 102237 97380 118943 111240
4/30/96 125996 120012 154852 144590
4/30/97 142867 136081 193751 162635
- --ARK Funds Capital Growth Portfolio, Retail Class
- --S&P 500 Composite Index
- --Lipper Growth Funds Average
Institutional Class Retail Class
One Year Life of Portfolio One Year Life of Portfolio
Cumulative
Total Returns 13.46% 48.69% 13.39% 34.20%
Average Annual
Total Returns 13.46% 11.04% 13.39% 9.81%
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning July 16, 1993, Retail Class
shares were offered beginning March 9, 1994. Performance for the Retail Class
excludes the maximum 4.75% sales charge which has been waived since inception.
The performance of the S&P 500 Composite Index and the Lipper Growth Funds
Average does not include annual operating expenses which are incurred by the
Portfolio. The performance reflected in the graph for the Institutional Class
begins at July 31, 1993 and at March 31, 1994 for the Retail Class. The
performance reflected in the table begins at the inception date.
18
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
================================================================================
Mid-Cap Equity Portfolio
Investment Objective:
The Mid-Cap Equity Portfolio seeks to provide long-term capital appreciation by
investing primarily in equity securities of medium-sized companies.
================================================================================
Portfolio Review and Outlook
[PHOTO OF CHRISTOPHER E. BAGGINI OMITTED]
Christopher E. Baggini,
CFA
Portfolio Manager
CHRISTOPHER E. BAGGINI HAS OVER TWELVE YEARS OF INVESTMENT MANAGEMENT
EXPERIENCE. HE IS A PRINCIPAL OF ALLIED INVESTMENT ADVISORS.
The Institutional Class of the Mid-Cap Equity Portfolio was established on
November 18, 1996. This Portfolio is managed as an enhanced index fund, in which
the top 100 holdings of the S&P 400 Mid-Cap Index ranked by market
capitalization are overweighted, and the balance of the holdings are selected on
a sector-weighted basis. The Portfolio is able to invest up to 20% in additional
mid-cap holdings that are not in the S&P 400, provided that the market
capitalization of the holding is between $500 million and $8 billion. During
fiscal 1997, the percentage of discretionary holdings ranged between one and
five percent of the Portfolio, which is well below the 20% limit. This selective
sampling investment style allows the Portfolio to closely track the performance
of the S&P 400 while avoiding a full replication of the index.
In the first quarter of 1997, mid-cap stocks continued to lag behind
large capitalization stocks as the movement towards S&P 500 Index funds and the
conservative big capitalization stocks continued throughout the quarter.
Financial and healthcare sectors have contributed the most to the Mid-Cap Equity
Portfolio's performance during the fiscal year with financials providing 55% of
the return on a weighted basis. The Mid-Cap Equity Portfolio benefited from
maintaining an overweighted position in these sectors with specific overweights
in Crestar Financial, Franklin Resources and Biogen. Energy and technology
sectors declined over the quarter. Stocks that contributed the most to the
overall performance include Coca Cola, Quantum, and Charles Schwab.
As we enter fiscal 1998, the Portfolio will continue to make
investments based on selective stock picking and industry weight decisions. The
dynamics of the mid-cap universe look favorable as many of America's fastest
growing companies have underperformed the large-cap market for the past three
years. The large capitalization market's gains are expected to slow to the rate
of earnings growth. We believe that the more attractively valued mid- and
small-cap stocks are poised to have good absolute and relative performance in
the year to come.
19
<PAGE>
- --------------------------------------------------------------------------------
Management's Discussion & Analysis (continued)
- --------------------------------------------------------------------------------
================================================================================
Mid-Cap Equity Portfolio
Performance as of 4/30/97
Institutional Class: Value of a $100,000 Investment
[Line Graph Omitted]
Ark S&P Lipper
11/30/96 100000 100000 100000
4/30/97 100671 101178 95014
- --ARK Funds Mid-Cap Equity Portfolio, Institutional Class
- --S&P 400 Mid-Cap Index
- --Lipper Mid-Cap Funds Average
Institutional Class
One Year Life of Portfolio
Cumulative
Total Returns N/A 1.98%
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning November 18, 1996. The
performance of the S&P 400 Mid-Cap Index and Lipper Mid-Cap Funds Average does
not include annual operating expenses which are incurred by the Portfolio. The
performance reflected in the graph begins at November 30, 1996. The performance
reflected in the table begins at the inception date.
================================================================================
Special Equity Portfolio
Investment Objective:
The Special Equity Portfolio seeks to provide capital appreciation by investing
primarily in securities of companies believed by the adviser to be "special
equities". Special equities include equity securities of: (1) companies with a
market capitalization of $1.2 billion or less at the time of investment and
deemed by the adviser to have above-average growth potential; or (2) companies
experiencing a "special situation"; that is, an unusual and possibly
non-repetitive positive development taking place in the company.
================================================================================
Portfolio Review and Outlook
[PHOTO OF H. GILES KNIGHT OMITTED]
H. Giles Knight
Portfolio Manager
H. GILES KNIGHT HAS OVER 25 YEARS OF INVESTMENT MANAGEMENT EXPERIENCE.
HE IS A PRINCIPAL OF ALLIED INVESTMENT ADVISORS.
After a very strong fiscal 1996 total return of 48% for the Special Equity
Portfolio, performance for the fiscal year ended April 30, 1997 was
disappointing. The Institutional Class of the Portfolio declined 23.43% during
the period, with much of the decline coming in the first quarter as a result of
the Portfolio's relatively higher price to earnings ratio and aggressive
philosophy. By comparison, the Russell 2000 Growth Index of small growth
companies declined 13.6%(1). For small companies, fiscal 1997 was just the
opposite of fiscal 1996; the more technology owned, the worse the performance
relative to the Russell 2000 Growth Index. In general, large stocks performed
surprisingly well, with positive double digit performance for the fiscal year.
Most investors know that small company stocks are a higher risk, high
reward asset class that has performed very well over the long term. They also
know, but sometimes forget, that small companies are also capable of
underperforming for longer periods of time than their larger brethren.
(1) The Frank Russell 2000 Growth Index has replaced the Frank Russell 2000
Index as the primary benchmark for the Special Equity Portfolio.
20
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
During fiscal 1996, a large number of investment managers of more
traditional large company oriented mutual funds chose to add small company
stocks to their portfolios, especially technology. Attracted by the strong
relative performance of the asset class, they elected to focus on the benefits
of greater growth opportunity, and chose to overlook the negatives of low
liquidity and higher volatility. Small company stocks weakened significantly in
the late spring of 1996, as did most equities. Unfortunately, when the stock
market rebounded in early summer, small company stocks continued to languish as
these same fund managers tried to sell substantial holdings of these less liquid
small company stocks in order to purchase very liquid large company stocks.
We believe that most of the damage to small company stocks has already
occurred. As this is being written, the stock market is setting new highs. Small
company stocks are beginning to show signs of life, most likely because they
have become very cheap relative to large company stocks.
During the course of the fiscal year, we have lowered the volatility of
the Portfolio by reducing technology holdings and increasing exposure to
financial services and healthcare sectors, which have generated higher levels of
earnings consistently over time. The bright side of the weakness in the small
companies' stocks is that we are finding many attractively valued stocks with
excellent long-term potential and are very excited about the prospects for the
Portfolio's future.
================================================================================
Special Equity Portfolio
Performance as of 4/30/97
Institutional Class: Value of a $100,000 Investment
[Line Graph Omitted]
Ark Russell Russell Growth Lipper
7/31/95 100000 100000 100000 100000
4/30/96 137992 117543 119379 122199
4/30/97 105661 117614 103203 118472
- --ARK Funds Special Equity Portfolio, Institutional Class
- --Frank Russell 2000 Index
- --Frank Russell 2000 Growth Index
- --Lipper Small Cap Funds Average
Retail Class: Value of a $10,000 Investment
[Line Graph Omitted]
Ark Russell Russell Growth Lipper
5/31/96 100000 100000 100000 100000
4/30/97 74255 96260 82231 92577
- --ARK Funds Special Equity Portfolio, Retail Class
- --Frank Russell 2000 Index
- --Frank Russell 2000 Growth Index
- --Lipper Small Cap Funds Average
Institutional Class Retail Class
One Year Life of Portfolio One Year Life of Portfolio
Cumulative
Total Returns (23.43)% 13.59% N/A (27.14)%
Average Annual
Total Returns (23.43)% 7.34% N/A N/A
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning July 13, 1995, Retail Class
shares were offered beginning May 16, 1996. Performance for the Retail Class
excludes the maximum 4.75% sales charge which has been waived since inception.
The performance of the Frank Russell 2000 Index, Frank Russell 2000 Growth
Index, and the Lipper Small Cap Funds Average does not include annual operating
expenses which are incurred by the Portfolio. The performance reflected in the
graph for the Institutional Class begins at July 31, 1995 and at May 31, 1996
for the Retail Class. The performance reflected in the table begins at the
inception date.
21
<PAGE>
- --------------------------------------------------------------------------------
Management's Discussion & Analysis (continued)
- --------------------------------------------------------------------------------
================================================================================
International Equity Portfolio
Investment Objective:
The International Equity Portfolio seeks to provide long-term capital growth
by investing primarily in foreign equity securities. Dividend income is
incidental to the Portfolio's primary objective.
================================================================================
Portfolio Review and Outlook
The past twelve months have seen relatively disappointing returns for U.S.
investors in the EAFE markets. The total return on the Morgan Stanley MSCI EAFE
Index for the period declined 0.88%, while the corresponding return on the
International Equity Portfolio (Institutional Class) declined 5.22%. U.S.-based
international investors have been penalized over the past year by the strength
of the dollar, which rose sharply against all other major currencies, with the
exception of British sterling.
As far as the stock markets are concerned, the period saw a clear
dichotomy between Europe, which performed well, and the Asia/Pacific region,
which did not. Japan, the largest element of the latter bloc, was the poorest
performer of all. In local currency terms the Tokyo market fell by 15.8%, which
was equivalent to a 30.5% drop in U.S. dollars. The Japanese economy has been in
a near-recession state since the beginning of the decade and while a recovery of
sorts is now under way, it has proven very lack-luster so far. The asset
deflation which accompanied the economic weakness has done considerable damage
to balance sheets in the financial sector, which in turn has had a direct impact
on the rest of the market. The package of tax increases, aimed at reducing the
bloated fiscal deficit, which took effect on April 1, 1996, has cast further
doubt on the strength of the economic recovery. On a more positive note,
interest rates are very low (and unlikely to rise soon), the stock market is
attractively valued against bonds, and the weakness of the yen over the past two
years should eventually provide a lagged stimulus for economic growth and
corporate profits.
Markets in the Pacific Ex-Japan area were also disappointing, although
not on the same scale as Japan. The Morgan Stanley MSCI EAFE Index for the bloc
(quoted in dollars) edged down by just 1.0%. Many of the economies across the
region have suffered a slowdown in growth from their normally rapid levels. One
contributory factor has been the strength of the U.S. dollar; with local
currencies closely linked to the dollar, this has impacted export volumes and
profit margins. Weakness in particular industry segments, notably
semiconductors, has also had an effect on countries such as Taiwan, Korea and
Singapore. In Thailand, where the stock market was a very poor performer,
weaknesses in the domestic financial sector damaged investor sentiment.
Continental Europe was the best performing bloc in local currency
terms, rising by 26.2% (in European Currency Units), but this was diluted to a
16.0% rise in dollars. Despite a sluggish economic background, companies across
the Continent are seeing rapid growth in profits as a result of exchange rate
weakness and the extensive restructuring which many of them have undertaken in
recent years. The European corporate sector has begun to focus much more closely
on shareholder value, and stock prices have moved in response to this. Most of
the large countries are due to enter the European Monetary Union in 1999, and
interest rates throughout the region are likely to remain low, if not fall
further, between now and then.
The U.K. market was the best performer in dollar terms (up 20.6%),
aided by sterling's 8.1% rise against the greenback. The U.K. has been among the
fastest growing economies around the world over the past year, to the benefit of
domestic consumer companies. However, the sharp rise of
22
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
sterling against almost every other currency has penalized exporting
companies and overseas earners, so that overall corporate profits growth in the
current year is being held to a modest 7% or so. Interest rates have been raised
a number of times since the fall of 1996, but the financial markets are
confident that a repeat of the U.K.'s traditional boom-bust cycle is not
anticipated. Meanwhile, strong institutional cash flow has helped to drive
equities ahead. The change of government in the U.K., following the recent
general election, had been well anticipated by markets and is not expected to
unduly disrupt the investment background.
The distribution of the Portfolio is now as shown in the
following table:
U.K. 15.9%
Continental Europe 40.2%
Japan 21.1%
Pacific Ex-Japan 9.9%
Cash 12.9%
------
100%
======
The Pacific Ex-Japan bloc and Continental Europe are neutrally
positioned against the MSCI EAFE Index, while the U.K. is a little
underweighted. The exposure to Japan has been cut sharply during the period, and
it is now underweighted. We envision that a substantial portion of the cash
balance will be committed to the European markets as buying opportunities
present themselves.
Over the year ahead, we expect to see modest positive returns from most
of the major world markets, based on a generally supportive background of very
low inflation, easy to neutral monetary policies, and business-friendly
governments. As ever, exchange rate movements are difficult to predict, but it
seems unlikely that the dollar will rise as strongly against other currencies as
it has in the past twelve months.
================================================================================
International Equity Portfolio
Performance as of 4/30/97
Institutional Class: Value of a $100,000 Investment
[Graphic Omitted]
Plot Points to follow
Retail Class: Value of a $10,000 Investment
[Graphic Omitted]
Plot Points to follow
International Equity Portfoloio Plot Points
Inst. Class
ARK Funds International Equity Portfolio, Institutional Class
Morgan Stanley MSCI EAFE Index
Ark Morgan
12/31/94 100000 100000
4/30/95 101504 105705
4/30/96 117400 117755
4/30/97 111272 116719
International Equity Portfoloio Plot Points
Retail Class
ARK Funds International Equity Portfolio, Retail Class
Morgan Stanley MSCI EAFE Index
Ark Morgan
11/30/96 100000 100000
4/30/97 96855 97681
Institutional Class Retail Class
One Year Life of Portfolio One Year Life of Portfolio
Cumulative
Total Returns (5.22)% 11.05% N/A (0.15)%
Average Annual
Total Returns (5.22)% 4.60% N/A N/A
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning December 30, 1994, Retail
Class shares were offered beginning November 1, 1996. Performance for the Retail
Class excludes the maximum 4.75% sales charge which has been waived since
inception.The performance of the Morgan Stanley MSCI EAFE Index does not include
annual operating expenses which are incurred by the Portfolio. The performance
reflected in the graph for the Institutional Class begins at December 31, 1994
and at November 30, 1996 for the Retail Class. The performance reflected in the
table begins at the inception date.
23
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditor's Report
- --------------------------------------------------------------------------------
The Trustees and Shareholders
ARK Funds
We have audited the accompanying statement of assets and liabilities of Income
Portfolio, including the schedule of investments of Income Portfolio, the
statements of net assets of Money Market Portfolio, Tax-Free Money Market
Portfolio, U.S. Government Money Market Portfolio, U.S. Treasury Money Market
Portfolio, Short-Term Treasury Portfolio, Maryland Tax-Free Portfolio,
Pennsylvania Tax-Free Portfolio, Intermediate Fixed Income Portfolio, Balanced
Portfolio, Equity Income Portfolio, Blue Chip Equity Portfolio, Stock Portfolio,
Capital Growth Portfolio, Mid-Cap Equity Portfolio, Special Equity Portfolio and
International Equity Portfolio, portfolios of ARK Funds, ("the Funds"), as of
April 30, 1997 and the related statements of operations for the year then ended
for Income Portfolio, Money Market Portfolio, Tax-Free Money Market Portfolio,
U.S. Government Money Market Portfolio, U.S. Treasury Money Market Portfolio,
Short-Term Treasury Portfolio, Balanced Portfolio, Blue Chip Equity Portfolio,
Capital Growth Portfolio, Special Equity Portfolio and International Equity
Portfolio and for the period from November 18, 1996 (inception of operations) to
April 30, 1997 for Maryland Tax-Free Portfolio, Pennsylvania Tax-Free Portfolio,
Intermediate Fixed Income Portfolio, Equity Income Portfolio, Stock Portfolio
and Mid-Cap Equity Portfolio, the statements of changes in net assets for each
of the periods presented on pages 68, 69, 70 and 71, and the financial
highlights for each of the periods presented on pages 72, 73, and 74. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1997 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Income Portfolio, Money Market Portfolio, Tax-Free Money Market Portfolio, U.S.
Government Money Market Portfolio, U.S. Treasury Money Market Portfolio,
Short-Term Treasury Portfolio, Maryland Tax-Free Portfolio, Pennsylvania
Tax-Free Portfolio, Intermediate Fixed Income Portfolio, Balanced Portfolio,
Equity Income Portfolio, Blue Chip Equity Portfolio, Stock Portfolio, Capital
Growth Portfolio, Mid-Cap Equity Portfolio, Special Equity Portfolio and
International Equity Portfolio, portfolios of ARK Funds, as of April 30, 1997,
the results of their operations, the changes in their net assets and the
financial highlights for each of the years or periods specified in the first
paragraph above in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
June 6, 1997
24
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
ARK Funds: Money Market Portfolio
[Pie Chart Graph Omitted]
Pie Chart depicting percentage of Portfolio investments
Repurchase Agreements -- 10%
Corporate & Municipal Debt -- 23%
Commercial Paper -- 19%
Certificates of Deposit -- 10%
Variable Rate Debt -- 35%
U.S. Government Agency Obligations -- 3%
% OF TOTAL PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
Principal
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 27.7%
COMMERCIAL BANKS - 5.9%
PNC Bank (A)
5.620%, 05/01/97 $10,000 $ 9,995
5.598%, 05/09/97 10,000 9,995
Wells Fargo (A)
5.648%, 06/19/97 10,000 10,003
- --------------------------------------------------------------------------------
TOTAL COMMERCIAL BANKS $29,993
- --------------------------------------------------------------------------------
ENTERTAINMENT - 2.0%
Walt Disney
8.000%, 12/19/97 10,000 10,127
- --------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $10,127
- --------------------------------------------------------------------------------
FINANCE - 7.4%
Capital One Funding (A) (B)
5.700%, 05/01/97 9,600 9,600
CIT Group Holdings
5.625%, 04/01/98 10,000 9,961
General Electric Capital (A)
5.780%, 05/06/97 5,000 5,000
General Electric Engine
Receivables (A)
5.668%, 05/04/97 3,200 3,200
Xerox Credit (A)
5.610%, 05/06/97 10,000 10,000
- --------------------------------------------------------------------------------
TOTAL FINANCE $37,761
- --------------------------------------------------------------------------------
PERSONAL CREDIT INSTITUTIONS - 9.5%
Abbey National Treasury
5.640%, 11/03/97 2,000 1,995
5.500%, 11/26/97 5,000 4,996
Asset Backed Securities
Investment Trust (A) (B)
5.688%, 05/15/97 10,000 10,000
Associates Corporation of
North America
5.875%, 08/15/97 2,000 2,000
Ford Motor Credit (A)
5.672%, 05/27/97 10,000 10,001
General Motors Acceptance
7.850%, 05/08/97 5,000 5,002
7.750%, 05/12/97 5,000 5,002
6.300%, 09/10/97 5,000 5,011
7.850%, 11/17/97 4,250 4,298
- --------------------------------------------------------------------------------
TOTAL PERSONAL CREDIT INSTITUTIONS $48,305
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Description Amount (000) Value
- --------------------------------------------------------------------------------
SECURITY BROKERS & DEALERS - 2.9%
Merrill Lynch (A)
5.680%, 05/01/97 $ 5,000 $ 5,000
5.720%, 05/01/97 5,000 5,000
5.738%, 05/12/97 5,000 5,000
- --------------------------------------------------------------------------------
TOTAL SECURITY BROKERS & DEALERS $ 15,000
- --------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS
(Cost $141,186) $141,186
- --------------------------------------------------------------------------------
COMMERCIAL PAPER - 18.6%
COMMERCIAL BANKS - 2.0%
Bank of New York (C)
5.530%, 05/05/97 10,000 9,994
- --------------------------------------------------------------------------------
TOTAL COMMERCIAL BANKS $ 9,994
- --------------------------------------------------------------------------------
FINANCE - 5.9%
CAFCO (C)
5.600%, 05/01/97 15,000 15,000
Delaware Funding (C)
5.600%, 05/19/97 15,000 14,958
- --------------------------------------------------------------------------------
TOTAL FINANCE $ 29,958
- --------------------------------------------------------------------------------
PERSONAL CREDIT INSTITUTIONS - 2.9%
Bavaria Asset (C)
5.600%, 05/15/97 15,000 14,967
- --------------------------------------------------------------------------------
TOTAL PERSONAL CREDIT INSTITUTIONS $ 14,967
- --------------------------------------------------------------------------------
SECURITY BROKERS & DEALERS - 7.8%
Goldman Sachs (C)
5.500%, 05/14/97 20,000 19,960
Smith Barney (C)
5.540%, 05/15/97 20,000 19,957
- --------------------------------------------------------------------------------
TOTAL SECURITY BROKERS & DEALERS $ 39,917
- --------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost $94,836) $ 94,836
- --------------------------------------------------------------------------------
TAXABLE MUNICIPAL BONDS - 14.1%
CALIFORNIA - 2.7%
Oakland Alameda County
5.660%, 05/12/97 13,680 13,680
- --------------------------------------------------------------------------------
TOTAL CALIFORNIA $ 13,680
- --------------------------------------------------------------------------------
INDIANA - 3.8%
City of Whiting
5.550%, 05/20/97 19,500 19,500
- --------------------------------------------------------------------------------
TOTAL INDIANA $ 19,500
- --------------------------------------------------------------------------------
MASSACHUSETTS - 3.9%
Industrial Finance Authority
5.600%, 05/14/97 20,000 20,000
- --------------------------------------------------------------------------------
TOTAL MASSACHUSETTS $ 20,000
- --------------------------------------------------------------------------------
NEW YORK - 2.0%
New York City (GO)
5.523%, 05/23/97 10,000 10,000
- --------------------------------------------------------------------------------
TOTAL NEW YORK $ 10,000
- --------------------------------------------------------------------------------
NORTH CAROLINA - 1.3%
Durham, Certificates of
Participation, Series B (A)
5.650%, 05/07/97 1,500 1,500
Winston-Salem, Certificates
of Participation
5.660%, 05/21/97 5,000 5,000
- --------------------------------------------------------------------------------
TOTAL NORTH CAROLINA $ 6,500
- --------------------------------------------------------------------------------
25
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
Money Market Portfolio (continued)
- --------------------------------------------------------------------------------
Principal
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
PENNSYLVANIA - 0.4%
Economic Development Financing
Authority (RB) (A)
5.650%, 05/01/97 $ 2,300 $ 2,300
- --------------------------------------------------------------------------------
TOTAL PENNSYLVANIA $ 2,300
- --------------------------------------------------------------------------------
TOTAL TAXABLE MUNICIPAL BONDS
(Cost $71,980) $71,980
- --------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - 13.5%
COMMERCIAL BANKS - 7.8%
Bank One
5.690%, 10/28/97 5,000 4,999
Bankers Trust New York (A)
5.430%, 05/06/97 10,000 9,996
Bankers Trust New York
5.500%, 12/10/97 5,000 4,995
Fifth Third Bank
5.530%, 05/12/97 15,000 15,000
Huntington National
6.200%, 07/08/97 5,000 5,004
- --------------------------------------------------------------------------------
TOTAL COMMERCIAL BANKS $39,994
- --------------------------------------------------------------------------------
FOREIGN BANKS - 3.7%
ABN Amro New York
6.120%, 07/14/97 4,000 4,000
Royal Bank of Canada (A)
5.615%, 05/01/97 10,000 9,998
Royal Bank of Canada
6.200%, 04/06/98 5,000 4,998
- --------------------------------------------------------------------------------
TOTAL FOREIGN BANKS $18,996
- --------------------------------------------------------------------------------
PERSONAL CREDIT INSTITUTIONS - 2.0%
Societe Generale
5.850%, 03/03/98 10,000 9,997
- --------------------------------------------------------------------------------
TOTAL PERSONAL CREDIT INSTITUTIONS $ 9,997
- --------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $68,987) $68,987
- --------------------------------------------------------------------------------
BONDS & NOTES - 13.2%
COMMERCIAL BANKS - 5.9%
Bank of America N.A. (A)
5.650%, 05/01/97 15,000 14,993
Bankers Trust New York (A) (B)
5.690%, 05/01/97 5,000 5,000
First USA Bank (A)
6.013%, 07/07/97 10,000 10,015
- --------------------------------------------------------------------------------
TOTAL COMMERCIAL BANKS $30,008
- --------------------------------------------------------------------------------
FINANCE - 2.0%
Beta Finance (A) (B)
5.710%, 05/01/97 10,000 10,000
- --------------------------------------------------------------------------------
TOTAL FINANCE $10,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
PERSONAL CREDIT INSTITUTIONS - 5.3%
ABTmrl 96 Series A-5 (A) (B)
5.698%, 05/15/97 $10,000 $10,000
Associates Corporation
of North America
8.375%, 01/15/98 8,825 8,976
Educaid Student Loan Trust (A)
5.678%, 05/15/97 8,307 8,307
- --------------------------------------------------------------------------------
TOTAL PERSONAL CREDIT INSTITUTIONS $27,283
- --------------------------------------------------------------------------------
TOTAL BONDS & NOTES
(Cost $67,291) $67,291
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 3.1%
Farmer MAC (C)
5.300%, 05/01/97 14,000 14,000
Student Loan Marketing
Association (A)
5.530%, 05/06/97 2,000 2,000
- --------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $16,000) $16,000
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 9.6%
First Boston
5.350%, dated 04/30/97,
matures 05/01/97, repurchase
price $29,006,310 (collateralized
by various U.S. Treasury Notes,
total par value $29,581,000,
6.000%-6.875%, 05/31/98-
05/15/06: total market
value $30,503,991) 29,002 29,002
Smith Barney
5.375%, dated 04/30/97,
matures 05/01/97, repurchase
price $20,002,986 (collateralized
by various U.S. Treasury STRIPS,
total par value $14,199,100,
11/15/98-11/15/14: various
U.S. Treasury Notes, total par
value $10,457,400, 5.875%-7.750%,
07/31/97-03/31/02: U.S. Treasury
Bond, total par value $2,500,000,
8.500%, 02/15/20: total
market value $20,400,058) 20,000 20,000
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $49,002) $ 49,002
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.8%
(Cost $509,282) $509,282
================================================================================
OTHER ASSETS AND LIABILITIES, NET - 0.2% $ 1,290
================================================================================
26
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Description Value (000)
- --------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization - no par value)
based on 318,896,337 outstanding shares
of beneficial interest $ 318,887
Portfolio Shares of Retail Class
(unlimited authorization - no par value)
based on 128,685,879 outstanding shares
of beneficial interest 128,681
Portfolio Shares of Institutional II
Class (unlimited authorization - no par
value) based on 62,960,407 outstanding
shares of beneficial interest 62,959
Undistributed net investment income 48
Distributions in excess of net
realized gain on investments (3)
================================================================================
TOTAL NET ASSETS - 100.0% $510,572
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL CLASS $1.00
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - RETAIL CLASS $1.00
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL II CLASS $1.00
================================================================================
(A) VARIABLE RATE SECURITY - THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS
THE RATE IN EFFECT AS OF APRIL 30, 1997. THE DATE SHOWN IS THE NEXT
SCHEDULED RESET DATE.
(B) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A, OR OFFERED PURSUANT TO
SECTION 4(2) OF THE SECURITIES ACT OF 1933. THESE SECURITIES MAY BE RESOLD
IN TRANSACTIONS EXEMPT FROM REGISTRATION NORMALLY TO QUALIFIED INSTITUTIONAL
INVESTORS.
(C) THE ANNUALIZED DISCOUNT YIELD AT TIME OF PURCHASE IS SHOWN AS THE RATE ON
THE STATEMENT OF NET ASSETS.
