ARK FUNDS/MA, 485APOS, 1997-08-26

ARK FUNDS/MA
485APOS, 1997-08-26

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<PAGE> 1

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A

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

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 15 [ x ]

and

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

Amendment No. 13 [ x ]

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

One Freedom Valley Drive
Oaks, PA 19456
(Address of Principal Executive Office)

Registrant's Telephone Number, including Area Code: 1-610-676-1000

Ms. Kathryn L. Stanton
Vice President and Secretary
ARK Funds
One Freedom Valley Drive
Oaks, PA 19456
(Name and Address of Agent for Service)

Copies to:

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

It is proposed that this filing will become effective:

( ) immediately upon filing pursuant to paragraph (b)
( ) on ( date ) pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)(1)
(x) on (August 27, 1997) pursuant to paragraph (a)(1)
( ) 75 days after filing pursuant to paragraph (a)(2)
( ) on ( date ) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

( ) This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

<PAGE> 2

The Registrant has previously elected to register an indefinite number of
shares of beneficial interest of its U.S. Treasury Money Market Portfolio, U.S.
Government Money Market Portfolio, Money Market Portfolio, Tax-Free Money
Market Portfolio, Short-Term Treasury Portfolio, Intermediate Fixed Income
Portfolio, Income Portfolio, Maryland Tax-Free Portfolio, Pennsylvania Tax-Free
Portfolio, Balanced Portfolio, Equity Income Portfolio, Equity Index Portfolio,
Blue Chip Equity Portfolio, Large-Cap Value Portfolio, Mid-Cap Equity
Portfolio, Stock Portfolio, Capital Growth Portfolio, Special Equity Portfolio
and International Equity Portfolio pursuant to Rule 24f-2 under the Investment
Company Act of 1940. The Rule 24f-2 Notice for the Registrant's fiscal year
ended April 30, 1997 was filed on June 25, 1997.

Page 1 of 197. Exhibit Index on Page 198.

ARK FUNDS
CONTENTS OF
POST-EFFECTIVE AMENDMENT NO. 15

<TABLE>
<CAPTION>
Page
<S> <C>
Facing Sheet

Table of Contents

Part A Cross Reference Sheet for Retail Class

Prospectus for Retail Class

Part A Cross Reference Sheet for Institutional Class

Prospectus for Institutional Class

Part A Cross Reference Sheet for Institutional II Class

Prospectus for Institutional II Class

Part B Cross Reference Sheet
Statement of Additional Information

Part C

Signature Page

Exhibits

Exhibit Index
</TABLE>

<PAGE> 3
ARK FUNDS: RETAIL CLASS

U.S. TREASURY MONEY MARKET PORTFOLIO
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
MONEY MARKET PORTFOLIO
TAX-FREE MONEY MARKET PORTFOLIO
SHORT-TERM TREASURY PORTFOLIO
INTERMEDIATE FIXED INCOME PORTFOLIO
INCOME PORTFOLIO
MARYLAND TAX-FREE PORTFOLIO
PENNSYLVANIA TAX-FREE PORTFOLIO
BALANCED PORTFOLIO
EQUITY INCOME PORTFOLIO
EQUITY INDEX PORTFOLIO
BLUE CHIP EQUITY PORTFOLIO
LARGE-CAP VALUE PORTFOLIO
MID-CAP EQUITY PORTFOLIO
STOCK PORTFOLIO
CAPITAL GROWTH PORTFOLIO
SPECIAL EQUITY PORTFOLIO
INTERNATIONAL EQUITY PORTFOLIO

CROSS REFERENCE SHEET

Form N-1A Item Number
<TABLE>
<CAPTION>
Part A Prospectus Caption
<S> <C>
1 . . . . . . . . . . . . . . . . . . . . . . Cover Page
2 . . . . . . . . . . . . . . . . . . . . . . Fees and Expenses
3 a,b . . . . . . . . . . . . . . . . . . . . Financial Highlights
c . . . . . . . . . . . . . . . . . . . . . Performance
4 a(i). . . . . . . . . . . . . . . . . . . . General Information
a(ii),b,c . . . . . . . . . . . . . . . . . Investment Objectives and Policies; Risks
to Consider
5 a,b,c,d,e,f . . . . . . . . . . . . . . . . Management of the Fund
g . . . . . . . . . . . . . . . . . . . . . Portfolio Transactions and Valuation
5A. . . . . . . . . . . . . . . . . . . . . . *
6 a . . . . . . . . . . . . . . . . . . . . . General Information
b,c,d . . . . . . . . . . . . . . . . . . . *
e . . . . . . . . . . . . . . . . . . . . . General Information
f,g . . . . . . . . . . . . . . . . . . . . Portfolio Transactions and Valuation; Tax Matters
h . . . . . . . . . . . . . . . . . . . . . General Information
7 a . . . . . . . . . . . . . . . . . . . . . Purchases, Exchanges and Redemptions
b(i),(ii) . . . . . . . . . . . . . . . . . Portfolio Transactions and Valuation
b(iii,iv,v),c . . . . . . . . . . . . . . . *
d . . . . . . . . . . . . . . . . . . . . . Purchases, Exchanges and Redemptions
e, f(i),(ii). . . . . . . . . . . . . . . . Management of the Fund
f(iii). . . . . . . . . . . . . . . . . . . *
8 . . . . . . . . . . . . . . . . . . . . . . Purchases, Exchanges and Redemptions
9 . . . . . . . . . . . . . . . . . . . . . . *
</TABLE>

_____________________
* Not applicable.
<PAGE> 4

ARK FUNDS -- RETAIL CLASS

- --------------------------------------------------------------------------------
PROSPECTUS
, 1997
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
* U.S. Treasury Money Market Portfolio * Equity Income Portfolio
* U.S. Government Money Market Portfolio * Equity Index Portfolio
* Money Market Portfolio * Blue Chip Equity Portfolio
* Tax-Free Money Market Portfolio * Large-Cap Value Portfolio
* Short-Term Treasury Portfolio * Mid-Cap Equity Portfolio
* Intermediate Fixed Income Portfolio * Stock Portfolio
* Income Portfolio * Capital Growth Portfolio
* Maryland Tax-Free Portfolio * Special Equity Portfolio
* Pennsylvania Tax-Free Portfolio * International Equity Portfolio
* Balanced Portfolio
</TABLE>

AN INVESTMENT IN A MONEY MARKET PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT ANY MONEY MARKET PORTFOLIO
WILL MAINTAIN A STABLE NET ASSET VALUE PER SHARE OF $1.00.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
ENDORSED OR GUARANTEED BY, THE FIRST NATIONAL BANK OF MARYLAND OR ANY DEPOSITARY
INSTITUTION, AND 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.

This Prospectus is designed to provide you with information that you should know
before investing. Please read and retain it for future reference. A Statement of
Additional Information dated , 1997 and Annual Report (including
financial statements for the fiscal year ended April 30, 1997) have been filed
with the Securities and Exchange Commission and are incorporated herein by
reference. The Statement of Additional Information and Annual Report, and
additional information about the classes of shares not offered through this
Prospectus, is available upon request without charge by calling 1-800-ARK-FUND.

- --------------------------------------------------------------------------------
TABLE OF CONTENTS

<TABLE>
<S> <C>
Summary....................................... 2
Fees and Expenses............................. 4
Financial Highlights.......................... 8
Investment Objectives and Policies............ 10
Additional Investment Policies and
Limitations................................. 19
Risks to Consider............................. 20
Performance................................... 22
Portfolio Transactions and Valuation.......... 23
Purchases, Exchanges and Redemptions.......... 24
Management of the Fund........................ 33
Tax Matters................................... 37
General Information........................... 38
Appendix...................................... 40
</TABLE>

- --------------------------------------------------------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 5

SUMMARY
- --------------------------------------------------------------------------------

The Fund is an open-end management investment company composed of
separately managed diversified and non-diversified portfolios. This Prospectus
provides information with respect to Retail Class shares of the portfolios
listed below (the "Portfolios" or a "Portfolio"). The Intermediate Fixed Income
Portfolio, Large-Cap Value Portfolio, Mid-Cap Equity Portfolio and Stock
Portfolio are not currently offering Retail Class shares.

U.S. TREASURY MONEY MARKET PORTFOLIO, U.S. GOVERNMENT MONEY MARKET
PORTFOLIO, MONEY MARKET PORTFOLIO and TAX-FREE MONEY MARKET PORTFOLIO -- seek to
maximize current income and provide liquidity and security of principal. Each
money market Portfolio seeks to maintain a constant net asset value per share of
$1.00.

SHORT-TERM TREASURY PORTFOLIO -- seeks to provide current income with a
secondary objective of stability of principal by investing in instruments which
are issued or guaranteed as to principal and interest by the U.S. government.

INTERMEDIATE FIXED INCOME PORTFOLIO -- seeks to provide current income
consistent with the preservation of capital by investing primarily in
intermediate-term fixed-income securities.

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.

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.

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.

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.

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.

EQUITY INDEX PORTFOLIO -- seeks to provide investment results that
correspond to the performance of the Standard & Poor's 500 Composite Stock Price
Index.

BLUE CHIP EQUITY PORTFOLIO -- seeks to provide long-term capital
appreciation by investing primarily in equity securities of established, large
capitalization companies.

LARGE-CAP VALUE PORTFOLIO -- seeks to provide long-term capital
appreciation by investing primarily in common stocks of large companies which
the adviser believes are undervalued.

MID-CAP EQUITY PORTFOLIO -- seeks to provide long-term capital appreciation
by investing primarily in equity securities of medium-sized companies.

STOCK PORTFOLIO -- seeks to provide long-term capital appreciation by
investing primarily in common stocks.

CAPITAL GROWTH PORTFOLIO -- seeks to achieve long-term capital appreciation
by investing primarily in common stock and securities convertible into common
stock.

SPECIAL EQUITY PORTFOLIO -- seeks to provide capital appreciation by
investing in securities of companies believed by the adviser to be "special
equities".

INTERNATIONAL EQUITY PORTFOLIO -- seeks to provide long-term capital growth
by investing primarily in foreign equity securities.

2
<PAGE> 6

INVESTMENT ADVISERS, DISTRIBUTOR AND ADMINISTRATOR. Allied Investment
Advisors, Inc. serves as investment adviser to each Portfolio other than the
International Equity Portfolio which is managed by AIB Investment Managers
Limited. SEI Investments Distribution Co. serves as the distributor of the
Portfolios' shares and SEI Fund Resources serves as the Fund's administrator.
See "Management of the Fund".

PURCHASE, EXCHANGE AND REDEMPTION OF SHARES. Investors may purchase Retail
Class shares of the Portfolios at their net asset value plus the applicable
sales charge through qualified securities brokers or financial institutions
("Investment Professionals"). No sales charges are imposed on shares of the
money market Portfolios and the Short-Term Treasury Portfolio. Shares of a
Portfolio may be exchanged for shares of another Portfolio. Shareholders may
redeem all or any portion of their shares at the net asset value next determined
after the Fund's transfer agent has received the redemption request. See
"Purchases, Exchanges and Redemptions".

RISKS TO CONSIDER. As with any investment, investing in any of the
Portfolios involves certain risks and there is no assurance that a Portfolio
will achieve its investment objective. By itself no Portfolio constitutes a
balanced investment plan. See "Risks to Consider".

SHAREHOLDER INQUIRIES. Any questions or communications regarding the
Portfolios can be directed to the Fund at 1-800-ARK-FUND.

3
<PAGE> 7

FEES AND EXPENSES
- --------------------------------------------------------------------------------

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

<TABLE>
<CAPTION>
RETAIL CLASS
---------------------------------------------------------
U.S.
TREASURY U.S. GOVERNMENT MONEY TAX-FREE
MONEY MARKET MONEY MARKET MARKET MONEY MARKET
SHAREHOLDER TRANSACTION EXPENSES PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........... None None None None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering
price)........................................ None None None None
Maximum Contingent Deferred Sales Charge........ None None None None
Exchange Fee.................................... None None None None
Redemption Fee.................................. None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Advisory Fees (after waivers)(1)................ .19% .14% .11% .09%
12b-1 Fees...................................... .25% .25% .25% .25%
Other Expenses (after waivers)(2)............... .24% .24% .24% .26%
- -----------------------------------------------------------------------------------------------------------
Total Operating Expenses (after waivers)(3)..... .68% .63% .60% .60%
- -----------------------------------------------------------------------------------------------------------
</TABLE>

(1) The adviser has agreed to waive, on a voluntary basis, a portion of its fees
for each Portfolio and the advisory fees shown reflect those voluntary
waivers. The adviser reserves the right to terminate its fee waivers at any
time in its sole discretion. Absent such waivers, the advisory fee for each
Portfolio would be .25%.

(2) Other expenses are estimated based on amounts incurred during the previous
fiscal year and include shareholder servicing fees (.06%) and all expenses
except nonrecurring account fees, brokerage commissions and other capital
items, and advisory and 12b-1 fees. A portion of the shareholder servicing
fees is being waived for the Portfolios. Absent such waivers, the
shareholder servicing fees would be .15%.

(3) Absent the voluntary fee waivers described above, total operating expenses
for Retail Class shares of the U.S. Treasury Money Market Portfolio, U.S.
Government Money Market Portfolio, Money Market Portfolio and Tax-Free Money
Market Portfolio would be .83%, .83%, .83% and .85%, respectively.