CAFCO-CORPORATE ASSET FUNDING INCORPORATED
GO-GENERAL OBLIGATION
MAC-FEDERAL AGRICULTURE MORTGAGE CORPORATION
RB-REVENUE BOND
STRIPS-SEPARATELY TRADED REGISTERED AND INTEREST PRINCIPAL SECURITIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
ARK Funds: Tax-Free Money Market Portfolio
[Pie Chart Graph Omitted]
Pie Chart depicting percentage of Portfolio investments
Variable Rate Municipal Obligations -- 64%
Fixed Rate Municipal Obligations -- 36%
% OF TOTAL PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
Principal
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS & NOTES - 100.3%
CALIFORNIA - 1.5%
California State (RAN)
4.500%, 06/30/97 $1,500 $1,501
- --------------------------------------------------------------------------------
TOTAL CALIFORNIA $1,501
- --------------------------------------------------------------------------------
COLORADO - 5.2%
Arapahoe County, School District
#005 Cherry Creek (TAN)
4.500%, 06/30/97 1,000 1,001
Colorado State Educational
Facilities Authority, Pro Rodeo
Hall of Fame Project,
LOC: Bank One (RB) (A)
4.700%, 05/01/97 2,570 2,570
Colorado State Student
Obligations Bond Authority,
LOC: SLMA (RB) (A)
4.400%, 05/07/97 1,775 1,775
- --------------------------------------------------------------------------------
TOTAL COLORADO $5,346
- --------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 4.9%
District of Columbia, LOC: Toronto
Dominion (GO) (A)
4.150%, 05/01/97 200 200
District of Columbia, Series 1992
A-2, LOC: Bank of Nova Scotia
(GO) (A)
4.150%, 05/01/97 1,800 1,800
District of Columbia, Series 1992
A-4, LOC: Toronto Dominion
(GO) (A)
4.150%, 05/01/97 3,000 3,000
- --------------------------------------------------------------------------------
TOTAL DISTRICT OF COLUMBIA $5,000
- --------------------------------------------------------------------------------
FLORIDA - 4.3%
Jacksonville, LOC: Morgan
Guaranty (TECP)
3.450%, 06/02/97 1,050 1,050
Lee County, Housing Finance
Authority (RB) (FNMA) (A)
4.500%, 05/07/97 1,685 1,685
27
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
Tax-Free Money Market Portfolio (continued)
- --------------------------------------------------------------------------------
Principal
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
Sunshine State Government
Financing Committee (TECP)
3.450%, 06/02/97 $1,700 $ 1,700
- --------------------------------------------------------------------------------
TOTAL FLORIDA $4,435
- --------------------------------------------------------------------------------
GEORGIA - 7.9%
Atlanta, Airport Facilities, Credit
Support: AMBAC (RB)
5.000%, 01/01/98 3,750 3,782
Chatham County, Hospital
Authority, Medical Center-A
(AMBAC)
4.150%, 01/01/98 1,000 1,003
De Kalb County, Housing
Authority, Winters Creek
Apartments Project
(RB) (FNMA) (A)
4.550%, 05/07/97 1,500 1,500
De Kalb County, Industrial
Development Authority,
LOC: PNC Bank (RB) (A)
4.750%, 05/07/97 1,300 1,300
Hapeville, Industrial Development
Authority, Hapeville Hotel Project,
LOC: Deutsche Bank (RB) (A)
4.100%, 05/01/97 500 500
- --------------------------------------------------------------------------------
TOTAL GEORGIA $8,085
- --------------------------------------------------------------------------------
ILLINOIS - 3.4%
Elmhurst, Joint Commission on
Accreditation of Health Bank,
LOC: Sanwa Bank (RB) (A)
4.750%, 05/07/97 335 335
Illinois State Health Facilities
Authority, Methodist Medical
Center, Series 1985, LOC:
Sumitomo Bank (RB) (A)
4.500%, 05/07/97 3,100 3,100
- --------------------------------------------------------------------------------
TOTAL ILLINOIS $3,435
- --------------------------------------------------------------------------------
INDIANA - 2.4%
Sullivan, Indiana Energy Rural
Electric Cooperative, LOC:
National Rural Utilities (TECP)
3.550%, 05/21/97 2,500 2,500
- --------------------------------------------------------------------------------
TOTAL INDIANA $2,500
- --------------------------------------------------------------------------------
IOWA - 8.0%
Iowa School Corporation, Warrant
Certificates Anticipation Notes,
Series A (FSA) (RAN)
4.750%, 06/27/97 2,000 2,002
Iowa School Corporation, Warrant
Certificates Anticipation Notes,
Series B (FSA) (RAN)
4.250%, 01/30/98 2,750 2,762
- --------------------------------------------------------------------------------
Principal
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
Iowa State Higher Education
Authority, St. Ambrose
University Project, LOC:
Norwest Bank (RB) (A)
4.700%, 05/07/97 $2,700 $2,700
Storm Lake, Buena Vista College
Project, LOC: Norwest Bank
(RB) (A)
4.700%, 05/07/97 700 700
- --------------------------------------------------------------------------------
TOTAL IOWA $8,164
- --------------------------------------------------------------------------------
KENTUCKY - 1.0%
Trimble County, Pollution Control,
Guaranty: Louisville Gas &
Electric (RB) (TECP)
3.450%, 06/02/97 1,000 1,000
- --------------------------------------------------------------------------------
TOTAL KENTUCKY $1,000
- --------------------------------------------------------------------------------
LOUISIANA - 3.8%
Louisiana State Public Facilities
Authority, Kenner Hotel Project,
LOC: Deutsche Bank (RB) (A)
4.100%, 05/01/97 2,680 2,680
Louisiana State Public Facilities
Authority, Hospital Equipment
Financing, Series A, LOC:
Sumitomo Bank (RB) (A)
4.300%, 05/07/97 1,200 1,200
- --------------------------------------------------------------------------------
TOTAL LOUISIANA $3,880
- --------------------------------------------------------------------------------
MARYLAND - 5.5%
Baltimore, Industrial Development
Authority, LOC: Dai Ichi Kango
Bank (RB) (A)
4.750%, 05/07/97 4,000 4,000
Maryland State Health & Higher
Education Facilities Authority,
Hospital & University
Improvements, LOC: FNB
Chicago (RB) (A)
4.500%, 05/07/97 1,100 1,100
Maryland State, First Series (GO)
6.300%, 05/15/97 500 501
- --------------------------------------------------------------------------------
TOTAL MARYLAND $5,601
- --------------------------------------------------------------------------------
MINNESOTA - 2.7%
Minneapolis, LOC: Bayerische
Vereinsbank (GO) (A)
4.530%, 05/07/97 1,800 1,800
Minnesota School District Credit
Enhancement, Tax & Aid
Anticipation Borrowing Program,
Series 1996-B (COP)
4.500%, 09/09/97 1,000 1,002
- --------------------------------------------------------------------------------
TOTAL MINNESOTA $2,802
- --------------------------------------------------------------------------------
MISSOURI - 1.0%
Columbia, Series A, LOC: Toronto
Dominion (RB) (A)
4.500%, 05/07/97 1,000 1,000
- --------------------------------------------------------------------------------
TOTAL MISSOURI $1,000
- --------------------------------------------------------------------------------
28
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Principal
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
MONTANA - 3.9%
Forsyth, Portland General
Electric, Colstrip Project,
LOC: Swiss Bank (RB) (A)
4.500%, 05/07/97 $1,000 $1,000
Forsyth, Portland General
Electric, Colstrip Project,
Series 1983-A, LOC:
Swiss Bank (RB) (A)
4.500%, 05/07/97 1,000 1,000
Forsyth, Portland General
Electric, Colstrip Project,
Series 1983-A,
LOC: UBS (RB) (A)
4.400%, 05/07/97 2,000 2,000
- --------------------------------------------------------------------------------
TOTAL MONTANA $4,000
- --------------------------------------------------------------------------------
NEVADA - 3.7%
Clark County, Airport
Improvement Authority,
Series A (RB) (MBIA) (A)
4.450%, 05/07/97 3,800 3,800
- --------------------------------------------------------------------------------
TOTAL NEVADA $3,800
- --------------------------------------------------------------------------------
NEW HAMPSHIRE - 3.1%
New Hampshire State, Pollution
Control, LOC: CIBC (RB) (A)
4.500%, 05/07/97 3,200 3,200
- --------------------------------------------------------------------------------
TOTAL NEW HAMPSHIRE $3,200
- --------------------------------------------------------------------------------
NEW JERSEY - 1.0%
New Jersey Wastewater
Treatment Trust, Series B,
Pre-refunded @ 102 (B)
7.250%, 05/15/98 985 1,036
- --------------------------------------------------------------------------------
TOTAL NEW JERSEY $1,036
- --------------------------------------------------------------------------------
NEW YORK - 0.5%
New York, LOC: Dai-Ichi
(GO) (A)
4.250%, 04/30/97 500 500
- --------------------------------------------------------------------------------
TOTAL NEW YORK $ 500
- --------------------------------------------------------------------------------
NORTH CAROLINA - 4.9%
Durham, Water & Sewer
Utility System (RB) (A)
4.550%, 05/07/97 2,000 2,000
Winston Salem (COP) (A)
4.650%, 05/07/97 3,000 3,000
- --------------------------------------------------------------------------------
TOTAL NORTH CAROLINA $5,000
- --------------------------------------------------------------------------------
PENNSYLVANIA - 5.7%
Bucks County, Industrial
Development Authority,
LOC: ABN-Amro (RB) (A)
4.400%, 05/07/97 2,200 2,200
Lehigh County, Industrial
Development Authority,
Series A, LOC: Rabo
Bank (RB) (A)
4.400%, 05/07/97 1,600 1,600
Philadelphia Hospital & Higher
Education Authority,
Pennsylvania Hospital Project,
Series C (RB) (FGIC)
3.900%, 07/01/97 1,000 1,000
- --------------------------------------------------------------------------------
Principal
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
Wyomissing, School District,
Pre-refunded @ 100
(GO) (FGIC) (B)
5.400%, 11/01/97 $1,010 $ 1,018
- --------------------------------------------------------------------------------
TOTAL PENNSYLVANIA $ 5,818
- --------------------------------------------------------------------------------
RHODE ISLAND - 1.9%
Rhode Island State (TAN)
4.500%, 06/30/97 2,000 2,002
- --------------------------------------------------------------------------------
TOTAL RHODE ISLAND $ 2,002
- --------------------------------------------------------------------------------
SOUTH CAROLINA - 2.6%
South Carolina State Public
Service Authority (TECP)
3.350%, 05/01/97 2,700 2,700
- --------------------------------------------------------------------------------
TOTAL SOUTH CAROLINA $ 2,700
- --------------------------------------------------------------------------------
TENNESSEE - 1.5%
Jefferson County, Industrial
Development Authority,
Ball Corporation Project,
LOC: PNC Bank (RB) (A)
4.750%, 05/07/97 1,500 1,500
- --------------------------------------------------------------------------------
TOTAL TENNESSEE $ 1,500
- --------------------------------------------------------------------------------
TEXAS - 14.8%
Port Corpus Christi, Industrial
Development, Series A, LOC:
Bank of Montreal (RB) (A)
4.400%, 05/07/97 3,000 3,000
Texas Municipal Power Agency
(BAN)
3.550%, 05/21/97 2,750 2,750
Texas State (TRAN)
4.750%, 08/29/97 5,660 5,680
Texas State Higher Education
Authority, Series B (RB)
(FGIC) (A)
4.000%, 05/07/97 2,865 2,865
Texas State Public Finance
Authority (RB) (MBIA)
6.400%, 02/01/98 850 865
- --------------------------------------------------------------------------------
TOTAL TEXAS $ 15,160
- --------------------------------------------------------------------------------
UTAH - 4.6%
Emery County, Pacificorp Project,
Series 1991, LOC: Credit Suisse
(RB) (A)
4.500%, 05/07/97 4,700 4,700
- --------------------------------------------------------------------------------
TOTAL UTAH $ 4,700
- --------------------------------------------------------------------------------
VERMONT - 0.5%
Vermont State (GO)
(RAN) (TECP)
3.700%, 06/13/97 500 500
- --------------------------------------------------------------------------------
TOTAL VERMONT $ 500
- --------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS & NOTES
(Cost $102,665) $102,665
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.3%
(Cost $102,665) $102,665
================================================================================
OTHER ASSETS AND LIABILITIES, NET - (0.3%) $ (352)
================================================================================
29
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
Tax-Free Money Market Portfolio (concluded)
- --------------------------------------------------------------------------------
Description Value (000)
- --------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization - no par value)
based on 69,090,371 outstanding shares
of beneficial interest $ 69,085
Portfolio Shares of Retail Class
(unlimited authorization - no par value)
based on 16,494,949 outstanding shares of
beneficial interest 16,494
Portfolio Shares of Institutional II Class
(unlimited authorization - no par
value) based on 16,727,622 outstanding shares
of beneficial interest 16,727
Undistributed net investment income 7
================================================================================
TOTAL NET ASSETS--100.0% $102,313
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL CLASS $1.00
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - RETAIL CLASS $1.00
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL II CLASS $1.00
================================================================================
(A) VARIABLE RATE SECURITY -- THE RATE REPORTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT AS OF APRIL 30, 1997. THE DATE SHOWN IS THE NEXT
SCHEDULED RESET DATE.
(B) THE PRE-REFUNDED DATE IS SHOWN AS THE MATURITY DATE ON THE STATEMENT OF NET
ASSETS.
AMBAC-AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
BAN-BOND ANTICIPATION NOTE
CIBC-CANADIAN IMPERIAL BANK CORPORATION
COP-CERTIFICATES OF PARTICIPATION
FGIC-FINANCIAL GUARANTY INSURANCE COMPANY
FNMA-FEDERAL NATIONAL MORTGAGE ASSOCIATION
FSA-FINANCIAL SECURITY ASSURANCE
GO-GENERAL OBLIGATION
LOC-LETTER OF CREDIT
MBIA-MUNICIPAL BOND INSURANCE ASSOCIATION
RAN-REVENUE ANTICIPATION NOTE
RB-REVENUE BOND
SLMA-STUDENT LOAN MARKETING ASSOCIATION
TAN-TAX ANTICIPATION NOTE
TECP-TAX EXEMPT COMMERCIAL PAPER
TRAN-TAX & REVENUE ANTICIPATION NOTE
UBS-UNION BANK OF SWITZERLAND
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
ARK Funds: U.S. Government Money Market Portfolio
[Pie Chart Graph Omitted]
Pie Chart depicting percentage of Portfolio investments
Repurchase Agreements -- 39%
Variable Rate U.S. Government Agency Obligations -- 18%
U.S. Government Agency Obligations -- 43%
% OF TOTAL PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
Principal
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 61.0%
Federal Farm Credit Bank (B)
5.550%, 05/01/97 $ 25,000 $ 24,990
5.570%, 05/01/97 25,000 24,986
Federal Farm Credit Bank (A)
5.850%, 08/01/97 15,000 15,004
11.900%, 10/20/97 7,033 7,226
Federal Home Loan Bank (A)
5.430%, 05/15/97 50,000 49,894
5.440%, 06/05/97 40,000 39,788
5.330%, 09/10/97 25,000 24,511
5.420%, 12/02/97 10,000 9,994
5.710%, 01/21/98 10,000 9,997
Federal Home Loan Mortgage
Corporation (A)
5.280%, 06/03/97 25,000 24,879
5.290%, 06/06/97 50,000 49,735
5.450%, 06/30/97 3,026 2,999
5.470%, 07/09/97 100,000 98,952
5.300%, 09/03/97 20,000 19,632
5.600%, 10/31/97 10,100 10,098
5.715%, 03/17/98 10,000 9,988
Federal National Mortgage
Association (B)
5.580%, 05/01/97 25,000 24,991
5.590%, 05/01/97 25,000 24,991
5.550%, 05/06/97 25,000 24,995
5.780%, 05/06/97 56,000 55,997
5.293%, 05/19/97 25,000 24,992
5.520%, 06/20/97 25,000 24,998
Federal National Mortgage
Association (A)
5.280%, 06/06/97 50,000 49,736
5.485%, 07/22/97 50,000 49,375
5.640%, 09/03/97 10,000 9,988
5.580%, 10/07/97 25,000 24,384
5.590%, 10/09/97 25,000 24,375
5.580%, 10/10/97 25,000 24,372
- --------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $785,867) $785,867
- --------------------------------------------------------------------------------
30
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Principal
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 39.2%
First Boston 5.350%,
dated 04/30/97,
matures 05/01/97,
repurchase price
$228,796,591
(collateralized by
various U.S. Treasury
Notes, total par
value $234,184,000,
5.500%-7.500%,
07/31/97- 04/30/02:
total market value
$234,393,796) $228,763 $ 228,763
Goldman Sachs
5.180%, dated 04/30/97,
matures 05/01/97, repurchase
price $96,013,813
(collateralized by U.S.
Treasury Bond, total par
value $101,529,000, 6.500%,
11/15/26: total market
value $97,920,114) 96,000 96,000
Smith Barney
5.375%, dated 04/30/97,
matures 05/01/97, repurchase
price $180,026,875
(collateralized by various
U.S. Treasury STRIPS,
total par value $127,791,900,
11/15/98-11/15/14: various
U.S. Treasury Notes, total par
value $94,116,600, 5.875%-
7.750%, 07/31/97-03/31/02:
U.S. Treasury Bond, total par
value $22,500,000,
8.500%, 02/15/20: total market
value $183,600,526) 180,000 180,000
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $504,763) $ 504,763
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.2%
(Cost $1,290,630) $1,290,630
================================================================================
OTHER ASSETS AND LIABILITIES, NET - (0.2%) $ (2,568)
================================================================================
- --------------------------------------------------------------------------------
Description Value (000)
- --------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of
Institutional Class
(unlimited authorization - no par value)
based on 1,250,788,349 outstanding shares
of beneficial interest $ 1,250,773
Portfolio Shares of
Institutional II Class
(unlimited authorization - no par
value) based on 37,285,649 outstanding shares
of beneficial interest 37,285
Undistributed net investment income 33
Distributions in excess of net realized
gain on investments (29)
================================================================================
TOTAL NET ASSETS - 100.0% $1,288,062
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL CLASS $ 1.00
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL II CLASS $ 1.00
================================================================================
(A) THE ANNUALIZED DISCOUNT YIELD AT TIME OF PURCHASE IS SHOWN AS THE RATE ON
THE STATEMENT OF NET ASSETS.
(B) VARIABLE RATE SECURITY - THE RATE REPORTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT AS OF APRIL 30, 1997. THE DATE SHOWN IS THE NEXT
SCHEDULED RESET DATE.
STRIPS-SEPARATELY TRADED REGISTERED AND INTEREST PRINCIPAL SECURITIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
31
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
ARK Funds: U.S. Treasury Money Market Portfolio
[Pie Chart Graph Omitted]
Pie Chart depicting percentage of Portfolio investments
U.S. Treasury Notes -- 55%
U.S. Treasury Bills -- 45%
% OF TOTAL PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
Principal
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 98.9%
U.S. Treasury Bills (A)
5.235%, 05/08/97 $ 1,867 $ 1,865
5.086%, 05/29/97 364 362
5.100%, 07/03/97 856 849
5.100%, 07/24/97 18,728 18,506
5.151%, 08/21/97 76,484 75,220
5.335%, 09/18/97 5,482 5,368
5.244%, 10/16/97 26,547 25,886
5.146%, 11/13/97 5,236 5,091
5.335%, 01/08/98 1,654 1,592
U.S. Treasury Notes
6.500%, 05/15/97 75,000 75,034
6.125%, 05/31/97 50,000 50,018
6.750%, 05/31/97 40,000 40,037
- --------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $299,828) $299,828
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 98.9%
(Cost $299,828) $299,828
================================================================================
OTHER ASSETS AND LIABILITIES, NET - 1.1% $ 3,265
================================================================================
- --------------------------------------------------------------------------------
Description Value (000)
- --------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization - no par value)
based on 225,912,622 outstanding shares
of beneficial interest $ 225,902
Portfolio Shares of Retail Class
(unlimited authorization - no par value)
based on 13,673,556 outstanding shares
of beneficial interest 13,674
Portfolio Shares of Institutional II Class
(unlimited authorization - no par
value) based on 63,499,915 outstanding shares
of beneficial interest 63,496
Undistributed net investment income 26
Distributions in excess of net realized
gain on investments (5)
================================================================================
TOTAL NET ASSETS - 100.0% $303,093
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL CLASS $ 1.00
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - RETAIL CLASS $ 1.00
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL II CLASS $ 1.00
================================================================================
(A) THE ANNUALIZED DISCOUNT YIELD AT TIME OF PURCHASE IS SHOWN AS THE RATE ON
THE STATEMENT OF NET ASSETS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
32
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
ARK Funds: Short-Term Treasury Portfolio
[Pie Chart Graph Omitted]
Pie Chart depicting percentage of Portfolio investments
U.S. Treasury Bonds -- 12%
U.S. Treasury Bills -- 18%
U.S. Treasury Notes -- 70%
% OF TOTAL PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
Principal
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 99.1%
U.S. Treasury Bills (A)
5.180%, 06/19/97 $ 107 $ 106
5.110%, 07/24/97 105 104
5.065%, 08/07/97 13 13
5.300%, 08/21/97 1,390 1,367
5.159%, 10/16/97 176 172
5.159%, 11/13/97 1,040 1,009
5.238%, 12/11/97 1,845 1,783
5.275%, 01/08/98 2,255 2,168
5.148%, 02/05/98 1,062 1,016
U.S. Treasury Notes
5.375%, 11/30/97 500 499
8.125%, 02/15/98 2,250 2,287
5.250%, 07/31/98 3,000 2,972
6.250%, 07/31/98 2,000 2,004
5.875%, 08/15/98 3,069 3,061
6.000%, 09/30/98 5,800 5,793
5.875%, 10/31/98 362 360
5.625%, 11/30/98 3,355 3,328
5.750%, 12/31/98 1,000 994
5.875%, 01/31/99 2,436 2,422
5.875%, 02/28/99 2,000 1,988
5.875%, 11/15/99 5,379 5,315
U.S. Treasury Bond
6.000%, 08/15/99 5,376 5,337
- --------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $44,297) $44,098
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.1%
(Cost $44,297) $44,098
================================================================================
OTHER ASSETS AND LIABILITIES, NET - 0.9% $ 402
================================================================================
- --------------------------------------------------------------------------------
Description Value (000)
- --------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization - no par value)
based on 2,164,358 outstanding shares
of beneficial interest $21,638
Portfolio Shares of Retail Class
(unlimited authorization - no par value)
based on 2,302,882 outstanding shares
of beneficial interest 23,073
Undistributed net investment income 1
Accumulated net realized loss on investments (13)
Net unrealized depreciation on investments (199)
================================================================================
TOTAL NET ASSETS - 100.0% $44,500
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL CLASS $ 9.96
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - RETAIL CLASS $ 9.96
================================================================================
(A) THE ANNUALIZED DISCOUNT YIELD AT TIME OF PURCHASE IS SHOWN AS THE RATE ON
THE STATEMENT OF NET ASSETS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
33
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
ARK Funds: Maryland Tax-Free Portfolio
[Pie Chart Graph Omitted]
Pie Chart depicting percentage of Portfolio investments
Cash -- 1%
Fixed Rate Municipal Obligations -- 99%
% OF TOTAL PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
Principal
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS & NOTES - 98.3%
MARYLAND - 96.4%
Allegany County, Public
Improvements, Callable
03/01/07 @ 101 (GO)
(AMBAC)
5.300%, 03/01/12 $1,190 $1,160
Anne Arundel County, Callable
09/01/06 @ 101 (GO)
5.000%, 09/01/10 1,500 1,442
Anne Arundel County, Water &
Sewer Utility Improvements,
Pre-refunded @ 102 (GO) (A)
6.900%, 03/01/98 1,000 1,043
Baltimore, Series A, Callable
04/01/03 @ 102 (COP) (MBIA)
5.200%, 04/01/04 750 758
Baltimore, Series B (GO) (MBIA)
7.000%, 10/15/03 1,000 1,114
Baltimore, Port Facilities-DuPont,
Callable 04/01/02 @ 103 (RB)
6.500%, 10/01/11 1,000 1,076
Baltimore, Water Project, Series A,
Callable 07/01/06 @ 101 (RB)
(FGIC)
5.500%, 07/01/26 1,500 1,433
Baltimore County, Consolidated
Public Improvements, Callable
06/01/06 @ 101 (GO)
5.500%, 06/01/16 2,000 1,960
Baltimore County, Pension Funding,
Callable 07/01/98 @ 102 (GO)
6.700%, 07/01/11 1,000 1,041
Baltimore County, Callable
06/16/97 @ 102 (COP)
6.900%, 12/01/99 1,000 1,022
Calvert County, Pollution Control,
Baltimore Gas & Electric
Company Project, Callable
07/15/04 @ 102 (RB)
5.550%, 07/15/14 2,500 2,453
- --------------------------------------------------------------------------------
Principal
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
Calvert County, Public & School
Improvements, Callable
01/01/06 @ 101 (GO)
5.750%, 01/01/11 $1,900 $1,933
Carroll County, Consolidated
Public Improvements,
Pre-refunded @ 102 (GO) (A)
6.250%, 11/01/01 1,000 1,076
Carroll County, Pre-refunded
@ 102 (GO) (A)
7.250%, 10/01/00 500 551
Charles County, Callable
03/01/05 @ 101 (GO)
5.700%, 03/01/10 750 767
Cumberland, Series A, Callable
05/01/04 @ 102 (RB) (FGIC)
5.125%, 05/01/13 1,000 961
Frederick, Callable 12/01/02
@ 102 (GO) (FGIC)
6.125%, 12/01/06 1,000 1,063
6.125%, 12/01/07 500 529
Frederick County, Callable
07/01/02 @ 102 (GO)
5.700%, 07/01/09 1,000 1,016
Frederick County, Series B,
Callable 07/01/02 @ 102 (GO)
6.300%, 07/01/07 1,000 1,064
6.300%, 07/01/08 2,000 2,123
Gaithersburg, Hospital & Nursing
Home Improvements, Shady
Grove, Callable 09/01/05
@ 102 (RB) (FSA)
6.000%, 09/01/22 1,000 1,010
Howard County, Consolidated
Public Improvements, Series A,
Callable 02/15/03 @ 101 (GO)
5.200%, 02/15/04 1,000 1,019
Howard County, Series B, Callable
08/15/01 @ 100 (GO)
6.000%, 08/15/19 3,000 3,041
Howard County, Series B (GO)
5.800%, 08/15/01 500 522
Maryland State (GO)
6.700%, 07/15/00 500 534
Maryland State, Callable
10/15/01 @ 101 (GO)
5.900%, 10/15/04 1,000 1,046
Maryland State, Callable
10/15/01 @ 102 (GO)
6.100%, 10/15/06 1,500 1,586
Maryland State & Local Facilities
Authority, First Series, Callable
02/01/03 @ 100 (GO)
5.300%, 02/01/04 1,000 1,019
34
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Principal
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
Maryland State & Local Facilities
Authority, Second Series AA,
Callable 06/01/04 @ 101.5 (GO)
5.500%, 06/01/08 $1,500 $1,541
Maryland State Department of
Transportation (RB)
4.500%, 07/15/97 500 501
Maryland State Department of
Transportation, Public
Improvements, Callable
09/01/00 @ 100.75 (RB)
6.100%, 09/01/01 2,000 2,100
Maryland State Doctors Community
Hospital, Health Improvements,
Callable 07/01/03 @ 100 (RB)
5.500%, 07/01/24 2,000 1,798
Maryland State Health & Higher
Education Facilities Authority,
Health Improvements, Peninsula
Regional Medical Center Project,
Callable 07/01/03 @ 102 (RB)
5.000%, 07/01/08 1,000 941
Maryland State Health & Higher
Education Facilities Authority,
Howard County General Hospital
Project, Callable 07/01/03
@ 102 (RB)
5.500%, 07/01/13 1,000 941
Maryland State Health & Higher
Education Facilities Authority,
Hospital Improvements, North
Arundel Project, Callable
07/01/03 @ 102 (RB) (MBIA)
6.000%, 07/01/12 500 514
Maryland State Health & Higher
Education Facilities Authority,
Loyola College Project, Series A,
Callable 10/01/06 @ 102
(RB) (MBIA)
5.375%, 10/01/11 950 935
5.375%, 10/01/26 1,500 1,410
Maryland State Health & Higher
Education Facilities Authority,
Johns Hopkins University Project,
Callable 07/01/98 @ 102 (RB)
7.375%, 07/01/08 1,000 1,051
Maryland State Health & Higher
Education Facilities Authority,
Johns Hopkins University Project,
Callable 11/15/98 @ 102 (RB)
7.375%, 07/01/09 1,000 1,056
Maryland State Health & Higher
Education Facilities Authority,
Mercy Medical Center Project,
Callable 07/01/03 @ 102
(RB) (AMBAC)
5.750%, 07/01/15 2,000 2,005
- --------------------------------------------------------------------------------
Principal
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
Maryland State Health & Higher
Education Facilities Authority,
Pickersgill Project, Series A,
Callable 01/01/07 @ 102 (RB)
6.000%, 01/01/15 $1,500 $1,502
Maryland State Health & Higher
Education Facilities Authority,
Sinai Hospital Project, Callable
07/01/03 @ 102 (RB) (AMBAC)
5.200%, 07/01/04 1,000 1,010
Maryland State Health & Higher
Education Facilities Authority,
University of Maryland Medical
Systems Project, Series A,
Pre-refunded @ 102 (RB)
(FGIC) (A)
7.000%, 07/01/01 1,000 1,100
Maryland State Health & Higher
Education Facilities Authority,
University of Maryland Medical
Systems Project, Callable 07/01/03
@ 102 (RB) (FGIC)
5.300%, 07/01/05 1,000 1,010
Maryland State Industrial
Development Financing
Authority, Holy Cross Health
Systems Project (RB)
5.000%, 12/01/03 1,000 1,004
Maryland State Transportation
Authority, Callable 07/01/02
@ 100 (RB)
5.750%, 07/01/15 3,000 2,974
Maryland State Transportation
Authority, Baltimore/Washington
International Airport Project,
Callable 07/01/04 @ 102
(RB) (FGIC)
6.000%, 07/01/07 1,000 1,065
Maryland State Water Quality
Financing Administration,
Revolving Loan Fund, Series A,
Callable 09/01/02 @ 101 (RB)
6.550%, 09/01/14 945 1,003
Maryland State Water Quality
Financing Administration,
Revolving Loan Fund, Series A,
Callable 09/01/05 @ 100 (RB)
5.500%, 09/01/12 1,250 1,234
Montgomery County, Consolidated
Public Improvements, Series A,
Callable 10/01/04 @ 102 (GO)
6.000%, 10/01/09 2,000 2,125
Montgomery County, Parking
Authority, Silver Spring Parking
Lot Project, Series A, Callable
06/01/02 @ 102 (RB) (FGIC)
6.250%, 06/01/09 500 531
35
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
MARYLAND TAX-FREE PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
Montgomery County, Public
Improvements, Series A (GO)
5.800%, 07/01/07 $1,000 $1,055
Montgomery County, Public
Improvements, Series A,
Callable 10/01/02 @ 102 (GO)
5.500%, 10/01/06 1,000 1,036
Montgomery County, Single Family
Mortgage Program, Series A,
Callable 07/01/05 @ 102 (RB)
(FHA/VA/FHLMC)
6.350%, 07/01/14 150 157
Prince Georges County, Consolidated
Public Improvements, Callable
03/15/03 @ 102 (GO) (AMBAC)
5.750%, 03/15/10 725 740
Prince Georges County, Health
Improvements, Dimensions Health
Corporation, Callable 07/01/04
@ 102 (RB)
5.375%, 07/01/14 1,500 1,410
Prince Georges County, Public
Improvements, Series A, Callable
03/01/02 @ 102 (GO) (MBIA)
6.000%, 03/01/07 1,450 1,521
Prince Georges County, Solid Waste
Management System, Callable
06/15/03 @ 102 (RB) (FSA)
5.000%, 06/15/04 1,000 990
Prince Georges County, Water
Utility Improvements, Stormwater
Management Project, Callable
03/15/03 @ 102 (GO)
5.500%, 03/15/13 2,575 2,507
Queens Annes County, Public
Facilities, Callable 11/15/07
@ 101 (GO) (FGIC)
5.400%, 11/15/11 1,000 998
Queens Annes County, School
and Recreational Facilities
Improvements, Callable 11/15/07
@ 101 (GO) (FGIC)
6.000%, 11/15/08 1,000 1,066
University of Maryland, Equipment
Loan Program, Second Series,
Callable 06/01/02 @ 102 (RB)
6.000%, 06/01/05 500 529
University of Maryland, Medical
Systems Project, Series A,
Callable 04/01/05 @ 102 (RB)
5.500%, 04/01/10 2,000 2,015
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
University of Maryland, Medical
Systems Project, Series B,
Callable 10/01/02 @ 102 (RB)
6.100%, 04/01/03 $ 500 $ 533
Washington County, Public
Improvements, Callable
01/01/05 @ 102 (GO) (MBIA)
5.800%, 01/01/15 1,250 1,267
Washington Suburban
Sanitation District, General
Construction (GO)
5.000%, 06/01/09 1,000 976
Washington Suburban Sanitation
District, General Construction,
Callable 06/01/04 @ 102 (RB)
5.000%, 06/01/11 1,000 950
Washington Suburban Sanitation
District, Sewer Improvements,
Callable 06/01/03 @ 102 (GO)
5.300%, 06/01/08 1,000 1,000
Washington Suburban Sanitation
District, Sewer Improvements,
Callable 06/01/06 @ 100 (GO)
5.600%, 06/01/18 1,000 986
- --------------------------------------------------------------------------------
TOTAL MARYLAND $84,449
- --------------------------------------------------------------------------------
PUERTO RICO - 1.2%
Commonwealth of Puerto Rico,
Public Improvements
(GO) (MBIA)
6.250%, 07/01/12 1,000 1,086
- --------------------------------------------------------------------------------
TOTAL PUERTO RICO $ 1,086
- --------------------------------------------------------------------------------
TEXAS - 0.7%
Austin, Utility Systems, Series A,
Escrowed to Maturity (RB)
9.100%, 05/15/00 190 213
Austin, Utility Systems, Un-refunded
Balance, Series A (RB)
9.100%, 05/15/00 310 349
- --------------------------------------------------------------------------------
TOTAL TEXAS $ 562
- --------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS & NOTES
(Cost $84,373) $86,097
- --------------------------------------------------------------------------------
CASH EQUIVALENT - 0.9%
Dreyfus Tax Exempt Cash
Management Fund 790 790
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $790) $ 790
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.2%
(Cost $85,163) $86,887
================================================================================
OTHER ASSETS AND LIABILITIES, NET - 0.8% $ 718
================================================================================
36
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Description Value (000)
- --------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization - no par value)
based on 8,067,718 outstanding shares
of beneficial interest $ 77,343
Portfolio Shares of Retail Class
(unlimited authorization - no par value)
based on 810,518 outstanding shares
of beneficial interest 8,069
Accumulated net realized gain on investments 469
Net unrealized appreciation on investments 1,724
================================================================================
TOTAL NET ASSETS - 100.0% $87,605
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL CLASS $9.87
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - RETAIL CLASS $9.87
================================================================================
MAXIMUM OFFERING PRICE PER SHARE -
RETAIL CLASS ($9.87 / 95.50%) $10.34
================================================================================
(A) THE PRE-REFUNDED DATE IS SHOWN AS THE MATURITY DATE ON THE STATEMENT OF NET
ASSETS.