EXAMPLE
- --------------------------------------------------------------------------------

An investor in Retail Class shares would pay the following expenses on a
$1,000 investment assuming (1) 5% annual return and (2) redemption at the end of
each time period:

<TABLE>
<CAPTION>
1 YR 3 YRS 5 YRS 10 YRS
---- ----- ----- ------
<S> <C> <C> <C> <C>
U.S. Treasury Money Market Portfolio......................... 7 22 38 85
U.S. Government Money Market Portfolio....................... 6 20 35 79
Money Market Portfolio....................................... 6 19 33 75
Tax-Free Money Market Portfolio.............................. 6 19 33 75
</TABLE>

4
<PAGE> 8

<TABLE>
<CAPTION>
RETAIL CLASS
----------------------------------------------------------------
SHORT-TERM INTERMEDIATE MARYLAND PENNSYLVANIA
TREASURY FIXED INCOME INCOME TAX-FREE TAX-FREE
SHAREHOLDER TRANSACTION EXPENSES PORTFOLIO PORTFOLIO+ PORTFOLIO PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases (as
a percentage of offering price).......... None -- 4.50%* 4.50%* 4.50%*
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering
price)................................... None -- None None None
Maximum Contingent Deferred Sales Charge... None -- None None None
Exchange Fee............................... None -- None None None
Redemption Fee............................. None -- None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Advisory Fees (after waivers)(1)........... .35% .45% .50% .45% .40%
12b-1 Fees (after waivers)(2).............. .25% .00% .25% .25% .25%
Other Expenses (after waivers)(3).......... .20% .23% .20% .23% .23%
- -------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after
waivers)(4).............................. .80% .68% .95% .93% .88%
- -------------------------------------------------------------------------------------------------------------
</TABLE>

+ Retail Class shares of this Portfolio are not currently being offered.

* Sales loads of 4.50% are currently being waived in their entirety on all
purchases of Portfolio shares until October 1, 1997. Investors who purchased
shares of any Portfolio prior to April 1, 1997 may continue to invest
without payment of any sales charges through December 31, 1997. Effective
October 1, 1997, waiver of the entire sales load will be discontinued and
share purchases by other investors will be subject to a maximum sales load
of 3.00%. These waivers may be discontinued at any time.

(1) The adviser has agreed to waive, on a voluntary basis, a portion of its fees
for the Intermediate Fixed Income Portfolio, Maryland Tax-Free Portfolio and
Pennsylvania Tax-Free Portfolio and the advisory fees shown reflect those
voluntary waivers. The adviser reserves the right to terminate its fee
waivers at any time in its sole discretion. Absent such waivers, the
advisory fees for the Intermediate Fixed Income Portfolio, Maryland Tax-Free
Portfolio and Pennsylvania Tax-Free Portfolio would be .60%, .50% and .50%,
respectively.

(2) The Fund's distributor has agreed to waive, on a voluntary basis, a portion
or all of its distribution fees for the Portfolios. Absent such waivers, the
distribution fees would be .40% for the Short-Term Treasury Portfolio and
.30% for the Intermediate Fixed Income Portfolio, Income Portfolio, Maryland
Tax-Free Portfolio and Pennsylvania Tax-Free Portfolio.

(4) Absent the voluntary fee waivers described above, total operating expenses
for Retail Class shares of the Short-Term Treasury Portfolio, Intermediate
Fixed Income Portfolio, Income Portfolio, Maryland Tax-Free Portfolio and
Pennsylvania Tax-Free Portfolio would be 1.10%, 1.28%, 1.15%, 1.18% and
1.18%, respectively.

EXAMPLE
- --------------------------------------------------------------------------------

An investor in Retail Class shares would pay the following expenses on a
$1,000 investment assuming (1) 5% annual return, (2) redemption at the end of
each time period and (3) imposition of a 3% sales charge:

<TABLE>
<CAPTION>
1 YR 3 YRS 5 YRS 10 YRS
---- ----- ----- ------
<S> <C> <C> <C> <C>
Short-Term Treasury Portfolio.......................... 38 55 73 126
Intermediate Fixed Income Portfolio.................... 37 51 67 112
Income Portfolio....................................... 39 59 81 143
Maryland Tax-Free Portfolio............................ 39 59 80 141
Pennsylvania Tax-Free Portfolio........................ 39 57 77 135
</TABLE>

5
<PAGE> 9

<TABLE>
<CAPTION>
RETAIL CLASS
---------------------------------------------------------
EQUITY EQUITY BLUE CHIP LARGE-CAP
BALANCED INCOME INDEX EQUITY VALUE
SHAREHOLDER TRANSACTION EXPENSES PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO+
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases (as a
percentage of offering price)................... 4.75%* 4.75%* 4.75%* 4.75%* --
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)............. None None None None --
Maximum Contingent Deferred Sales Charge.......... None None None None --
Exchange Fee...................................... None None None None --
Redemption Fee.................................... None None None None --
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Advisory Fees (after waivers)(1).................. .55% .60% .07% .60% .50%
12b-1 Fees (after waivers)(2)..................... .25% .25% .25% .25% .00%
Other Expenses(after waivers)(3).................. .21% .23% .13% .17% .50%
- -------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after waivers)(4)....... 1.01% 1.08% .45% 1.02% 1.00%
- -------------------------------------------------------------------------------------------------------------
</TABLE>

+ Retail Class shares of this Portfolio are not currently being offered.

* Sales loads of 4.75% are currently being waived in their entirety on all
purchases of Portfolio shares until October 1, 1997. Investors who purchased
shares of any Portfolio prior to April 1, 1997 may continue to invest
without payment of any sales charges through December 31, 1997. Effective
October 1, 1997, waiver of the entire sales load will be discontinued and
share purchases by other investors will be subject to a maximum sales load
of 3.00%. These waivers may be discontinued at any time.

(1) The adviser has agreed to waive, on a voluntary basis, a portion of its fees
for the Equity Income Portfolio, Equity Index Portfolio and Large-Cap Value
Portfolio and the advisory fees shown reflect those voluntary waivers. The
adviser reserves the right to terminate its fee waivers at any time in its
sole discretion. Absent such waivers, the advisory fees for the Equity
Income Portfolio, Equity Index Portfolio and Large-Cap Value Portfolio would
be .70%, .20%, and .70%, respectively.

(2) The Fund's distributor has agreed to waive, on a voluntary basis, a portion
or all of its distribution fees for the Portfolios. Absent such waivers, the
distribution fees would be .40% for the Balanced Portfolio, Equity Income
Portfolio, Equity Index Portfolio and Large-Cap Value Portfolio, and .55%
for the Blue Chip Equity Portfolio.

(3) Other expenses are estimated based on amounts incurred during the previous
fiscal year and include shareholder servicing fees and all expenses except
nonrecurring account fees, brokerage commissions and other capital items,
and advisory and 12b-1 fees. All shareholder servicing fees are being waived
for the Portfolios. Absent such waivers, the shareholder servicing fees
would be .15%. The Fund's administrator has agreed to waive, on a voluntary
basis, .10% of its fee for the Equity Index Portfolio. Absent such waiver,
other expenses for the Equity Index Portfolio would be .23%.

(4) Absent the voluntary fee waivers described above, total operating expenses
for Retail Class shares of the Balanced Portfolio, Equity Income Portfolio,
Equity Index Portfolio, Blue Chip Equity Portfolio and Large-Cap Value
Portfolio would be 1.31%, 1.48%, .98%, 1.47% and 1.75%, respectively.

EXAMPLE
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
1 YR 3 YRS 5 YRS 10 YRS
---- ----- ----- ------
<S> <C> <C> <C> <C>
Balanced Portfolio........................................... 40 61 84 150
Equity Income Portfolio...................................... 41 63 88 158
Equity Index Portfolio....................................... 34 44 -- --
Blue Chip Equity Portfolio................................... 40 61 85 151
Large-Cap Value Portfolio.................................... 40 61 -- --
</TABLE>

The example assumes that all dividends and distributions are reinvested and that
the amounts listed under "Total Operating Expenses" remain the same in the years
shown. The example should not be considered a representation of past or future
expenses and actual expenses may be greater or less than shown. Because the
Large-Cap Value Portfolio was not in operation as of the date of this
Prospectus, its expenses have not been projected beyond the three-year period
shown.

6
<PAGE> 10

<TABLE>
<CAPTION>
RETAIL CLASS
--------------------------------------------------------------
MID-CAP CAPITAL SPECIAL INTERNATIONAL
EQUITY STOCK GROWTH EQUITY EQUITY
SHAREHOLDER TRANSACTION EXPENSES PORTFOLIO+ PORTFOLIO+ PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............ -- -- 4.75%* 4.75%* 4.75%*
Maximum Sales Load Imposed on Reinvested
Dividends
(as a percentage of offering price)............ -- -- None None None
Maximum Contingent Deferred Sales Charge......... -- -- None None None
Exchange Fee..................................... -- -- None None None
Redemption Fee................................... -- -- None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Advisory Fees (after waivers)(1)................. .65% .65% .60% .60% .38%
12b-1 Fees (after waivers)(2).................... .00% .00% .25% .25% .00%
Other Expenses (after waivers)(3)................ .30% .25% .26% .39% 1.17%
- -----------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after waivers)(4)...... .95% .90% 1.11% 1.24% 1.55%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

+ Retail Class shares of this Portfolio are not currently being offered.

(1) The adviser has agreed to waive, on a voluntary basis, a portion of its fee
for the Mid-Cap Equity Portfolio and Stock Portfolio; the adviser to the
International Equity Portfolio has agreed to waive, on a voluntary basis, a
portion of its fee (and, if necessary, to reimburse other expenses) in order
to limit the Portfolio's expense ratio to 1.55%. The advisory fees shown
reflect these voluntary waivers. The advisers reserve the right to terminate
their fee waivers at any time in their sole discretion. Absent such waivers,
the advisory fees for the Mid-Cap Equity Portfolio, Stock Portfolio and
International Equity Portfolio would be .70%, .70% and .80%, respectively.

(2) The Fund's distributor has agreed to waive, on a voluntary basis, a portion
or all of its distribution fees for the Portfolios. Absent such waivers, the
distribution fees would be .40% for the Mid-Cap Equity Portfolio, Capital
Growth Portfolio, Special Equity Portfolio and International Equity
Portfolio, and .55% for the Stock Portfolio.

(4) Absent the voluntary fee waivers described above, total operating expenses
for Retail Class shares of the Mid-Cap Equity Portfolio, Stock Portfolio,
Capital Growth Portfolio, Special Equity Portfolio and International Equity
Portfolio would be 1.55%, 1.65%, 1.41%, 1.54% and 2.52%, respectively.

EXAMPLE
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
1 YR 3 YRS 5 YRS 10 YRS
---- ----- ----- ------
<S> <C> <C> <C> <C>
Mid-Cap Equity Portfolio..................................... 39 59 81 143
Stock Portfolio.............................................. 39 58 78 137
Capital Growth Portfolio..................................... 41 64 89 161
Special Equity Portfolio..................................... 42 68 96 175
International Equity Portfolio............................... 48 85 125 235
</TABLE>

7
<PAGE> 11

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

The following table provides information about the financial history of the
Retail Class of each Portfolio (excluding Portfolios which as of April 30, 1997
did not offer Retail Class shares). The table expresses the information in terms
of a single share outstanding throughout the year or period. The information has
been audited by KPMG Peat Marwick LLP, independent auditors for the Fund. Their
report on the financial statements and financial highlights for the year ended
April 30, 1997 is included in the Annual Report, which is incorporated by
reference into the Statement of Additional Information. The table should be read
in conjunction with the Portfolios' financial statements and the notes thereto
which may be obtained free of charge from the Fund.

For a Share Outstanding Throughout the Year or Period Ended April 30,

<TABLE>
<CAPTION>
Realized Distri-
and butions Ratio of
Net Unrealized from Distri- Net Net Expenses
Asset Gains or Net butions Asset Assets to
Value, Net (Losses) Invest- from Value, End of Average
Beginning Investment on ment Capital End of Total Period Net
of Period Income Investments Income Gains Period Return+ (000) Assets
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO
- -------------------------------
1997 $ 1.00 0.05 -- (0.05) -- $ 1.00 4.71% $ 13,673 0.64%
1996(1) 1.00 0.02 -- (0.02) -- 1.00 1.82 8,758 0.55*
- -------------------
MONEY MARKET PORTFOLIO
- -------------------
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*
- ---------------------------
TAX-FREE MONEY MARKET PORTFOLIO
- ---------------------------
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(3) 1.00 -- -- -- -- 1.00 0.20 50 1.25*
- ------------------------
SHORT-TERM TREASURY PORTFOLIO
- ------------------------
1997(4) $ 9.95 0.27 0.03 (0.28) (0.01) $ 9.96 3.39% $ 22,937 0.67%*
- -------------
INCOME PORTFOLIO
- -------------
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(5) 9.69 0.02 (0.06) (0.03) -- 9.62 (0.41) 30 1.72*
- -----------------------
MARYLAND TAX-FREE PORTFOLIO
- -----------------------
1997(6) $ 9.96 0.13 (0.07) (0.15) -- $ 9.87 0.63% $ 7,997 0.91%*
- ---------------------------
PENNSYLVANIA TAX-FREE PORTFOLIO
- ---------------------------
1997(6) $ 10.01 0.13 (0.07) (0.15) -- $ 9.92 0.60% $ 1,177 0.87%*
- ---------------
BALANCED PORTFOLIO
- ---------------
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(7) 10.62 0.01 (0.43) (0.05) -- 10.15 (3.95) 166 1.86*
- ---------------------
BLUE CHIP EQUITY PORTFOLIO
- ---------------------
1997(8) $ 10.33 0.16 2.06 (0.16) (0.01) $12.38 21.74% $ 13,211 0.86%*

<CAPTION>
Ratio of
Net Ratio of
Investment Expenses
Income to Average
to Net
Average Assets Portfolio Average
Net (Excluding Turnover Commission
Assets Waivers) Rate Rate**
---------
<S> <C><C> <C> <C> <C>
- -------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO
- -------------------------------
1997 4.62% 0.83% -- --
1996(1) 4.71* 0.86* -- --
- -------------------
MONEY MARKET PORTFOLIO
- -------------------
1997 4.92% 0.83% -- --
1996 5.25 0.77 -- --
1995 4.88 0.97 -- --
1994(2) 2.26* 592.55* -- --
- --------------------------
TAX-FREE MONEY MARKET PORTFOLIO
- --------------------------
1997 2.97% 0.84% -- --
1996 3.33 0.90 -- --
1995 2.68 2.94 -- --
1994(3) 1.20* 32.17* -- --
- ------------------------
SHORT-TERM TREASURY PORTFOLIO
- ------------------------
1997(4) 5.07%* 0.91%* 147.86% --
- -------------
INCOME PORTFOLIO
- -------------
1997 5.96% 1.09% 271.60% --
1996 5.54 1.37 107.33 --
1995 5.66 27.63 73.00 --
1994(5) 3.95* 55.35* 20.00 --
- -----------------------
MARYLAND TAX-FREE PORTFOLIO
- -----------------------
1997(6) 4.70%* 1.10%* 11.13% --
- ----------------------------
PENNSYLVANIA TAX-FREE PORTFOLIO
- ----------------------------
1997(6) 4.65%* 1.12%* 32.76% --
- ---------------
BALANCED PORTFOLIO
- ---------------
1997 2.56% 1.19% 124.22% .0673
1996 2.51 1.55 107.56 --
1995 2.83 5.80 81.00 --
1994(7) 1.36* 15.08* 37.00 --
- ---------------------
BLUE CHIP EQUITY PORTFOLIO
- ---------------------
1997(8) 1.29%* 1.25%* 46.91% .0727
</TABLE>

8
<PAGE> 12

<CAPTION>
Ratio of Net Ratio of
Investment Expenses
Income to Average
to Net
Average Assets Portfolio Average
Net (Excluding Turnover Commission
Assets Waivers) Rate Rate**
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------
CAPITAL GROWTH PORTFOLIO
- ------------------------
1997 0.74% 1.30% 246.14% .0692
1996 1.05 1.65 578.57 --
1995 0.86 9.73 182.00 --
1994(7) (0.27)* 30.78* 41.00 --
- ------------------------
SPECIAL EQUITY PORTFOLIO
- ------------------------
1997(8) (0.13 )%* 1.21 %* 704.41 % .0678
- ------------------------------
INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------
1997(9) 0.16 %* 2.50 %* 26.65 % .0381
</TABLE>

* 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 December 15, 1995.
(2) Commenced operations on March 2, 1994.
(3) Commenced operations on March 15, 1994.
(4) Commenced operations on September 9, 1996.
(5) Commenced operations on April 12, 1994.
(6) Commenced operations on January 2, 1997.
(7) Commenced operations on March 9, 1994.
(8) Commenced operations on May 16, 1996.
(9) Commenced operations on November 1, 1996.

9
<PAGE> 13

INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------

The Fund consists of separate investment portfolios with a variety of
investment objectives and policies. A Portfolio's investment adviser is
responsible for providing a continuous investment program in accordance with its
investment objective and policies. Except for its investment objective and those
policies identified as fundamental, the investment policies of a Portfolio are
not fundamental and may be changed by the Board of Trustees of the Fund without
shareholder approval.

The investment objectives and policies of the Portfolios are set forth
below. Additional information regarding the types of securities in which the
Portfolios may invest and certain investment transactions is provided in the
Appendix to this Prospectus. Additional information regarding the investment
policies of the Portfolios and a complete listing of each Portfolio's investment
limitations is contained in the Statement of Additional Information.

MONEY MARKET PORTFOLIOS
- --------------------------------------------------------------------------------

The U.S. TREASURY MONEY MARKET PORTFOLIO, U.S. GOVERNMENT MONEY MARKET
PORTFOLIO, MONEY MARKET PORTFOLIO and TAX-FREE MONEY MARKET PORTFOLIO invest in
high-quality, short-term, U.S. dollar-denominated instruments determined by the
adviser to present minimal credit risks in accordance with guidelines adopted by
the Board of Trustees. The Portfolios seek to maintain a net asset value per
share of $1.00, limit their investments to securities with remaining maturities
of 397 days or less, and maintain a dollar-weighted average maturity of 90 days
or less. Estimates may be used in determining a security's maturity for purposes
of calculating average maturity. An estimated maturity can be substantially
shorter than a stated final maturity.

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

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

The investment objective of the U.S. GOVERNMENT MONEY MARKET PORTFOLIO is
to maximize current income and provide liquidity and security of principal by
investing in instruments which are issued or guaranteed as to principal and
interest by the U.S. government or any of its agencies or instrumentalities
("U.S. Government Securities"), or in repurchase agreements backed by such
instruments. As a non-fundamental policy, the Portfolio invests 100% of its
assets in U.S. Government Securities and in repurchase agreements backed by such
instruments. The Portfolio normally may not invest more than 5% of its total
assets in the securities of any single issuer (other than the U.S. government).
Under certain conditions, however, the Portfolio may invest up to 25% of its
total assets in first-tier securities of a single issuer for up to three days.

10
<PAGE> 14

NRSROs or, if only one such rating organization has assigned a rating, such
single organization. The Portfolio may also acquire unrated securities
determined by the adviser to be comparable in quality to rated securities in
accordance with guidelines adopted by the Board of Trustees. The Portfolio may
invest in U.S. dollar-denominated obligations of U.S. banks and foreign branches
of U.S. banks ("Eurodollars"), U.S. branches and agencies of foreign banks
("Yankee dollars"), and foreign branches of foreign banks. See the Appendix for
more information. The Portfolio may also invest more than 25% of its total
assets in certain obligations of domestic banks and normally may not invest more
than 5% of its total assets in the securities of any single issuer (other than
the U.S. government). Under certain conditions, however, the Portfolio may
invest up to 25% of its total assets in first-tier securities of a single issuer
for up to three days.

The investment objective of the TAX-FREE MONEY MARKET PORTFOLIO is to
provide a high level of interest income by investing primarily in high-quality
municipal obligations that are exempt from federal income taxes. The Portfolio
attempts to invest 100% of its assets in securities exempt from federal income
tax (not including the alternative minimum tax), and maintains a fundamental
policy that at least 80% of its income will, under normal market conditions, be
exempt from federal income tax, including the federal alternative minimum tax.
The Portfolio invests in high-quality, short-term municipal securities but may
also invest in high-quality, long-term fixed, variable, or floating rate
instruments (including tender option bonds) which have demand features or
interest rate adjustment features that result in interest rates, maturities, and
prices similar to short-term instruments. The Portfolio's investments in
municipal securities may include tax, revenue, or bond anticipation notes;
tax-exempt commercial paper; general obligation or revenue bonds (including
municipal lease obligations and resource recovery bonds); and zero coupon bonds.
At least 95% of the assets of the Portfolio will be invested in securities that
have received the highest rating assigned by any two NRSROs or, if only one such
rating organization has assigned a rating, such single organization. The
Portfolio may also acquire unrated securities determined by the adviser to be of
comparable quality in accordance with guidelines adopted by the Board of
Trustees.

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

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

11
<PAGE> 15

SHORT-TERM TREASURY PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of the SHORT-TERM TREASURY PORTFOLIO is to provide
current income, with a secondary objective of stability of principal, by
investing in instruments which are issued or guaranteed as to principal and
interest by the U.S. government.

The Portfolio invests 100% of its total assets in instruments which are
issued or guaranteed by the U.S. government and thus constitute direct
obligations of the United States, and in repurchase agreements backed by such
instruments. As a non-fundamental policy, the Portfolio will invest 100% of its
total assets in U.S. Treasury bills, notes and bonds, and will limit its
investments to U.S. Treasury obligations that pay interest that is specifically
exempt from state and local taxes under federal law.

The Portfolio has no restriction on maturity; however, it normally invests
in short-term securities and maintains a dollar-weighted average maturity of
approximately two years. The average maturity of the Portfolio's investments
will vary depending on market conditions. In making investment decisions for the
Portfolio, the adviser will consider factors in addition to current yield,
including preservation of capital, the potential for realizing capital
appreciation, maturity and yield to maturity. The adviser will monitor the
Portfolio's investments in particular securities in response to its appraisal of
changing economic conditions and trends, and may sell securities in anticipation
of a market decline or purchase securities in anticipation of a market rise.

INTERMEDIATE FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of the INTERMEDIATE FIXED INCOME PORTFOLIO is to
provide current income consistent with the preservation of capital by investing
primarily in intermediate-term fixed-income securities.

The Portfolio may invest in income-producing securities of all types,
including bonds, notes, mortgage securities, government and government agency
obligations, zero coupon securities, convertible securities, foreign securities,
indexed securities, and asset-backed securities. The Portfolio normally will
invest in investment-grade debt securities (including convertible securities)
and unrated securities determined by the adviser to be of comparable quality.
The Portfolio may also invest up to 5% of its total assets in lower-quality debt
securities, sometimes referred to as "junk bonds". Common stocks acquired
through the exercise of conversion rights or warrants, or the acceptance of
exchange or similar offers, ordinarily will not be retained by the Portfolio. An
orderly disposition of these stocks will be effected consistent with the
judgment of the Adviser as to the best price available.

Under normal circumstances, at least 65% of the value of the Portfolio's
total assets will be invested in fixed-income securities. The Portfolio has no
restriction on maturity; however, it normally invests in intermediate-term
securities and maintains a dollar-weighted average maturity of three to ten
years. The average maturity of the Portfolio's investments will vary depending
on market conditions. In making investment decisions for the Portfolio, the
adviser will consider factors in addition to current yield, including
preservation of capital, the potential for realizing capital appreciation,
maturity and yield to maturity. The adviser will monitor the Portfolio's
investments in particular securities or in types of debt securities in response
to its appraisal of changing economic conditions and trends, and may sell
securities in anticipation of a market decline or purchase securities in
anticipation of a market rise.

INCOME PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of the INCOME PORTFOLIO is 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.

Under normal circumstances, at least 65% of the value of the Portfolio's
total assets will be invested in fixed-income securities. The Portfolio may
invest in income-producing securities of all

12
<PAGE> 16

types, including bonds, notes, mortgage securities, government and government
agency obligations, zero coupon securities, convertible securities, foreign
securities, indexed securities, and asset-backed securities. The Portfolio
normally will invest in investment-grade debt securities (including convertible
securities) and unrated securities determined by the adviser to be of comparable
quality. The Portfolio may also invest up to 5% of its total assets in
lower-quality debt securities, sometimes referred to as "junk bonds". Common
stocks acquired through exercise of conversion rights or warrants or acceptance
of exchange or similar offers ordinarily will not be retained by the Portfolio.
An orderly disposition of these stocks will be effected consistent with the
judgment of the adviser as to the best price available.

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

MARYLAND TAX-FREE PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of the MARYLAND TAX-FREE PORTFOLIO is to provide
high current income that is free from federal income tax and the Maryland state
and county income taxes.

Under normal circumstances, at least 65% of the value of the Portfolio's
total assets will be invested in Maryland municipal securities. In addition, as
a matter of fundamental policy, the Portfolio's assets will be invested during
periods of normal market conditions so that at least 80% of its income will not
be subject to federal income tax, including the federal alternative minimum tax.

The Portfolio normally invests primarily in investment-grade debt
securities (and unrated securities determined by the adviser to be of comparable
quality), but may also invest up to 5% of its total assets in lower-quality debt
securities, sometimes referred to as "junk bonds". The Portfolio has no
restriction on maturity; however, it normally invests in intermediate- and
long-term bonds and maintains a dollar-weighted average maturity of seven to ten
years. The average maturity of the Portfolio's investments will vary depending
on market conditions.

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

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

PENNSYLVANIA TAX-FREE PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of the PENNSYLVANIA TAX-FREE PORTFOLIO is to
provide high current income that is free from federal and Pennsylvania state
income taxes.

Under normal circumstances, at least 65% of the value of the Portfolio's
total assets will be invested in Pennsylvania municipal securities. In addition,
as a matter of fundamental policy, the Portfolio's assets will be invested
during periods of normal market conditions so that at least 80% of its income
will not be subject to federal income tax, including the federal alternative
minimum tax.

The Portfolio invests primarily in investment-grade debt securities (and
unrated securities determined by the adviser to be of comparable quality), but
also may invest up to 5% of its total assets in lower-quality debt securities,
sometimes referred to as "junk bonds". The Portfolio has no restriction on
maturity; however, it normally invests in intermediate- and long-term bonds and

13
<PAGE> 17

maintains a dollar-weighted average maturity of seven to ten years. The average
maturity of the Portfolio's investments will vary depending on market
conditions.

BALANCED PORTFOLIO

- --------------------------------------------------------------------------------

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

The Portfolio's common stock investments may include foreign and domestic
issues of larger, well-established companies, as well as medium-sized and
smaller companies. The Portfolio may invest in preferred stock convertible
securities. Debt securities acquired by the Portfolio may include mortgage or
asset-backed securities, corporate issues, indexed securities, and U.S.
Government Securities. The Portfolio normally will invest in investment-grade
debt securities (including convertible securities) and unrated securities
determined by the adviser to be of comparable quality, but may also invest up to
5% of its total assets in lower-quality debt securities, referred to as "junk
bonds". The average maturity of the Portfolio's debt obligations will vary
depending on market conditions. The adviser may adjust the Portfolio's
investments based on its interpretation of underlying economic, financial, and
security trends. The adviser's ability to make such adjustments successfully
will depend on its ability to predict market trends. The Portfolio maintains at
least 25% of its total assets in fixed-income securities.

The Portfolio emphasizes long-term total return from capital appreciation
and current income. Although it is not a policy of the Portfolio to engage in
short-term trading, the adviser may dispose of securities without regard to the
length of time they are held if it believes such action will benefit the
Portfolio. Although the adviser will consider the potential for income in
selecting investments for the Portfolio, the Portfolio is generally not intended
to achieve a level of income comparable to fixed-income portfolios.