AMBAC-AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
COP-CERTIFICATES OF PARTICIPATION
FGIC-FINANCIAL GUARANTY INSURANCE COMPANY FHA-FEDERAL HOUSING ADMINISTRATION
FHLMC-FEDERAL HOME LOAN MORTGAGE CORPORATION
FSA-FINANCIAL SECURITY ASSURANCE
GO-GENERAL OBLIGATION
MBIA-MUNICIPAL BOND INSURANCE ASSOCIATION
RB-REVENUE BOND
VA-VETERANS ADMINISTRATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
ARK FUNDS: PENNSYLVANIA TAX-FREE PORTFOLIO
[Pie Chart Graph Omitted]
Pie Chart depicting percentage of Portfolio investments
Cash -- 4%
Variable Rate Municipal Obligations -- 2%
Fixed Rate Municipal Obligations -- 94%
% OF TOTAL PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS & NOTES - 96.8%
PENNSYLVANIA - 94.5%
Allegheny County, Hospital
Development Authority,
Pittsburgh Mercy Health
System Project, Callable
8/15/06 @ 102 (RB) (AMBAC)
5.625%, 08/15/18 $500 $486
Allegheny County, Hospital
Development Authority,
Presbyterian Health Center
Project, Series C
(RB) (MBIA) (A)
4.600%, 05/01/97 500 500
Allegheny County, Series C-39,
Callable 05/01/02 @ 102
(GO) (AMBAC)
5.600%, 05/01/04 300 311
Allentown, Callable 07/15/03
@ 100 (GO) (AMBAC)
5.650%, 07/15/08 500 511
Allentown, Callable 07/15/09
@ 100 (GO) (AMBAC)
5.650%, 07/15/10 250 254
Allentown, Sewer Systems,
Callable 07/15/09 @ 100
(RB) (AMBAC)
5.650%, 07/15/10 250 254
Bucks County, Community
College Project, Callable
6/15/07 @ 100 (RB)
5.500%, 06/15/17 500 482
Chester County, Callable
12/15/03 @ 100 (GO)
5.300%, 12/15/05 500 506
Conrad Weiser Area School
District, Pre-refunded @ 100
(GO) (MBIA) (B)
6.700%, 12/15/04 500 551
37
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
PENNSYLVANIA TAX-FREE PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
Cornwall & Lebanon, Suburban
Joint School Authority,
Callable 03/01/04 @ 100
(RB) (FGIC)
5.750%, 03/01/08 $500 $512
Cumberland County, Messiah
College Project, Callable 10/01/06
@ 100 (RB) (AMBAC)
5.125%, 10/01/15 500 466
Cumberland Valley, School District,
Callable 09/01/03 @ 100
(GO) (FGIC)
5.350%, 09/01/07 500 504
Dauphin County (GO) (MBIA)
4.850%, 08/01/01 500 502
Delaware County, Dunwoody
Village Project (RB) (C)
5.550%, 04/01/06 300 300
Delaware County (GO)
5.300%, 11/15/01 250 255
Delaware County, Callable
11/15/07 @ 100 (GO)
5.125%, 11/15/16 500 468
Fox Chapel, Sanitation Sewer
Authority, Callable 05/01/97
@ 100 (RB)
5.900%, 05/01/05 440 440
Harrisburg, School District
Authority, Series B, Callable
09/01/02 @ 100 (RB) (AMBAC)
5.650%, 09/01/05 250 253
Lancaster County, Lancaster
General Hospital Project
(RB) (AMBAC)
5.800%, 07/01/01 500 518
Lancaster, Franklin & Marshall
College Project, Callable 04/15/02
@ 100 (RB) (MBIA)
6.500%, 04/15/06 250 267
Lansdale, Callable 06/01/02 @ 100
(GO) (AMBAC)
6.400%, 06/01/05 150 159
6.500%, 06/01/06 100 106
Luzerne County, Callable 12/15/07
@ 100 (GO) (FGIC)
5.600%, 12/15/16 500 492
Montgomery County, Callable
10/15/01 @ 102 (GO)
5.200%, 10/15/02 300 307
Montgomery County, Health &
Higher Education Authority,
Abington Memorial Hospital
Project, Series A, Callable 06/01/04
@ 102 (RB) (AMBAC)
5.125%, 06/01/14 500 464
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
Montgomery County, Health &
Higher Education Authority,
Beaver College Project, Callable
04/01/06 @ 102 (RB) (Connie Lee)
5.700%, 04/01/10 $500 $506
Montgomery County, Callable
10/15/01 @ 102 (GO)
5.750%, 10/15/10 500 514
Montgomery County, Sewer
Authority, Callable 08/01/97
@ 100 (RB) (FGIC)
5.850%, 08/01/06 500 502
Norristown, School District
Authority, Callable 03/01/07
@ 100 (GO) (FGIC)
5.500%, 09/01/14 500 490
Northampton County, Pennsylvania
Higher Education Authority,
Lehigh University, Callable
10/15/01 @ 102 (RB) (MBIA)
6.900%, 10/15/06 500 547
North Hills, School District
Authority, Callable 11/15/07
@ 100 (GO) (FGIC)
5.625%, 11/15/14 500 495
North Huntingdon Township,
Escrowed To Maturity (GO)
5.750%, 04/01/08 305 311
North Wales, Water Authority,
Callable 11/01/05 @ 100
(RB) (FGIC)
5.600%, 11/01/16 500 490
Parkland, School District
Improvements, Callable
03/01/06 @100 (GO) (MBIA)
5.500%, 09/01/09 500 511
Pennsylvaina State Higher
Education Facility, Drexel
University (RB) (MBIA)
5.750%, 05/01/03 500 519
Pennsylvania State Convention
Center Authority, Series A,
Escrowed To Maturity
(RB) (FGIC)
6.700%, 09/01/16 265 297
Pennsylvania State Higher
Education Facilities Authority,
Series E, Escrowed to Maturity
(RB) (MBIA)
6.450%, 06/15/01 500 531
Pennsylvania State Higher
Education Facilities Authority,
University of Pennsylvania
Project, Callable 01/01/06
@ 101 (RB)
5.600%, 01/01/10 500 504
38
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
Pennsylvania State Housing
Finance Agency, Callable
07/01/02 @ 102 (RB) (FNMA)
6.400%, 07/01/12 $500 $512
Pennsylvania State University,
Callable 3/01/02 @ 102 (RB)
5.950%, 03/01/03 500 527
Pennsylvania State Financing
Authority, Callable
11/01/03 @ 102 (RB)
6.600%, 11/01/09 400 424
Pennsylvania State, First Series,
Callable 05/15/06 @ 101.5
(GO) (FGIC)
5.375%, 05/15/14 500 486
Pennsylvania State, Second
Series (GO)
6.000%, 07/01/07 300 322
Pennsylvania State, Third Series,
Callable 09/01/03 @ 101.5 (GO)
5.000%, 09/01/12 500 471
Pennsylvania State Turnpike
Commission, Callable 12/01/02
@ 102 (RB) (FGIC)
6.000%, 12/01/12 400 412
Philadelphia Airport Parking
Authority, Callable 09/01/07
@ 101 (RB) (AMBAC)
5.500%, 09/01/18 500 481
Philadelphia Higher Education
Facilities Authority, Moss
Rehabilitation Hospital Project
(RB) (AMBAC)
6.900%, 07/01/00 295 314
Pittsburgh, School District, Series B,
Pre-refunded @ 100 (GO)
(FGIC) (B)
5.250%, 08/01/97 250 251
Punxsutawney Area School District,
Callable 04/15/05 @ 100
(GO) (MBIA)
5.750%, 04/15/10 500 511
Red Lion Area School District,
Callable 04/01/02 @ 100
(GO) (AMBAC)
5.850%, 04/01/05 100 103
Ridley Park, Taylor Hospital
Authority, Series A (RB)
6.000%, 12/01/05 500 501
Scranton-Lackawanna, Health
& Welfare Authority, Mercy
Health Project, Series B
(RB) (MBIA)
5.100%, 01/01/07 500 498
South Allegheny School District,
Callable 10/01/05 @ 100
(GO) (MBIA)
5.100%, 10/01/06 500 497
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
Upper Merion, Municipal
Utility Authority, Callable
08/15/03 @ 100 (RB)
6.000%, 08/15/12 $500 $ 510
York County (GO) (FGIC)
5.500%, 10/01/01 200 206
- --------------------------------------------------------------------------------
TOTAL PENNSYLVANIA $23,111
- --------------------------------------------------------------------------------
PUERTO RICO - 2.3%
Commonwealth of Puerto Rico
(GO) (MBIA)
6.500%, 07/01/08 500 556
- --------------------------------------------------------------------------------
TOTAL PUERTO RICO $ 556
- --------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS & NOTES
(Cost $23,461) $23,667
- --------------------------------------------------------------------------------
CASH EQUIVALENT - 3.5%
Federated Pennsylvania
Municipal Cash Trust Fund 850 850
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $850) $ 850
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.3%
(Cost $24,311) $24,517
================================================================================
OTHER ASSETS AND LIABILITIES, NET - (0.3%) $ (62)
================================================================================
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization - no par value)
based on 2,345,987 outstanding shares
of beneficial interest $22,973
Portfolio Shares of Retail Class
(unlimited authorization - no par value)
based on 118,730 outstanding shares
of beneficial interest 1,184
Accumulated net realized gain on investments 92
Net unrealized appreciation on investments 206
================================================================================
TOTAL NET ASSETS - 100.0% $24,455
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL CLASS $9.92
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - RETAIL CLASS $9.92
================================================================================
MAXIMUM OFFERING PRICE PER SHARE -
RETAIL CLASS ($9.92 / 95.50%) $10.39
================================================================================
(A) VARIABLE RATE SECURITY - THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS
THE RATE IN EFFECT AS OF APRIL 30, 1997. THE DATE SHOWN IS THE NEXT
SCHEDULED RESET DATE.
(B) THE PRE-REFUNDED DATE IS SHOWN AS THE MATURITY DATE ON THE STATEMENT OF NET
ASSETS.
(C) WHEN-ISSUED SECURITY (TOTAL COST $300,000)
AMBAC-AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
CONNIE LEE-COLLEGE CONSTRUCTION LOAN INSURANCE ASSOCIATION
FGIC-FINANCIAL GUARANTY INSURANCE COMPANY
FNMA-FEDERAL NATIONAL MORTGAGE ASSOCIATION
GO-GENERAL OBLIGATION
MBIA-MUNICIPAL BOND INSURANCE ASSOCIATION
RB-REVENUE BOND
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
39
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
- --------------------------------------------------------------------------------
ARK FUNDS: INCOME PORTFOLIO
[Pie Chart Graph Omitted]
Pie Chart depicting percentage of Portfolio investments
Repurchase Agreements -- 11%
U.S. Government Mortgage Backed -- 23%
Mortgage Backed Securities -- 6%
Corporate Obligations -- 27%
Yankee Bonds -- 3%
Asset Backed Securities -- 2%
U.S. Treasury Obligations -- 28%
% OF TOTAL PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 28.0%
U.S. Treasury Notes
6.125%, 05/15/98 $ 5,600 $ 5,608
5.375%, 05/31/98 8,855 8,797
9.125%, 05/15/99 6,000 6,318
7.125%, 09/30/99 4,000 4,068
7.750%, 11/30/99 3,000 3,095
6.375%, 01/15/00 5,000 5,004
6.375%, 09/30/01 6,000 5,961
7.875%, 11/15/04 5,900 6,301
6.500%, 05/15/05 600 591
U.S. Treasury Bonds
10.750%, 08/15/05 15,625 19,542
9.125%, 05/15/09 2,600 2,932
10.375%, 11/15/12 4,000 5,026
8.000%, 11/15/21 895 992
- --------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $73,886) $74,235
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 26.8%
AUTOMOTIVE - 0.4%
Chrysler (A)
7.450%, 02/01/97 1,000 950
- --------------------------------------------------------------------------------
TOTAL AUTOMOTIVE $ 950
- --------------------------------------------------------------------------------
BANKS/FINANCE - 11.0%
Abbey National Treasury
Services (B)
5.650%, 05/01/97 5,000 4,997
Bank of America (B)
5.650%, 05/01/97 5,000 5,000
Bank of New York (A)
7.780%, 12/01/26 1,500 1,419
BankAmerica Institutional
Series A (A)
8.070%, 12/31/26 2,500 2,456
Compass Trust I
8.230%, 01/15/27 2,000 1,957
Crestar Financial (A)
8.160%, 12/15/26 3,500 3,430
First Nationwide Holdings
10.625%, 10/01/03 1,000 1,065
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
First Union Capital (A)
8.040%, 12/01/26 $ 2,425 $ 2,392
First Union Capital
7.935%, 01/15/27 1,700 1,640
Keycorp Institutional Capital (A)
7.826%, 12/01/26 3,100 2,945
Mellon Capital I
7.720%, 12/01/26 2,000 1,885
- --------------------------------------------------------------------------------
TOTAL BANKS/FINANCE $29,186
- --------------------------------------------------------------------------------
COMMUNICATIONS - 2.9%
360 Communication
7.500%, 03/01/06 1,500 1,487
ITT
6.750%, 11/15/03 2,000 1,920
7.375%, 11/15/15 1,000 907
Worldcom
7.750%, 04/01/07 3,500 3,487
- --------------------------------------------------------------------------------
TOTAL COMMUNICATIONS $ 7,801
- --------------------------------------------------------------------------------
ELECTRIC SERVICES - 2.6%
Southern California Edison
8.875%, 06/01/24 1,384 1,434
Texas Utility Electric
9.750%, 05/01/21 5,000 5,594
- --------------------------------------------------------------------------------
TOTAL ELECTRIC SERVICES $ 7,028
- --------------------------------------------------------------------------------
ENTERTAINMENT - 2.8%
Comcast Cablevision (A)
8.375%, 05/01/07 2,000 2,010
Time Warner (A)
6.100%, 12/30/01 2,000 1,890
TKR Cable
10.500%, 10/30/07 3,250 3,547
- --------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $ 7,447
- --------------------------------------------------------------------------------
HEALTHCARE - 0.9%
Tenet Healthcare
8.000%, 01/15/05 2,500 2,456
- --------------------------------------------------------------------------------
TOTAL HEALTHCARE $ 2,456
- --------------------------------------------------------------------------------
MACHINERY - 1.4%
Case Equipment
7.250%, 01/15/16 3,885 3,628
- --------------------------------------------------------------------------------
TOTAL MACHINERY $ 3,628
- --------------------------------------------------------------------------------
PETROLEUM - 0.8%
Oryx Energy
8.125%, 10/15/05 2,000 2,043
- --------------------------------------------------------------------------------
TOTAL PETROLEUM $ 2,043
- --------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST - 0.7%
Storage USA
7.125%, 11/01/03 2,000 1,958
- --------------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUST $ 1,958
- --------------------------------------------------------------------------------
RETAIL - 2.9%
Federated Department Store
8.500%, 06/15/03 2,000 2,077
Great Atlantic & Pacific Tea (A)
7.750%, 04/15/07 1,500 1,502
40
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
Kroger
7.650%, 04/15/07 $ 2,000 $ 2,017
Loewen Group International (A)
8.250%, 10/15/03 2,000 2,017
- --------------------------------------------------------------------------------
TOTAL RETAIL $ 7,613
- --------------------------------------------------------------------------------
TRANSPORTATION - 0.4%
AMR
9.270%, 08/13/98 1,000 1,033
- --------------------------------------------------------------------------------
TOTAL TRANSPORTATION $ 1,033
- --------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS
(Cost $72,096) $71,143
- --------------------------------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS - 23.1%
Federal Home Loan Mortgage
Corporation
8.500%, 11/01/01 87 90
9.000%, 01/01/02 81 84
8.000%, 01/01/08 150 152
14.750%, 03/01/10 47 55
8.500%, 09/01/26 2,497 2,581
Federal Home Loan Mortgage
Corporation (GTD)
9.000%, 09/15/08 43 49
12.450%, 09/15/09 30 31
Federal Home Loan Mortgage
Corporation (CMO)
10.000%, 06/15/19 524 536
Federal National Mortgage
Association (REMIC)
5.000%, 01/25/01 261 260
9.750%, 09/25/18 706 754
Federal National Mortgage
Association (CMO)
10.000%, 01/25/16 161 165
Federal National Mortgage
Association
7.000%, 08/01/25 475 460
7.000%, 09/01/25 3,537 3,428
7.000%, 02/01/26 3,079 2,983
7.500%, 06/01/27 (C) 20,000 19,837
Government National Mortgage
Association (REMIC)
7.750%, 06/16/20 1,000 1,021
Government National Mortgage
Association
7.500%, 05/15/22 1,075 1,066
7.500%, 10/15/23 4,028 3,994
7.500%, 12/15/23 1,712 1,698
7.000%, 02/15/24 4,575 4,425
7.000%, 05/15/24 8,853 8,563
7.500%, 05/15/24 3,901 3,868
7.500%, 10/15/24 3,414 3,385
7.000%, 09/20/25 1,895 1,825
- --------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS
(Cost $60,778) $61,310
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
MORTGAGE RELATED - 5.8%
Countrywide Funding
Series 1994-4 A12
6.950%, 04/25/24 $ 5,452 $ 4,986
IMC Home Equity Loan
Trust 1996-4 Cl A1
6.590%, 07/25/11 1,423 1,420
IMC Home Equity Loan
Trust 1997-2 Cl A3
6.940%, 11/20/11 4,000 3,993
MDC Asset Investors
Trust Series V Cl 2
9.325%, 12/01/17 7 7
Prudential Home Mortgage Securities
1993-36 Cl A1
6.850%, 10/25/23 2,875 2,849
Residential Asset Securitization
Series 1996-A8 Cl A1
8.000%, 12/25/26 2,169 2,191
- --------------------------------------------------------------------------------
TOTAL MORTGAGE RELATED
(Cost $15,323) $15,446
- --------------------------------------------------------------------------------
YANKEE BONDS - 3.1%
Gulf Canada Resources
8.250%, 03/15/17 2,000 1,965
Hydro-Quebec
7.500%, 04/01/16 2,195 2,146
Quebec Province
7.500%, 07/15/23 465 445
Saga Petroleum
9.125%, 07/15/14 3,400 3,715
- --------------------------------------------------------------------------------
TOTAL YANKEE BONDS
(Cost $8,518) $ 8,271
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES - 2.4%
Premier Auto Trust 96-2 Cl A4
6.575%, 10/06/00 4,600 4,594
Standard Credit Card Master
Trust Series 1995-10 Cl A
5.900%, 02/07/01 1,875 1,856
- --------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost $6,473) $ 6,450
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 0.1%
Federal National Mortgage
Association
8.625%, 11/10/04 400 414
- --------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $413) $ 414
- --------------------------------------------------------------------------------
41
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
INCOME PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 10.7%
First Boston
5.350%, dated 04/30/97,
matures 05/01/97, repurchase
price $28,328,269 (collateralized
by U.S. Treasury Note, total par
value $27,615,000, 8.250%,
07/15/98: total market
value $28,957,630) $28,324 $ 28,324
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $28,324) $ 28,324
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.0%
(Cost $265,811) $265,593
================================================================================
(A) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A, OR OFFERED PURSUANT TO
SECTION 4(2) OF THE SECURITIES ACT OF 1933. THESE SECURITIES MAY BE RESOLD
IN TRANSACTIONS EXEMPT FROM REGISTRATION NORMALLY TO QUALIFIED INSTITUTIONAL
INVESTORS.
(B) VARIABLE RATE SECURITY--THE RATE REPORTED ON THE STATEMENT OF NET
ASSETS IS THE RATE IN EFFECT AS OF APRIL 30, 1997. THE DATE SHOWN IS THE
NEXT SCHEDULED RESET DATE.
(C) WHEN ISSUED SECURITY (TOTAL COST $19,575,000).
CL-CLASS
CMO-COLLATERALIZED MORTGAGE OBLIGATION
GTD-GUARANTEED MORTGAGE CERTIFICATES
REMIC-REAL ESTATE MORTGAGE INVESTMENT CONDUIT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
ARK FUNDS: INTERMEDIATE FIXED INCOME PORTFOLIO
[Pie Chart Graph Omitted]
Pie Chart depicting percentage of Portfolio investments
Repurchase Agreements -- 1%
U.S. Government Mortgage Backed -- 10%
U.S. Government Agency Obligations -- 2%
U.S. Treasury Obligations -- 48%
Corporate Obligations -- 21%
Yankee Bonds -- 7%
Asset Backed Securities -- 8%
Mortgage Related -- 2%
% OF TOTAL PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 47.7%
U.S. Treasury Notes
7.375%, 11/15/97 $8,000 $ 8,064
7.500%, 10/31/99 8,000 8,204
7.750%, 11/30/99 5,000 5,158
7.500%, 11/15/01 5,000 5,181
7.875%, 11/15/04 5,000 5,340
6.500%, 05/15/05 2,000 1,972
U.S. Treasury Bond
10.750%, 08/15/05 2,000 2,501
- --------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $36,108) $36,420
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 21.0%
BANKS/FINANCE - 3.1%
Case Credit Note
6.125%, 02/15/03 1,000 951
First Union, Callable 11/15/99
@ 100
8.770%, 11/15/04 1,350 1,407
- --------------------------------------------------------------------------------
TOTAL BANKS/FINANCE $ 2,358
- --------------------------------------------------------------------------------
COMMUNICATIONS - 4.1%
360 Communications
7.125%, 03/01/03 1,000 987
ITT
6.750%, 11/15/03 1,000 960
Lucent Technologies
7.250%, 07/15/06 1,220 1,225
- --------------------------------------------------------------------------------
TOTAL COMMUNICATIONS $ 3,172
- --------------------------------------------------------------------------------
ENTERTAINMENT - 2.8%
Continental Cablevision
8.300%, 05/15/06 1,125 1,181
Time Warner (A)
6.100%, 12/30/01 1,000 945
- --------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $ 2,126
- --------------------------------------------------------------------------------
HEALTHCARE - 1.3%
Tenet Healthcare
8.000%, 01/15/05 1,000 982
- --------------------------------------------------------------------------------
TOTAL HEALTHCARE $ 982
- --------------------------------------------------------------------------------
42
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
PERSONAL CREDIT INSTITUTIONS - 2.6%
General Motors Acceptance
7.850%, 05/08/97 $2,000 $ 2,000
- --------------------------------------------------------------------------------
TOTAL PERSONAL CREDIT INSTITUTIONS $ 2,000
- --------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST - 1.3%
Storage USA
7.125%, 11/01/03 1,000 979
- --------------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUST $ 979
- --------------------------------------------------------------------------------
RETAIL - 1.4%
Federated Department Store
8.500%, 06/15/03 1,000 1,039
- --------------------------------------------------------------------------------
TOTAL RETAIL $ 1,039
- --------------------------------------------------------------------------------
SECURITY BROKERS & DEALERS - 4.4%
Lehman Brothers Holdings
7.250%, 10/15/03 1,250 1,242
Merrill Lynch
7.375%, 08/17/02 2,100 2,129
- --------------------------------------------------------------------------------
TOTAL SECURITY BROKERS & DEALERS $ 3,371
- --------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS
(Cost $16,137) $16,027
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
OBLIGATIONS - 11.5%
Federal Home Loan Bank (CMO)
6.634%, 02/20/04 1,575 1,551
Federal Home Loan Mortgage
Corporation (CMO) (B)
7.000%, 11/01/97 500 504
7.250%, 11/01/97 473 474
8.000%, 11/01/97 231 232
Federal National Mortgage
Association (CMO) (B)
7.000%, 05/01/02 1,500 1,484
Federal National Mortgage
Association (B)
6.500%, 11/01/01 4,675 4,541
- --------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED OBLIGATIONS
(Cost $8,871) $ 8,786
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES - 8.3%
Capita Equipment Trust
Series 1996-1 Cl A3 (B)
6.110%, 11/01/98 1,500 1,497
Cityscape Home Equity Loan
Trust Series 1996-3 Cl A1A (B)
6.700%, 05/01/98 1,649 1,653
Premier Auto Trust
Series 1996-2 Cl A4 (B)
6.575%, 05/01/99 1,575 1,573
Standard Credit Card Master
Trust Series 1990-6 Cl A (B)
9.375%, 08/01/97 600 604
Standard Credit Card Master
Trust Series 1995-10 Cl A (B)
5.900%, 02/01/99 1,000 990
- --------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost $6,326) $ 6,317
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
YANKEE BONDS - 7.3%
Hydro Quebec
6.490%, 07/16/03 $1,500 $ 1,472
Merita Bank
6.500%, 01/15/06 1,350 1,261
Royal Caribbean
8.250%, 04/01/05 1,500 1,558
Santander Financial
7.000%, 04/01/06 1,350 1,318
- --------------------------------------------------------------------------------
TOTAL YANKEE BONDS
(Cost $5,686) $ 5,609
- --------------------------------------------------------------------------------
MORTGAGE RELATED - 1.9%
Collateralized Mortgage
Series 1992-2 Cl F
7.000%, 10/20/00 500 503
Prudential Home Mortgage
Series 1993-36 Cl A1
6.850%, 10/25/23 927 919
- --------------------------------------------------------------------------------
TOTAL MORTGAGE RELATED
(Cost $1,424) $ 1,422
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 1.0%
First Boston
5.350%, dated 04/30/97,
matures 05/01/97, repurchase
price $770,044 (collateralized
by U.S. Treasury Note, total par
value $720,000, 9.125%, 05/15/99:
total market value $787,704) 770 770
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $770) $ 770
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 98.7%
(Cost $75,322) $75,351
================================================================================
OTHER ASSETS AND LIABILITIES, NET - 1.3% $ 975
================================================================================
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization - no par value)
based on 7,787,352 outstanding shares
of beneficial interest 76,378
Accumulated net realized loss on investments (81)
Net unrealized appreciation on investments 29
================================================================================
TOTAL NET ASSETS-100.0% $76,326
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL CLASS $9.80
================================================================================
(A) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION NORMALLY TO QUALIFIED INSTITUTIONAL INVESTORS.
(B) THE AVERAGE LIFE DATE IS SHOWN AS THE MATURITY DATE ON THE STATEMENT
OF NET ASSETS.