EQUITY INCOME PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of the EQUITY INCOME PORTFOLIO is to provide a
moderate level of current income and growth of capital by investing primarily in
high-quality, income-producing common stocks.

The Portfolio seeks capital appreciation from a broadly diversified
portfolio of common stocks which, in general, have above-average dividend yields
relative to the stock market as measured by the Standard & Poor's 500 Composite
Stock Price Index. Under normal circumstances, at least 65% of the value of the
Portfolio's total assets will be invested in dividend-paying common stocks. The
Portfolio may invest up to 35% of its total assets in other types of securities,
including preferred stock, which may be convertible into common stock, and
investment-grade debt securities (including convertible debt securities) and
unrated securities determined by the adviser to be of comparable quality. The
Portfolio may invest up to 5% of its total assets in lower-quality debt
securities, sometimes referred to as "junk bonds".

The adviser considers many factors when evaluating a security for
investment by the Portfolio, including the company's current financial strength
and relative value. Although the adviser will consider the potential for income
in selecting investments for the Portfolio, the Portfolio is generally not
intended to achieve a level of income comparable to fixed-income portfolios. The
adviser may adjust

14
<PAGE> 18

the Portfolio's investments based on its interpretation of underlying economic,
financial, and security trends; however, the adviser's ability to make such
adjustments successfully will depend on its ability to predict market trends.

EQUITY INDEX PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of the Equity Index Portfolio is to provide
investment results that correspond to the performance of the Standard & Poor's
500 Composite Stock Price Index (the "S&P 500").

The Portfolio invests at least 65% of total assets in common stocks
included in the S&P 500. The Portfolio's adviser believes that the Portfolio's
objective can best be achieved by investing in the common stocks of
approximately 250 to 500 of the companies included in the S&P 500, depending
upon the size of the Portfolio.

Standard & Poor's designates the stocks included in the S&P 500 on a
statistical basis. A particular stock's weighting in the S&P 500 is based on its
total market value (that is, its market price per share times the number of
shares outstanding) relative to the total market value of all stocks included in
the S&P 500. From time to time, Standard & Poor's may add or delete stocks to or
from the S&P 500. Inclusion of a particular stock in the S&P 500 does not imply
any opinion by Standard & Poor's as to its merits as an investment, nor is
Standard & Poor's a sponsor of or in any way affiliated with the Portfolio or
the Fund.

The Portfolio is managed by utilizing a computer program that identifies
which stocks should be purchased or sold in order to replicate, as closely as
practicable, the composition of the S&P 500. The Portfolio includes a stock in
the order of its weighting in the S&P 500, starting with the most heavily
weighted stock. Thus, the proportion of the Portfolio's assets invested in a
stock or industry closely approximates the percentage of the S&P 500 represented
by that stock or industry. Portfolio turnover is expected to be well below that
of actively managed mutual funds.

Although the Portfolio will not duplicate the performance of the S&P 500
precisely, it is anticipated that there will be a close correlation between the
Portfolio's performance and that of the S&P 500 in both rising and falling
markets. The Portfolio will attempt to achieve a correlation of at least 95%,
without taking into account expenses of the Portfolio. A perfect correlation
would be indicated by a figure of 100%, which would be achieved if the
Portfolio's net asset value, including the value of its dividends and capital
gains distributions, increased or decreased in exact proportion to changes in
the S&P 500. The Portfolio's ability to replicate the performance of the S&P 500
may be affected by, among other things, changes in securities markets, the
manner in which Standard & Poor's calculates the S&P 500, and the amount and
timing of cash flows into and out of the Portfolio. Although cash flows into and
out of the Portfolio will affect the Portfolio's ability to replicate the S&P
500's performance as well as its portfolio turnover rate, investment adjustments
will be made, as practicable, to account for these circumstances. The Board of
Trustees will monitor the targeted correlation of the Portfolio and, in the
event that it is not achieved, will consider alternative methods for replicating
the composition of the S&P 500.

The Portfolio also may invest up to 20% of its total assets in stock index
futures contracts, options on stock indices, options on stock index futures, and
index participation contracts based on the S&P 500. The Portfolio will not
invest in these types of contracts and options for speculative purposes, but
rather to maintain sufficient liquidity to meet redemption requests, to increase
the level of Portfolio assets devoted to replicating the composition of the S&P
500, and to reduce transaction costs. These types of contracts and options and
certain associated risks are described in the Appendix to this Prospectus and in
the Statement of Additional Information.

15
<PAGE> 19

BLUE CHIP EQUITY PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of the BLUE CHIP EQUITY PORTFOLIO is to achieve
long-term appreciation by investing primarily in equity securities of
established, large capitalization companies. The Portfolio is expected to
produce current income consistent with its primary objective.

The Portfolio seeks capital appreciation from a broadly diversified
portfolio of common stocks of established, large capitalization companies. The
adviser may also seek capital appreciation on behalf of the Portfolio by
investing up to 35% of its total assets in other types of securities, including
preferred stock and debt securities, securities convertible into common stock
and asset-backed securities. The Portfolio normally invests in investment-grade
debt securities (including convertible securities) and unrated securities
determined by the adviser to be of comparable quality, but may also invest up to
5% of its total assets in lower-quality debt securities, sometimes referred to
as "junk bonds".

Under normal circumstances, at least 65% of the value of the Portfolio's
total assets will be invested in equity securities of companies with operating
histories of ten years or more and market capitalizations in excess of $5
billion which the adviser considers to be leaders in their respective markets.
The median market capitalization of the stocks included in the S&P 500 is
approximately $5 billion. It is expected that the companies in which the
Portfolio invests will be based primarily in the United States, and will be
recognized market leaders with strong financial positions. The Portfolio will
invest in securities that the adviser believes offer above-average growth
potential based on their fundamental strength. The adviser considers many
factors when evaluating the overall quality of a security for investment by the
Portfolio, including a company's current financial strength and relative value.

LARGE-CAP VALUE PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of the Large-Cap Value Portfolio is to provide
long-term capital appreciation by investing primarily in common stocks of large
companies which the adviser believes are undervalued. Current income is a
secondary objective.

The Portfolio seeks capital appreciation from a broadly diversified
portfolio of common stocks of large companies. Under normal circumstances, at
least 65% of the value of the Portfolio's total assets will be invested in
companies with a market capitalization of at least $5 billion which the adviser
believes are undervalued in relation to their earnings, book value, cash flows
or other tangible measures. Companies with market capitalizations in the range
of $5 billion are generally regarded as "large cap" companies. A market
capitalization of this size is also close to the median of the companies
included in the S&P 500. While many of the stocks selected by the adviser may
have above-average current yields as a result of their low valuations, the
Portfolio also may invest in non-dividend paying securities.

Assets not invested in common stocks of large companies as described above
may be invested in other equity securities (including preferred stock) or in
investment-grade fixed income securities (and unrated securities determined by
the adviser to be of comparable quality).

MID-CAP EQUITY PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of the MID-CAP EQUITY PORTFOLIO is to provide
long-term capital appreciation by investing primarily in equity securities of
medium-sized companies.

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<PAGE> 20

capitalizations of the companies included in the S&P 400 ranged from $300
million to $11 billion. The companies in which the Portfolio invests are
typically well established but have not reached full maturity and may offer
significant growth potential. The adviser will seek to identify companies which
have above-average trends in sales and earnings and whose valuation by the
market is relatively low or unrecognized.

Assets not invested in equity securities of medium-sized companies as
described above may be invested in equity securities of larger, more established
companies or in investment-grade fixed-income securities (and unrated securities
determined by the adviser to be of comparable quality).

STOCK PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of the STOCK PORTFOLIO is to provide long-term
capital appreciation by investing primarily in common stocks.

The Portfolio seeks capital appreciation from a broadly diversified
portfolio of common stocks. The adviser will seek to identify growth-oriented
companies for investment by the Portfolio, including market leaders in various
industries. Under normal circumstances, at least 65% of the value of the
Portfolio's total assets will be invested in common stocks.

Assets not invested in common stocks as described above may be invested in
other equity securities (including preferred stock), convertible securities, or
investment-grade debt securities (and unrated securities determined by the
adviser to be of comparable quality).

CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of CAPITAL GROWTH PORTFOLIO is to provide
long-term capital appreciation. The Portfolio is expected to produce modest
dividend or interest income. This income will be incidental to the Portfolio's
primary objective.

The Portfolio seeks capital appreciation from a broadly diversified
portfolio of primarily common stocks and securities convertible into common
stock. The adviser may also seek capital appreciation on behalf of the Portfolio
by investing up to 35% of its total assets in other types of securities,
including preferred stock, debt securities, asset-backed securities and indexed
securities. Debt securities (including convertible securities) in which the
Portfolio invests will normally be investment grade or unrated securities
determined by the adviser to be of comparable quality. The Portfolio may,
however, invest up to 5% of its total assets in lower-quality debt securities,
sometimes referred to as "junk bonds".

It is the Portfolio's policy to invest in the securities of both
well-known, established companies and smaller, less-well-known companies. The
Portfolio will invest in securities that the adviser believes offer
above-average growth potential based on their fundamental strength. The adviser
considers many factors when evaluating the overall quality of a security for
investment by the Portfolio, including a company's current financial strength,
earnings momentum, and relative value.

SPECIAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of the SPECIAL EQUITY PORTFOLIO is to provide
capital appreciation by investing primarily in securities of companies believed
by the adviser to be "special equities".

Under normal circumstances, at least 65% of the value of the Portfolio's
total assets will be invested in "special equities" which include equity
securities of: (1) a company 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) a company experiencing a "special situation"; that is,
an unusual and possibly non-repetitive development taking place in the company.
The Portfolio will invest in securities that the adviser believes offer
above-average growth potential based on their fundamental strength.

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<PAGE> 21

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

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

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

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

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

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

In seeking capital appreciation, the Portfolio may also invest in
securities of companies that are not special equities, but which have valuable
fixed assets and whose securities are believed by the adviser to be undervalued
in relation to their assets, earnings, or growth potentials.

The adviser intends to invest primarily in common stocks and securities
that are convertible into common stocks; however, the Portfolio may also invest
up to 35% of its total assets in debt securities of all types and quality if the
adviser believes that investing in these securities will result in capital
appreciation. The Portfolio may invest up to 35% of its total assets in
lower-quality debt securities, sometimes referred to as "junk bonds". The
Portfolio may invest up to 35% of its total assets in foreign securities of all
types and may enter into forward currency contracts for the purpose of managing
exchange rate risks and to facilitate transactions in foreign securities. The
Portfolio may purchase or engage in indexed securities, illiquid instruments,
loans and other direct debt instruments, options and futures contracts,
repurchase agreements, securities loans, restricted securities, swap agreements,
warrants, real estate-related instruments and zero coupon bonds. See "Risks to
Consider", the Appendix to this Prospectus and the Statement of Additional
Information for more information.

The Portfolio spreads investment risk by limiting its holdings in any one
company or industry. The adviser may use various investment techniques to hedge
the Portfolio's risks, but there is no guarantee that these strategies will work
as intended. The adviser normally invests the Portfolio's assets according to
its investment strategy. The Portfolio expects to be fully invested under most
market conditions. However, the Portfolio reserves the right to invest without
limitation in preferred stocks and investment-grade debt instruments for
temporary, defensive purposes when, in the adviser's judgment, a more
conservative approach to investment is desirable.

INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of the INTERNATIONAL EQUITY PORTFOLIO is to
provide long-term capital growth. Dividend income is incidental to the
Portfolio's primary objective.

Under normal circumstances, at least 65% of the value of the Portfolio's
total assets will be invested in foreign equity securities. The Portfolio
invests in companies in at least three countries other than the United States.
The Portfolio's investments will be primarily focused on those equity securities
of well-established companies with large market capitalizations.

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<PAGE> 22

America, South Africa, Central and Eastern Europe, and emerging Asian markets
are also permitted. The risks of investing in foreign securities are heightened
when investing in emerging markets. See "Risks to Consider -- Foreign
Securities". The countries that make up the EAFE index include, but are not
limited to: United Kingdom, Ireland, France, Germany, Switzerland, the
Netherlands, Italy, Spain, Belgium, Sweden, Norway, Finland, Denmark, Austria,
Japan, Australia, New Zealand, Hong Kong, Malaysia and Singapore. It is not the
objective of the Portfolio to replicate the EAFE index. The Portfolio may also
invest in investment-grade convertible debt securities (and unrated securities
determined by the adviser to be of comparable quality), and may purchase U.S.
government securities and indexed securities.

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

ADDITIONAL INVESTMENT POLICIES AND LIMITATIONS
- --------------------------------------------------------------------------------

GOVERNMENT SECURITIES. Government Securities include U.S. Treasury bills,
notes and bonds, and obligations issued by federal agencies such as the
Export-Import Bank of the United States, the General Services Administration,
the Government National Mortgage Association, and the Small Business
Administration. Obligations issued or guaranteed as to principal and interest by
U.S. government agencies or instrumentalities include instruments issued by the
Federal Home Loan Bank, Federal Farm Credit Bank and Federal National Mortgage
Association.

MONEY MARKET INSTRUMENTS. Money Market Instruments include but are not
limited to: U.S. Government Securities; custodial receipts evidencing future
interest or principal payments on U.S. Government Securities; obligations of
domestic or foreign banks, including bankers' acceptances, time deposits and
certificates of deposit ("CDs"); commercial paper (including variable and
floating rate instruments); corporate obligations; and asset-backed securities
and indexed securities -- each with 397 days or less remaining to maturity. For
temporary defensive purposes, the non-money-market Portfolios may invest all or
a portion of their assets in Money Market Instruments.

INVESTMENT GRADE SECURITIES. Investment grade securities are securities
which have been rated Baa or higher by Moody's Investors Service, Inc.
("Moody's") or BBB or higher by Standard & Poor's Ratings Group ("S&P"), or
which have equivalent ratings by other NRSROs. Securities rated Baa or BBB may
be regarded as having speculative characteristics. See the Statement of
Additional Information for a description of the various rating categories.

INVESTMENT LIMITATIONS. Each of the Portfolios has adopted certain
investment limitations. The principal investment limitations of the Portfolios
are summarized below. A complete listing is contained in the Statement of
Additional Information. With the exception of 3(b), these limitations are
fundamental policies and may only be changed with shareholder approval.

1. Each Portfolio (other than the Maryland Tax-Free Portfolio and
Pennsylvania Tax-Free Portfolio) may not, with respect to 75% of its assets,
invest more than 5% of the total market value of its assets in the securities of
any one issuer (other than the U.S. government) if as a result, (a) more than 5%
of its total assets would be invested in the securities of that issuer, or (b)
it would hold more than 10% of the issuer's outstanding voting securities.
(Under applicable regulations, a money market Portfolio may not invest more than
5% of its total assets in securities of a single issuer unless the securities
are first-tier securities.)

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<PAGE> 23

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

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

4. A Portfolio may not make a loan if more than 33 1/3% of its assets would
be lent to other parties. Only the Short-Term Treasury Portfolio, Intermediate
Fixed Income Portfolio and Income Portfolio currently intend to lend portfolio
securities.

OTHER POLICIES. The Appendix to this Prospectus contains additional
information concerning certain securities in which the Portfolios may invest and
transactions in which they may engage. See the Statement of Additional
Information for a complete listing of the Portfolios' investment policies and
limitations and more detailed information about the Portfolios' investments.

RISKS TO CONSIDER
- --------------------------------------------------------------------------------

An investment in any of the Portfolios involves certain risks. These risks
include the following:

FIXED-INCOME SECURITIES. The market value of fixed-income securities will
change in response to interest rate changes and other factors. During periods of
falling interest rates, the value of outstanding fixed-income securities
generally rises. Conversely, during periods of rising interest rates, the value
of such securities generally declines. Moreover, while securities with longer
maturities tend to produce higher yields, the prices of longer maturity
securities are also subject to greater market fluctuations as a result of
changes in interest rates. Changes by recognized agencies in the credit rating
of any fixed-income security and in the ability of an issuer to make payments of
interest and principal also affect the value of these investments. Changes in
the value of portfolio securities will not necessarily affect cash income
derived from those securities but will affect the net asset value of the
Portfolio's shares.

Bonds rated Baa by Moody's or BBB by S&P, or with equivalent ratings by
other NRSROs, may have speculative characteristics, and changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to make principal and interest payments than is the case with higher grade
bonds. Debt securities rated lower than Baa by Moody's or BB by S&P, or with
equivalent ratings by other NRSROs, (sometimes referred to as "junk bonds") have
poor protection against default in payment of principal and interest. These
securities are often considered to be speculative and involve greater risk of
loss or price changes due to changes in the issuer's capacity to pay. Market
prices of lower-rated debt securities may fluctuate more than those of
higher-rated securities, and may decline significantly in periods of general
economic difficulty which may follow rising interest rates. Unrated securities
are not necessarily of lower quality than rated securities, but they may not be
attractive to as many buyers.

MUNICIPAL OBLIGATIONS. The Tax-Free Money Market Portfolio, Maryland
Tax-Free Portfolio and Pennsylvania Tax-Free Portfolio invest primarily in
municipal obligations and other Portfolios may invest in such obligations to the
extent permitted by their investment policies. Municipal securities are issued
to raise money for various public purposes, including general purpose financing
for state and local governments as well as financing for specific projects or
public facilities. Municipal securities may be backed by the full taxing power
of a municipality or by the revenues from a specific project or the credit of a
private organization. Some municipal securities are insured by private insurance
companies, while others may be supported by letters of credit ("LOCs") furnished
by domestic or foreign banks.

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<PAGE> 24

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

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

EQUITY SECURITIES GENERALLY. Investments in equity securities are subject
to market risks which may cause their prices to fluctuate. Accordingly, the
Portfolios investing in equity securities may be more suitable for long-term
investors who can bear the risk of short-term fluctuations. Changes in the value
of portfolio securities will not necessarily affect income derived from those
securities but will affect the net asset value of the Portfolio's shares. Equity
securities held by a Portfolio may not perform well during certain market cycles
and may not respond to general market movements to the same extent as other
securities.

SMALLER-CAPITALIZATION COMPANIES. The Special Equity Portfolio emphasizes
investments in companies with relatively-small market capitalizations and other
Portfolios may invest in such companies to the extent permitted by their
investment policies. The equity securities of smaller-capitalization companies
frequently have experienced greater price volatility than those of larger-
capitalization companies, and they may be expected to do so in the future. Their
reliance on limited product lines, markets, financial resources, or other
factors may make smaller companies more susceptible to setbacks and downturns.
As a result, their stock prices may be particularly volatile. In addition,
investing in securities involving a "special situation" bears the risk that the
situation will not develop as favorably as expected, or that it may deteriorate.
For example, a merger with favorable implications may be blocked, an industrial
development may not enjoy anticipated market acceptance, or a bankruptcy may not
be as favorably resolved as had been expected.

FOREIGN SECURITIES. Investing in the securities of foreign issuers
involves special risks not typically associated with investing in U.S.
companies. These risks include differences in accounting, auditing and financial
reporting standards, generally higher commission rates on foreign portfolio
transactions, the possibility of expropriation or confiscatory taxation, adverse
changes in investment or exchange control regulations, political instability
which could affect U.S. investment in foreign countries, and potential
restrictions on the flow of international capital and currencies. Foreign
issuers may also be subject to less government regulation than U.S. companies.
Moreover, the dividends and interest payable on foreign securities may be
subject to foreign withholding taxes, thus reducing the net amount of income
available for distribution to a Portfolio's shareholders. Further, foreign
securities often trade with less frequency and volume than domestic securities
and, therefore, may exhibit greater price volatility. Investing in emerging
markets involves special considerations (in addition to those relating to
foreign investments generally) which include, among others, greater political
uncertainty, an economy's dependence on revenues from particular commodities or
on international aide or development assistance, currency transfer restrictions,
a limited number of potential buyers for securities, and delays and disruptions
in securities settlement procedures. Changes in foreign exchange rates will
affect, favorably or unfavorably, the value of those securities which are
denominated or quoted in currencies other than the U.S. dollar.

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<PAGE> 25

fluctuation in the total market value of the Portfolio's holdings. Any economic,
political or regulatory developments affecting the value of the securities the
Portfolio holds could have a greater impact on the total value of its holdings
than would be the case if the securities were diversified among more issuers.

Maryland tax-free securities include obligations issued by the State of
Maryland or its counties, municipalities, authorities or other subdivisions. The
performance of these securities is closely tied to economic and political
conditions in the state. Maryland's rate of economic growth has been slower in
the early 1990s than it had been during the 1980s. State revenues in recent
years have been less than expected and, because Maryland's constitution requires
a balanced budget, expenditures have been cut. While the ratings assigned to
Maryland municipal investments indicate that Maryland and its principal
subdivisions and agencies are overall in satisfactory economic health, there can
be no assurance that this will continue or that particular bond issues may not
be adversely affected by changes in state or local economic or political
conditions.

Pennsylvania's economy is based on a mixture of manufacturing, mining,
trade, medical and health services, education and financial institutions.
Pennsylvania's continued dependence on manufacturing, mining, steel and coal,
however, has made the state vulnerable to cyclical fluctuations, foreign imports
and environmental concerns. Pennsylvania's population and per capita income have
been increasing slightly over the past five years, and its employment and
unemployment rates have generally not been significantly different over the past
five years from that of the United States. Pennsylvania is engaged in certain
litigation matters which are described in the Statement of Additional
Information.

OTHER CONSIDERATIONS. Certain other investments and investment techniques
permitted for the Portfolios pose special risks in addition to those described
above. See the Appendix to this Prospectus and the Statement of Additional
Information for more information.

By itself no Portfolio constitutes a balanced investment plan. There is no
assurance that a Portfolio will achieve its investment objective. Changes in the
values of a Portfolio's investments will generally not affect the income derived
from them; however, they may affect the Portfolio's share price. The yield and
total return of the Portfolios will fluctuate. The money market Portfolios seek
to maintain a stable net asset value per share of $1.00 but there is no
assurance that they will be able to do so. The share price of the
non-money-market Portfolios will fluctuate and investors may have a gain or loss
when redeeming shares.

Investors should review the investment objective and policies of a
Portfolio and carefully consider their ability to assume the risks involved in
purchasing its shares.

PERFORMANCE
- --------------------------------------------------------------------------------

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

The YIELD of shares of a Portfolio is calculated by dividing the net
investment income earned by the shares over a 7-day period (for the money market
Portfolios) or a 30-day period (for other Portfolios), by the average number of
shares entitled to receive dividends and expressing the result as an annualized
percentage rate based on each share price at the end of the 7- and 30-day
periods, respectively. The EFFECTIVE YIELD is calculated similarly, but assumes
that the income earned from the investment is reinvested. The effective yield
will be slightly higher than the yield because of the compounding effect of this
assumed reinvestment. Because yield accounting methods differ from the methods
used for other accounting purposes, the yields of shares of the Portfolios may
not equal their

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respective distribution rates, the income paid to your account or the income
reported in the financial statements of the Retail Class of the relevant
Portfolio.

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

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

Each Portfolio may periodically compare its performance to the performance
of other mutual funds tracked by mutual-fund rating services, broad groups of
comparable mutual funds, or unmanaged indices which may assume investment of
dividends but generally do not reflect deductions for administrative and
management costs. Certain Portfolios may advertise performance that includes
results from periods in which the Portfolio's assets were managed in a
non-registered predecessor vehicle. The classes of shares of a Portfolio have
different sales charges and other expenses that may affect performance.

For additional performance information, please contact your Investment
Professional or call 1-800-ARK-FUND to request a Statement of Additional
Information and Annual Report.

PORTFOLIO TRANSACTIONS AND VALUATION
- --------------------------------------------------------------------------------

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

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

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volatility during the period, liquidations related to share redemptions and the
realignment of certain portfolio investments. Because a higher turnover rate
increases transaction costs and may increase taxable capital gains, the advisers
carefully weigh the anticipated benefits of short-term investing against these
consequences.

VALUATION. The net asset value of the Retail Class shares of each Portfolio
is calculated by adding the Retail Class' pro rata share of the value of all
securities and other assets attributable to a Portfolio, deducting the Retail
Class' pro rata share of Portfolio-level liabilities, deducting Retail Class-
specific liabilities, and dividing the result by the number of Retail Class
shares outstanding. Assets of the money market Portfolios are valued based upon
the amortized cost method. Assets of the other Portfolios that are traded on an
exchange or in the over-the-counter market are valued based upon market
quotations. Other assets for which market quotations are not readily available
are valued by an independent pricing service approved by the Board of Trustees.
Foreign securities held by a Portfolio are valued on the basis of quotations
from the primary U.S. market in which they are traded or, if not traded on a
U.S. market, then their primary foreign market and are translated from foreign
market quotations into U.S. dollars using current exchange rates.

PRICING OF SHARES. The Portfolios are open for business and the net asset
values of their shares are calculated each day that the New York Stock Exchange
("NYSE") and the Federal Reserve Bank of New York are open ("Business Day").
Your purchase of shares of a money market Portfolio must be made in federal
funds or other readily available funds and will be processed at the net asset
value next calculated after your order is received and accepted by the Fund's
transfer agent. Your purchase of other Portfolios will be processed at the
public offering price next calculated after your order is received and accepted
by the transfer agent. The net asset values of the Portfolios (other than the
money market Portfolios) are determined at the close of business of the NYSE,
normally 4:00 p.m. Eastern Time ("4:00 p.m."). The net asset values of the U.S.
Treasury Money Market Portfolio and Tax-Free Money Market Portfolio are
determined as of 12:00 noon Eastern Time ("12:00 noon") and the close of
business of the NYSE, normally 4:00 p.m. The net asset values of the U.S.
Government Money Market Portfolio and Money Market Portfolio are determined as
of 5:00 p.m. Eastern Time ("5:00 p.m.").

PURCHASES, EXCHANGES AND REDEMPTIONS
- --------------------------------------------------------------------------------

WHO MAY INVEST?
- --------------------------------------------------------------------------------

Retail Class shares are designed for all investors seeking professionally
managed mutual funds. All investors in Retail Class shares will be required to
establish a brokerage account with a qualified securities broker or financial
institution (an "Investment Professional"), such as First Maryland Brokerage
Corporation, that has a clearing brokerage arrangement with National Financial
Services Corporation.

The minimum initial investment is $500 per Portfolio. Subsequent
investments may be in any amount of $500 or more. If your total investment in a
Portfolio falls below $500 due to redemption and you do not increase your total
investment, your account may be closed and the proceeds mailed to you at the
address on record. You will be given 30 days' notice to reestablish the minimum
investment. Shares will be redeemed at the last calculated net asset value on
the day the account is closed.

HOW DO I SET UP AN ACCOUNT?
- --------------------------------------------------------------------------------

You may set up an account through your Investment Professional. Please
contact your Investment Professional or call 1-800-ARK FUND for information on
opening a brokerage account to invest in Retail Class shares of a Portfolio. The
program materials/brokerage account application from your Investment
Professional should be read in conjunction with this Prospectus. An Investment
Professional may impose additional charges for its services and limitations may
apply.

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HOW DO I INVEST?
- --------------------------------------------------------------------------------

To invest in any Portfolio of the Fund, please contact your Investment
Professional.