CL-CLASS
CMO-COLLATERALIZED MORTGAGE OBLIGATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
43
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
ARK FUNDS: BALANCED PORTFOLIO
[Pie Chart Graph Omitted]
Pie Chart depicting percentage of Portfolio investments
Repurchase Agreements --5%
Real Estate Investment Trusts -- 1%
Asset Backed Securities -- 1%
Mortgage Related -- 2%
U.S. Government Mortgage Backed Obligations -- 13%
Corporate Obligations --10%
U.S. Treasury -- 6%
Common Stocks -- 62%
% OF TOTAL PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCKS - 62.9%
AIRCRAFT - 2.6%
Boeing 11,000 $ 1,085
Lockheed Martin 12,000 1,074
- --------------------------------------------------------------------------------
TOTAL AIRCRAFT $2,159
- --------------------------------------------------------------------------------
AUTOMOTIVE - 1.1%
Magna International, Cl A 18,000 938
- --------------------------------------------------------------------------------
TOTAL AUTOMOTIVE $ 938
- --------------------------------------------------------------------------------
BANKS - 3.8%
Banc One 25,000 1,059
Chase Manhattan 12,000 1,111
Norwest 20,000 997
- --------------------------------------------------------------------------------
TOTAL BANKS $3,167
- --------------------------------------------------------------------------------
BEAUTY PRODUCTS - 1.0%
Gillette 10,000 850
- --------------------------------------------------------------------------------
TOTAL BEAUTY PRODUCTS $ 850
- --------------------------------------------------------------------------------
BROADCASTING, NEWSPAPERS & ADVERTISING - 0.7%
Evergreen Media, Cl A* 18,400 596
- --------------------------------------------------------------------------------
TOTAL BROADCASTING, NEWSPAPERS & ADVERTISING $ 596
- --------------------------------------------------------------------------------
CHEMICALS - 1.5%
Monsanto 30,000 1,282
- --------------------------------------------------------------------------------
TOTAL CHEMICALS $1,282
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.6%
Ascend Communications* 10,000 457
- --------------------------------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT $ 457
- --------------------------------------------------------------------------------
COMPUTER SOFTWARE - 3.3%
Computer Associates
International 30,000 1,560
Microsoft* 10,000 1,215
- --------------------------------------------------------------------------------
TOTAL COMPUTER SOFTWARE $2,775
- --------------------------------------------------------------------------------
COMPUTERS & SERVICES - 3.3%
Hewlett Packard 15,000 788
Sun Microsystems* 40,000 1,152
Sybase* 65,000 959
- --------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES $2,899
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
DRUGS - 4.4%
Abbott Laboratories 12,500 $ 762
American Home Products 11,000 729
Pfizer 10,000 960
Schering Plough 15,000 1,200
- --------------------------------------------------------------------------------
TOTAL DRUGS $3,651
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 1.3%
General Electric 10,000 1,109
- --------------------------------------------------------------------------------
TOTAL ELECTRICAL EQUIPMENT $1,109
- --------------------------------------------------------------------------------
ENTERTAINMENT - 2.6%
Carnival 35,000 1,291
Walt Disney 10,000 820
- --------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $2,111
- --------------------------------------------------------------------------------
FINANCIAL SERVICES - 2.7%
Dean Witter Discover 30,000 1,148
Federal Home Loan Mortgage
Corporation 34,000 1,084
- --------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $2,232
- --------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO - 4.7%
CPC International 14,000 1,157
PepsiCo 40,000 1,395
Philip Morris 34,500 1,358
- --------------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO $3,910
- --------------------------------------------------------------------------------
HEALTH CARE PRODUCTS & SERVICES - 1.5%
Johnson & Johnson 20,000 1,225
- --------------------------------------------------------------------------------
TOTAL HEALTH CARE PRODUCTS & SERVICES $1,225
- --------------------------------------------------------------------------------
HOTELS & LODGING - 1.8%
HFS* 25,000 1,481
- --------------------------------------------------------------------------------
TOTAL HOTELS & LODGING $1,481
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS - 1.6%
Colgate-Palmolive 12,000 1,332
- --------------------------------------------------------------------------------
TOTAL HOUSEHOLD PRODUCTS $1,332
- --------------------------------------------------------------------------------
INSURANCE - 2.0%
Aetna 10,000 911
American International Group 5,500 707
- --------------------------------------------------------------------------------
TOTAL INSURANCE $1,618
- --------------------------------------------------------------------------------
LEASING & RENTING - 1.2%
Pitney Bowes 15,000 960
- --------------------------------------------------------------------------------
TOTAL LEASING & RENTING $ 960
- --------------------------------------------------------------------------------
MACHINERY - 0.6%
Deere 10,000 460
- --------------------------------------------------------------------------------
TOTAL MACHINERY $ 460
- --------------------------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES - 3.3%
Columbia/HCA Healthcare 30,000 1,050
Guidant 20,000 1,365
Orthodontic Centers
of America* 30,000 360
- --------------------------------------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES $2,775
- --------------------------------------------------------------------------------
44
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Shares/Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
MISCELLANEOUS BUSINESS SERVICES - 3.7%
Computer Sciences* 18,000 $ 1,125
CUC International* 60,000 1,268
OfficeMax* 55,000 681
- --------------------------------------------------------------------------------
TOTAL MISCELLANEOUS BUSINESS SERVICES $ 3,074
- --------------------------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS - 2.4%
Oryx Energy* 16,300 326
Smith International* 15,650 741
Union Pacific Resources Group 35,000 949
- --------------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS $ 2,016
- --------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST - 1.0%
Kilroy Realty Corp 36,000 846
- --------------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUST $ 846
- --------------------------------------------------------------------------------
RETAIL - 6.7%
Cracker Barrel Old
Country Stores 45,000 1,204
Home Depot 21,000 1,218
McDonald's 22,000 1,180
Sears Roebuck 20,000 960
Wal-Mart Stores 35,000 989
- --------------------------------------------------------------------------------
TOTAL RETAIL $ 5,551
- --------------------------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS - 1.6%
LSI Logic* 35,000 1,339
- --------------------------------------------------------------------------------
TOTAL SEMI-CONDUCTORS/INSTRUMENTS $ 1,339
- --------------------------------------------------------------------------------
TECHNOLOGY - 1.7%
Cisco Systems* 28,250 1,462
- --------------------------------------------------------------------------------
TOTAL TECHNOLOGY $ 1,462
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $43,809) $52,275
- --------------------------------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS - 13.2%
Federal Home Loan Mortgage Corporation
8.500%, 11/01/01 $ 45 46
9.000%, 01/01/02 91 94
9.500%, 07/01/02 10 11
6.500%, 04/01/08 984 956
8.500%, 09/01/26 277 287
Federal National Mortgage Association
10.500%, 12/01/00 9 9
7.000%, 02/01/07 428 424
7.000%, 02/01/26 608 589
7.500%, 08/01/26 1,903 1,890
Federal National Mortgage Association
(REMIC)
9.750%, 09/25/18 235 251
Government National Mortgage Association
7.500%, 10/15/23 1,190 1,180
7.500%, 12/15/23 1,140 1,130
7.000%, 02/15/24 1,324 1,281
7.000%, 05/15/24 2,656 2,569
Government National Mortgage Association
(REMIC)
7.750%, 06/16/20 300 306
- --------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS
(Cost $10,979) $11,023
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 7.9%
Bank of New York (A)
7.780%, 12/01/26 $ 500 $ 473
Case Equipment
7.250%, 01/15/16 650 607
Crestar Financial (A)
8.160%, 12/15/26 800 784
Federated Department Store
8.500%, 06/15/03 500 519
First Union Capital (A)
8.040%, 12/01/26 250 247
Great Atlantic & Pacific Tea (A)
7.750%, 04/15/07 250 250
Interamerican Development Bank
9.500%, 10/15/97 200 203
Loewen Group International (A)
8.250%, 10/15/03 500 504
Oryx Energy
8.125%, 10/15/05 500 511
Tenet Healthcare
8.000%, 01/15/05 500 491
Texas Utility Electric
9.750%, 05/01/21 600 671
Time Warner (A)
6.100%, 12/30/01 500 473
TKR Cable
10.500%, 10/30/07 750 818
- --------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS
(Cost $6,625) $ 6,551
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 5.5%
U.S. Treasury Notes
7.375%, 11/15/97 815 822
7.875%, 04/15/98 1,050 1,069
7.500%, 10/31/99 500 513
7.750%, 02/15/01 350 364
6.625%, 06/30/01 750 752
U.S. Treasury Bonds
9.125%, 05/15/09 725 818
8.000%, 11/15/21 200 222
- --------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $4,534) $ 4,560
- --------------------------------------------------------------------------------
MORTGAGE RELATED - 2.1%
Countrywide Funding
Series 1994-4 C1 A12
6.950%, 04/25/24 969 886
IMC Home Equity Loan
Trust 1997-2 C1 A3
6.940%, 11/20/11 400 399
MDC Asset Investors Trust
8.940%, 03/01/18 43 44
Prudential Home Mortgage
Securities 1993-36 C1 A1
6.850%, 10/25/23 394 391
- --------------------------------------------------------------------------------
TOTAL MORTGAGE RELATED
(Cost $1,700) $ 1,720
- --------------------------------------------------------------------------------
YANKEE BONDS - 1.6%
Hydro-Quebec
7.500%, 04/01/16 375 367
Saga Petroleum
9.125%, 07/15/14 900 983
- --------------------------------------------------------------------------------
TOTAL YANKEE BONDS
(Cost $1,408) $ 1,350
- --------------------------------------------------------------------------------
45
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO (CONCLUDED)
- --------------------------------------------------------------------------------
Shares/Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES - 1.3%
Premier Auto Trust 96-2 C1 A4
6.575%, 10/06/00 $ 675 $ 674
Standard Credit Card Master
Trust Cl A
5.900%, 02/07/01 450 446
- --------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost $1,125) $ 1,120
- --------------------------------------------------------------------------------
PREFERRED CONVERTIBLE STOCK - 0.6%
FINANCIAL SERVICES - 0.6%
Money Store 21,000 483
- --------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $ 483
- --------------------------------------------------------------------------------
TOTAL PREFERRED CONVERTIBLE STOCK
(Cost $507) $ 483
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 4.5%
First Boston
5.350%, dated 04/30/97,
matures 05/01/97, repurchase
price $3,744,738 (collateralized
by U.S. Treasury Note, total par
value $3,735,000, 6.000%,
11/30/97: total market
value $3,829,122) 3,744 3,744
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $3,744) $ 3,744
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.6%
(Cost $74,431) $82,826
================================================================================
OTHER ASSETS AND LIABILITIES, NET - 0.4% $ 325
================================================================================
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization - no par value)
based on 6,734,238 outstanding shares
of beneficial interest 64,791
Portfolio Shares of Retail Class
(unlimited authorization - no par value) based
on 540,205 outstanding shares
of beneficial interest 5,978
Undistributed net investment income 208
Accumulated net realized gain on investments 3,779
Net unrealized appreciation on investments 8,395
================================================================================
TOTAL NET ASSETS - 100.0% $83,151
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL CLASS $11.43
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - RETAIL CLASS $11.40
================================================================================
MAXIMUM OFFERING PRICE PER SHARE -
RETAIL CLASS ($11.40 / 95.25%) $11.97
================================================================================
(A) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES
ACT OF 1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION NORMALLY TO QUALIFIED INSTITUTIONAL INVESTORS.
* NON-INCOME PRODUCING SECURITY
CL-CLASS
REMIC-REAL ESTATE MORTGAGE INVESTMENT CONDUIT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
ARK FUNDS: EQUITY INCOME PORTFOLIO
[Pie Chart Graph Omitted]
Pie Chart depicting percentage of Portfolio investments
Repurchase Agreements --1%
Energy -- 14%
Financial -- 22%
Real Estate Investment Trusts -- 4%
Retail -- 3%
Miscellaneous Business -- 12%
Chemicals & Drugs -- 12%
Transportation -- 11%
Consumer Non-Durable -- 12%
Technology -- 9%
% OF TOTAL PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCKS - 90.9%
AIRCRAFT - 3.8%
General Dynamics 25,000 $ 1,781
Lockheed Martin 15,500 1,387
- --------------------------------------------------------------------------------
TOTAL AIRCRAFT $3,168
- --------------------------------------------------------------------------------
AUTOMOTIVE - 4.1%
Ford Motor 50,000 1,737
General Motors 30,000 1,736
- --------------------------------------------------------------------------------
TOTAL AUTOMOTIVE $3,473
- --------------------------------------------------------------------------------
BANKS - 8.9%
Banc One 44,000 1,864
Fleet Financial Group 27,000 1,647
Norwest 46,000 2,294
PNC 40,000 1,645
- --------------------------------------------------------------------------------
TOTAL BANKS $7,450
- --------------------------------------------------------------------------------
BEAUTY PRODUCTS - 2.4%
Colgate Palmolive 17,800 1,976
- --------------------------------------------------------------------------------
TOTAL BEAUTY PRODUCTS $1,976
- --------------------------------------------------------------------------------
CHEMICALS - 3.4%
Dow Chemical 17,900 1,519
Olin 32,000 1,316
- --------------------------------------------------------------------------------
TOTAL CHEMICALS $2,835
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 1.9%
GTE 34,000 1,560
- --------------------------------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT $1,560
- --------------------------------------------------------------------------------
COMPUTERS & SERVICES - 1.5%
Hewlett Packard 24,000 1,260
- --------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES $1,260
- --------------------------------------------------------------------------------
DRUGS - 8.8%
Abbott Laboratories 37,000 2,257
American Home Products 30,000 1,988
Bristol-Myers Squibb 27,200 1,782
Pharmacia & Upjohn 45,000 1,333
- --------------------------------------------------------------------------------
TOTAL DRUGS $7,360
- --------------------------------------------------------------------------------
46
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
ELECTRICAL SERVICES - 3.2%
Allegheny Power System 42,000 $ 1,103
Public Service of Colorado 40,293 1,561
- --------------------------------------------------------------------------------
TOTAL ELECTRICAL SERVICES $2,664
- --------------------------------------------------------------------------------
FINANCIAL SERVICES - 4.0%
Federal National Mortgage
Association 24,000 987
Great Western Financial 57,000 2,394
- --------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $3,381
- --------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO - 9.8%
CPC International 23,000 1,900
General Mills 28,000 1,736
H.J. Heinz 44,000 1,826
Philip Morris 48,000 1,890
UST 35,000 914
- --------------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO $8,266
- --------------------------------------------------------------------------------
GAS/NATURAL GAS - 1.4%
Washington Gas Light 52,000 1,196
- --------------------------------------------------------------------------------
TOTAL GAS/NATURAL GAS $1,196
- --------------------------------------------------------------------------------
INSURANCE - 5.0%
ITT Hartford Group 30,000 2,235
Marsh & McLennan 16,500 1,988
- --------------------------------------------------------------------------------
TOTAL INSURANCE $4,223
- --------------------------------------------------------------------------------
LEASING & RENTING - 2.1%
Pitney Bowes 27,000 1,728
- --------------------------------------------------------------------------------
TOTAL LEASING & RENTING $1,728
- --------------------------------------------------------------------------------
MACHINERY - 1.9%
Deere 34,000 1,564
- --------------------------------------------------------------------------------
TOTAL MACHINERY $1,564
- --------------------------------------------------------------------------------
MARINE TRANSPORTATION - 1.1%
Knightsbridge Tankers Limited 40,000 910
- --------------------------------------------------------------------------------
TOTAL MARINE TRANSPORTATION $ 910
- --------------------------------------------------------------------------------
MISCELLANEOUS BUSINESS SERVICES - 1.1%
Electronic Data Systems 27,200 908
- --------------------------------------------------------------------------------
TOTAL MISCELLANEOUS BUSINESS SERVICES $ 908
- --------------------------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS - 1.9%
Atlantic Richfield 12,000 1,634
- --------------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS $1,634
- --------------------------------------------------------------------------------
PETROLEUM REFINING - 8.2%
Chevron 26,000 1,781
Imperial Oil 39,000 1,779
Mobil 12,000 1,560
Texaco 16,800 1,772
- --------------------------------------------------------------------------------
TOTAL PETROLEUM REFINING $6,892
- --------------------------------------------------------------------------------
PROFESSIONAL SERVICES - 1.6%
Dun & Bradstreet 55,000 1,354
- --------------------------------------------------------------------------------
TOTAL PROFESSIONAL SERVICES $1,354
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares/Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
RAILROADS - 2.0%
Norfolk Southern 18,400 $ 1,654
- --------------------------------------------------------------------------------
TOTAL RAILROADS $ 1,654
- --------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 3.7%
Arden Realty Group 25,000 622
First Industrial Realty Trust 25,000 738
Health & Retirement
Property Trust 50,000 944
Kilroy Realty Corp 35,000 823
- --------------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUSTS $ 3,127
- --------------------------------------------------------------------------------
RETAIL - 1.4%
Sears Roebuck 25,000 1,200
- --------------------------------------------------------------------------------
TOTAL RETAIL $ 1,200
- --------------------------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS - 1.7%
AMP 40,000 1,435
- --------------------------------------------------------------------------------
TOTAL SEMI-CONDUCTORS/INSTRUMENTS $ 1,435
- --------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS - 6.0%
BellSouth 40,500 1,802
Telefonica de Espana, ADR 26,000 2,002
US West 35,900 1,261
- --------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS $ 5,065
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $63,694) $76,283
- --------------------------------------------------------------------------------
PREFERRED CONVERTIBLE STOCKS - 5.6%
FINANCIAL SERVICES - 1.6%
Money Store 60,000 1,380
- --------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $ 1,380
- --------------------------------------------------------------------------------
INSURANCE - 2.3%
Aetna 22,500 1,913
- --------------------------------------------------------------------------------
TOTAL INSURANCE $ 1,913
- --------------------------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS - 1.7%
Enron 70,000 1,400
- --------------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS $ 1,400
- --------------------------------------------------------------------------------
TOTAL PREFERRED CONVERTIBLE STOCKS
(Cost $4,745) $ 4,693
- --------------------------------------------------------------------------------
CONVERTIBLE BONDS - 2.3%
ENVIRONMENTAL SERVICES - 0.5%
Allwaste, 83.77 Shares
7.250%, 06/01/14 $ 450 442
- --------------------------------------------------------------------------------
TOTAL ENVIRONMENTAL SERVICES $ 442
- --------------------------------------------------------------------------------
RETAIL - 1.8%
Home Depot, 14.4665 Shares
3.250%, 10/01/01 1,500 1,536
- --------------------------------------------------------------------------------
TOTAL RETAIL $ 1,536
- --------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS
(Cost $1,906) $ 1,978
- --------------------------------------------------------------------------------
47
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
Equity Income Portfolio (concluded)
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 1.2%
First Boston
5.350% dated 04/30/97, matures
05/01/97, repurchase price
$993,932 (collateralized by
U.S. Treasury Note, total par
value $970,000, 8.000%,
08/15/99: total market
value $1,018,300) $994 $ 994
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $994) $ 994
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.0%
(Cost $71,339) $83,948
================================================================================
OTHER ASSETS AND LIABILITIES, NET - 0.0% $ (1)
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization - no par value)
based on 7,867,378 outstanding shares
of beneficial interest 64,913
Accumulated net realized gain on investments 6,425
Net unrealized appreciation on investments 12,609
================================================================================
TOTAL NET ASSETS - 100.0% $83,947
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL CLASS $ 10.67
================================================================================
ADR-AMERICAN DEPOSITORY RECEIPT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
ARK FUNDS: BLUE CHIP EQUITY PORTFOLIO
[Pie Chart Graph Omitted]
Pie Chart depicting percentage of Portfolio investments
American Depository Receipts --5%
Repurchase Agreements -- 9%
Miscellaneous -- 6%
Consumer Products -- 23%
Chemical & Drugs -- 11%
Technology --13%
Oil-Energy -- 8%
Financial -- 17%
Transportation -- 8%
% OF TOTAL PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCKS - 92.0%
AIRCRAFT - 5.5%
Boeing 14,000 $1,381
Lockheed Martin 14,800 1,325
- --------------------------------------------------------------------------------
TOTAL AIRCRAFT $2,706
- --------------------------------------------------------------------------------
AUTOMOTIVE - 2.7%
General Motors 23,100 1,337
- --------------------------------------------------------------------------------
TOTAL AUTOMOTIVE $1,337
- --------------------------------------------------------------------------------
BANKS - 5.3%
Chase Manhattan 13,500 1,250
Norwest 26,800 1,337
- --------------------------------------------------------------------------------
TOTAL BANKS $2,587
- --------------------------------------------------------------------------------
CHEMICALS - 2.6%
E.I. du Pont de Nemours 11,900 1,263
- --------------------------------------------------------------------------------
TOTAL CHEMICALS $1,263
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 2.9%
Philips Electronics, ADR 26,900 1,439
- --------------------------------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT $1,439
- --------------------------------------------------------------------------------
COMPUTER SOFTWARE - 4.7%
Computer Associates
International 20,000 1,040
Microsoft* 10,300 1,251
- --------------------------------------------------------------------------------
TOTAL COMPUTER SOFTWARE $2,291
- --------------------------------------------------------------------------------
COMPUTERS & SERVICES - 2.3%
Hewlett Packard 21,000 1,102
- --------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES $1,102
- --------------------------------------------------------------------------------
DRUGS - 8.2%
Abbott Laboratories 21,800 1,330
Merck 14,300 1,294
Pfizer 14,300 1,373
- --------------------------------------------------------------------------------
TOTAL DRUGS $3,997
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 2.8%
General Electric 12,300 1,364
- --------------------------------------------------------------------------------
TOTAL ELECTRICAL EQUIPMENT $1,364
- --------------------------------------------------------------------------------
48
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
ENTERTAINMENT - 2.8%
Walt Disney 16,900 $ 1,386
- --------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $1,386
- --------------------------------------------------------------------------------
FINANCIAL SERVICES - 5.8%
Associates First Capital 27,800 1,425
Federal National Mortgage
Association 33,800 1,390
- --------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $2,815
- --------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO - 10.8%
Coca Cola 21,700 1,381
CPC International 15,000 1,239
PepsiCo 39,400 1,374
Philip Morris 33,000 1,299
- --------------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO $5,293
- --------------------------------------------------------------------------------
HEALTHCARE PRODUCTS & SERVICES - 2.9%
Johnson & Johnson 22,800 1,396
- --------------------------------------------------------------------------------
TOTAL HEALTHCARE PRODUCTS & SERVICES $1,396
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS - 2.7%
Procter & Gamble 10,600 1,333
- --------------------------------------------------------------------------------
TOTAL HOUSEHOLD PRODUCTS $1,333
- --------------------------------------------------------------------------------
INSURANCE - 2.4%
Chubb 20,700 1,195
- --------------------------------------------------------------------------------
TOTAL INSURANCE $1,195
- --------------------------------------------------------------------------------
LEASING & RENTING - 3.9%
Pitney Bowes 20,800 1,331
Hertz, Cl A* 20,000 580
- --------------------------------------------------------------------------------
TOTAL LEASING & RENTING $1,911
- --------------------------------------------------------------------------------
MISCELLANEOUS BUSINESS SERVICES - 1.8%
Electronic Data Systems 26,300 878
- --------------------------------------------------------------------------------
TOTAL MISCELLANEOUS BUSINESS SERVICES $ 878
- --------------------------------------------------------------------------------
PETROLEUM-INTERNATIONAL - 5.5%
Exxon 24,000 1,359
Royal Dutch Petroleum 7,300 1,316
- --------------------------------------------------------------------------------
TOTAL PETROLEUM-INTERNATIONAL $2,675
- --------------------------------------------------------------------------------
PETROLEUM REFINING - 2.6%
Texaco 11,800 1,245
- --------------------------------------------------------------------------------
TOTAL PETROLEUM REFINING $1,245
- --------------------------------------------------------------------------------
RAILROADS - 2.0%
Tranz Rail Holdings, ADR 55,000 976
- --------------------------------------------------------------------------------
TOTAL RAILROADS $ 976
- --------------------------------------------------------------------------------
RETAIL - 4.2%
Home Depot 22,900 1,328
Sears Roebuck 15,500 744
- --------------------------------------------------------------------------------
TOTAL RETAIL $2,072
- --------------------------------------------------------------------------------
STEEL & STEEL WORKS - 2.6%
Aluminum Company of America 18,400 1,286
- --------------------------------------------------------------------------------
TOTAL STEEL & STEEL WORKS $1,286
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares/Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
TECHNOLOGY - 2.3%
Cisco Systems* 21,500 $ 1,113
- --------------------------------------------------------------------------------
TOTAL TECHNOLOGY $ 1,113
- --------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS - 2.7%
SBC Communications 24,100 1,338
- --------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS $ 1,338
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $39,682) $44,998
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 8.5%
First Boston
5.350%, dated 04/30/97,
matures 05/01/97, repurchase
price $4,162,464 (collateralized by
U.S. Treasury Note, total par
value $3,920,000, 8.000%,
05/15/01: total market
value $4,251,221) $4,162 4,162
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $4,162) $ 4,162
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.5%
(Cost $43,844) $49,160
================================================================================
OTHER ASSETS AND LIABILITIES, NET - (0.5%) $ (259)
================================================================================
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization - no par value)
based on 2,879,790 outstanding shares
of beneficial interest 31,162
Portfolio Shares of Retail Class
(unlimited authorization - no par value)
based on 1,067,157 outstanding shares
of beneficial interest 12,200
Undistributed net investment income 10
Accumulated net realized gain on investments 213
Net unrealized appreciation on investments 5,316
================================================================================
TOTAL NET ASSETS - 100.0% $48,901
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL CLASS $12.39
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - RETAIL CLASS $12.38
================================================================================
MAXIMUM OFFERING PRICE PER SHARE -
RETAIL CLASS ($12.38 / 95.25%) $13.00
================================================================================
* NON-INCOME PRODUCING SECURITY
ADR-AMERICAN DEPOSITORY RECEIPT
CL-CLASS
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
49
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
ARK FUNDS: STOCK PORTFOLIO
[Pie Chart Graph Omitted]
Pie Chart depicting percentage of Portfolio investments
Healthcare -- 4%
Repurchase Agreements -- 1%
Building & Construction -- 5%
Consumer Products -- 29%
Technology -- 13%
Transportation -- 12%
Financial -- 18%
Oil-Energy -- 3%
Chemcial & Drugs -- 15%
% OF TOTAL PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCKS - 99.9%
AIR TRANSPORTATION - 2.0%
Southwest Airlines 30,000 $ 825
- --------------------------------------------------------------------------------
TOTAL AIR TRANSPORTATION $ 825
- --------------------------------------------------------------------------------
AIRCRAFT - 7.2%
Boeing 12,000 1,183
Lockheed Martin 8,500 761
United Technologies 13,000 983
- --------------------------------------------------------------------------------
TOTAL AIRCRAFT $2,927
- --------------------------------------------------------------------------------
BANKS - 7.1%
Chase Manhattan 10,500 973
Crestar Financial 15,000 555
NationsBank 12,000 724
Norwest 13,000 648
- --------------------------------------------------------------------------------
TOTAL BANKS $2,900
- --------------------------------------------------------------------------------
BEAUTY PRODUCTS - 5.6%
Gillette 12,000 1,020
Procter & Gamble 10,000 1,257
- --------------------------------------------------------------------------------
TOTAL BEAUTY PRODUCTS $2,277
- --------------------------------------------------------------------------------
CHEMICALS - 4.5%
E.I. du Pont de Nemours 9,000 955
Monsanto 20,000 855
- --------------------------------------------------------------------------------
TOTAL CHEMICALS $1,810
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.8%
Motorola 6,000 343
- --------------------------------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT $ 343
- --------------------------------------------------------------------------------
COMPUTERS & SERVICES - 4.2%
Cisco Systems* 22,500 1,164
Hewlett Packard 10,000 525
- --------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES $1,689
- --------------------------------------------------------------------------------
DRUGS - 11.0%
Abbott Laboratories 13,000 793
American Home Products 8,000 530
Bristol-Myers Squibb 12,000 786
Eli Lilly 8,528 749
Merck 10,000 905
Pfizer 7,500 720
- --------------------------------------------------------------------------------
TOTAL DRUGS $4,483
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 3.3%
General Electric 12,000 $ 1,331
- --------------------------------------------------------------------------------
TOTAL ELECTRICAL EQUIPMENT $1,331
- --------------------------------------------------------------------------------
ENTERTAINMENT - 2.3%
Walt Disney 11,500 943
- --------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $ 943
- --------------------------------------------------------------------------------
FINANCIAL SERVICES - 7.6%
American Express 12,000 791
Dean Witter Discover 18,000 689
Federal Home Loan Mortgage
Corporation 27,000 861
Federal National Mortgage
Association 18,000 740
- --------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $3,081
- --------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO - 8.6%
Coca Cola 20,000 1,273
PepsiCo 30,000 1,046
Philip Morris 30,000 1,181
- --------------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO $3,500
- --------------------------------------------------------------------------------
GLASS PRODUCTS - 0.6%
Corning 5,000 241
- --------------------------------------------------------------------------------
TOTAL GLASS PRODUCTS $ 241
- --------------------------------------------------------------------------------
HEALTH CARE - 1.8%
Johnson & Johnson 12,000 735
- --------------------------------------------------------------------------------
TOTAL HEALTH CARE $ 735
- --------------------------------------------------------------------------------
HOTELS & LODGING - 2.2%
HFS* 15,000 889
- --------------------------------------------------------------------------------
TOTAL HOTELS & LODGING $ 889
- --------------------------------------------------------------------------------
INSURANCE - 3.6%
Allstate 9,270 607
American International Group 6,750 867
- --------------------------------------------------------------------------------
TOTAL INSURANCE $1,474
- --------------------------------------------------------------------------------
MACHINERY - 3.5%
Baker Hughes 15,000 518
Caterpillar 10,000 890
- --------------------------------------------------------------------------------
TOTAL MACHINERY $1,408
- --------------------------------------------------------------------------------
MARINE TRANSPORTATION - 2.3%
Carnival, Cl A 25,000 922
- --------------------------------------------------------------------------------
TOTAL MARINE TRANSPORTATION $ 922
- --------------------------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES - 1.8%
Guidant 10,978 749
- --------------------------------------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES $ 749
- --------------------------------------------------------------------------------
50
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
MISCELLANEOUS BUSINESS SERVICES - 5.7%
Computer Associates
International 16,000 $ 832
Computer Sciences* 5,000 313
Microsoft* 9,500 1,154
- --------------------------------------------------------------------------------
TOTAL MISCELLANEOUS BUSINESS SERVICES $ 2,299
- --------------------------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS - 1.2%
Anadarko Petroleum 6,500 357
Union Pacific Resources Group 4,234 115
- --------------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS $ 472
- --------------------------------------------------------------------------------
PETROLEUM REFINING - 1.8%
Texaco 7,000 739
- --------------------------------------------------------------------------------
TOTAL PETROLEUM REFINING $ 739
- --------------------------------------------------------------------------------
PRINTING & PUBLISHING - 1.1%
Times Mirror, Cl A 8,000 442
- --------------------------------------------------------------------------------
TOTAL PRINTING & PUBLISHING $ 442
- --------------------------------------------------------------------------------
RAILROADS - 0.9%
Norfolk Southern 4,000 360
- --------------------------------------------------------------------------------
TOTAL RAILROADS $ 360
- --------------------------------------------------------------------------------
RETAIL - 4.3%
Gap 15,000 478
McDonald's 10,000 536
Sears Roebuck 15,000 720
- --------------------------------------------------------------------------------
TOTAL RETAIL $ 1,734
- --------------------------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS - 0.8%
LSI Logic* 8,000 306
- --------------------------------------------------------------------------------
TOTAL SEMI-CONDUCTORS/INSTRUMENTS $ 306
- --------------------------------------------------------------------------------
STEEL & STEEL WORKS - 1.2%
Aluminum Company of America 7,000 489
- --------------------------------------------------------------------------------
TOTAL STEEL & STEEL WORKS $ 489
- --------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS - 2.9%
Lucent Technologies 13,000 769
SBC Communications 7,000 389
- --------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS $ 1,158
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $29,200) $40,526
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 0.3%
CS First Boston 5.350%, dated 04/30/97,
matures 05/01/97, repurchase price
$117,384 (collateralized by U.S.