Payments for Retail Class shares of a money market Portfolio must be made
by Federal Funds wire or other funds immediately available to the Portfolio. An
order for the purchase of shares will become effective on the day of receipt of
the order by the Fund's transfer agent and the shares purchased will be entitled
to that day's dividend if the order, together with available funds, is received
prior to 12:00 noon (for the U.S. Treasury Money Market Portfolio and Tax-Free
Money Market Portfolio) or 5:00 p.m. (for the Money Market Portfolio and U.S.
Government Money Market Portfolio). If a purchase order for the U.S. Treasury
Money Market Portfolio or Tax-Free Money Market Portfolio, together with
available funds, is received after 12:00 noon but before 4:00 p.m., it will be
processed at the net asset value determined at 4:00 p.m. and the shares
purchased will begin earning dividends the following Business Day. If an order
or payment is received after 4:00 p.m. (for the U.S. Treasury Money Market
Portfolio and Tax-Free Money Market Portfolio) or 5:00 p.m. (for the Money
Market Portfolio and U.S. Government Money Market Portfolio), an investor will
receive the net asset value next determined on the following Business Day.

Investors who wish to receive same-day acceptance of investments in the
Money Market Portfolio and the U.S. Government Money Market Portfolio must
contact the Fund's transfer agent (or its authorized agent) before 5:00 p.m. to
place the trade. In order for an investor to begin earning dividends on the
Business Day the investment is made, the transfer agent must receive the wire
before 5:00 p.m.

Purchase orders for Retail Class shares of a fixed-income or equity
Portfolio received by the transfer agent prior to 4:00 p.m. will be processed at
that day's public offering price (the net asset value plus the applicable sales
charge). The shares purchased will be eligible for dividends on the Business Day
following the date the purchase order is accepted. Payment is expected at the
time of the purchase order, but must be received within three Business Days of
the date of the purchase order. If funds are not received within three Business
Days, the order may be canceled and notice thereof provided to the party placing
the order. Any fees or losses due to cancellation of a purchase order may be the
responsibility of the party placing the order.

When the NYSE or the Federal Reserve Bank of New York closes early, the
Fund reserves the right to advance the time on any such day by which purchase
orders must be received.

It is the responsibility of your Investment Professional to transmit your
order to purchase and redeem shares to the transfer agent before the
next-determined net asset value calculation on a Business Day in order for you
to receive the next-determined share price. No certificates representing Retail
Class shares will be issued.

The Fund and its distributor reserve the right to reject any purchase
order.

25
<PAGE> 29

SALES CHARGES
- --------------------------------------------------------------------------------

The offering price (price to buy one share) is the net asset value of the
applicable Portfolio, divided by the sum of one minus the sales charge
percentage. The redemption price (price to sell one share) is the net asset
value of the applicable Portfolio. There are no sales charges imposed on the
money market Portfolios and the Short-Term Treasury Portfolio. The following
table shows the total sales charges applicable to purchases of shares of the
other Portfolios:

<TABLE>
<CAPTION>
BALANCED, EQUITY INCOME,
EQUITY INDEX, BLUE CHIP EQUITY,
LARGE-CAP VALUE,
INTERMEDIATE FIXED INCOME, MID-CAP EQUITY, STOCK,
INCOME, MARYLAND TAX-FREE CAPITAL GROWTH,
AND PENNSYLVANIA TAX-FREE SPECIAL EQUITY AND
PORTFOLIOS INTERNATIONAL EQUITY PORTFOLIOS
-------------------------------------------- --------------------------------------------
SALES CHARGE SALES CHARGE
AS A % OF PROFESSIONAL AS A % OF PROFESSIONAL
--------------------------- CONCESSION --------------------------- CONCESSION
NET AMOUNT AS A % OF NET AMOUNT AS A % OF
OFFERING PRICE INVESTED OFFERING PRICE OFFERING PRICE INVESTED OFFERING PRICE
-------------- ---------- -------------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Less than $50,000......... 4.50 4.71 4.05 4.75 4.99 4.28
$50,000 to less than
$100,000................ 4.00 4.17 3.60 4.50 4.71 4.05
$100,000 to less than
$250,000................ 3.00 3.09 2.70 3.50 3.63 3.15
$250,000 to less than
$500,000................ 2.50 2.56 2.25 2.50 2.56 2.25
$500,000 to less than
$1,000,000.............. 2.00 2.04 1.80 2.00 2.04 1.80
$1,000,000 to less than
$3,000,000.............. 1.00 1.01 0.90 1.00 1.01 0.90
$3,000,000 to less than
$5,000,000.............. 0.50 0.50 0.45 0.50 0.50 0.45
$5,000,000 and above...... 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>

All applicable sales charges are currently being waived for all share
purchases until October 1, 1997. Investors who purchased shares of any Portfolio
prior to April 1, 1997 may continue to invest without payment of any sales
charges through December 31, 1997. Effective October 1, 1997, the total sales
charges applicable to purchases of Portfolio shares by other investors will be
as follows:

<TABLE>
<CAPTION>
SALES CHARGE
AS A % OF PROFESSIONAL
--------------------------- CONCESSION
NET AMOUNT AS A % OF
OFFERING PRICE INVESTED OFFERING PRICE
-------------- ---------- --------------
<S> <C> <C> <C>
Less than $50,000.......................................... 3.00 3.09 2.90
$50,000 to less than $100,000.............................. 2.50 2.56 2.40
$100,000 to less than $250,000............................. 2.00 2.04 1.90
$250,000 to less than $500,000............................. 1.50 1.52 1.40
$500,000 to less than $1,000,000........................... 1.00 1.01 0.90
$1,000,000 and above....................................... 0.00 0.00 0.00
</TABLE>

All questions regarding the applicability of sales charges to share
purchases after October 1, 1997 will be determined by the Distributor. The sales
charge waivers reflected in the above table may be discontinued at any time.

SALES CHARGE REDUCTIONS AND WAIVERS
- --------------------------------------------------------------------------------

The sales charge will be reduced for purchases of Retail Class shares
according to the above schedule if your purchase qualifies for one of the
following reduction plans. Please call your Investment Professional for more
details about each plan.

26
<PAGE> 30

QUANTITY DISCOUNTS apply to purchases of Retail Class shares of a single
Portfolio or to combined purchases of Retail Class shares of any Portfolio
subject to a sales charge, and to purchases through an exchange from any such
Portfolio. An investment in Retail Class shares for several accounts held by
you, your spouse, and your children under age 21 at the same time will be
considered a single transaction and qualify for a quantity discount as long as
the shares are purchased through the same Investment Professional and the total
is at least $50,000.

RIGHTS OF ACCUMULATION let you reduce your sales charge by adding to your
new purchases the value of all Retail Class shares held by you, your spouse, and
your children under age 21.

A LETTER OF INTENT (the "Letter") lets you receive a reduced sales charge
on purchases during a 13-month period as if the total amount invested had been
invested in a single lump sum. See "Quantity Discounts" above. You must file
your non-binding Letter with the Fund's transfer agent within 90 days of the
start of your purchases. Your initial investment must be at least 5% of the
amount you plan to invest. Out of the initial investment, 5% of the dollar
amount specified in the Letter will be registered in your name and held in
escrow. You will earn income dividends and capital gain distributions on
escrowed shares. Neither income dividends nor capital gain distributions
reinvested in additional shares will apply towards completion of the Letter. The
escrow will be released when your purchase of the total amount has been
completed. You are not obligated to complete the Letter and, in such case,
sufficient escrowed shares will be redeemed to pay any applicable sales charge.

A sales charge will not apply to Retail Class shares purchased: (1) by a
bank trust officer, registered representative, or other employee (or a member of
their immediate families) of Investment Professionals; (2) by a current or
former trustee or officer of the Fund or a current or retired officer, director
or regular employee of Allied Irish Banks, p.l.c., or its direct or indirect
subsidiaries (an "AIB employee"), the spouse of an AIB employee, an AIB employee
acting as custodian for a minor child, or a person acting as trustee of a trust
for the sole benefit of the minor child of an AIB employee; (3) by a charitable
organization (as defined in Section 501(c)(3) of the Code) investing $100,000 or
more; (4) for a charitable remainder trust or life income pool established for
the benefit of a charitable organization (as defined in Section 501(c)(3) of the
Code); (5) for a First Maryland account with the proceeds of a distribution from
an employee benefit plan that qualified for waiver (9); (6) for any state,
county or city, or any governmental instrumentality, department, authority or
agency; (7) with redemption proceeds from other mutual fund complexes on which
you have previously paid an initial or contingent deferred sales charge; (8) for
use in a broker-dealer managed account program, provided the broker-dealer has
executed a participation agreement with the Fund's distributor specifying
certain asset minimums and qualifications, and marketing, program and trading
restrictions (employee benefit plans assets do not qualify for this waiver); (9)
as part of an employee benefit plan having more than 25 eligible employees or a
minimum of $250,000 of plan assets invested in the Fund; (10) as part of an
employee benefit plan through an intermediary that has signed a participation
agreement with the Fund's distributor specifying certain asset minimums and
qualifications, and marketing, program and trading restrictions; and (11) on a
discretionary basis by a registered investment adviser that is not part of an
organization primarily engaged in the brokerage business and has executed a
participation agreement with the Fund's distributor specifying certain asset
minimums and qualifications, and marketing, program and trading restrictions
(employee benefit plan assets do not qualify for this waiver).

In order to continue to qualify for waiver (8), eligible investors with
existing Fund accounts will be required to sign and comply with a participation
agreement. You must notify your Investment Professional or First Maryland
Brokerage Corporation in advance if you qualify for a sales charge waiver. If
you are investing through an account managed by a broker-dealer, if you have
authorized an investment adviser to make investment decisions for you, or if you
are investing through a trust department, you may qualify to purchase either
Retail Class shares without a sales charge or Institutional Class shares.
Because Institutional Class shares have no sales charge, and do not pay a
distribution fee or a shareholder servicing fee, Institutional Class shares are
expected to have a higher total return than Retail Class shares. Contact your
Investment Professional to discuss if you qualify.

27
<PAGE> 31

HOW DO I EXCHANGE SHARES?
- --------------------------------------------------------------------------------

An exchange is a convenient way to buy and sell shares of another Portfolio
registered in your state. Retail Class shares of a Portfolio may be exchanged
for Retail Class shares of another Portfolio. The redemption will be made at the
net asset value of the shares to be redeemed next determined after the exchange
request is received by the transfer agent. If Retail Class shares are exchanged
for Retail Class shares of another Portfolio with a higher sales charge than
that paid for the shares being exchanged, you will pay a sales charge equal to
the difference between the sales charges. In order to exchange into another
Portfolio, the $500 minimum initial investment must be met.

Each exchange between Portfolios actually represents the sale of shares of
one Portfolio and the purchase of shares of another, which may produce a gain or
loss for tax purposes. In order to protect each Portfolio's performance and its
shareholders, frequent exchange activity in response to short-term market
fluctuations is discouraged. The Fund reserves the right to modify or withdraw
the exchange privilege or to suspend the offering of shares of a Portfolio of
any class without notice to shareholders if, in the adviser's judgment, the
Portfolio would be unable to invest effectively in accordance with its
investment objective and policies, or would otherwise potentially be adversely
affected. The Fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange.

An exchange between the Retail Class and the Institutional or Institutional
II Classes of any Portfolio is generally not permitted, except that an exchange
to the Institutional Class or Institutional II Class of a Portfolio will be
permitted should a Retail Class shareholder become eligible to purchase
Institutional Class or Institutional II Class shares. The Fund reserves the
right to require shareholders to complete an application or other documentation
in connection with the exchange. The Fund has received a private letter ruling
from the Internal Revenue Service which provides that exchanges of shares of one
class of a Portfolio for shares of another class of the same Portfolio will not
constitute taxable events. See your Investment Professional for additional
information.

HOW DO I REDEEM SHARES?
- --------------------------------------------------------------------------------

You may redeem all or a portion of your Retail Class shares on any Business
Day. Call your Investment Professional with redemption requests. Shares will be
redeemed at the net asset value next calculated after the Fund's transfer agent
has received the redemption request from your Investment Professional. It is the
responsibility of your Investment Professional to transmit promptly your order
to redeem shares to the transfer agent. Shares redeemed on any Business Day for
each Portfolio will receive the dividends declared, if any, through the time of
redemption. When the NYSE or the Federal Reserve Bank of New York closes early,
the Fund reserves the right to advance the time on any such day by which
redemption orders must be received.

To the extent portfolio securities are traded in other markets on days
which are not Business Days, the net asset value of the shares of a Portfolio
may be affected on days when investors are not able to purchase or redeem its
shares.

If making immediate payment could adversely affect a Portfolio, the
Portfolio may take up to seven days after redemption to pay the proceeds. When
the NYSE is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closings, or when any emergency circumstances exist
that the Securities and Exchange Commission determines merit such action, the
right of redemption may be suspended or the date of payment postponed for a
period of time that may exceed seven days.

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

28
<PAGE> 32

EMPLOYEE INVESTMENT PROGRAM
- --------------------------------------------------------------------------------

Current and former trustees and officers of the Fund, current and retired
officers, directors and regular employees of Allied Irish Banks, p.l.c. and its
direct and indirect subsidiaries, and their spouses and minor children
("employees") may open an employee investment account directly with the Fund by
making an initial investment of $100 ($50 if purchasing through the Automatic
Investment Plan) or more in any Portfolio. Shares of the Portfolios may be
purchased without a sales charge and may be redeemed for an employee account as
described below. Automatic investment and systematic withdrawal plans are also
available for employee accounts. To open an employee account call 1-888-
4ARK-FUND to request an Account Application.