Treasury Note, total par value $120,000,
5.125%, 06/30/98: total market
value $120,801) $117 $ 117
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $117) $ 117
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.2%
(Cost $29,317) $40,643
================================================================================
OTHER ASSETS AND LIABILITIES, NET - (0.2%) $ (72)
================================================================================
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization - no par value)
based on 3,766,477 outstanding shares
of beneficial interest 25,691
Undistributed net investment income 17
Accumulated net realized gain on investments 3,537
Net unrealized appreciation on investments 11,326
================================================================================
TOTAL NET ASSETS - 100.0% $40,571
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- INSTITUTIONAL CLASS $10.77
================================================================================
* NON-INCOME PRODUCING SECURITY
CL-CLASS
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
51
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
ARK FUNDS: CAPITAL GROWTH PORTFOLIO
[Pie Chart Graph Omitted]
Pie Chart depicting percentage of Portfolio investments
Repurchase Agreements -- 5%
Oil-Energy -- 3%
Durable Goods -- 25%
Chemicals & Drugs -- 8%
Miscellaneous -- 2%
Financial -- 17%
Consumer Products -- 40%
% OF TOTAL PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCKS - 97.4%
AIRCRAFT - 5.2%
Boeing 12,000 $ 1,183
Lockheed Martin 10,000 895
- --------------------------------------------------------------------------------
TOTAL AIRCRAFT $2,078
- --------------------------------------------------------------------------------
APPAREL/TEXTILES - 1.7%
Gucci Group* 10,000 694
- --------------------------------------------------------------------------------
TOTAL APPAREL/TEXTILES $ 694
- --------------------------------------------------------------------------------
BANKS - 7.4%
Banc One 20,000 847
Chase Manhattan 10,000 926
Crestar Financial 15,000 555
Norwest 12,000 598
- --------------------------------------------------------------------------------
TOTAL BANKS $2,926
- --------------------------------------------------------------------------------
BEAUTY PRODUCTS - 1.5%
Gillette 7,000 595
- --------------------------------------------------------------------------------
TOTAL BEAUTY PRODUCTS $ 595
- --------------------------------------------------------------------------------
CHEMICALS - 2.1%
Monsanto 20,000 855
- --------------------------------------------------------------------------------
TOTAL CHEMICALS $ 855
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 1.1%
Ascend Communications* 10,000 457
- --------------------------------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT $ 457
- --------------------------------------------------------------------------------
COMPUTER SOFTWARE - 3.9%
Computer Associates
International 30,000 1,560
- --------------------------------------------------------------------------------
TOTAL COMPUTER SOFTWARE $1,560
- --------------------------------------------------------------------------------
COMPUTERS & SERVICES - 8.7%
America Online* 10,000 451
Gateway 2000* 7,500 412
HBO 10,000 535
Seagate Technology* 10,000 459
Sun Microsystems* 45,000 1,297
Sybase* 20,000 295
- --------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES $3,449
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
DRUGS - 5.6%
Abbott Laboratories 10,000 $ 610
American Home Products 10,000 662
Schering Plough 12,000 960
- --------------------------------------------------------------------------------
TOTAL DRUGS $2,232
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 2.1%
General Electric 7,500 832
- --------------------------------------------------------------------------------
TOTAL ELECTRICAL EQUIPMENT $ 832
- --------------------------------------------------------------------------------
ENTERTAINMENT - 3.5%
Carnival 15,000 553
Walt Disney 10,000 820
- --------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $1,373
- --------------------------------------------------------------------------------
FINANCIAL SERVICES - 5.4%
American Express 13,000 856
Federal Home Loan Mortgage
Corporation 40,000 1,275
- --------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $2,131
- --------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO - 5.6%
PepsiCo 40,000 1,395
Philip Morris 21,000 827
- --------------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO $2,222
- --------------------------------------------------------------------------------
HEALTHCARE PRODUCTS & SERVICES - 3.1%
Johnson & Johnson 20,000 1,225
- --------------------------------------------------------------------------------
TOTAL HEALTHCARE PRODUCTS & SERVICES $1,225
- --------------------------------------------------------------------------------
HOTELS & LODGING - 2.2%
HFS* 15,000 889
- --------------------------------------------------------------------------------
TOTAL HOTELS & LODGING $ 889
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS - 1.4%
Colgate-Palmolive 5,000 555
- --------------------------------------------------------------------------------
TOTAL HOUSEHOLD PRODUCTS $ 555
- --------------------------------------------------------------------------------
INSURANCE - 3.1%
American International Group 3,000 385
Travelers 15,000 831
- --------------------------------------------------------------------------------
TOTAL INSURANCE $1,216
- --------------------------------------------------------------------------------
LEASING & RENTING - 1.2%
Pitney Bowes 7,500 480
- --------------------------------------------------------------------------------
TOTAL LEASING & RENTING $ 480
- --------------------------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES - 5.2%
Becton, Dickinson 15,000 690
Columbia/HCA Healthcare 25,000 875
Guidant 7,500 512
- --------------------------------------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES $2,077
- --------------------------------------------------------------------------------
MISCELLANEOUS BUSINESS SERVICES - 6.1%
Computer Sciences* 15,000 937
CUC International* 30,000 634
OfficeMax* 68,000 842
- --------------------------------------------------------------------------------
TOTAL MISCELLANEOUS BUSINESS SERVICES $2,413
- --------------------------------------------------------------------------------
52
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Shares/Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS - 2.9%
Oryx Energy* 9,700 $ 194
Reading & Bates* 10,000 224
Smith International* 7,000 332
Union Pacific Resources Group 15,000 407
- --------------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS $ 1,157
- --------------------------------------------------------------------------------
PETROLEUM REFINING - 1.1%
Mobil 3,500 455
- --------------------------------------------------------------------------------
TOTAL PETROLEUM REFINING $ 455
- --------------------------------------------------------------------------------
PROFESSIONAL SERVICES - 0.5%
International Network Services* 10,000 205
- --------------------------------------------------------------------------------
TOTAL PROFESSIONAL SERVICES $ 205
- --------------------------------------------------------------------------------
RETAIL - 6.9%
Home Depot 25,000 1,450
McDonald's 8,000 429
Sears Roebuck 18,000 864
- --------------------------------------------------------------------------------
TOTAL RETAIL $ 2,743
- --------------------------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS - 4.0%
Intel 3,000 459
LSI Logic* 21,000 803
Teradyne* 10,000 327
- --------------------------------------------------------------------------------
TOTAL SEMI-CONDUCTORS/INSTRUMENTS $ 1,589
- --------------------------------------------------------------------------------
TECHNOLOGY - 5.9%
3Com* 15,000 435
Cisco Systems* 30,000 1,553
Motorola 6,000 344
- --------------------------------------------------------------------------------
TOTAL TECHNOLOGY $ 2,332
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $34,964) $38,740
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 5.5%
First Boston
5.350%, dated 04/30/97, matures
05/01/97, repurchase price
$2,175,017 (collateralized by
U.S. Treasury Note, total par
value $2,180,000, 7.875%,
04/15/98: total market
value $2,224,510) $2,175 2,175
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $2,175) $ 2,175
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 102.9%
(Cost $37,139) $40,915
================================================================================
OTHER ASSETS AND LIABILITIES, NET - (2.9%) $ (1,150)
================================================================================
- --------------------------------------------------------------------------------
Market
Description Value (000)
- --------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization - no par value)
based on 2,867,259 outstanding shares
of beneficial interest $ 27,775
Portfolio Shares of Retail Class
(unlimited authorization - no par value)
based on 471,390 outstanding shares
of beneficial interest 5,421
Undistributed net investment income 88
Accumulated net realized gain on investments 2,705
Net unrealized appreciation on investments 3,776
================================================================================
TOTAL NET ASSETS -100.0% $39,765
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL CLASS $11.92
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - RETAIL CLASS $11.87
================================================================================
MAXIMUM OFFERING PRICE PER SHARE -
RETAIL CLASS ($11.87 / 95.25%) $12.46
================================================================================
*NON-INCOME PRODUCING SECURITY
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
53
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
ARK FUNDS: MID-CAP EQUITY PORTFOLIO
[Pie Chart Graph Omitted]
Pie Chart depicting percentage of Portfolio investments
Healthcare -- 3%
Repurchase Agreements -- 1%
Miscellaneous Services -- 5%
Miscellaneous Goods -- 3%
Durable Goods -- 2%
Utilities -- 11%
Building & Construction -- 5%
Oil-Energy -- 7%
Chemicals & Drugs -- 6%
Technology -- 17%
Transportation -- 3%
Consumer Products --16%
Financial -- 21%
% OF TOTAL PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCKS - 99.6%
AEROSPACE & DEFENSE - 1.0%
Hubbell, Cl B 2,816 $ 122
Litton Industries* 2,050 87
Thiokol 900 59
- --------------------------------------------------------------------------------
TOTAL AEROSPACE & DEFENSE $268
- --------------------------------------------------------------------------------
AIR TRANSPORTATION - 0.2%
Airborne Freight 950 33
ASA Holdings 1,300 28
- --------------------------------------------------------------------------------
TOTAL AIR TRANSPORTATION $ 61
- --------------------------------------------------------------------------------
AIRCRAFT - 0.5%
Sundstrand 2,600 127
- --------------------------------------------------------------------------------
TOTAL AIRCRAFT $127
- --------------------------------------------------------------------------------
APPAREL/TEXTILES - 1.0%
Albany International 1,150 23
Burlington Industries* 2,600 27
Jones Apparel Group* 2,100 88
Shaw Industries 5,300 64
Unifi 2,600 81
- --------------------------------------------------------------------------------
TOTAL APPAREL/TEXTILES $283
- --------------------------------------------------------------------------------
AUTOMOTIVE - 0.9%
Federal Mogul 1,450 40
Federal Signal 1,882 46
Kaydon 600 27
Modine Manufacturing 1,250 33
OEA 800 29
Superior Industries
International 1,155 27
Teleflex 850 49
- --------------------------------------------------------------------------------
TOTAL AUTOMOTIVE $251
- --------------------------------------------------------------------------------
BANKS - 9.6%
Central Fidelity Banks 2,450 68
City National 1,700 39
Crestar Financial 5,400 200
Dauphin Deposit Bank & Trust 1,250 53
First of America Bank 2,700 180
First Security 3,175 113
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
First Tennessee National 2,750 $ 119
First Virginia Banks 1,500 78
Firstar 6,000 176
Hibernia, Cl A 5,000 64
Marshall & Ilsley 3,750 144
Mercantile Bankshares 2,050 75
Mercantile Bancorp 2,600 151
Northern Trust 4,500 200
Pacific Century Financial 1,700 73
Regions Financial Corporation 2,480 141
Southtrust 3,950 148
State Street 3,300 260
Summit Bancorp 3,700 172
Union Planters 1,900 85
Wilmington Trust 1,400 60
- --------------------------------------------------------------------------------
TOTAL BANKS $2,599
- --------------------------------------------------------------------------------
BEAUTY PRODUCTS - 0.1%
Church & Dwight 825 21
- --------------------------------------------------------------------------------
TOTAL BEAUTY PRODUCTS $ 21
- --------------------------------------------------------------------------------
BROADCASTING, NEWSPAPERS & ADVERTISING - 0.9%
Chris-Craft Industries* 1,307 53
Omnicom Group 3,400 180
- --------------------------------------------------------------------------------
TOTAL BROADCASTING, NEWSPAPERS & ADVERTISING $ 233
- --------------------------------------------------------------------------------
BUILDING & CONSTRUCTION - 0.1%
Jacobs Engineering Group* 1,175 30
- --------------------------------------------------------------------------------
TOTAL BUILDING & CONSTRUCTION $ 30
- --------------------------------------------------------------------------------
BUILDING & CONSTRUCTION SUPPLIES - 0.1%
Lukens 700 13
- --------------------------------------------------------------------------------
TOTAL BUILDING & CONSTRUCTION SUPPLIES $ 13
- --------------------------------------------------------------------------------
CHEMICALS - 3.8%
A. Schulman 1,600 30
Airgas * 3,000 45
Albemarle 2,650 47
Betzdearborn 1,231 79
Cabot 3,000 66
Crompton & Knowles 2,700 59
Cytec Industries* 1,700 64
Dexter 1,000 30
Ethyl 4,850 44
Georgia Gulf 1,400 34
Fuller (H.B.) 590 32
IMC Global 4,200 155
Lawter International 1,800 19
Lubrizol 2,600 85
Olin 2,150 88
RPM 3,112 52
Wellman 1,500 24
Witco Chemical 2,275 85
- --------------------------------------------------------------------------------
TOTAL CHEMICALS $1,038
- --------------------------------------------------------------------------------
54
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 1.5%
ADC Telecommunications* 5,600 $ 146
Molex 5,162 160
Octel Communications* 1,900 31
Vishay Intertechnology* 2,487 60
- --------------------------------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT $397
- --------------------------------------------------------------------------------
COMPUTERS & SERVICES - 3.6%
Arrow Electronics* 2,106 117
Avnet 1,975 120
Cirrus Logic* 2,600 24
Diebold 2,754 92
Exabyte* 945 13
Quantum* 2,650 110
Solectron* 2,300 132
Storage Technology* 2,261 79
Symbol Technologies 1,612 52
U.S. Robotics* 3,550 180
Verifone* 950 48
- --------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES $967
- --------------------------------------------------------------------------------
COMPUTER SOFTWARE - 1.8%
Adobe Systems 2,950 115
BMC Software* 4,148 179
Compuware* 3,400 128
Informix* 6,000 44
Symantec* 2,140 31
- --------------------------------------------------------------------------------
TOTAL COMPUTER SOFTWARE $497
- --------------------------------------------------------------------------------
CONCRETE & MINERAL PRODUCTS - 0.2%
Calmat 1,100 20
Ferro 1,050 33
- --------------------------------------------------------------------------------
TOTAL CONCRETE & MINERAL PRODUCTS $ 53
- --------------------------------------------------------------------------------
CONSUMER PRODUCTS - 0.2%
First Brands 1,700 43
Stanhome 700 21
- --------------------------------------------------------------------------------
TOTAL CONSUMER PRODUCTS $ 64
- --------------------------------------------------------------------------------
CONTAINERS & PACKAGING - 0.1%
Longview Fibre 2,200 35
- --------------------------------------------------------------------------------
TOTAL CONTAINERS & PACKAGING $ 35
- --------------------------------------------------------------------------------
DRUGS - 3.6%
Allegiance 1,500 33
Biogen* 3,300 106
Cardinal Health 4,305 229
Carter-Wallace 1,900 25
Centocor* 3,000 84
Chiron* 6,964 131
Forest Laboratories* 1,834 63
Genzyme* 3,524 81
Ivax* 4,850 37
Mylan Laboratories 4,887 59
Perrigo* 3,050 36
R.P. Scherer* 850 39
Watson Pharmaceuticals* 1,500 54
- --------------------------------------------------------------------------------
TOTAL DRUGS $977
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
ELECTRICAL SERVICES - 8.8%
AES* 3,150 $ 206
Allegheny Power System 5,229 137
Atlantic Energy 2,050 33
CMS Energy 4,050 129
Delmarva Power & Light 2,450 43
Florida Progress 3,900 120
Hawaiian Electric Industries 1,475 49
Illinova 3,100 70
Idaho Power 1,650 48
Ipalco Enterprises 2,371 72
Kansas City Power & Light 2,550 72
LG&E 3,350 81
MidAmerican Energy Holdings 4,114 69
Minnesota Power & Light 1,325 37
Montana Power 2,150 48
Nevada Power 2,000 40
New England Electric System 2,600 89
New York State Electric & Gas 3,650 77
Nipsco Industries 2,550 101
Northeast Utilities 5,200 43
OGE Energy 1,703 71
Pinnacle West Capital 3,500 100
Potomac Electric Power 4,850 109
Public Service of Colorado 2,625 102
Puget Sound Energy 2,000 49
Scana 4,250 103
Southwestern Public Service 1,644 60
TECO Energy 4,772 114
Wisconsin Energy 4,500 112
- --------------------------------------------------------------------------------
TOTAL ELECTRICAL SERVICES $2,384
- --------------------------------------------------------------------------------
ENERGY & POWER - 0.3%
Calenergy* 2,250 88
- --------------------------------------------------------------------------------
TOTAL ENERGY & POWER $ 88
- --------------------------------------------------------------------------------
ENTERTAINMENT - 0.8%
Mirage Resorts* 7,550 152
Promus Hotel* 2,000 70
- --------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $ 222
- --------------------------------------------------------------------------------
ENVIRONMENTAL SERVICES - 0.7%
USA Waste Services* 5,700 187
- --------------------------------------------------------------------------------
TOTAL ENVIRONMENTAL SERVICES $ 187
- --------------------------------------------------------------------------------
FINANCIAL SERVICES - 3.8%
A.G. Edwards & Sons 2,612 91
Bear Stearns 5,089 155
Charles Schwab 7,074 259
Franklin Resources 5,025 297
Painewebber Group 3,800 129
T. Rowe Price 2,300 106
- --------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $1,037
- --------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO - 4.0%
Coca Cola 5,350 323
Dean Foods 1,575 58
Dole Food 2,350 96
55
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
MID-CAP EQUITY PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO - CONTINUED
Dreyer's Grand Ice Cream 650 $ 20
Flowers Industries 2,437 59
Hormel Foods 3,000 73
IBP 3,800 90
Lancaster Colony 1,232 51
Lance 1,250 23
McCormick 3,250 77
Tyson Foods 8,910 178
Universal Foods 1,200 42
- --------------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO $1,090
- --------------------------------------------------------------------------------
FORESTRY - 0.2%
Rayonier 1,100 44
- --------------------------------------------------------------------------------
TOTAL FORESTRY $ 44
- --------------------------------------------------------------------------------
GAS/NATURAL GAS - 1.8%
AGL Resources 2,150 41
Brooklyn Union Gas 2,000 55
El Paso Natural Gas 1,459 85
MCN 2,700 77
National Fuel & Gas 1,425 59
Questar 1,550 59
Utilicorp United 1,950 51
Washington Gas Light 2,000 46
- --------------------------------------------------------------------------------
TOTAL GAS/NATURAL GAS $ 473
- --------------------------------------------------------------------------------
HOME BUILDERS - 0.3%
Clayton Homes 4,861 68
- --------------------------------------------------------------------------------
TOTAL HOME BUILDERS $ 68
- --------------------------------------------------------------------------------
HOTELS & LODGING - 0.4%
Circus Circus Enterprises* 4,225 102
- --------------------------------------------------------------------------------
TOTAL HOTELS & LODGING $ 102
- --------------------------------------------------------------------------------
HOUSEHOLD FURNITURE & FIXTURES - 0.5%
Leggett & Platt 3,950 137
- --------------------------------------------------------------------------------
TOTAL HOUSEHOLD FURNITURE & FIXTURES $ 137
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS - 0.6%
Danaher 2,350 106
Dial 3,700 57
- --------------------------------------------------------------------------------
TOTAL HOUSEHOLD PRODUCTS $ 163
- --------------------------------------------------------------------------------
INSURANCE - 7.1%
AFLAC 5,730 246
AMBAC 1,500 97
American Financial Group 2,450 85
Equifax 5,900 170
Foundation Health
Systems, Cl A* 3,152 85
Hartford Steam Boiler Inspection
& Insurance 900 43
Healthcare Compare* 1,400 61
Healthsource* 2,600 55
Oxford Health Plans* 3,500 231
Pacificare Health Systems,
Cl B* 1,153 93
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
PMI Group 1,000 $ 51
Policy Management Systems* 850 37
Progressive of Ohio 3,000 228
Provident 1,750 98
SunAmerica 4,800 221
Transatlantic Holdings 1,000 83
Value Health* 2,046 41
- --------------------------------------------------------------------------------
TOTAL INSURANCE $1,925
- --------------------------------------------------------------------------------
INTERNET SERVICE PROVIDERS - 0.7%
America Online* 4,375 197
- --------------------------------------------------------------------------------
TOTAL INTERNET SERVICE PROVIDERS $ 197
- --------------------------------------------------------------------------------
LEASING & RENTING - 0.2%
Comdisco 2,000 63
- --------------------------------------------------------------------------------
TOTAL LEASING & RENTING $ 63
- --------------------------------------------------------------------------------
LEISURE PRODUCTS - 0.8%
Callaway Golf 3,050 91
Electronic Arts* 2,100 51
Tiffany & Company 1,850 73
- --------------------------------------------------------------------------------
TOTAL LEISURE PRODUCTS $ 215
- --------------------------------------------------------------------------------
MACHINERY - 1.7%
Donaldson 1,100 38
Duriron 937 23
Kennametal 1,100 40
Keystone International 1,450 29
Mark IV Industries 2,615 61
Nordson 800 40
Pentair 1,574 47
Smith International* 2,000 95
Stewart & Stevenson Services 1,400 34
Varco International* 1,325 30
Watts Industries, Cl A 1,350 34
- --------------------------------------------------------------------------------
TOTAL MACHINERY $ 471
- --------------------------------------------------------------------------------
MARINE TRANSPORTATION - 0.3%
Alexander & Baldwin 1,900 50
Overseas Shipholding Group 1,575 28
- --------------------------------------------------------------------------------
TOTAL MARINE TRANSPORTATION $ 78
- --------------------------------------------------------------------------------
MEASURING DEVICES - 0.3%
Ametek 1,350 30
Beckman Instruments 1,250 52
- --------------------------------------------------------------------------------
TOTAL MEASURING DEVICES $ 82
- --------------------------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES - 2.8%
Acuson Corp* 1,026 25
Apria Healthcare Group* 1,550 26
Bergen Brunswig, Cl A 1,645 56
Dentsply International 1,150 57
Healthcare & Retirement* 1,825 58
Horizon/CMS Healthcare* 2,074 33
McKesson 1,800 130
Nellcor* 2,996 51
Stryker 3,900 128
Varian Associates 1,300 63
Vencor* 2,850 119
- --------------------------------------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES $ 746
- --------------------------------------------------------------------------------
56
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
METALS & MINING - 0.6%
Cleveland Cliffs 325 $ 14
Minerals Technologies 900 32
Vulcan Materials 1,625 106
- --------------------------------------------------------------------------------
TOTAL METALS & MINING $ 152
- --------------------------------------------------------------------------------
MISCELLANEOUS BUSINESS SERVICES - 4.2%
Advanced Technology
Laboratories* 600 20
Cintas 2,200 120
Computer Sciences* 2,000 125
Fiserv* 1,825 69
Information Resources* 1,068 14
Kelly Services, Cl A 1,000 25
Office Depot* 6,623 93
OfficeMax* 8,000 99
Olsten 3,437 61
Reynolds & Reynolds, Cl A 3,400 71
Sensormatic Electronics 2,925 44
Sotheby's Holdings, Cl A 2,600 41
Staples* 6,474 117
Sterling Commerce* 3,300 85
Sungard Data Systems* 1,700 75
Viad 2,400 37
Viking Office Products* 3,600 49
- --------------------------------------------------------------------------------
TOTAL MISCELLANEOUS BUSINESS SERVICES $1,145
- --------------------------------------------------------------------------------
MISCELLANEOUS CONSUMER SERVICES - 0.9%
Manpower 3,325 133
Robert Half International* 2,600 102
- --------------------------------------------------------------------------------
TOTAL MISCELLANEOUS CONSUMER SERVICES $ 235
- --------------------------------------------------------------------------------
MISCELLANEOUS MANUFACTURING - 0.4%
Gtech* 1,000 31
International Game Technology 5,000 79
- --------------------------------------------------------------------------------
TOTAL MISCELLANEOUS MANUFACTURING $ 110
- --------------------------------------------------------------------------------
MISCELLANEOUS TRANSPORTATION - 0.3%
Harsco 2,200 81
- --------------------------------------------------------------------------------
TOTAL MISCELLANEOUS TRANSPORTATION $ 81
- --------------------------------------------------------------------------------
MOTORCYCLES, BICYCLES & PARTS - 0.5%
Harley-Davidson 3,130 124
- --------------------------------------------------------------------------------
TOTAL MOTORCYCLES, BICYCLES & PARTS $ 124
- --------------------------------------------------------------------------------
OFFICE FURNITURE & FIXTURES - 0.2%
Hon Industries 1,200 51
- --------------------------------------------------------------------------------
TOTAL OFFICE FURNITURE & FIXTURES $ 51
- --------------------------------------------------------------------------------
PAPER & PAPER PRODUCTS - 1.2%
Bowater 1,650 71
Chesapeake 1,050 36
Consolidated Papers 1,900 102
PH Glatfelter 1,800 28
Tambrands 1,450 68
Wausau Paper Mills 1,520 27
- --------------------------------------------------------------------------------
TOTAL PAPER & PAPER PRODUCTS $ 332
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS - 5.0%
Anadarko Petroleum 2,400 $ 132
Apache 3,650 124
BJ Services* 1,400 66
Ensco International* 2,800 133
Global Marine* 6,775 136
Mapco 2,200 65
Nabors Industries* 3,750 70
Noble Affiliates 2,400 86
Noble Drilling* 5,100 89
Parker & Parsley Petroleum 1,450 48
Quaker State 1,350 20
Ranger Oil Limited 4,010 40
Seagull Energy* 2,400 41
Tidewater 2,525 101
Transocean Offshore 2,300 139
Weatherford Enterra* 2,233 71
- --------------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS $1,361
- --------------------------------------------------------------------------------
PETROLEUM REFINING - 1.5%
Lyondell Petrochemical 2,200 45
Murphy Oil 1,800 78
Tosco 5,250 156
Ultramar Diamond Shamrock 1,800 58
Valero Energy 1,800 63
- --------------------------------------------------------------------------------
TOTAL PETROLEUM REFINING $ 400
- --------------------------------------------------------------------------------
PRINTING & PUBLISHING - 1.8%
Banta 1,200 30
A.H. Belo, Cl A 1,800 65
Houghton Mifflin 690 39
Lee Enterprises 1,850 46
Media General 1,100 32
Scholastic* 600 15
Standard Register 1,200 39
Wallace Computer Services 1,900 51
Washington Post, Cl B 450 162
- --------------------------------------------------------------------------------
TOTAL PRINTING & PUBLISHING $ 479
- --------------------------------------------------------------------------------
PROFESSIONAL SERVICES - 0.8%
Medaphis* 2,050 11
Ogden 2,000 42
Paychex 3,244 152
- --------------------------------------------------------------------------------
TOTAL PROFESSIONAL SERVICES $ 205
- --------------------------------------------------------------------------------
RAILROADS - 0.6%
Illinois Central 2,625 87
Kansas City Southern Industries 1,600 82
- --------------------------------------------------------------------------------
TOTAL RAILROADS $ 169
- --------------------------------------------------------------------------------
RETAIL - 5.2%
Ann Taylor Stores* 900 22
Bed Bath & Beyond* 3,250 89
Best Buy* 1,400 19
Brinker International* 3,099 36
Claire's Stores 1,987 38
Consolidated Stores* 2,750 110
Cracker Barrel Old
Country Stores 2,800 75
57
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
Mid-Cap Equity Portfolio (continued)
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
RETAIL - CONTINUED
Dollar General 4,610 $ 146
Duty Free International 880 12
Family Dollar Stores 2,300 60
Fastenal 1,650 64
Hannaford Brothers 1,750 56
Heilig-Meyers 2,050 31
Kohl's* 3,100 152
Lands' End* 1,350 36
Lone Star Steakhouse
& Saloon* 1,650 33
Mac Frugals Bargains
Close-Outs* 1,047 31
Nine West Group* 1,600 63
Outback Steakhouse* 1,800 35
Revco Drug Stores* 3,150 137
Ruddick 1,400 21
Sbarro 850 24
Service Merchandise* 3,550 9
Waban* 1,300 35
Warnaco Group 2,100 60
- --------------------------------------------------------------------------------
TOTAL RETAIL $1,394
- --------------------------------------------------------------------------------
RUBBER & PLASTIC - 1.0%
Carlisle 1,200 34
Hanna 2,124 44
Sealed Air* 1,850 86
Sonoco Products 3,650 98
- --------------------------------------------------------------------------------
TOTAL RUBBER & PLASTIC $ 262
- --------------------------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS - 5.4%
Altera* 3,700 183
American Power Conversion* 3,850 74
Analog Devices* 6,906 185
Atmel* 3,950 98
Cadence Design Systems* 3,500 112
Cypress Semiconductor* 3,250 45
Integrated Device Technology* 3,000 35
Linear Technology 3,000 151
LSI Logic* 3,000 115
Maxim Integrated Products* 2,700 143
Mentor Graphics* 2,400 17
Structural Dynamics Research* 1,327 28
Teradyne* 3,650 120
Xilinx* 3,400 167
- --------------------------------------------------------------------------------
TOTAL SEMI-CONDUCTORS/INSTRUMENTS $1,473
- --------------------------------------------------------------------------------
SPECIALTY MACHINERY - 0.5%
Tecumseh Products, Cl A 950 51
York International 2,100 94
- --------------------------------------------------------------------------------
TOTAL SPECIALTY MACHINERY $ 145
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
STEEL & STEEL WORKS - 0.9%
Alumax* 2,950 $ 108
Carpenter Technology 1,100 45
Oregon Steel Mills 1,600 26
Precision Castparts 1,050 56
- --------------------------------------------------------------------------------
TOTAL STEEL & STEEL WORKS $ 235
- --------------------------------------------------------------------------------
TECHNOLOGY - 0.4%
NCR* 4,100 119
- --------------------------------------------------------------------------------
TOTAL TECHNOLOGY $ 119
- --------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS - 2.0%
360 Communications* 5,000 87
Aliant Communications 1,450 23
Century Telephone Enterprises 2,350 70
Comsat 2,050 43
Nextel Communications, Cl A* 8,500 112
Southern New England Telecom 2,900 106
Telephone & Data Systems 2,500 92
- --------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS $ 533
- --------------------------------------------------------------------------------
TRANSPORTATION SERVICES - 0.2%
GATX 775 42
- --------------------------------------------------------------------------------
TOTAL TRANSPORTATION SERVICES $ 42
- --------------------------------------------------------------------------------
TRUCKING - 0.5%
APL Limited 1,000 29
Consolidated Freightways 1,500 45
JB Hunt Transport Services 1,600 22
Pittston Services 1,600 51
- --------------------------------------------------------------------------------
TOTAL TRUCKING $ 147
- --------------------------------------------------------------------------------
WATER UTILITIES - 0.2%
American Water Works 2,800 59
- --------------------------------------------------------------------------------
TOTAL WATER UTILITIES $ 59
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $20,269) $26,939
- --------------------------------------------------------------------------------
RIGHTS - 0.0%
Talbert Medical Management* 81 1
- --------------------------------------------------------------------------------
TOTAL RIGHTS
(Cost $0) $ 1
- --------------------------------------------------------------------------------
58
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal Market
Description Amount(000) Value (000)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 0.4%
CS First Boston,
5.350%, dated 04/30/97, matures
05/01/97, repurchase price
$105,519 (collateralized by
U.S. Treasury Note, total
par value $105,000, 7.875%,
11/15/99: total market
value $112,270) $106 $ 106
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $106) $ 106
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.0%
(Cost $20,375) $27,046
================================================================================
OTHER ASSETS AND LIABILITIES, NET - 0.0% $ 13
================================================================================
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization - no par value)
based on 2,660,851 outstanding shares
of beneficial interest 19,991
Undistributed net investment income 6
Accumulated net realized gain on investments 391
Net unrealized appreciation on investments 6,671
================================================================================
TOTAL NET ASSETS - 100.0% $27,059
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- INSTITUTIONAL CLASS $ 10.17
================================================================================
* NON-INCOME PRODUCING SECURITY
CL-CLASS
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
ARK FUNDS: SPECIAL EQUITY PORTFOLIO
[Pie Chart Graph Omitted]
Pie Chart depicting percentage of Portfolio investments
Financial -- 17%
Durable Goods -- 12%
Consumer Products -- 6%
Chemicals & Drugs -- 5%
Healthcare -- 6%
Miscellaneous -- 3%
Transportation -- 1%
Technology -- 10%
Repurchase Agreements -- 14%
Real Estate Investment Trusts -- 5%
Oil-Energy -- 7%
Retail -- 14%
% OF TOTAL PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCKS - 95.2%
APPAREL/TEXTILES - 3.8%
Jones Apparel Group* 11,000 $ 459
Nautica Enterprises* 5,000 111
Russell 5,000 139
- --------------------------------------------------------------------------------
TOTAL APPAREL/TEXTILES $709
- --------------------------------------------------------------------------------
AUTOMOTIVE - 0.8%
JLG Industries 12,000 150
- --------------------------------------------------------------------------------
TOTAL AUTOMOTIVE $150
- --------------------------------------------------------------------------------
BANKS - 3.5%
Commonwealth Bancorp 15,000 216
Cullen/Frost Bankers 8,000 280
Dime Community Bancorp* 8,900 157
- --------------------------------------------------------------------------------
TOTAL BANKS $653
- --------------------------------------------------------------------------------
BROADCASTING, NEWSPAPERS & ADVERTISING - 3.8%
American Radio Systems* 10,000 292
Evergreen Media, Cl A* 5,000 162
United Television 2,900 258
- --------------------------------------------------------------------------------
TOTAL BROADCASTING, NEWSPAPERS & ADVERTISING $712
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 1.3%
Intervoice* 25,000 237
- --------------------------------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT $237
- --------------------------------------------------------------------------------
COMPUTER SOFTWARE - 1.2%
Cognos* 9,000 228
- --------------------------------------------------------------------------------
TOTAL COMPUTER SOFTWARE $228
- --------------------------------------------------------------------------------
COMPUTERS & SERVICES - 2.9%
Computer Task Group 7,500 323
Network Appliance* 5,000 146
Sequent Computer Systems* 5,000 79
- --------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES $548
- --------------------------------------------------------------------------------
CONSUMER PRODUCTS - 0.5%
Vans* 10,000 96
- --------------------------------------------------------------------------------
TOTAL CONSUMER PRODUCTS $ 96
- --------------------------------------------------------------------------------
59
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
Special Equity Portfolio (continued)
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
DRUGS - 4.3%
Chirex* 5,000 $ 49
Guilford Pharmaceuticals* 5,000 116
Medarex* 17,000 117
Neose Technologies* 5,000 61
Perrigo* 10,000 117
Watson Pharmaceuticals* 10,000 357
- --------------------------------------------------------------------------------
TOTAL DRUGS $ 817
- --------------------------------------------------------------------------------
FINANCIAL SERVICES - 12.4%
Camden Property Trust 10,000 274
Everen Capital 10,000 236
John Nuveen, Cl A 25,000 734
Quick & Reilly Group 15,000 332
Sirrom Capital 4,000 124
Spieker Properties 10,000 349
United Asset Management 12,000 294
- --------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $2,343
- --------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO - 1.7%
Canandaigua Wine, Cl A* 8,000 205
General Cigar Holdings* 5,000 118
- --------------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO $ 323
- --------------------------------------------------------------------------------
INSURANCE - 3.1%
Reliastar Financial 5,000 302
RLI 9,000 291
- --------------------------------------------------------------------------------
TOTAL INSURANCE $ 593
- --------------------------------------------------------------------------------
MEASURING DEVICES - 0.7%
Input/Output* 10,000 140
- --------------------------------------------------------------------------------
TOTAL MEASURING DEVICES $ 140
- --------------------------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES - 8.5%
ADAC Laboratories 5,000 116
Beverly Enterprises* 20,000 290
Healthcor Holdings* 10,000 84
Integrated Medical Resources* 15,000 37
Mentor 12,000 277
Nellcor* 15,000 255
Sun Healthcare Group* 20,000 282
Vivus* 7,000 259
- --------------------------------------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES $1,600
- --------------------------------------------------------------------------------
MISCELLANEOUS BUSINESS SERVICES - 7.9%
Apac Teleservices* 2,500 28
CSG Systems International* 5,000 89
G&K Services 10,000 290
McAfee Associates* 7,000 390
Sitel* 5,000 49
Sotheby's Holdings, Cl A 40,000 635
- --------------------------------------------------------------------------------
TOTAL MISCELLANEOUS BUSINESS SERVICES $1,481
- --------------------------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS - 7.2%
Belco Oil & Gas* 6,000 122
Cabot Oil & Gas, Cl A 10,000 168
Helmerich & Payne 10,000 478
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
Marine Drilling* 10,000 $ 158
Pride Petroleum Service* 11,000 190
Tetra Technologies* 10,000 233
- --------------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS $ 1,349
- --------------------------------------------------------------------------------
PROFESSIONAL SERVICES - 1.2%
Sylvan Learning Systems* 7,800 235
- --------------------------------------------------------------------------------
TOTAL PROFESSIONAL SERVICES $ 235
- --------------------------------------------------------------------------------
REAL ESTATE - 1.3%
CB Commercial Real Estate* 12,000 252
- --------------------------------------------------------------------------------
TOTAL REAL ESTATE $ 252
- --------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 5.6%
Apartment Investment
& Management 15,000 416
CarrAmerica Realty 10,000 279
Health Care Property Investors 11,000 364
- --------------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUSTS $ 1,059
- --------------------------------------------------------------------------------
RETAIL - 10.5%
99 Cents Only Stores* 17,000 368
Ann Taylor Stores* 10,000 243
Apple South 16,000 208
CKE Restaurants 5,000 98
Finish Line* 10,000 103
Gymboree* 10,000 277
Neiman-Marcus Group 15,000 394
Warnaco Group 10,000 285
- --------------------------------------------------------------------------------
TOTAL RETAIL $ 1,976
- --------------------------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS - 9.5%
AVX 15,000 336
Cypress Semiconductor* 5,000 69
FEI* 10,000 96
Integrated Device Technology* 15,000 176
Kulicke & Soffa Industries* 15,000 419
Methode Electronics, Cl A 15,000 212
Photronics Labs* 10,000 346
Teradyne* 4,000 131
- --------------------------------------------------------------------------------
TOTAL SEMI-CONDUCTORS/INSTRUMENTS $ 1,785
- --------------------------------------------------------------------------------
STEEL & STEEL WORKS - 1.6%
Steel Dynamics* 15,000 293
- --------------------------------------------------------------------------------
TOTAL STEEL & STEEL WORKS $ 293
- --------------------------------------------------------------------------------
TESTING LABORATORIES - 1.3%
Curative Technologies* 10,000 236
- --------------------------------------------------------------------------------
TOTAL TESTING LABORATORIES $ 236
- --------------------------------------------------------------------------------
WHOLESALE - 0.6%
Gilead Sciences* 5,000 111
- --------------------------------------------------------------------------------
TOTAL WHOLESALE $ 111
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $19,395) $17,926
- --------------------------------------------------------------------------------
PREFERRED CONVERTIBLE STOCK - 0.2%
Sparta Pharmaceuticals* (A)(C) 10,000 44
- --------------------------------------------------------------------------------
TOTAL PREFERRED CONVERTIBLE STOCK
(Cost $95) $ 44
- --------------------------------------------------------------------------------
60
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
WARRANT - 0.1%
Sparta Pharmaceuticals, Cl C* $66,666 $ 12
- --------------------------------------------------------------------------------
TOTAL WARRANT
(Cost $5) $ 12
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 15.7%
First Boston
5.350%, dated 04/30/97,
matures 05/01/97, repurchase
price $2,958,142 (collateralized
by various U.S. Treasury Notes,
total par value $2,770,000, 8.000%-
9.125%, 05/15/99-05/15/01:
total market value $3,026,307) $2,958 $ 2,958
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $2,958) $ 2,958
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 111.2%
(Cost $22,453) $20,940
================================================================================
OTHER ASSETS AND LIABILITIES - (11.2%)
Investment Securities Purchased (2,128)
Other Assets and Liabilities 9
================================================================================
TOTAL OTHER ASSETS AND LIABILITIES, NET $ (2,119)
================================================================================
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization - no par value)
based on 2,079,440 outstanding shares
of beneficial interest 20,829
Portfolio Shares of Retail Class
(unlimited authorization - no par value) based
on 125,977 outstanding shares
of beneficial interest 1,636
Accumulated net realized loss on investments (2,280)
Net unrealized depreciation on investments (1,513)
Net unrealized appreciation on security
sold short (A) 149
================================================================================
TOTAL NET ASSETS -100.0% $18,821
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL CLASS $ 8.53
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - RETAIL CLASS $ 8.53
================================================================================
MAXIMUM OFFERING PRICE PER SHARE -
RETAIL CLASS ($8.53 / 95.25%) $ 8.96
================================================================================
(A) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A, OR OFFERED PURSUANT TO
SECTION 4(2) OF THE SECURITIES ACT OF 1933. THESE SECURITIES MAY BE RESOLD
IN TRANSACTIONS EXEMPT FROM REGISTRATION NORMALLY TO QUALIFIED INSTITUTIONAL
INVESTORS.
(B) VIVUS COMMON STOCK SOLD SHORT AT VALUE -PROCEEDS $406,984; MARKET VALUE
$258,563
(C) FAIR VALUED SECURITY.
* NON-INCOME PRODUCING SECURITY
CL-CLASS
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
ARK FUNDS: INTERNATIONAL EQUITY PORTFOLIO
[Pie Chart Graph Omitted]
Pie Chart depicting percentage of Portfolio investments
Other -- 9%
Hong Kong -- 3%
United States -- 13%
United Kingdom -- 16%
Germany -- 13%
France -- 7%
Japan -- 21%
Switzerland -- 8%
Netherlands -- 10%
% OF TOTAL PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
FOREIGN COMMON STOCKS - 85.0%
AUSTRALIA - 1.5%
Broken Hill Proprietary 333 $ 5
Burns Phillip 7,203 12
National Australia Bank 1,366 19
RTZ-CRA Group 1,075 16
Western Mining 1,971 12
- --------------------------------------------------------------------------------
TOTAL AUSTRALIA $ 64
- --------------------------------------------------------------------------------
FRANCE - 6.5%
Accor 330 47
AXA 800 49
Cie Generale des Eaux 509 71
Groupe SEB 273 48
Total, Series B 720 60
- --------------------------------------------------------------------------------
TOTAL FRANCE $275
- --------------------------------------------------------------------------------
GERMANY - 10.8%
Bayer 2,120 84
Deutsche Bank 1,200 63
Douglas Holding 1,500 49
Mannesmann 245 97
RWE 700 29
Veba 950 49
Volkswagen 131 83
- --------------------------------------------------------------------------------
TOTAL GERMANY $454
- --------------------------------------------------------------------------------
HONG KONG - 3.3%
Cheung Kong Holdings 2,606 23
First Pacific 18,000 21
HSBC Holdings 1,200 30
Hutchison Whampoa 7,000 52
Swire Pacific, Series A 1,736 13
- --------------------------------------------------------------------------------
TOTAL HONG KONG $139
- --------------------------------------------------------------------------------
INDONESIA - 0.7%
PT Indosat, ADR 1,000 28
- --------------------------------------------------------------------------------
TOTAL INDONESIA $ 28
- --------------------------------------------------------------------------------
61
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
JAPAN - 21.1%
Akita Bank 2,000 $ 11
Asahi Chemical Industries 3,000 17
Asahi Diamond Industrial 3,090 24
Asahi Glass 3,000 27
Chiyoda 3,000 37
Daiwa Bank 2,000 6
DDI 6 40
Hitachi Metals 3,000 19
Matsushita Electric 3,000 48
Mitsubishi Heavy Industries 7,000 46
Mitsui Trust & Banking 4,000 23
Mizuno 5,000 27
Nagase 5,000 34
Nippon Yusen Kabushik 7,000 25
Ohsho Food Service 2,000 26
Olympus Optical 6,000 50
Orix 1,000 51
Royal 1,100 16
Sagami Railway 6,000 19
Sankyo 1,000 27
Shimachu 2,000 48
Shinki 1,200 20
Sodick* 2,000 18
Sumitomo Electric 4,000 54
Taiko Bank 5,000 16
Tokio Marine & Fire Insurance 3,000 29
Toppan Printing 2,000 26
Toshiba 8,000 45
Toyota Motor 2,000 58
- --------------------------------------------------------------------------------
TOTAL JAPAN $887
- --------------------------------------------------------------------------------
MALAYSIA - 2.3%
Arab Malaysian Finance Rights 6,000 --
Arab Malaysian Merchant Bank 6,000 13
Genting Berhad 1,000 5
Land and General 4,500 6
Malayan Banking 3,000 30
UMW Holdings Berhad 8,266 43
- --------------------------------------------------------------------------------
TOTAL MALAYSIA $ 97
- --------------------------------------------------------------------------------
NETHERLANDS - 9.9%
ABN-Amro Holdings 1,524 105
Aegon 963 68
Ahold 810 55
Ing Groep 1,500 59
Royal Dutch Petroleum 280 50
VNU 3,850 80
- --------------------------------------------------------------------------------
TOTAL NETHERLANDS $417
- --------------------------------------------------------------------------------
SINGAPORE - 1.8%
DBS Land 3,000 10
Development Bank of Singapore 1,000 12
Keppel 2,500 11
Malayan Credit 3,000 5
Singapore Press, Series F 2,000 37
- --------------------------------------------------------------------------------
TOTAL SINGAPORE $ 75
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
SPAIN - 1.2%
Banco de Santander 654 $ 49
- --------------------------------------------------------------------------------
TOTAL SPAIN $ 49
- --------------------------------------------------------------------------------
SWEDEN - 2.1%
Atlas AB, Series A 2,502 62
Ericsson 900 28
- --------------------------------------------------------------------------------
TOTAL SWEDEN $ 90
- --------------------------------------------------------------------------------
SWITZERLAND - 7.6%
Alusuisse-Lonza 50 42
BBC Brown Boveri 47 57
CS Holdings 350 39
Nestle SA 67 81
Roche Holdings 12 101
- --------------------------------------------------------------------------------
TOTAL SWITZERLAND $ 320
- --------------------------------------------------------------------------------
THAILAND - 0.3%
Finance One Public* 3,000 3
Land and House 999 3
Total Access Communications 1,500 8
- --------------------------------------------------------------------------------
TOTAL THAILAND $ 14
- --------------------------------------------------------------------------------
UNITED KINGDOM - 15.9%
ASDA Group 6,200 12
Barclays Bank 846 16
Bass 2,000 26
BAT Industries 2,370 20
British Airport Authority 2,600 22
British Airways 1,200 14
British Petroleum 4,083 47
British Telecommunications 4,000 29
Burton Group 11,600 29
General Accident 1,900 27
General Electric 5,707 34
GKN 2,500 39
Glaxo Wellcome 2,600 51
HSBC Holdings 900 24
Lloyds TSB Group 3,894 36
Marks & Spencer 1,299 10
National Power 2,700 23
National Westminster 995 12
Prudential 2,443 24
Railtrack Group 2,200 17
Shell Transportation & Trading 2,473 44
Smithkline Beecham, Series A 1,856 30
TI Group 2,500 21
Unilever 300 8
Vodafone Group 5,000 22
Zeneca Group 1,014 31
- --------------------------------------------------------------------------------
TOTAL UNITED KINGDOM $ 668
- --------------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(Cost $3,389) $3,577
- --------------------------------------------------------------------------------
62
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Shares/Principal Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
FOREIGN PREFERRED STOCKS - 2.1%
GERMANY - 2.1%
GEA 260 $ 88
- --------------------------------------------------------------------------------
TOTAL GERMANY $ 88
- --------------------------------------------------------------------------------
TOTAL FOREIGN PREFERRED STOCKS
(Cost $92) $ 88
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 13.1%
U.S. Treasury Bills (A)
5.049%, 05/01/97 $ 65 65
4.677%, 05/08/97 460 460
4.800%, 05/15/97 25 25
- --------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $550) $ 550
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.2%
(Cost $4,031) $4,215
================================================================================
OTHER ASSETS AND LIABILITIES, NET - (0.2%) $ (6)
================================================================================
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization - no par value)
based on 367,060 outstanding shares
of beneficial interest 3,661
Portfolio Shares of Retail Class
(unlimited authorization - no par value)
based on 35,679 outstanding shares
of beneficial interest 377
Distribution in excess of net investment income (5)
Accumulated net realized loss on investments (8)
Net unrealized appreciation on investments 184
================================================================================
TOTAL NET ASSETS - 100.0% $4,209
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - INSTITUTIONAL CLASS $10.45
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - RETAIL CLASS $10.44
================================================================================
MAXIMUM OFFERING PRICE PER
SHARE - RETAIL CLASS ($10.44 / 95.25%) $10.96
================================================================================
* NON-INCOME PRODUCING SECURITY
(A) THE ANNUALIZED DISCOUNT YIELD AT TIME OF PURCHASE IS SHOWN AS THE RATE ON
THE STATEMENT OF NET ASSETS.
ADR-AMERICAN DEPOSITORY RECEIPT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
63
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities (000)
- -------------------------------------------------------------------------------
AS OF APRIL 30, 1997
INCOME
PORTFOLIO
----------
ASSETS:
Investments at market value (cost $265,811) $265,593
Interest receivable 3,728
Receivable for investment securities sold 19,622
Other assets 1,035
--------
Total assets 289,978
--------
LIABILITIES:
Distribution payable 1,295
Payable for investment securities purchased 41,200
Other liabilities 415
--------
Total liabilities 42,910
--------
NET ASSETS:
Portfolio shares of Institutional Class
(unlimited authorization -- no par value)
based on 24,738,193 outstanding shares of
beneficial interest 246,972
Portfolio shares of Retail Class (unlimited
authorization -- no par value)
based on 412,890 outstanding shares of
beneficial interest 4,214
Undistributed net investment income 8
Accumulated net realized loss on investments (3,908)
Net unrealized depreciation on investments (218)
--------
TOTAL NET ASSETS $247,068
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE--INSTITUTIONAL CLASS $ 9.82
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE--RETAIL CLASS $ 9.94
========
MAXIMUM OFFERING PRICE
PER SHARE--RETAIL CLASS (1) $ 10.41
========
(1) The offering price is calculated by dividing the Net Asset Value by 1 minus
the maximum sales charge of 4.50%.
The accompanying notes are an integral part of the financial statements.
65
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
FOR THE YEAR OR PERIOD ENDED APRIL 30, 1997
<TABLE>
<CAPTION>
TAX-FREE U.S. GOVERNMENT U.S. TREASURY SHORT-TERM MARYLAND PENNSYLVANIA
MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET TREASURY TAX-FREE TAX-FREE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO(1) PORTFOLIO(1)
------------- ----------- -------------- ------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ -- $ -- $ -- $ -- $ -- $ -- $ --
Interest 25,449 4,137 64,725 18,287 1,844 2,131 568
Less: Foreign Taxes Withheld -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------
Total Investment Income 25,449 4,137 64,725 18,287 1,844 2,131 568
EXPENSES:
Administrator Fees 599 153 1,550 452 42 50 14
Less: Waiver of Administrator (15) -- -- -- -- -- --
Fees
Investment Advisory Fees 1,152 294 2,980 868 113 191 53
Less: Waiver of Investment
Advisory Fees (668) (188) (1,311) (208) (16) (19) (14)
Custodian Fees 92 27 229 69 8 4 2
Professional Fees 38 9 95 34 2 3 1
Registration Fees 57 20 141 21 18 28 7
Distribution Fees - Retail Class 289 43 -- 26 33 4 --
Less: Waiver of Distribution
Fees - Retail Class -- (6) -- (4) (18) (1) --
Distribution Fees -
Institutional II Class 51 16 36 67 -- -- --
Printing Fees 23 7 65 31 7 (2) 2
Trustee Fees 9 2 17 7 -- -- --
Amortization of Deferred
Organization Costs 4 4 4 4 3 -- 1
Miscellaneous Fees 6 2 52 10 1 1 --
Shareholder Servicing Fees -
Retail Class 174 26 -- 15 5 1 --
Less: Waiver of Shareholder
Servicing Fees - Retail Class (104) (16) -- (9) (5) (1) --
------ ------ ------ ------ ------ ------ ------
Total Expenses 1,707 393 3,858 1,383 193 259 66
------ ------ ------ ------ ------ ------ ------
Net Investment Income (Loss) 23,742 3,744 60,867 16,904 1,651 1,872 502
------ ------ ------ ------ ------ ------ ------
Net Realized Gain (Loss) On:
Investments (3) -- (29) (5) 12 469 92
Foreign Currency Transactions -- -- -- -- -- -- --
Net Change in Unrealized
Appreciation (Depreciation)
on Investments and Foreign
Currency Transactions -- -- -- -- (116) (1,565) (356)
------ ------ ------ ------ ------ ------ ------
Net Realized and Unrealized
Gain (Loss) on Investments
and Foreign Currency Transactions (3) -- (29) (5) (104) (1,096) (264)
------ ------ ------ ------ ------ ------ ------
Net Increase (Decrease)
in Net Assets
Resulting from Operations $23,739 $ 3,744 $60,838 $16,899 $ 1,547 $ 776 $ 238
======= ======= ======= ======= ======= ====== ======
<FN>
(1) Commenced operations on November 18, 1996.
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE EQUITY BLUE CHIP
INCOME FIXED INCOME BALANCED INCOME EQUITY
PORTFOLIO PORTFOLIO(1) PORTFOLIO PORTFOLIO(1) PORTFOLIO
--------- ----------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ -- $ -- $ 702 $ 1,111 $ 461
Interest 14,674 2,420 2,738 122 116
Less: Foreign Taxes Withheld -- -- -- -- --
------- ------ ------- ------- -------
Total Investment Income 14,674 2,420 3,440 1,233 577
EXPENSES:
Administrator Fees 277 45 126 49 35
Less: Waiver of Administrator
Fees -- -- -- -- --
Investment Advisory Fees 1,066 211 535 262 155
Less: Waiver of Investment
Advisory Fees -- (53) -- (37) (52)
Custodian Fees 43 5 28 6 20
Professional Fees 16 2 9 3 1
Registration Fees 26 25 4 25 15
Distribution Fees - Retail Class 11 -- 14 -- 13
Less: Waiver of Distribution
Fees - Retail Class (2) -- (4) -- (7)
Distribution Fees -
Institutional II Class -- -- -- -- --
Printing Fees 9 2 9 1 4
Trustee Fees 4 -- 2 -- --
Amortization of Deferred
Organization Costs 4 1 4 1 4
Miscellaneous Fees 7 1 4 1 --
Shareholder Servicing Fees -
Retail Class 6 -- 7 -- 1
Less: Waiver of Shareholder
Servicing Fees - Retail Class (6) -- (7) -- (1)
------- ------ ------- ------- -------
Total Expenses 1,461 239 731 311 188
------- ------ ------- ------- -------
Net Investment Income (Loss) 13,213 2,181 2,709 922 389
------- ------ ------- ------- -------
Net Realized Gain (Loss) On:
Investments (2,706) (81) 6,028 6,425 236
Foreign Currency Transactions -- -- -- -- --
Net Change in Unrealized
Appreciation (Depreciation)
on Investments and Foreign
Currency Transactions 1,565 (1,200) (1,398) (1,090) 5,200
------- ------ ------- ------- -------
Net Realized and Unrealized
Gain (Loss) on Investments
and Foreign Currency
Transactions (1,141) (1,281) 4,630 5,335 5,436
------- ------ ------- ------- -------
Net Increase (Decrease)
in Net Assets
Resulting from Operations $12,072 $ 900 $ 7,339 $ 6,257 $ 5,825
======= ====== ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
CAPITAL MID-CAP SPECIAL INTERNATIONAL
STOCK GROWTH EQUITY EQUITY EQUITY
PORTFOLIO(1) PORTFOLIO PORTFOLIO(1) PORTFOLIO PORTFOLIO
------------ --------- ------------ --------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 283 $ 458 $ 177 $ 57 $ 59
Interest 33 46 9 153 15
Less: Foreign Taxes Withheld -- -- -- -- (6)
------- ------- ------ ------- ------
Total Investment Income 316 504 186 210 68
EXPENSES:
Administrator Fees 25 50 16 32 5
Less: Waiver of Administrator
Fees -- -- -- -- --
Investment Advisory Fees 134 230 84 150 29
Less: Waiver of Investment
Advisory Fees (9) (172) (6) -- (13)
Custodian Fees 5 22 6 36 13
Professional Fees 2 3 -- 10 --
Registration Fees 11 10 8 7 8
Distribution Fees - Retail Class -- 10 -- 1 --
Less: Waiver of Distribution
Fees - Retail Class -- (7) -- -- --
Distribution Fees -
Institutional II Class -- -- -- -- --
Printing Fees 2 4 (1) 1 --
Trustee Fees -- 1 -- 1
Amortization of Deferred
Organization Costs 1 4 1 -- --
Miscellaneous Fees 1 2 -- 1 14
Shareholder Servicing Fees -
Retail Class -- 5 -- -- --
Less: Waiver of Shareholder
Servicing Fees - Retail Class -- (5) -- -- --
------- ------- ------ ------- ------
Total Expenses 172 157 108 239 56
------- ------- ------ ------- ------
Net Investment Income (Loss) 144 347 78 (29) 12
------- ------- ------ ------- ------
Net Realized Gain (Loss) On:
Investments 3,537 3,560 391 2,092 5
Foreign Currency Transactions -- -- -- -- (8)
Net Change in Unrealized
Appreciation (Depreciation)
on Investments and Foreign
Currency Transactions (240) 836 (72) (8,396) (192)
------- ------- ------ ------- ------
Net Realized and Unrealized
Gain (Loss) on Investments
and Foreign Currency
Transactions 3,297 4,396 319 (6,304) (195)
------- ------- ------ ------- ------
Net Increase (Decrease)
in Net Assets
Resulting from Operations $ 3,441 $ 4,743 $ 397 $(6,333) $ (183)
======= ======= ====== ======= ======
</TABLE>
66 & 67
<PAGE>
APRIL 30, 1997 [ARK FUND LOGO OMITTED]
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets (000)
- --------------------------------------------------------------------------------
FOR THE YEAR OR PERIOD ENDED APRIL 30, 1997
<TABLE>
<CAPTION>
TAX-FREE U.S. GOVERNMENT U.S. TREASURY
MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ------------------ ---------------------- ------------------
1997 1996 1997 1996 1997 1996 1997 1996
-------- -------- -------- -------- ---------- ---------- -------- --------
OPERATIONS:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Investment Income $ 23,742 $ 22,753 $ 3,744 $ 3,388 $ 60,867 $ 46,614 $ 16,904 $ 16,263
Net Realized Gain (Loss) from Investments
and Foreign Currency Transactions (3) 10 -- 4 (29) 11 (5) 14
Net Change in Unrealized Appreciation
(Depreciation) of Investments
and Foreign Currency -- -- -- -- -- -- -- --
-------- -------- -------- -------- ---------- ---------- -------- --------
Net Increase in Net Assets from Operations 23,739 22,763 3,744 3,392 60,838 46,625 16,899 16,277
-------- -------- -------- -------- ---------- ---------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Institutional Class (15,435) (17,731) (2,735) (2,862) (59,082) (45,937) (13,231) (14,187)
Retail Class (5,700) (4,145) (515) (319) -- -- (473) (72)
Institutional II Class (2,607) (892) (495) (211) (1,811) (665) (3,200) (2,012)
Net Capital Gains
Institutional Class -- -- -- -- -- -- -- --
Retail Class -- -- -- -- -- -- -- --
-------- -------- -------- -------- ---------- ---------- -------- --------
Total Distributions (23,742) (22,768) (3,745) (3,392) (60,893) (46,602) (16,904) (16,271)
-------- -------- -------- -------- ---------- ---------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Institutional Class:
Shares Issued 630,250 860,169 101,174 131,718 2,115,793 2,007,796 443,559 418,427
Shares Issued in Conjunction with
Acquisition of Common Trust Fund Assets -- -- -- -- -- -- -- --
Shares Issued in Lieu of Cash Distributions -- 1 -- -- 45 11 6 3
Shares Redeemed (659,673)(789,681) (106,822) (121,091) (1,908,765) (1,615,184) (492,896) (364,250)
-------- -------- -------- -------- ---------- ---------- -------- --------
Total Institutional Class Share
Transactions (29,423) 70,489 (5,648) 10,627 207,073 392,623 (49,331) 54,180
-------- -------- -------- -------- ---------- ---------- -------- --------
Retail Class:
Shares Issued 78,945 99,955 33,688 26,603 -- -- 23,822 11,195
Shares Issued in Lieu of Cash Distributions 5,699 4,145 516 319 -- -- 474 72
Shares Redeemed (60,653) (50,477) (33,888) (13,234) -- -- (19,380) (2,509)
-------- -------- -------- -------- ---------- ---------- -------- --------
Total Retail Class Share Transactions 23,991 53,623 316 13,688 -- -- 4,916 8,758
-------- -------- -------- -------- ---------- ---------- -------- --------
Institutional II Class:
Shares Issued 136,399 70,265 66,745 28,161 315,465 144,979 186,332 157,259
Shares Issued in Lieu of Cash Distributions -- -- -- -- -- -- -- --
Shares Redeemed (102,228) (41,476) (59,404) (18,774) (295,206) (127,953) (170,056) (110,035)
-------- -------- -------- -------- ---------- ---------- -------- --------
Total Institutional II Class
Share Transactions 34,171 28,789 7,341 9,387 20,259 17,026 16,276 47,224
-------- -------- -------- -------- ---------- ---------- -------- --------
Increase (Decrease) in Net Assets from
Shareholder Transactions 28,739 152,901 2,009 33,702 227,332 409,649 (28,139) 110,162
-------- -------- -------- -------- ---------- ---------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS 28,736 152,896 2,008 33,702 227,277 409,672 (28,144) 110,168
-------- -------- -------- -------- ---------- ---------- -------- --------
NET ASSETS:
Beginning of period 481,836 328,940 100,305 66,603 1,060,785 651,113 331,237 221,069
-------- -------- -------- -------- ---------- ---------- -------- --------
End of period $510,572 $481,836 $102,313 $100,305 $1,288,062 $1,060,785 $303,093 $331,237
======== ======== ======== ======== ========== ========== ======== ========
SHARES ISSUED AND REDEEMED:
Institutional Class:
Shares Issued 630,250 860,170 101,174 131,714 2,115,793 2,007,818 443,559 418,437
Shares Issued in Conjunction with
Acquisition of Common Trust Fund Assets -- -- -- -- -- -- -- --
Shares Issued in Lieu of Cash
Distributions -- 1 -- -- 45 11 6 3
Shares Redeemed (659,673)(789,681) (106,822) (121,091) (1,908,765) (1,615,184) (492,895) (364,250)
-------- -------- -------- -------- ---------- ---------- -------- --------
Total Institutional Class Share
Transactions (29,423) 70,490 (5,648) 10,623 207,073 392,645 (49,330) 54,190
-------- -------- -------- -------- ---------- ---------- -------- --------
Retail Class:
Shares Issued 78,945 99,955 33,688 26,603 -- -- 23,822 11,195
Shares Issued in Lieu of Cash Distributions 5,699 4,145 516 319 -- -- 474 72
Shares Redeemed (60,653) (50,477) (33,888) (13,234) -- -- (19,380) (2,509)
-------- -------- -------- -------- ---------- ---------- -------- --------
Total Retail Class Share Transactions 23,991 53,623 316 13,688 -- -- 4,916 8,758
-------- -------- -------- -------- ---------- ---------- -------- --------
Institutional II Class:
Shares Issued 136,399 70,265 66,745 28,161 315,465 144,979 186,332 157,259
Shares Issued in Lieu of Cash Distributions -- -- -- -- -- -- -- --
Shares Redeemed (102,228) (41,476) (59,404) (18,774) (295,206) (127,953) (170,056) (110,035)
-------- -------- -------- -------- ---------- ---------- -------- --------
Total Institutional II Class Share
Transactions 34,171 28,789 7,341 9,387 20,259 17,026 16,276 47,224
-------- -------- -------- -------- ---------- ---------- -------- --------
Net Increase (Decrease) in Share
Transactions 28,739 152,902 2,009 33,698 227,332 409,671 (28,138) 110,172
======== ======== ======== ======== ========== ========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM MARYLAND PENNSYLVANIA
TREASURY TAX-FREE TAX-FREE
PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO(2)
------------------- ------------ ------------
1997 1996 1997 1997
-------- -------- ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 1,651 $ 104 $ 1,872 $ 502
Net Realized Gain (Loss) from Investments 469 92
and Foreign Currency Transactions 12 --
Net Change in Unrealized Appreciation
(Depreciation) of Investments
and Foreign Currency (116) (83) (1,565) (356)
-------- -------- ------- -------
Net Increase in Net Assets from Operations 1,547 21 776 238
-------- -------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Institutional Class (1,009) (104) (1,787) (494)
Retail Class (641) -- (85) (8)
Institutional II Class -- -- -- --
Net Capital Gains
Institutional Class (12) -- -- --
Retail Class (13) -- -- --
-------- -------- ------- -------
Total Distributions (1,675) (104) (1,872) (502)
-------- -------- ------- -------
CAPITAL SHARE TRANSACTIONS:
Institutional Class:
Shares Issued 4,158 18,961 4,262 2,248
Shares Issued in Conjunction with
Acquisition of Common Trust Fund Assets -- -- 81,100 22,508
Shares Issued in Lieu of Cash Distributions 11 -- -- --
Shares Redeemed (1,437) (55) (4,730) (1,221)
-------- -------- ------- -------
Total Institutional Class Share
Transactions 2,732 18,906 80,632 23,535
-------- -------- ------- -------
Retail Class:
Shares Issued 30,973 -- 8,773 1,207
Shares Issued in Lieu of Cash Distributions 654 -- 85 8
Shares Redeemed (8,554) -- (789) (31)
-------- -------- ------- -------
Total Retail Class Share Transactions 23,073 -- 8,069 1,184
-------- -------- ------- -------
Institutional II Class:
Shares Issued -- -- -- --
Shares Issued in Lieu of Cash Distributions -- -- -- --
Shares Redeemed -- -- -- --
-------- -------- ------- -------
Total Institutional II Class
Share Transactions -- -- -- --
-------- -------- ------- -------
Increase (Decrease) in Net Assets from
Shareholder Transactions 25,805 18,906 88,701 24,719
-------- -------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS 25,677 18,823 87,605 24,455
-------- -------- ------- -------
NET ASSETS:
Beginning of period 18,823 -- -- --
-------- -------- ------- -------
End of period $ 44,500 $ 18,823 $87,605 $24,455
======== ======== ======= =======
SHARES ISSUED AND REDEEMED:
Institutional Class:
Shares Issued 416 1,896 436 218
Shares Issued in Conjunction with
Acquisition of Common Trust Fund Assets -- -- 8,110 2,251
Shares Issued in Lieu of Cash
Distributions 1 -- -- --
Shares Redeemed (144) (5) (478) (123)
-------- -------- ------- -------
Total Institutional Class Share
Transactions 273 1,891 8,068 2,346
-------- -------- ------- -------
Retail Class:
Shares Issued 3,093 -- 883 121
Shares Issued in Lieu of Cash Distributions 65 -- 8 1
Shares Redeemed (855) -- (80) (3)
-------- -------- ------- -------
Total Retail Class Share Transactions 2,303 -- 811 119
-------- -------- ------- -------
Institutional II Class:
Shares Issued -- -- -- --
Shares Issued in Lieu of Cash Distributions -- -- -- --
Shares Redeemed -- -- -- --
-------- -------- ------- -------
Total Institutional II Class Share
Transactions -- -- -- --
-------- -------- ------- -------
Net Increase (Decrease) in Share
Transactions 2,576 1,891 8,879 2,465
======== ======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE
INCOME FIXED INCOME
PORTFOLIO PORTFOLIO(2)
------------------ ------------
1997 1996 1997
-------- -------- --------
<S> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 13,213 $ 6,728 $ 2,181
Net Realized Gain (Loss) from Investments (2,706) 706 (81)
and Foreign Currency Transactions
Net Change in Unrealized Appreciation
(Depreciation) of Investments
and Foreign Currency 1,565 (3,654) (1,200)
-------- -------- --------
Net Increase in Net Assets from Operations 12,072 3,780 900
-------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Institutional Class (12,965) (6,384) (2,181)
Retail Class (249) (102) --
Institutional II Class -- -- --
Net Capital Gains
Institutional Class -- -- --
Retail Class -- -- --
-------- -------- --------
Total Distributions (13,214) (6,486) (2,181)
-------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Institutional Class:
Shares Issued 36,737 134,768 4,653
Shares Issued in Conjunction with
Acquisition of Common Trust Fund Assets 55,913 -- 78,230
Shares Issued in Lieu of Cash Distributions 1,652 -- --
Shares Redeemed (31,143) (17,667) (5,276)
-------- -------- --------
Total Institutional Class Share
Transactions 63,159 $117,101 77,607
-------- -------- --------
Retail Class:
Shares Issued 2,111 7,481 --
Shares Issued in Lieu of Cash Distributions 249 102 --
Shares Redeemed (2,455) (3,569) --
-------- -------- --------
Total Retail Class Share Transactions (95) 4,014 --
-------- -------- --------
Institutional II Class:
Shares Issued -- -- --
Shares Issued in Lieu of Cash Distributions -- -- --
Shares Redeemed -- -- --
-------- -------- --------
Total Institutional II Class
Share Transactions -- -- --
-------- -------- --------
Increase (Decrease) in Net Assets from
Shareholder Transactions 63,064 121,115 77,607
-------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS 61,922 118,409 76,326
-------- -------- --------
NET ASSETS:
Beginning of period 185,146 66,737 --
-------- -------- --------
End of period $247,068 $185,146 $ 76,326
======== ======== ========
SHARES ISSUED AND REDEEMED:
Institutional Class:
Shares Issued 3,712 13,309 499
Shares Issued in Conjunction with
Acquisition of Common Trust Fund Assets 5,552 -- 7,823
Shares Issued in Lieu of Cash
Distributions 169 -- --
Shares Redeemed (3,161) (1,767) (535)
-------- -------- --------
Total Institutional Class Share
Transactions 6,272 11,542 7,787
-------- -------- --------
Retail Class:
Shares Issued 212 739 --
Shares Issued in Lieu of Cash Distributions 25 10 --
Shares Redeemed (246) (357) --
-------- -------- --------
Total Retail Class Share Transactions (9) 392 --
-------- -------- --------
Institutional II Class:
Shares Issued -- -- --
Shares Issued in Lieu of Cash Distributions -- -- --
Shares Redeemed -- -- --
-------- -------- --------
Total Institutional II Class Share
Transactions -- -- --
-------- -------- --------
Net Increase (Decrease) in Share
Transactions 6,263 11,934 7,787
======== ======== ========
<FN>
(1) Commenced operations on March 20, 1996.
(2) Commenced operations on November 18, 1996.
</FN>
</TABLE>
68 & 69
<PAGE>
APRIL 30, 1997 [ARK LOGO OMITTED]
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
FOR THE YEAR OR PERIOD ENDED APRIL 30,
<TABLE>
<CAPTION>
EQUITY BLUE CHIP
BALANCED INCOME EQUITY STOCK
PORTFOLIO PORTFOLIO(2) PORTFOLIO(3) PORTFOLIO(2)
---------------- ----------- ----------------- ------------
1997 1996 1997 1997 1996 1997
---- ---- ----------- ---- ---- ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income (Loss) $ 2,709 $ 3,277 $ 922 $ 389 $ 13 $ 144
Net Realized Gain (Loss) from Investments
and Foreign Currency Transactions 6,028 8,219 6,425 236 -- 3,537
Net Change in Unrealized Appreciation
(Depreciation) of Investments and
Foreign Currency (1,398) 7,402 (1,090) 5,200 116 (240)
-------- -------- -------- -------- -------- --------
Net Increase (Decrease) in Net Assets
from Operations 7,339 18,898 6,257 5,825 129 3,441
-------- -------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Institutional Class (2,387) (3,166) (922) (326) -- (127)
Retail Class (118) (32) -- (66) -- --
Institutional II Class -- -- -- -- -- --
Net Capital Gains
Institutional Class (4,424) (3,544) -- (19) -- --
Retail Class (203) (53) -- (4) -- --
-------- -------- -------- -------- -------- --------
Total Distributions (7,132) (6,795) (922) (415) -- (127)
-------- -------- -------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Institutional Class:
Shares Issued 14,504 27,190 1,578 22,062 11,327 897
Shares Issued in Conjunction with
Acquisition of Common Trust Fund Assets -- -- 80,587 -- -- 43,067
Shares Issued in Lieu of Cash Distributions 4,943 -- -- 87 -- --
Shares Redeemed (44,855) (27,957) (3,553) (2,314) -- (6,707)
-------- -------- -------- -------- -------- --------
Total Institutional Class Share
Transactions (25,408) (767) 78,612 19,835 11,327 37,257
-------- -------- -------- -------- -------- --------
Retail Class:
Shares Issued 3,804 2,896 -- 12,987 -- --
Shares Issued in Lieu of Cash Distributions 321 85 -- 70 -- --
Shares Redeemed (1,329) (349) -- (857) -- --
-------- -------- -------- -------- -------- --------
Total Retail Class Share Transactions 2,796 2,632 -- 12,200 -- --
-------- -------- -------- -------- -------- --------
Institutional II Class:
Shares Issued -- -- -- -- -- --
Shares Issued in Lieu of Cash Distributions -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total Institutional II Class
Share Transactions -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Increase (Decrease) in Net Assets from
Shareholder Transactions (22,612) 1,865 78,612 32,035 11,327 37,257
-------- -------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS (22,405) 13,968 83,947 37,445 11,456 40,571
-------- -------- -------- -------- -------- --------
NET ASSETS:
Beginning of period 105,556 91,588 -- 11,456 -- --
-------- -------- -------- -------- -------- --------
End of period $ 83,151 $105,556 $ 83,947 $ 48,901 $ 11,456 $ 40,571
======== ======== ======== ========= ======== ========
SHARES ISSUED AND REDEEMED:
Institutional Class:
Shares Issued 1,290 2,469 151 1,943 1,132 87
Shares Issued in Conjunction with
Acquisition of Common Trust Fund Assets -- -- 8,058 -- -- 4,307
Shares Issued in Lieu of Cash Distributions 444 -- -- 7 -- --
Shares Redeemed (3,988) (2,545) (342) (202) -- (628)
-------- -------- -------- -------- -------- --------
Total Institutional Class
Share Transactions (2,254) (76) 7,867 1,748 1,132 3,766
-------- -------- -------- -------- -------- --------
Retail Class:
Shares Issued 337 262 -- 1,135 -- --
Shares Issued in Lieu of Cash Distributions 29 8 -- 6 -- --
Shares Redeemed (118) (31) -- (74) -- --
-------- -------- -------- -------- -------- --------
Total Retail Class Share Transactions 248 239 -- 1,067 -- --
-------- -------- -------- -------- -------- --------
Institutional II Class:
Shares Issued -- -- -- -- -- --
Shares Issued in Lieu of Cash Distributions -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total Institutional II Class
Share Transactions -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Net Increase (Decrease) in
Share Transactions (2,006) 163 7,867 2,815 1,132 3,766
======== ======== ======== ======== ======== ========
CAPITAL MID-CAP SPECIAL INTERNATIONAL
GROWTH EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO(2) PORTFOLIO(4) PORTFOLIO
---------------- ----------- ----------------- ---------------
1997 1996 1997 1997 1996 1997 1996
---- ---- ----------- ---- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income (Loss) $ 347 $ 567 $ 78 $ (29) $ 65 $ 12 $ 5
Net Realized Gain (Loss) from Investments
and Foreign Currency Transactions 3,560 8,217 391 2,092 531 (3) 172
Net Change in Unrealized Appreciation
(Depreciation) of Investments and
Foreign Currency 836 275 (72) (8,396) 7,032 (192) 300
-------- --------- -------- --------- --------- ------- --------
Net Increase (Decrease) in Net Assets
from Operations 4,743 9,059 397 (6,333) 7,628 (183) 477
-------- --------- -------- --------- --------- ------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Institutional Class (395) (638) (72) -- (90) -- (70)
Retail Class (44) (17) -- -- -- -- --
Institutional II Class -- -- -- -- -- -- --
Net Capital Gains
Institutional Class (2,960) (3,005) -- (4,563) -- (63) (69)
Retail Class (304) (125) -- (286) -- (2) --
-------- --------- -------- --------- --------- ------- --------
Total Distributions (3,703) (3,785) (72) (4,849) (90) (65) (139)
-------- --------- -------- --------- --------- ------- --------
CAPITAL SHARE TRANSACTIONS:
Institutional Class:
Shares Issued 5,594 12,998 3,539 8,165 26,526 446 154
Shares Issued in Conjunction with
Acquisition of Common Trust Fund Assets -- -- 26,212 -- -- -- --
Shares Issued in Lieu of Cash Distributions 2,960 -- 11 4,563 -- 63 139
Shares Redeemed (14,909) (19,789) (3,028) (17,980) (443) -- --
-------- --------- -------- --------- --------- ------- --------
Total Institutional Class Share
Transactions (6,355) (6,791) 26,734 (5,252) 26,083 509 293
-------- --------- -------- --------- --------- ------- --------
Retail Class:
Shares Issued 3,797 2,335 -- 1,732 -- 393 --
Shares Issued in Lieu of Cash Distributions 348 141 -- 286 -- 2 --
Shares Redeemed (736) (862) -- (384) -- (18) --
-------- --------- -------- --------- --------- ------- --------
Total Retail Class Share Transactions 3,409 1,614 -- 1,634 -- 377 --
-------- --------- -------- --------- --------- ------- --------
Institutional II Class:
Shares Issued -- -- -- -- -- -- --
Shares Issued in Lieu of Cash Distributions -- -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- -- --
-------- --------- -------- --------- --------- ------- --------
Total Institutional II Class
Share Transactions -- -- -- -- -- -- --
-------- --------- -------- --------- --------- ------- --------
Increase (Decrease) in Net Assets from
Shareholder Transactions (2,946) (5,177) 26,734 (3,618) 26,083 886 293
-------- --------- -------- --------- --------- ------- --------
NET INCREASE (DECREASE) IN NET ASSETS (1,906) 97 27,059 (14,800) 33,621 638 631
-------- --------- -------- --------- --------- ------- --------
NET ASSETS:
Beginning of period 41,671 41,574 -- 33,621 -- 3,571 2,940
-------- --------- -------- --------- --------- ------- --------
End of period $ 39,765 $ 41,671 $ 27,059 $ 18,821 $ 33,621 $ 4,209 $ 3,571
======== ========= ======== ========= ========= ======= ========
SHARES ISSUED AND REDEEMED:
Institutional Class:
Shares Issued 476 1,182 341 678 2,321 43 15
Shares Issued in Conjunction with
Acquisition of Common Trust Fund Assets -- -- 2,621 -- -- -- --
Shares Issued in Lieu of Cash Distributions 255 -- 1 457 -- 6 13
Shares Redeemed (1,275) (1,808) (302) (1,340) (37) -- --
-------- --------- -------- --------- --------- ------- --------
Total Institutional Class
Share Transactions (544) (626) 2,661 (205) 2,284 49 28
-------- --------- -------- --------- --------- ------- --------
Retail Class:
Shares Issued 321 210 -- 134 -- 37 --
Shares Issued in Lieu of Cash Distributions 30 13 -- 28 -- 1 --
Shares Redeemed (63) (80) -- (36) -- (2) --
-------- --------- -------- --------- --------- ------- --------
Total Retail Class Share Transactions 288 143 -- 126 -- 36 --
-------- --------- -------- --------- --------- ------- --------
Institutional II Class:
Shares Issued -- -- -- -- -- -- --
Shares Issued in Lieu of Cash Distributions -- -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- -- --
-------- --------- -------- --------- --------- ------- --------
Total Institutional II Class
Share Transactions -- -- -- -- -- -- --
-------- --------- -------- --------- --------- ------- --------
Net Increase (Decrease) in
Share Transactions (256) (483) 2,661 (79) 2,284 85 28
======== ========= ======== ========= ========= ======= ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
(2)Commenced operations on November 18, 1996.
(3)Commenced operations on April 1, 1996.
(4)Commenced operations on July 13, 1995.
70 & 71
<PAGE>
- -------------------------------------------------------------------------------
Financial Highlights
- -------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR OR PERIOD ENDED APRIL 30,
<TABLE>
<CAPTION>
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS RATIO OF
VALUE, NET UNREALIZED FROM NET FROM NET ASSET NET ASSETS EXPENSES
BEGINNING INVESTMENT GAINS OR (LOSSES) INVESTMENT CAPITAL VALUE, END TOTAL END OF TO AVERAGE
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN+ PERIOD (000) NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
- ----------------------
MONEY MARKET PORTFOLIO
- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INSTITUTIONAL CLASS
1997 $1.00 0.05 -- (0.05) -- $1.00 5.36% $ 318,919 0.28%
1996 1.00 0.06 -- (0.06) -- 1.00 5.78 348,343 0.25
1995 1.00 0.05 -- (0.05) -- 1.00 5.13 277,859 0.20
1994 (1) 1.00 0.03 -- (0.03) -- 1.00 2.80 197,162 0.26*
RETAIL CLASS
1997 $1.00 0.05 -- (0.05) -- $1.00 5.03% $ 128,693 0.59%
1996 1.00 0.05 -- (0.05) -- 1.00 5.44 104,703 0.58
1995 1.00 0.05 -- (0.05) -- 1.00 4.69 51,081 0.45
1994 (2) 1.00 -- -- -- -- 1.00 0.42 12 1.16*
INSTITUTIONAL II CLASS
1997 $1.00 0.05 -- (0.05) -- $1.00 5.25% $ 62,960 0.38%
1996 (3) 1.00 0.04 -- (0.04) -- 1.00 4.33 28,790 0.36*
- -------------------------------
TAX-FREE MONEY MARKET PORTFOLIO
- -------------------------------
INSTITUTIONAL CLASS
1997 $1.00 0.03 -- (0.03) -- $1.00 3.29% $ 69,091 0.28%
1996 1.00 0.04 -- (0.04) -- 1.00 3.61 74,739 0.22
1995 1.00 0.03 -- (0.03) -- 1.00 3.24 64,112 0.22
1994 (1) 1.00 0.02 -- (0.02) -- 1.00 1.87 66,692 0.35*
RETAIL CLASS
1997 $1.00 0.03 -- (0.03) -- $1.00 3.01% $ 16,495 0.55%
1996 1.00 0.03 -- (0.03) -- 1.00 3.53 16,179 0.34
1995 1.00 0.03 -- (0.03) -- 1.00 2.74 2,491 0.75
1994 (4) 1.00 -- -- -- -- 1.00 0.20 50 1.25*
INSTITUTIONAL II CLASS
1997 $1.00 0.03 -- (0.03) -- $1.00 3.19% $ 16,727 0.38%
1996 (5) 1.00 0.02 -- (0.02) -- 1.00 2.62 9,387 0.33*
- --------------------------------------
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
- --------------------------------------
INSTITUTIONAL CLASS
1997 $1.00 0.05 -- (0.05) -- $1.00 5.22% $1,250,778 0.32%
1996 1.00 0.05 -- (0.05) -- 1.00 5.64 1,043,758 0.31
1995 1.00 0.05 -- (0.05) -- 1.00 5.00 651,113 0.25
1994 (1) 1.00 0.03 -- (0.03) -- 1.00 2.70 271,437 0.35*
INSTITUTIONAL II CLASS
1997 $1.00 0.05 -- (0.05) -- $1.00 5.12% $ 37,284 0.42%
1996 (5) 1.00 0.04 -- (0.04) -- 1.00 4.11 17,027 0.41*
- ------------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO
- ------------------------------------
INSTITUTIONAL CLASS
1997 $1.00 0.05 -- (0.05) -- $1.00 5.00% $ 225,924 0.37%
1996 1.00 0.05 -- (0.05) -- 1.00 5.32 275,259 0.36
1995 1.00 0.05 -- (0.05) -- 1.00 4.60 221,069 0.38
1994 (1) 1.00 0.03 -- (0.03) -- 1.00 2.48 137,826 0.43*
RETAIL CLASS
1997 $1.00 0.05 -- (0.05) -- $1.00 4.71% $ 13,673 0.64%
1996 (6) 1.00 0.02 -- (0.02) -- 1.00 1.82 8,758 0.55*
INSTITUTIONAL II CLASS
1997 $1.00 0.05 -- (0.05) -- $1.00 4.89% $ 63,496 0.47%
1996 (5) 1.00 0.04 -- (0.04) -- 1.00 3.87 47,220 0.47*
- -----------------------------
SHORT-TERM TREASURY PORTFOLIO
- -----------------------------
INSTITUTIONAL CLASS
1997 $ 9.96 0.50 -- (0.49) (0.01) $9.96 5.13% $ 21,563 0.55%
1996 (7) 10.00 0.06 (0.04) (0.06) -- 9.96 0.16 18,823 0.55*
RETAIL CLASS
1997 (8) $ 9.95 0.27 0.03 (0.28) (0.01) $9.96 3.39% $ 22,937 0.67%*
</TABLE>
<TABLE>
<CAPTION>
RATIO
RATIO OF NET OF EXPENSES
INVESTMENT TO AVERAGE
INCOME NET ASSETS PORTFOLIO
TO AVERAGE (EXCLUDING TURNOVER
NET ASSETS WAIVERS) RATE
- --------------------------------------------------
- ----------------------
MONEY MARKET PORTFOLIO
- ----------------------
<S> <C> <C> <C>
INSTITUTIONAL CLASS
1997 5.23% 0.43% --
1996 5.62 0.44 --
1995 5.13 0.46 --
1994 (1) 3.16* 0.52* --
RETAIL CLASS
1997 4.92% 0.83% --
1996 5.25 0.77 --
1995 4.88 0.97 --
1994 (2) 2.26* 592.55* --
INSTITUTIONAL II CLASS
1997 5.14% 0.53% --
1996 (3) 5.37* 0.55* --
- -------------------------------
TAX-FREE MONEY MARKET PORTFOLIO
- -------------------------------
INSTITUTIONAL CLASS
1997 3.23% 0.44% --
1996 3.54 0.45 --
1995 3.21 0.47 --
1994 (1) 2.10* 0.53* --
RETAIL CLASS
1997 2.97% 0.84% --
1996 3.33 0.90 --
1995 2.68 2.94 --
1994 (4) 1.20* 32.17* --
INSTITUTIONAL II CLASS
1997 3.14% 0.54% --
1996 (5) 3.35* 0.58* --
- --------------------------------------
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
- --------------------------------------
INSTITUTIONAL CLASS
1997 5.10% 0.43% --
1996 5.45 0.44 --
1995 5.09 0.47 --
1994 (1) 3.03* 0.62* --
INSTITUTIONAL II CLASS
1997 5.01% 0.53% --
1996 (5) 5.25* 0.56* --
- ------------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO
- ------------------------------------
INSTITUTIONAL CLASS
1997 4.88% 0.43% --
1996 5.18 0.45 --
1995 4.59 0.47 --
1994 (1) 2.80* 0.51* --
RETAIL CLASS
1997 4.62% 0.83% --
1996 (6) 4.71* 0.86* --
INSTITUTIONAL II CLASS
1997 4.79% 0.53%* --
1996 (5) 4.98* 0.55* --
- -----------------------------
SHORT-TERM TREASURY PORTFOLIO
- -----------------------------
INSTITUTIONAL CLASS
1997 5.11% 0.60% 147.86%
1996 (7) (0.55)* 0.60* --
RETAIL CLASS
1997 (8) 5.07%* 0.91%* 147.86%
</TABLE>
72
<PAGE>
<TABLE>
<CAPTION>
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS RATIO OF
VALUE, NET UNREALIZED FROM NET FROM NET ASSET NET ASSETS EXPENSES
BEGINNING INVESTMENT GAINS OR (LOSSES) INVESTMENT CAPITAL VALUE, END TOTAL END OF TO AVERAGE
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN+ PERIOD (000) NET ASSETS
- --------------------------------------------------------------------------------------------------------------------------
- ---------------------------
MARYLAND TAX-FREE PORTFOLIO
- ---------------------------
INSTITUTIONAL CLASS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 (9) $10.00 0.22 (0.13) (0.22) -- $ 9.87 0.89% $ 79,608 0.67%*
RETAIL CLASS
1997 (10) $ 9.96 0.13 (0.07) (0.15) -- $ 9.87 0.63% $ 7,997 0.91%*
- -------------------------------
PENNSYLVANIA TAX-FREE PORTFOLIO
- -------------------------------
INSTITUTIONAL CLASS
1997 (9) $10.00 0.21 (0.08) (0.21) -- $ 9.92 1.32% $ 23,278 0.63%*
RETAIL CLASS
1997 (10) $10.01 0.13 (0.07) (0.15) -- $ 9.92 0.60% $ 1,177 0.87%*
- ----------------
INCOME PORTFOLIO
- ----------------
INSTITUTIONAL CLASS
1997 $ 9.80 0.59 0.02 (0.59) -- $ 9.82 6.51% $242,966 0.68%
1996 9.60 0.61 0.20 (0.61) -- 9.80 8.46 180,962 0.73
1995 9.61 0.58 0.02 (0.58) (0.03) 9.60 6.53 66,441 0.74
1994 (11) 10.00 0.38 (0.38) (0.38) (0.01) 9.61 (0.08) 54,289 0.77*
RETAIL CLASS
1997 $ 9.91 0.59 0.01 (0.57) -- $ 9.94 6.32% $ 4,102 0.89%
1996 9.72 0.60 0.19 (0.60) -- 9.91 8.14 4,184 1.02
1995 9.62 0.55 0.05 (0.47) (0.03) 9.72 6.45 296 1.23
1994 (12) 9.69 0.02 (0.06) (0.03) -- 9.62 (0.41) 30 1.72*
- -----------------------------------
INTERMEDIATE FIXED INCOME PORTFOLIO
- -----------------------------------
INSTITUTIONAL CLASS
1997 (9) $10.00 0.28 (0.20) (0.28) -- $ 9.80 0.78% $ 76,326 0.68%*
- ------------------
BALANCED PORTFOLIO
- ------------------
INSTITUTIONAL CLASS
1997 $11.38 0.33 0.53 (0.30) (0.51) $11.43 7.85% $ 76,987 0.74%
1996 10.04 0.34 1.71 (0.34) (0.37) 11.38 20.90 102,233 0.75
1995 10.16 0.33 0.03 (0.29) (0.19) 10.04 3.75 91,039 0.77
1994 (11) 10.00 0.19 0.17 (0.19) (0.01) 10.16 3.56 88,208 0.81*
RETAIL CLASS
1997 $11.35 0.28 0.56 (0.28) (0.51) $11.40 7.66% $ 6,164 0.96%
1996 10.04 0.31 1.68 (0.31) (0.37) 11.35 20.23 3,323 1.09
1995 10.15 0.27 0.05 (0.24) (0.19) 10.04 3.33 549 1.26
1994 (13) 10.62 0.01 (0.43) (0.05) -- 10.15 (3.95) 166 1.86*
- -----------------------
EQUITY INCOME PORTFOLIO
- -----------------------
INSTITUTIONAL CLASS
1997 (9) $10.00 0.12 0.67 (0.12) -- $10.67 7.88% $ 83,947 0.83%*
- --------------------------
BLUE CHIP EQUITY PORTFOLIO
- --------------------------
INSTITUTIONAL CLASS
1997 $10.12 0.17 2.28 (0.17) (0.01) $12.39 24.41% $ 35,690 0.70%
1996 (14) 10.00 -- 0.12 -- -- 10.12 1.20 11,456 0.65*
RETAIL CLASS
1997 (15) $10.33 0.16 2.06 (0.16) (0.01) $12.38 21.74% $ 13,211 0.86%*
</TABLE>
<TABLE>
<CAPTION>
RATIO
RATIO OF NET OF EXPENSES
INVESTMENT TO AVERAGE
INCOME NET ASSETS PORTFOLIO AVERAGE
TO AVERAGE (EXCLUDING TURNOVER COMMISSION
NET ASSETS WAIVERS) RATE RATE**
- --------------------------------------------------------------------------------
- ---------------------------
MARYLAND TAX-FREE PORTFOLIO
- ---------------------------
<S> <C> <C> <C> <C> <C>
INSTITUTIONAL CLASS
1997 (9) 4.95%* 0.72%* 11.13% --
RETAIL CLASS
1997 (10) 4.70%* 1.10%* 11.13% --
- -------------------------------
PENNSYLVANIA TAX-FREE PORTFOLIO
- -------------------------------
INSTITUTIONAL CLASS
1997 (9) 4.78%* 0.76%* 32.76% --
RETAIL CLASS
1997 (10) 4.65%* 1.12%* 32.76% --
- ----------------
INCOME PORTFOLIO
- ----------------
INSTITUTIONAL CLASS
1997 6.19% 0.68% 271.60% --
1996 6.00 0.73 107.33 --
1995 6.15 0.74 73.00 --
1994 (11) 4.90* 0.77* 20.00 --
RETAIL CLASS
1997 5.96% 1.09% 271.60% --
1996 5.54 1.37 107.33 --
1995 5.66 27.63 73.00 --
1994 (12) 3.95* 55.35* 20.00 --
- -----------------------------------
INTERMEDIATE FIXED INCOME PORTFOLIO
- -----------------------------------
INSTITUTIONAL CLASS
1997 (9) 5.55%* 0.83%* 17.18% --
- ------------------
BALANCED PORTFOLIO
- ------------------
INSTITUTIONAL CLASS
1997 2.79% 0.74% 124.22% .0673
1996 3.19 0.75 107.56 --
1995 3.32 0.77 81.00 --
1994 (11) 2.41* 0.81* 37.00 --
RETAIL CLASS
1997 2.56% 1.19% 124.22% .0673
1996 2.51 1.55 107.56 --
1995 2.83 5.80 81.00 --
1994 (13) 1.36* 15.08* 37.00 --
- -----------------------
EQUITY INCOME PORTFOLIO
- -----------------------
INSTITUTIONAL CLASS
1997 (9) 2.47%* 0.93%* 34.38% .0689
- --------------------------
BLUE CHIP EQUITY PORTFOLIO
- --------------------------
INSTITUTIONAL CLASS
1997 1.55% 0.90% 46.91% .0727
1996 (14) 1.52* 1.38* 0.97 --
RETAIL CLASS
1997 (15) 1.29%* 1.25%* 46.91% .0727
<FN>
* ANNUALIZED
** AVERAGE COMMISSION RATE PAID PER SHARE FOR SECURITY PURCHASES AND SALES
DURING THE PERIOD. PRESENTATION OF THE RATE IS ONLY REQUIRED FOR FISCAL YEARS
BEGINNING AFTER SEPTEMBER 1, 1995.
+ TOTAL RETURN FOR THE RETAIL CLASS DOES NOT INCLUDE THE ONE TIME SALES CHARGE.
(1) COMMENCED OPERATIONS ON JUNE 14, 1993.
(2) COMMENCED OPERATIONS ON MARCH 2, 1994.
(3) COMMENCED OPERATIONS ON JULY 21, 1995.
(4) COMMENCED OPERATIONS ON MARCH 15, 1994.
(5) COMMENCED OPERATIONS ON JULY 28, 1995.
(6) COMMENCED OPERATIONS ON DECEMBER 15, 1995.
(7) COMMENCED OPERATIONS ON MARCH 20, 1996.
(8) COMMENCED OPERATIONS ON SEPTEMBER 9, 1996.
(9) COMMENCED OPERATIONS ON NOVEMBER 18, 1996.
(10) COMMENCED OPERATIONS ON JANUARY 2, 1997.
(11) COMMENCED OPERATIONS ON JULY 16, 1993.
(12) COMMENCED OPERATIONS ON APRIL 12, 1994.
(13) COMMENCED OPERATIONS ON MARCH 9, 1994.
(14) COMMENCED OPERATIONS ON APRIL 1, 1996.
(15) COMMENCED OPERATIONS ON MAY 16, 1996.
(16) COMMENCED OPERATIONS ON JULY 13, 1995.
(17) COMMENCED OPERATIONS ON DECEMBER 30, 1994.
(18) COMMENCED OPERATIONS ON NOVEMBER 1, 1996.
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
73
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (concluded)
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR OR PERIOD ENDED APRIL 30,
<TABLE>
<CAPTION>
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS RATIO OF
VALUE, NET UNREALIZED FROM NET FROM NET ASSET NET ASSETS EXPENSES
BEGINNING INVESTMENT GAINS OR (LOSSES) INVESTMENT CAPITAL VALUE, END TOTAL END OF TO AVERAGE
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN+ PERIOD (000) NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------
STOCK PORTFOLIO
- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INSTITUTIONAL CLASS
1997 (9) $10.00 0.03 0.77 (0.03) -- $10.77 8.04% $ 40,571 0.90%*
- ------------------------
CAPITAL GROWTH PORTFOLIO
- ------------------------
INSTITUTIONAL CLASS
1997 $11.60 0.11 1.41 (0.14) (1.06) $11.92 13.46% $ 34,170 0.39%
1996 10.20 0.16 2.17 (0.16) (0.77) 11.60 23.62 39,560 0.24
1995 10.19 0.14 0.16 (0.11) (0.18) 10.20 3.15 41,170 0.74
1994 (11) 10.00 0.06 0.21 (0.03) (0.05) 10.19 2.66 52,233 0.87*
RETAIL CLASS
1997 $11.56 0.09 1.41 (0.13) (1.06) $11.87 13.39% $ 5,595 0.56%
1996 10.18 0.12 2.15 (0.12) (0.77) 11.56 23.24 2,111 0.50
1995 10.18 0.08 0.18 (0.08) (0.18) 10.18 2.74 404 1.23
1994 (13) 10.89 -- (0.71) -- -- 10.18 (6.52) 87 1.92*
- ------------------------
MID-CAP EQUITY PORTFOLIO
- ------------------------
INSTITUTIONAL CLASS
1997 (9) $10.00 0.03 0.17 (0.03) -- $10.17 1.98% $ 27,059 0.90%*
- ------------------------
SPECIAL EQUITY PORTFOLIO
- ------------------------
INSTITUTIONAL CLASS
1997 $14.72 (0.01) (2.97) -- (3.21) $ 8.53 (23.43)% $ 17,746 0.95%
1996 (16 10.00 0.09 4.72 (0.09) -- 14.72 48.34 33,621 0.91*
RETAIL CLASS
1997 (15) $15.47 (0.01) (3.72) -- (3.21) $ 8.53 (27.14)% $ 1,075 1.11%*
- ------------------------------
INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------
INSTITUTIONAL CLASS
1997 $11.23 0.05 (0.63) -- (0.20) $10.45 (5.22)% $ 3,836 1.55%
1996 10.13 0.19 1.37 (0.23) (0.23) 11.23 15.66 3,571 1.55
1995 (17) 10.00 0.03 0.10 -- -- 10.13 1.30 2,940 1.55*
RETAIL CLASS
1997 (18) $10.63 0.01 -- -- (0.20) $10.44 (0.15)% $ 373 1.77%*
RATIO
RATIO OF NET OF EXPENSES
INVESTMENT TO AVERAGE
INCOME NET ASSETS PORTFOLIO AVERAGE
TO AVERAGE (EXCLUDING TURNOVER COMMISSION
NET ASSETS WAIVERS) RATE RATE**
- -------------------------------------------------------------
- ---------------
STOCK PORTFOLIO
- ---------------
<S> <C> <C> <C> <C> <C>
INSTITUTIONAL CLASS
1997 (9) 0.76%* 0.95%* 83.17% .0720
- ------------------------
CAPITAL GROWTH PORTFOLIO
- ------------------------
INSTITUTIONAL CLASS
1997 0.92% 0.85% 246.14% .0692
1996 1.26 0.84 578.57 --
1995 1.35 0.85 182.00 --
1994 (11) 0.78* 0.87* 41.00 --
RETAIL CLASS
1997 0.74% 1.30% 246.14% .0692
1996 1.05 1.65 578.57 --
1995 0.86 9.73 182.00 --
1994 (13) (0.27)* 30.78* 41.00 --
- ------------------------
MID-CAP EQUITY PORTFOLIO
- ------------------------
INSTITUTIONAL CLASS
1997 (9) 0.65%* 0.95%* 14.74% .0715
- ------------------------
SPECIAL EQUITY PORTFOLIO
- ------------------------
INSTITUTIONAL CLASS
1997 (0.12)% 0.95% 704.41% .0678
1996 (16 0.60* 0.91* 286.80 --
RETAIL CLASS
1997 (15) (0.13)%* 1.21%* 704.41% .0678
- ------------------------------
INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------
INSTITUTIONAL CLASS
1997 0.33% 1.91% 26.65% .0381
1996 0.15 2.96 37.16 --
1995 (17) 0.97* 5.35* 2.00 --
RETAIL CLASS
1997 (18) 0.16%* 2.50%* 26.65% .0381
<FN>
* ANNUALIZED
** AVERAGE COMMISSION RATE PAID PER SHARE FOR SECURITY PURCHASES AND SALES
DURING THE PERIOD. PRESENTATION OF THE RATE IS ONLY REQUIRED FOR FISCAL YEARS
BEGINNING AFTER SEPTEMBER 1, 1995.
+ TOTAL RETURN FOR THE RETAIL CLASS DOES NOT INCLUDE THE ONE TIME SALES CHARGE.
(1) COMMENCED OPERATIONS ON JUNE 14, 1993.
(2) COMMENCED OPERATIONS ON MARCH 2, 1994.
(3) COMMENCED OPERATIONS ON JULY 21, 1995.
(4) COMMENCED OPERATIONS ON MARCH 15, 1994.
(5) COMMENCED OPERATIONS ON JULY 28, 1995.
(6) COMMENCED OPERATIONS ON DECEMBER 15, 1995.
(7) COMMENCED OPERATIONS ON MARCH 20, 1996.
(8) COMMENCED OPERATIONS ON SEPTEMBER 9, 1996.
(9) COMMENCED OPERATIONS ON NOVEMBER 18, 1996.
(10) COMMENCED OPERATIONS ON JANUARY 2, 1997.
(11) COMMENCED OPERATIONS ON JULY 16, 1993.
(12) COMMENCED OPERATIONS ON APRIL 12, 1994.
(13) COMMENCED OPERATIONS ON MARCH 9, 1994.
(14) COMMENCED OPERATIONS ON APRIL 1, 1996.
(15) COMMENCED OPERATIONS ON MAY 16, 1996.
(16) COMMENCED OPERATIONS ON JULY 13, 1995.
(17) COMMENCED OPERATIONS ON DECEMBER 30, 1994.
(18) COMMENCED OPERATIONS ON NOVEMBER 1, 1996.
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
74
<PAGE>
APRIL 30, 1997 [ARK FUNDS LOGO OMITTED]
- -------------------------------------------------------------------------------
Notes to Financial Statements
- -------------------------------------------------------------------------------
1. Organization
ARK Funds (the "Fund") is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end 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 Fund consists of seventeen portfolios: Money Market Portfolio, Tax-Free
Money Market Portfolio, U.S. Government Money Market Portfolio, U.S. Treasury
Money Market Portfolio, Short-Term Treasury Portfolio, Maryland Tax-Free
Portfolio, Pennsylvania Tax-Free Portfolio, Income Portfolio, Intermediate Fixed
Income Portfolio, Balanced Portfolio (formerly Growth and Income Portfolio,)
Equity Income Portfolio, Blue Chip Equity Portfolio, Stock Portfolio, Capital
Growth Portfolio, Mid-Cap Equity Portfolio, Special Equity Portfolio and
International Equity Portfolio (individually a "Portfolio" and collectively the
"Portfolios"). The Fund may issue an unlimited number of shares of each of its
Portfolios.
Each Portfolio (with the exception of the U.S. Government Money Market
Portfolio, Equity Income Portfolio, Intermediate Fixed Income Portfolio, Mid-Cap
Equity Portfolio, and Stock Portfolio) offers both Institutional and Retail
Class shares. In addition, each money market Portfolio offers Institutional II
Class shares. Institutional Class shares were originally offered with the
commencement of each Portfolio's operations. Retail Class shares commenced in
April 1994 for the Income Portfolio, in March 1994 for the Tax-Free Money Market
Portfolio, Money Market Portfolio, Balanced Portfolio and Capital Growth
Portfolio, in December 1995 for the U.S. Treasury Money Market Portfolio, in May
1996 for the Blue Chip Equity Portfolio and Special Equity Portfolio, in
September 1996 for the Short-Term Treasury Portfolio and in November 1996 for
the International Equity Portfolio. Retail Class shares have not yet been issued
for the U.S. Government Money Market Portfolio. Institutional II Class shares
commenced in July 1995 for the U.S. Treasury Money Market Portfolio, U.S.
Government Money Market Portfolio, Money Market Portfolio and Tax-Free Money
Market Portfolio. Each class of shares has equal rights as to earnings, assets
and voting privileges, except that each class bears different distribution and
shareholder service expenses. Each class of shares has exclusive voting rights
with respect to matters that affect just that class.
2. Significant Accounting Policies
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect amounts reported therein. Although actual results could differ from these
estimates, any such differences are expected to be immaterial to the net assets
of the Portfolios.
The following is a summary of significant accounting policies followed by
the Portfolios.
SECURITY VALUATION - Securities listed on a securities exchange for which
market quotations are readily available are valued at the last reported sale
price on the principal exchange on which they are traded on the valuation date
or, if there is no such reported sale on the valuation date, at the most
recently quoted bid price. Unlisted securities for which market quotations are
readily available are valued at the most recently quoted bid price. Debt
obligations exceeding sixty days to maturity for which market quotations are
readily available are valued at the most recently quoted bid price. Debt
obligations with sixty days or less to maturity are valued at their amortized
cost.
75
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
When market quotations are not readily available, securities of the Special
Equity Portfolio are valued at fair value as determined in good faith under
procedures established and approved by the Board of Trustees. Securities valued
in good faith by the Board of Trustees amounted to $43,750 (.2% of net assets)
and have been noted in the Statement of Net Assets.
Investment securities held by the money market Portfolios are stated at
their amortized cost which approximates market value. Under the amortized cost
method, any discount or premium is amortized ratably to the maturity of the
security and is included in interest income.
INCOME TAXES - It is the intention of each Portfolio to qualify as a
regulated investment company and to distribute all of its taxable income.
Accordingly, no provision for federal income taxes is considered necessary.
The International Equity Portfolio may be subject to taxes imposed by
countries in which it invests with respect to its investments in issuers
existing or operating in such countries. Such taxes are generally based on
either income earned or repatriated. The International Equity Portfolio accrues
such taxes when the related income is earned.
NET ASSET VALUE PER SHARE - The net asset value per share of each class of
each Portfolio is calculated each business day. It is computed by dividing the
assets of each class of the Portfolio, less the class-related liabilities, by
the number of outstanding shares of each class of the Portfolio.
CLASSES - Class-specific expenses are borne by that class. Income,
expenses, and realized and unrealized gains/losses are allocated to the
respective classes on the basis of relative daily net assets.
ORGANIZATIONAL COSTS - All organizational costs associated with the
start-up of the Portfolios are being amortized on a straight-line basis over a
period of sixty months. If any or all of the shares representing initial capital
of a Portfolio are redeemed by any holder thereof prior to the end of the
amortization period, the proceeds will be reduced by the unamortized
organization cost balance in the same proportion as the number of shares
redeemed bears to the initial shares outstanding immediately preceding the
redemption.
REPURCHASE AGREEMENTS - Securities pledged as collateral for repurchase
agreements are held by the custodian bank until maturity of the repurchase
agreements. Provisions of the repurchase agreements and procedures adopted by
the Board of Trustees require that the market value of the collateral, including
accrued interest thereon, is sufficient in the event of default by the
counterparty. If the counterparty defaults and the value of the collateral
declines or if the counterparty enters an insolvency proceeding, realization of
the collateral by the Fund may be delayed or limited.
SHORT SALES - The Portfolios may sell a security that they own "short
against the box" in anticipation of a decline in the market value of that
security. As collateral for this transaction, the Portfolio must deposit liquid
securities with the broker-dealer through which it made the short sale. A gain,
limited to the price at which the Portfolio sold the security short, or a loss,
the difference between the proceeds received and the market value of the
security, will be recognized upon termination of the short sale.
DOLLAR ROLL TRANSACTIONS - The Income Portfolio, Balanced Portfolio, and
Special Equity Portfolio may engage in dollar roll transactions with
76
<PAGE>
APRIL 30, 1997 [ARK FUNDS LOGO OMITTED]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
respect to mortgage-related securities issued by GNMA, FNMA, and FHLMC.
In a dollar roll transaction, a Portfolio sells a mortgage-related security to a
financial institution, such as a bank or broker/dealer, and simultaneously
agrees to repurchase a substantially similar (i.e., same type, coupon, and
maturity) security from the institution at a later date at an agreed upon price.
The mortgage-related securities that are repurchased will bear the same interest
rate as those sold, but generally will be collateralized by different pools of
mortgages with different prepayment histories.
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS - Each Portfolio may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"forward commitment" basis. These transactions, which involve a commitment by a
Portfolio to purchase or sell particular securities with payment and delivery
taking place at a future date (perhaps one or two months later), permit the
Portfolio to lock in a price or yield on a security it owns or intends to
purchase, regardless of future changes in interest rates. When-issued and
forward commitment transactions involve the risk, however, that the yield
obtained in a transaction and therefore the value of the security) may be less
favorable than the yield (and therefore the value of the security) available in
the market when the securities delivery takes place. A Portfolio is required to
hold and maintain in a segregated account until the settlement date cash, U.S.
Government securities or liquid, high grade debt obligations in an amount
sufficient to meet the purchase price. No Portfolio intends to engage in
when-issued purchases and forward commitments for speculative purposes.
FOREIGN CURRENCY TRANSLATION - The books and records of the International
Equity Portfolio are maintained in U.S. dollars. Foreign currency amounts are
translated into U.S. dollars on the following basis: (i) market value of
investment securities, other assets and liabilities at the current rate of
exchange; and (ii) purchases and sales of investment securities, income and
expenses at the relevant rates of exchange prevailing on the respective dates of
such transactions.
For foreign equity securities, the International Equity Portfolio does not
isolate that portion of gains and losses on investments in securities that is
due to changes in foreign exchange rates from that which is due to changes in
market prices of such securities. The International Equity Portfolio does
isolate the effect of fluctuations in foreign currency rates when determining
the gain or loss upon sale or maturity of foreign currency denominated debt
obligations in accordance with Federal income tax regulations. Such amounts are
categorized as foreign currency gain or loss for both financial reporting and
income tax reporting purposes.
The International Equity Portfolio reports gains and losses on foreign
currency related transactions as realized and unrealized gains and losses for
financial reporting purposes, whereas such gains and losses, to the extent
realized, are treated as ordinary income or loss for federal income tax
purposes.
FORWARD FOREIGN CURRENCY CONTRACTS - The International Equity Portfolio may
enter into forward foreign currency contracts as hedges against specific
transactions or portfolio positions.
Such contracts protect the value of the Portfolio's investment securities
against a decline in the value of currency, but do not eliminate fluctuations in
the underlying prices of the securities. They simply establish an exchange rate
at a future date. Also, although such contracts tend to minimize the risk of
loss due to a decline in the value of a hedged
77
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Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
currency, at the same time they tend to limit any potential gain that
might be realized should the value of such foreign currency increase. In
addition, if the counterparty to the contract fails to deliver under the terms
of the contract, realization of any gains or losses could be delayed or limited.
All commitments are "marked-to-market" daily at the applicable foreign
exchange rate, and any resulting unrealized gains or losses are recorded
currently. The Portfolio realizes gains or losses at the time forward contracts
are extinguished, except that gains or losses on certain open contracts are
required to be recognized for U.S. federal income tax purposes at the close of
the Portfolio's taxable year and are generally treated as ordinary income for
such purposes.
DISTRIBUTIONS - Dividends from net investment income are declared daily and
paid monthly for each money market portfolio. The Short-Term Treasury Portfolio,
Income Portfolio, Intermediate Fixed Income Portfolio, Maryland Tax-Free
Portfolio, Pennsylvania Tax-Free Portfolio and Equity Income Portfolio declare
and pay dividends monthly, the Balanced Portfolio, Blue Chip Equity Portfolio,
Mid-Cap Equity Portfolio and Stock Portfolio declare and pay dividends
quarterly, and the Capital Growth Portfolio, Special Equity Portfolio and
International Equity Portfolio declare and pay dividends annually from net
investment income. Distributions from net capital gains, if any, are declared
and paid at least annually by each Portfolio.
Distributions from net investment income and net realized capital gains are
determined in accordance with U.S. federal income tax regulations, which may
differ from those amounts determined under generally accepted accounting
principles. These book/tax differences are either temporary or permanent in
nature. To the extent these differences are permanent, they are charged or
credited to paid-in capital in the period that the difference arises.
On the Statement of Net Assets, the following adjustments were made (000):
Acumulated Undistributed
Net Realized Net Investment
Portfolio Gain (Loss) Income Paid-in-Capital
- ------------ ---------- -------------- ---------------
Money Market $(40) $48 $(8)
Tax-Free Money Market -- 8 (8)
U.S. Government Money Market (51) 59 (8)
U.S. Treasury Money Market (18) 26 (8)
Income 3 5 (8)
Balanced -- 4 (4)
Capital Growth -- 4 (4)
Special Equity (54) 29 25
International Equity 3 (11) 8
In addition, the International Equity Portfolio had a permanent difference
reclassified from realized foreign exchange loss to undistributed net investment
income of $8,000. These reclassifications have no effect on net assets or net
asset value per share.
OTHER - Security transactions are accounted for on the date the security is
purchased or sold (trade date). Net realized capital gains and losses on the
sale of investment securities are determined using the identified cost method
with the exception of the money market Portfolios, for which original issue
discounts and purchase premiums on securities held by the Portfolios are
accreted and amortized ratably to maturity using the effective interest method.
Dividend income is recognized on the ex-dividend date and interest income is
recognized using the accrual method.
3. Investment Advisory and Administrative Fees and Other Transactions with
Affiliates
Allied Investment Advisors, Inc. is the investment adviser to each of the
Portfolios, with the exception of the International Equity Portfolio, which is
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APRIL 30, 1997 [ARK FUND LOGO OMITTED]
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- --------------------------------------------------------------------------------
advised by AIB Investment Managers Limited ("AIB I.M."). Allied Investment
Advisors, Inc. and AIB I.M. are affiliates of FMB Trust Company, N.A. Pursuant
to an investment advisory contract on behalf of each Portfolio, Allied
Investment Advisors, Inc. and AIB I.M. (in the case of the International Equity
Portfolio) are entitled to receive fees for their advisory services at the
annual rates shown in the following table based on the average net assets of the
Portfolio.
Portfolio Annual Rate
- -------- ------------
Money Market .25%
Tax-Free Money Market .25%
U.S. Government Money Market .25%
U.S. Treasury Money Market .25%
Short-Term Treasury .35%
Maryland Tax-Free .50%
Pennsylvania Tax-Free .50%
Income .50%
Intermediate Fixed Income .60%
Balanced .55%
Equity Income .70%
Blue Chip Equity .60%
Stock .70%
Capital Growth .60%
Mid-Cap Equity .70%
Special Equity .60%
International Equity .80%
Allied Investment Advisors, Inc. and AIB I.M. have agreed to waive a
portion of their fees or reimburse expenses on certain Portfolios in order to
limit total operating expenses of such Portfolios. The waivers are voluntary and
may be discontinued at anytime.
SEI Fund Resources serves as administrator and transfer agent for the Fund
under an Administration Agreement and Transfer Agency Agreement. SEI Fund
Resources is entitled to receive an annual fee of .13% of each Portfolio's
average net assets, paid monthly, for services performed under the agreement.
SEI Fund Resources has voluntarily agreed to waive a portion of its
administrative fees on certain Portfolios in order to limit total operating
expenses of such Portfolios. The waiver is voluntary and may be discontinued at
any time. SEI Investments Distribution Co. (formerly SEI Financial Services)
acts as distributor for the Fund pursuant to a General Distribution Agreement on
behalf of each Portfolio.
FMB Trust Company, N.A. serves as custodian to each of the Portfolios.
4. Distribution Plan and Shareholder Services Plan
The Fund's Board of Trustees has adopted a Distribution Plan on behalf of the
Retail Class of each Portfolio and a Distribution and Service Plan on behalf of
the Institutional II Class of each money market Portfolio pursuant to Rule 12b-1
under the 1940 Act ("the Plan"). Under the Plan, SIDCO (formerly SFS) is
entitled to a fee of .75% of average net assets of the Retail and Institutional
II Classes of each Portfolio. However, the Trustees have authorized payment of a
fee to SIDCO of .25% of the average net assets of the Retail Class of each money
market Portfolio; .30% of average net assets of the Retail Class of the Income
Portfolio, Maryland Tax-Free Portfolio and Pennsylvania Tax-Free Portfolio, .40%
of average net assets of the Retail Class of the Short-Term Treasury Portfolio,
Balanced Portfolio, Capital Growth Portfolio, Special Equity Portfolio and
International Equity Portfolio, and .55% of average net assets of the Retail
Class of the Blue Chip Equity Portfolio, and .10% of the average net assets of
the Institutional II Class of each money market Portfolio. SIDCO has
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<PAGE>
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Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
voluntarily agreed to waive a portion of its fee on certain Portfolios in order
to limit total operating expenses of such Portfolios. The waiver is voluntary
and may be discontinued at any time.
In addition, the Board of Trustees 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 Trustees. Currently, the Trustees have approved a fee for
shareholder services of .15% of average net assets of the Retail Class of each
Portfolio, except the Short-Term Treasury Portfolio, Blue Chip Equity Portfolio,
International Equity Portfolio, Maryland Tax-Free Portfolio and Pennsylvania
Tax-Free Portfolio, for which the Trustees have approved a fee of .06%.
5. Investment Transactions
The cost of securities purchased and the proceeds from the sale of securities,
other than short-term investments, during the period ended April 30, 1997, were
as follows:
------------------
Purchases Sales
Portfolio (000) (000)
- -------- --------- ------
Short-Term Treasury $ 60,250 $ 41,490
Maryland Tax-Free 18,305 9,135
Pennsylvania Tax-Free 8,701 7,161
Income 542,014 546,204
Intermediate Fixed Income 12,458 13,220
Balanced 114,388 142,573
Equity Income 28,729 27,436
Blue Chip Equity 40,365 11,349
Stock 34,688 39,954
Capital Growth 93,026 100,048
Mid-Cap Equity 4,551 3,887
Special Equity 155,830 166,061
International Equity 9,793 1,876
For federal income tax purposes, securities owned at April 30, 1997 was not
materially different from the amounts reported for financial reporting purposes.
The aggregate gross unrealized appreciation and depreciation based on Federal
tax cost of securities at April 30, 1997 for each Portfolio is as follows:
Net
Unrealized
Appreciation/
Securities Securities (Depreciation)
Portfolio (000) (000) (000)
- -------- ---------- ---------- ------------
Short-Term Treasury $ -- $ (230) $ (230)
Maryland Tax-Free 2,048 (324) 1,724
Pennsylvania Tax-Free 347 (141) 206
Income 1,965 (2,218) (253)
Intermediate Fixed Income 519 (490) 29
Balanced 9,699 (1,426) (8,273)
Equity Income 13,883 (1,274) 12,609
Blue Chip Equity 6,052 (736) 5,316
Stock 11,463 (177) 11,286
Capital Growth 4,710 (1,059) 3,651
Mid-Cap Equity 8,291 (1,633) 6,658
Special Equity 546 (2,002) (1,456)
International Equity 535 (355) 180
At April 30, 1997, the following Portfolios have capital loss carryforwards and
post October losses:
Capital Loss Post
Carryforward Expiration October 31, 1996
Amount Date Deferred Losses
Portfolio (000) (000)
- --------- ---------- ---------- --------------
Money Market $ -- -- $ 5
U.S. Government
Money Market -- -- 30
U.S. Treasury
Money Market 4 2005 1
Income 230 2003 --
784 2004 --
2,860 2005 --
Intermediate Fixed
Income -- -- 81
Special Equity -- -- 2,724
International Equity -- -- 18
6. Concentration of Credit Risk
The Maryland Tax-Free Portfolio and Pennsylvania Tax-Free Portfolio invest in
debt instruments of municipal issuers. Although these Portfolios monitor
investment concentration, the issuers' ability to meet their obligations may be
affected by economic developments in a specific state or region.
The Maryland Tax-Free Portfolio and Pennsylvania Tax-Free Portfolio invest
in securities which include revenue bonds and general obligation bonds.
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APRIL 30, 1997 [ARK FUND LOGO OMITTED]
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At April 30, 1997, the percentage of portfolio investments by each revenue
source was as follows:
Maryland Pennsylvania
Tax-Free Portfolio Tax-Free Portfolio
------------------- ------------------
Revenue Bonds:
Education Bonds 11% 19%
Health Care Bonds 12 12
Transportation Bonds 7 4
Utility Bonds 4 9
Housing Bonds 0 2
Pollution Control Bonds 3 4
Public Facility Bonds 2 1
Industrial Bonds 1 1
Other 7 11
General Obligations 53 37
---- ----
100% 100%
==== ====
7. Common Trust Fund Conversion
On November 18, 1996, certain common trust funds of FMB Trust and its affiliates
were converted into the ARK Funds. The Funds that were involved in the
conversion are as follows:
Common Trust Fund ARK Fund
- ----------------- --------
CTF Tax-Exempt Fund Maryland Tax-Free Portfolio
CTF Pennsylvania Municipal Bond Fund Pennsylvania Tax-Free Portfolio
CTF Intermediate-Term Fixed Income Fund Intermediate Fixed Income Portfolio
CTF Stock Fund Stock Portfolio
CTF Equity Income Fund Equity Income Portfolio
CTF Mid-Cap Equity Fund Mid-Cap Equity Portfolio
CTF Qualified Plans Mid-Cap Equity Fund Mid-Cap Equity Portfolio
CTF Fixed Income Fund Income Portfolio
The assets, which consisted of securities and related receivables, were
converted on a tax-free basis. The number of Institutional Class shares issued
for each fund and the net assets of each common trust fund (including net
unrealized gain/loss) immediately before the conversion were as follows:
Common Trust Fund Net Assets
- ----------------- -----------
CTF Tax-Exempt Fund $81,100,250
CTF Pennsylvania Municipal Bond Fund 22,507,951
CTF Intermediate-Term Fixed Income Fund 78,230,519
CTF Stock Fund 43,067,476
CTF Equity Income Fund 80,587,319
CTF Qualified Plans Mid-Cap Equity Fund
& CTF Mid-Cap Equity Fund 26,212,249
CTF Fixed Income Fund 55,912,875
Six new mutual funds were created from the common trust funds, with the
exception of the CTF Fixed Income Fund, which was converted into the existing
Income Portfolio. The net assets of the ARK Funds Income Portfolio immediately
before the conversion were $191,986,710.
The value and number of shares issued in exchange for each common trust
fund's assets and shares outstanding in the tax-free conversions are included in
the capital share transactions of the Institutional Class in the Statement of
Changes in Net Assets for each respective Portfolio.
8. Other Matters
Retail Class shares of the Income Portfolio, Maryland Tax-Free Portfolio and
Pennsylvania Tax-Free Portfolio are subject to a maximum sales charge of 4.50%
of the public offering price. Balanced Portfolio, Blue Chip Equity Portfolio,
Capital Growth Portfolio, Special Equity Portfolio, International Equity
Portfolio are subject to a maximum sales charge of 4.75% of the public offering
price. Effective March 1, 1994, sales loads have been waived for all purchases
of Retail Class shares. The sales load waiver was in effect through the year
ended April 30, 1997.
9. Shareholder Voting Results (Unaudited)
Pursuant to a consent dated November 15, 1996, the sole shareholder of each
class of the Intermediate Fixed Income, Equity Income, Stock, Pennsylvania
Tax-Free and Mid-Cap Equity Portfolios approved (i) the Investment Advisory
Agreement between the ARK Funds and Allied Investment Advisors, Inc. dated May
1, 1993 and the Fee Schedule to such Agreement with respect to such Portfolio;
(ii) the Administration Agreement between the ARK Funds and SEI Fund Resources
dated November 1, 1995; (iii) the Distribution Agreement between the Fund and
SEI Investments Distribution Co. (formerly SEI Financial Services Company) dated
November 1, 1995; and (iv) the form of Distribution Plan pursuant to Rule 12b-1
under the 1940 Act for the Retail Class shares of each such Portfolio.
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Notice to Shareholders (Unaudited)
- --------------------------------------------------------------------------------
For taxpayers filing on a calendar year basis, this notice is for informational
purposes only.
For the fiscal year ended April 30, 1997, each Portfolio is designating
qualifying dividends and exempt income with regard to distributions paid during
the year as follows:
<TABLE>
<CAPTION>
(A)* (B)* (C) (D)** (E)** (F)**
LONG TERM ORDINARY
CAPITAL GAINS INCOME TOTAL TAX
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS QUALIFYING EXEMPT FOREIGN
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS) DIVIDENDS(1) INTEREST TAX CREDIT
- ---------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Money Market 0% 100% 100% 0% 0% 0%
Tax-Free Money Market 0% 100% 100% 0% 100% 0%
U.S. Government Money Market 0% 100% 100% 0% 0% 0%
U.S. Treasury Money Market 0% 100% 100% 0% 0% 0%
Short-Term Treasury 0% 100% 100% 0% 0% 0%
Maryland Tax-Free 0% 100% 100% 0% 100% 0%
Pennsylvania Tax-Free 0% 100% 100% 0% 98% 0%
Income 0% 100% 100% 0% 0% 0%
Intermediate Fixed Income 0% 100% 100% 0% 0% 0%
Balanced 41% 59% 100% 14% 0% 0%
Equity Income 0% 100% 100% 100% 0% 0%
Blue Chip Equity 0% 100% 100% 77% 0% 0%
Stock 0% 100% 100% 100% 0% 0%
Capital Growth 0% 100% 100% 10% 0% 0%
Mid-Cap Equity 0% 100% 100% 100% 0% 0%
Special Equity 0% 100% 100% 0% 0% 0%
International Equity 72% 28% 100% 0% 0% 0%
<FN>
(1) Qualifying dividends represent dividends which qualify for the corporate dividends received deduction.
* Items (A) and (B) are based on a percentage of the Portfolio's total distributions.
** Items (D), (E) and (F) are based on a percentage of ordinary income distributions of the Portfolio.
</FN>
</TABLE>
Please consult your tax adviser for proper treatment of this information.
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Notes
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83
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Notes
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84
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INVESTMENT ADVISERS
Allied Investment Advisors, Inc.
Baltimore, Maryland
AIB Investment Managers Limited
Dublin, Ireland
TRUSTEES
William H. Cowie, Jr.
David D. Downes
Charlotte R. Kerr
George K. Reynolds, III
Thomas Schweizer
ADMINISTRATOR
SEI Fund Resources
Oaks, Pennsylvania
DISTRIBUTOR
SEI Investments Distribution Company
Oaks, Pennsylvania
LEGAL COUNSEL
Piper & Marbury, L.L.P.
Baltimore, Maryland
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
Boston, Massachusetts
CUSTODIAN
FMB Trust Company, N.A.
Baltimore, Maryland
[Ark Logo Omitted]
This material must be preceded or
accompanied by a current prospectus. AK0430(97-6)