PURCHASES BY MAIL. Shares may be purchased for an employee account through
the mail by forwarding a completed Account Application along with a check (in
the case of a new account) or a check with the proper account information and
investment instructions (in the case of existing accounts) to:

ARK Funds
P.O. Box 8525
Boston, MA 02266-8525

All purchases made by check should be in U.S. dollars and made payable to
ARK Funds or for an IRA account, State Street Bank and Trust Company, as
custodian. Third party checks will not be accepted. When purchases are made by
check or through the Automatic Investment Plan, redemptions will not be allowed
until the investment being redeemed has been in the account for 15 calendar
days.

PURCHASES BY WIRE. Shares may be purchased for an employee account by
wiring money to:

State Street Bank and Trust Company
Boston, MA
ABA 011000028
Account Number: 99051609
Attention: [ARK Portfolio Name]
Further Credit to: [Employee Account Name and Number]

The wire instructions must include the employee's account number. An order
to purchase shares by Federal Funds wire will be deemed to have been received on
the Business Day of the wire, provided that employees notify the Fund's transfer
agent at 1-888-4ARK-FUND by 12:00 p.m. of their intention to wire money.

REDEMPTIONS BY MAIL. Written requests for redemptions from an employee
account must be received in good order by the Fund's transfer agent in order to
constitute a valid tender for redemption by mail. Requests should be mailed to:

ARK FUNDS
P.O. Box 8525
Boston, MA 02266-8525

The transfer agent may require that the signature on the written request be
guaranteed by a commercial bank or by a member firm of a domestic stock
exchange. Signature guarantees will be required if: (a) the redemption request
is an amount in excess of $25,000; (b) redemption proceeds are to be sent to a
name and/or address that differs from the registered name or address of record;
or (c) a transfer of registration is requested. Otherwise, written redemption
requests by mail may be accepted without a signature guarantee.

REDEMPTIONS BY TELEPHONE. Employees wishing to redeem shares from an
employee account by telephone must provide the information requested in the
Account Application. Thereafter, telephone redemption requests may be made by
calling 1-888-4ARK-FUND. Payment for telephone redemptions will normally be
transmitted on the next business day following receipt of a valid request for
redemption. Employees may have the proceeds sent either by mail or wire.

29
<PAGE> 33

BY WIRE: Shareholders of record may have their telephone redemption requests
paid by a direct wire to a domestic commercial bank account previously
designated by the employee on the Account Application. The Fund's
transfer agent may deduct its then-current wire fee from the proceeds
for wire redemptions. As of the date of this Prospectus, the fee was
$10 for each wire redemption. There is no minimum for telephone
redemptions paid by wire.

BY MAIL: Redemption proceeds may be paid by a check mailed to the name and
address in which the employee's account is registered with the Fund.
There is no minimum for telephone redemptions paid by check.

Employees may not close their accounts by telephone.

Neither the Fund nor its transfer agent will be responsible for any loss,
liability, cost or expense for acting upon wire instructions or upon telephone
instructions that it reasonably believes to be genuine. The Fund and the
transfer agent will each employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. To ensure the authenticity
of redemption or exchange instructions received by telephone, the transfer agent
examines each shareholder request by verifying the account number and/or tax
identification number at the time the request is made. The transfer agent
subsequently sends confirmations of the transaction to the shareholder for
verification. If reasonable procedures are not employed, the Fund and the
transfer agent may be liable for any losses due to unauthorized or fraudulent
telephone transactions.

REDEMPTION BY CHECKWRITING. Checkwriting is available for regular employee
accounts investing in a money market Portfolio. The Fund will provide
shareholders of record, upon request and without charge, with checks drawn on
the Portfolio. Shareholders will be required to sign signature cards and will be
subject to any applicable rules and regulations of the clearing bank relating to
check redemption privileges.

Checks drawn on the money market Portfolios may be made payable to the
order of any payee in an amount of $500 or more. Shareholders should be aware
that, as is the case with regular bank checks, certain banks may not provide
cash at the time of deposit, but will wait until they have received payment from
the clearing bank. When a check is presented to the clearing bank for payment,
subject to the Fund's acceptance of the check, the clearing bank, as agent,
causes the Fund to redeem, at the net asset value next determined after such
presentation, a sufficient number of full and fractional shares in the
shareholder's account to cover the amount of the check. Checks will be returned
by the clearing bank if there are insufficient shares to meet the withdrawal
amount. Shareholders of record wishing to use this method of redemption should
check the appropriate box on the Account Application, obtain a signature card by
calling 1-888-4ARK-FUND, and mail the completed form and signature card to ARK
Funds, P.O. Box 8525, Boston, MA 02266-8525. There is no charge for the
clearance of any checks, although the clearing bank will impose its customary
overdraft fee in connection with returning any checks as to which there are
insufficient shares to meet the withdrawal amount. As of the date of this
Prospectus, the overdraft fee was $20.

REDEMPTION BY TELEPHONE EXCHANGE. Employees may make telephone exchanges
of shares held in their accounts for shares in any other Portfolio offering
Retail Class shares by calling 1-888-4ARK-FUND. Shareholders wishing to use the
telephone exchange privilege must check the appropriate box on the Account
Application. The telephone exchange privilege is only available in states where
exchanges from one Portfolio to another can lawfully be made.

Telephone exchange requests received prior to 4:00 p.m. for an equity or
fixed-income Portfolio, or prior to 12:00 p.m. for the U.S. Treasury Money
Market Portfolio and Tax-Free Money Market Portfolio or 5:00 p.m. for the U.S.
Government Money Market Portfolio and Money Market Portfolio, on any Business
Day will be processed on the date of receipt. "Processing" a telephone exchange
request means that shares in the Portfolio from which the shareholder is making
the exchange will be redeemed at the net asset value per share as of 4:00 p.m.
(12:00 p.m. for the U.S. Treasury Money Market Portfolio and Tax-Free Money
Market Portfolio or 5:00 p.m. for the U.S. Government Money Market Portfolio and
Money Market Portfolio) on the date of receipt. Purchases of shares for the

30
<PAGE> 34

Portfolio into which the shareholder is making an exchange will be effected on
the same Business Day, at such other Portfolio's net asset value per share
determined as of 4:00 p.m. (12:00 p.m. for the U.S. Treasury Money Market
Portfolio and Tax-Free Money Market Portfolio or 5:00 p.m. for the U.S.
Government Money Market Portfolio and Money Market Portfolio) on such Business
Day. Telephone exchange requests received after 4:00 p.m. for an equity or
fixed-income Portfolio, or after 12:00 p.m. for the U.S. Treasury Money Market
Portfolio and Tax-Free Money Market Portfolio, or 5:00 p.m. for the U.S.
Government Money Market Portfolio and Money Market Portfolio, will be processed
on the next Business Day in the manner described above. The Fund will not be
responsible for the authenticity of exchange instructions received by telephone
and the investor will bear the risk of loss.

Before making an exchange, shareholders should consider the investment
objective, policies and restrictions of the Portfolio into which they are
exchanging, as set forth in the Prospectus. Any telephone exchange must satisfy
the requirements relating to the minimum initial investment amounts of the
Portfolio involved. The Fund reserves the right to reject any telephone exchange
request and to modify or terminate the telephone exchange privilege at any time,
upon 60 days' written notice.

For more information on exchanging shares, please see "Purchases, Exchanges
and Redemptions -- How Do I Exchange Shares?" above.

AUTOMATIC INVESTMENT PLAN. An employee may arrange for periodic
investments on any Business Day in a Portfolio through automatic deductions from
a checking account by completing the appropriate section of the Account
Application. The minimum pre-authorized investment amount is $50 per month per
Portfolio. All IRA investments made through the plan will be credited as
contributions for the current calendar year.

SYSTEMATIC WITHDRAWAL PLAN. The Systematic Withdrawal Plan may be used by
employees who wish to receive regular distributions from their accounts. Upon
commencement of a withdrawal plan, an account must have a current value of
$5,000 or more. Employees may elect to receive automatic payments of $50 or more
via check or direct deposit to a checking account on a monthly, quarterly,
semi-annual or annual basis. Automatic withdrawals are normally processed on the
25th day of the applicable month (if this is not a Business Day, then on the
next Business Day) and are paid promptly thereafter. To arrange a withdrawal
plan, an employee must complete the appropriate section of the Account
Application.

Employees should realize that if withdrawals exceed income dividends, their
invested principal in the account will be depleted. Thus, depending upon the
frequency and amount of the withdrawal payments and/or fluctuations in the net
asset value per share of the applicable Portfolio, their original investment
could be exhausted entirely. To participate in the Systematic Withdrawal
Program, employees must have their dividends automatically reinvested. Employees
may change or cancel a withdrawal plan at any time, upon written notice to ARK
Funds, P.O. Box 8525, Boston, MA 02266-8525.

IRA ACCOUNTS. Any of the Portfolios (other than the Tax-Free Money Market,
Maryland Tax-Free and Pennsylvania Tax-Free Portfolios) may be used as an
investment for an existing or new employee IRA account. Employee IRA accounts
are subject to minimum initial and subsequent investments of $100 ($50 through
the Automatic Investment Plan) in a Portfolio and the applicable contribution
limits set by the Internal Revenue Service. If an employee does not have an
existing IRA that permits investments in the Portfolios, one may be established
by obtaining an Account Application. All IRA investments made through the
Automatic Investment Plan will be credited as contributions for the current
calendar year. The telephone, wire and checkwriting privileges are not available
to employee IRA accounts. For more information about IRA accounts and to obtain
an Account Application, call 1-888-4ARK-FUND.

31
<PAGE> 35

ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------

TAX-SHELTERED RETIREMENT PLANS. Retirement plans offer tax advantages to
individuals. Call your Investment Professional for more information on the plans
and their benefits, provisions and fees. Your Investment Professional can set up
your new account in any of the Portfolios (with the exception of the Tax-Free
Money Market Portfolio, Maryland Tax-Free Portfolio and Pennsylvania Tax-Free
Portfolio) under one of several tax-sheltered plans. These plans let you invest
for retirement and shelter your investment income from current taxes. Minimums
may differ from those described above. Plans include Individual Retirement
Accounts ("IRAs"), Rollover IRAs, Keogh Plans, and Simplified Employee Pension
Plans.

DISTRIBUTION OPTIONS. The money market Portfolios earn interest from their
investments. This interest, after payment of expenses, is passed along to
shareholders as income dividends. Income dividends for each money market
Portfolio are declared daily and paid monthly. The other Portfolios earn
dividends from stocks and interest from bond, money market, and other
investments. These dividends and interest, after payment of expenses, are passed
along as income dividends. Income dividends for the Short-Term Treasury
Portfolio, Intermediate Fixed Income Portfolio, Income Portfolio, Maryland
Tax-Free Portfolio, Pennsylvania Tax-Free Portfolio and Equity Income Portfolio
are declared and paid monthly; for the Balanced Portfolio, Equity Index
Portfolio, Large-Cap Value Portfolio, Blue Chip Equity Portfolio, Mid-Cap Equity
Portfolio and Stock Portfolio dividends are declared and paid quarterly; and for
the Capital Growth Portfolio, Special Equity Portfolio and International Equity
Portfolio dividends are declared and paid annually. Net realized capital gains,
if any, for any Portfolio, are declared and paid at least annually.

When you fill out your brokerage account application, you can specify how
you want to receive your distributions. Currently, there are three available
options:

1. The SHARE OPTION reinvests dividends and capital gain distributions, if
any, in additional shares of the same Portfolio. Reinvestment will be made at
the net asset value next determined after payment. If you do not indicate a
choice on your application, you will be assigned this option.

2. The CASH OPTION. Each dividend and capital gain distribution, if any,
will be credited to your account in the manner specified for settlement on your
account application.

3. The INCOME-EARNED OPTION. This option is available for the Portfolios
other than the money market Portfolios. Your capital gain distributions will be
automatically reinvested in shares of the same Portfolio, and your dividends, if
any, will be credited to your account in the manner specified for settlement on
your account application.

AUTOMATIC ASSET BUILDER. This program offers a simple way to maintain a
regular investment program. You may arrange automatic transfers (minimum $100
per transaction) from your bank account to your brokerage account on a periodic
basis. When you participate in the Automatic Asset Builder, the minimum initial
investment in each Portfolio is $500. You will receive written confirmation when
you set up your program participation, or any time you make a change to your
participation. You may change the amount of your automatic investment, skip an
investment, or stop your Automatic Asset Builder investment by calling your
Investment Professional at least three business days prior to your next
scheduled investment date. This program is not available for the money market
Portfolios.

STATEMENTS AND REPORTS. You will receive a quarterly (or, if there has been
account activity, monthly) statement. You will also receive a statement after
each trading transaction in your account. A consolidated IRS Form 1099-DIV with
federal tax information will be mailed to you by January 31 of each tax year and
also will be filed with the IRS. At least twice a year, you will receive
financial reports of any Portfolio in which you are invested.

TELEPHONE TRANSACTIONS. You may initiate any transaction by telephoning
your Investment Professional. Neither the Fund nor its agents will be
responsible for any losses resulting from unauthorized transactions if
reasonable procedures designed to verify the identity of the caller are
followed. Your Investment Professional may request personalized security codes
or other information,

32
<PAGE> 36

and may also record calls. You should verify the accuracy of your confirmation
statements immediately after you receive them.

MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------

INVESTMENT ADVISERS
- --------------------------------------------------------------------------------

Allied Investment Advisors, Inc. 100 E. Pratt Street, Baltimore, MD 21202,
provides investment advisory services to each Portfolio other than the
Tax-Managed Equity Portfolio and International Equity Portfolio. AIB Investment
Managers Limited, AIB Investment House, Percy Place, Dublin 4, Ireland, provides
investment advisory services to the International Equity Portfolio. Investment
advisory services are provided subject to the general supervision of the Board
of Trustees. The adviser to a Portfolio is entitled to receive for its advisory
services payment at an annual rate based on the following fee schedule: money
market Portfolios: .25% of each Portfolio's average net assets; Short-Term
Treasury Portfolio: .35% of average net assets; Intermediate Fixed Income
Portfolio: .60% of average net assets; Income Portfolio: .50% of average net
assets; Maryland Tax Free Portfolio: 50% of average net assets; Pennsylvania
Tax-Free Portfolio: .50% of average net assets; Balanced Portfolio: .55% of
average net assets; Equity Income Portfolio: .70% of average net assets; Equity
Index Portfolio: .20% of average net assets; Blue Chip Equity Portfolio: .60% of
average net assets; Large-Cap Value Portfolio: .70% of average net assets;
Mid-Cap Equity Portfolio: .70% of average net assets; Stock Portfolio: .70% of
average net assets; Capital Growth Portfolio: .60% of average net assets;
Special Equity Portfolio: .60% of average net assets; and International Equity
Portfolio: .80% of average net assets. The adviser, in its sole discretion, may
waive all or any portion of its advisory fee for any Portfolio. Any such
voluntary waiver will increase such Portfolio's yield for the period during
which the waiver is in effect.

Allied Investment Advisors, Inc. is a wholly-owned subsidiary of First
Maryland. First Maryland, established in 1806, is a wholly-owned subsidiary of
First Maryland Bancorp, a bank holding company registered under the Federal Bank
Holding Company Act of 1956. First Maryland Bancorp is a subsidiary of Allied
Irish Banks, p.l.c. which, together with its subsidiaries, is Ireland's leading
banking and financial services organization, See "Banking Law Matters". Allied
Investment Advisors, Inc. was organized in 1995 to manage assets and provide
research services for the Trust Division of First Maryland, which previously
served as investment adviser to the Portfolios. It provides investment
management and advisory services to individual, corporate and institutional
clients, pension plans, common and collective trust funds, and mutual funds.
First Maryland transferred responsibility for advising the Portfolios (other
than the International Equity Portfolio) to Allied Investment Advisors, Inc.
effective as of September 1, 1996. The transfer did not involve a change of
actual control or management of the investment adviser to the Portfolios and,
although Allied Investment Advisors, Inc. is a newly-organized entity with no
prior experience in managing mutual funds, its officers, portfolio managers and
investment analysts previously served in comparable capacities for the Trust
Division of First Maryland. As of June 30, 1997, Allied Investment Advisors,
Inc. had assets under management of approximately $7.77 billion.

AIB Investment Managers Limited is the discretionary investment management
arm of the AIB Group. It has extensive experience managing the investments of
corporations, public and private pension funds, high-net-worth individuals, and
has a broad range of international, foreign mutual fund accounts. As of June 30,
1997, AIB Investment Managers Limited had assets under management of
approximately $9.05 billion.

The investment advisory fee payable to AIB Investment Managers Limited by
the International Equity Portfolio is higher than the fees payable by most
mutual funds (although not necessarily higher than the fees payable by a typical
international fund), due to the greater complexity, expense and commitment of
resources involved in international investing. AIB Investment Managers Limited
has voluntarily agreed to waive all or a portion of its advisory fee (and, if
necessary, to reimburse other expenses) in order to limit the International
Equity Portfolio's total operating expenses to 1.55% of its

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<PAGE> 37

average net assets. This expense cap is subject to annual review by AIB
Investment Managers Limited.

The Portfolios may from time to time, consistent with their investment
policies and applicable law, invest in securities of companies with which First
Maryland or its affiliates has a lending relationship. The lending relationship
will not be a factor in the selection by the advisers of the securities in which
the Portfolios invest.

PORTFOLIO MANAGEMENT
- --------------------------------------------------------------------------------

James M. Hannan is a Principal of Allied Investment Advisors, Inc. and
manager of the money market Portfolios and the Short-Term Treasury Portfolio. He
is also responsible for several separately managed institutional portfolios
which he has managed since 1992. He has served as a Vice President of First
Maryland since 1987. Prior to 1987 he served as the Treasurer for the City of
Hyattsville, Maryland.

Susan S. Schnaars is a Principal of Allied Investment Advisors, Inc. and
co-manager, with Mr. Gradow, of the Intermediate Fixed Income Portfolio and
Income Portfolio. She is also manager of the Maryland Tax-Free Portfolio and
Pennsylvania Tax-Free Portfolio. Ms. Schnaars is also responsible for managing
several commingled funds (taxable and tax-free) and several large institutional
accounts. Prior to 1992, Ms. Schnaars managed institutional and commingled
fixed-income portfolios, including the RAF Fixed Income Fund for PNC Investment
Management and Research (formerly known as Provident National Bank). Ms.
Schnaars is a Chartered Financial Analyst and a Certified Public Accountant.

Steven M. Gradow is a Managing Director of Allied Investment Advisors, Inc.
and co-manager, with Ms. Schnaars, of the Intermediate Fixed Income Portfolio
and Income Portfolio. Prior to joining First Maryland in January 1996, Mr.
Gradow was responsible for the management of $15 billion of fixed-income pension
assets for Washington State Investment Board in Seattle for four years. Mr.
Gradow's experience also includes five years fixed-income management for the
Public Employees Retirement System of California (CALPERS).

Charles E. Knudsen is a Principal of Allied Investment Advisors, Inc. and
co-manager, with Mr. Leo, of the Balanced Portfolio. He follows several equity
industry groups. In addition, he is a senior portfolio manager for key, tax-free
institutional accounts, including pension and profit sharing plans, foundations,
and endowments. Mr. Knudsen has more than eight years of investment management
experience with First Maryland. Mr. Knudsen is a Chartered Financial Analyst.

Clyde L. Randall is a Principal of Allied Investment Advisors, Inc. and the
co-manager, with Mr. Ashcroft, of the Equity Income Portfolio, Blue Chip Equity
Portfolio and Large-Cap Value Portfolio. Prior to March 1995, Mr. Randall was an
equity analyst and portfolio manager for more than five years at Mercantile Safe
Deposit and Trust Company, Baltimore, Maryland. Mr. Randall is a Chartered
Financial Analyst.

Allen J. Ashcroft, Jr. is a Principal of Allied Investment Advisors, Inc.
and co-manager, with Mr. Randall, of the Equity Income Portfolio, Blue Chip
Equity Portfolio and Large-Cap Value Portfolio. Prior to joining First Maryland,
Mr. Ashcroft was an equity analyst and portfolio manager for McGlinn Capital
Management, Wyomissing, Pennsylvania, for 12 years. Mr. Ashcroft has more than
17 years of experience in investment research and equity analysis.

H. Giles Knight is a Principal of Allied Investment Advisors, Inc. and
manager of the Stock Portfolio and Special Equity Portfolio. Prior to joining
First Maryland, Mr. Knight was with ASB Capital Management, a subsidiary of
NationsBank, from 1990 to 1994. He was Director of Special Equity Investments,
Capital Markets Division, where he was responsible for one mutual fund and six
employee benefit and personal trust common stock funds.

Christopher E. Baggini is a Principal of Allied Investment Advisors, Inc.
and co-manager, with Mr. Baker, of the Mid-Cap Equity Portfolio and manager of
the Capital Growth Portfolio. Prior to

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<PAGE> 38

joining First Maryland, Mr. Baggini served as portfolio manager and research
analyst for First Metropolitan Development Corporation. He has more than nine
years of experience in investment management, including more than four years at
Salomon Brothers with responsibilities in equity research, sales and trading.
Mr. Baggini is a Chartered Financial Analyst.

Christopher D. Baker is an Investment Officer of Allied Investment
Advisors, Inc. and the co-manager, with Mr. Baggini, of the Mid-Cap Equity
Portfolio and manager of the Equity Index Portfolio. Mr. Baker has more than two
years of experience in managing mid-cap index common trust funds for the Trust
Division of First Maryland and more than five years of experience in First
Maryland's Trust Division in investment research and equity analysis.

J. Eric Leo is a Managing Director of, and Director of Equity Research for,
Allied Investment Advisors, Inc. and co-manager, with Mr. Knudsen, of the
Balanced Portfolio. Prior to 1997, he was Executive Vice President and Chief
Investment Officer of Legg Mason Capital Management, Inc. Mr. Leo has more than
20 years of experience in investment management, including managing mutual fund
portfolios and accounts for both individuals and institutions.

Joseph Mottley is an Associate Director of AIB Investment Managers Limited
and the manager of the International Equity Portfolio. Since joining AIB
Investment Managers in 1985, he has worked on a number of international equity
funds, with broad exposure in the Asian and European markets. He has also
managed several U.S. equity funds. Prior to 1985, Mr. Mottley was a Policy
Analyst with the Irish Government's Treasury Department. He has a Master of
Science in Economics and Statistics from Trinity College, Dublin.

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

ADMINISTRATOR
- --------------------------------------------------------------------------------

SEI Fund Resources (the "Administrator"), One Freedom Valley Drive, Oaks,
PA 19456, serves as the Portfolios' administrator under an administration
agreement with the Fund. SEI Financial Management Corporation, which served as
administrator for the Fund prior to June 1, 1996, is the owner of all beneficial
interest in the Administrator.

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

DISTRIBUTION AND SERVICING OF THE SHARES
- --------------------------------------------------------------------------------

SEI Investments Distribution Co. (the "Distributor"), One Freedom Valley
Drive, Oaks, PA 19456, a wholly-owned subsidiary of SEI Investments Company,
serves as the distributor for the Fund pursuant to a distribution agreement with
the Fund. The Distributor, a Pennsylvania corporation incorporated on July 20,
1981, is a broker-dealer registered under the Securities Exchange Act of 1934
and a member of the National Association of Securities Dealers. Inc. The
Distributor is the principal underwriter of the Fund. First Maryland neither
participates in nor is responsible for the underwriting of the shares of the
Fund.

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<PAGE> 39

The Board of Trustees has adopted a distribution plan on behalf of the
Retail Class of each Portfolio pursuant to Rule 12b-1 under the 1940 Act
("Plan"). The Plan provides for payment of a fee to the Distributor of up to
.75% of average net assets of the Retail Class of each Portfolio. The Board has
approved the following fee rates: .25% of the average net assets of the Retail
Class of each money market Portfolio; .30% of the average net assets of the
Retail Class of the Intermediate Fixed Income Portfolio, Income Portfolio, the
Maryland Tax-Free Portfolio and Pennsylvania Tax-Free Portfolio; .40% of the
average net assets of the Retail Class of the Short-Term Treasury Portfolio,
Balanced Portfolio, Equity Income Portfolio, Equity Index Portfolio, Large-Cap
Value Portfolio, Mid-Cap Equity Portfolio, Capital Growth Portfolio, Special
Equity Portfolio and International Equity Portfolio; and .55% of the average net
assets of the Retail Class of the Blue Chip Equity Portfolio and Stock
Portfolio.

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

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

Under a Shareholder Services Plan in effect with respect to the Retail
Class of a Portfolio, the Retail Class of a Portfolio may pay shareholder
servicing fees to Investment Professionals at an annual rate of up to .25% of
the average net assets of the Retail Class shares attributable to their
customers for providing ongoing shareholder support services to their customers
with accounts in such class, including responding to shareholder communications,
account balance maintenance and dividend posting. The Board of Trustees has
approved an annual shareholder servicing fee rate of .15% of the average net
assets of the Retail Class of each Portfolio.

All or any portion of the 12b-1 or shareholder servicing fee for a
Portfolio may be waived at any time. Any such voluntary waiver, which can be
discontinued at any time, will increase the Portfolio's yield for the period
during which the waiver is in effect.

TRANSFER AGENT
- --------------------------------------------------------------------------------

SEI Fund Resources, One Freedom Valley Drive, Oaks, PA 19456, provides
transfer agent and related services for the Portfolios. SEI Fund Resources has
subcontracted the transfer agency services to State Street Bank and Trust
Company ("State Street Bank"). State Street Bank maintains shareholder accounts
and records for the Portfolios.

CUSTODIAN
- --------------------------------------------------------------------------------

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

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BANKING LAW MATTERS
- --------------------------------------------------------------------------------

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

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

TAX MATTERS
- --------------------------------------------------------------------------------

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

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

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

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<PAGE> 41

Shareholders of the Maryland Tax-Free Portfolio who are subject to Maryland
state and local income tax will not be subject to tax in Maryland on dividends
paid by the Portfolio to the extent that they are attributable to interest on
tax-exempt obligations of the State of Maryland or its political subdivisions,
interest on obligations of the United States or its possessions and territories,
or gains realized from the disposition of either of these categories of
obligations (with the express exception of dividends attributable to gain from
the disposition of obligations of a U.S. territory or possession which are
subject to Maryland state and local income tax). Dividends attributable to
interest on obligations issued by states other than Maryland and income from
repurchase agreements are subject to Maryland state and local income tax.

Individual shareholders of the Pennsylvania Tax-Free Portfolio will not be
subject to Pennsylvania personal income taxes on distributions of interest
attributable to exempt obligations (generally, obligations issued by
Pennsylvania and its agencies, public authorities, municipalities and other
political subdivisions as well as obligations of the United States), but will be
subject to Pennsylvania personal income taxes on distributions of profits, gains
or income derived from the sale, exchange or other disposition of obligations
issued by Pennsylvania and its agencies, public authorities, municipalities and
other political subdivisions as well as obligations of the United States. Exempt
interest in Pennsylvania is referred to as excludable exempt-interest dividends
and will be identified by the Portfolio.

The Fund will send written notices to shareholders annually regarding the
tax status of distributions made by each Portfolio.

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

Shareholders are urged to consult their tax advisers concerning their own
tax situation, including the application of state and local income taxes to
investments in a Portfolio.

GENERAL INFORMATION
- --------------------------------------------------------------------------------

ARK Funds is 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 Board of Trustees
supervises Fund activities and reviews contractual arrangements with the
companies that provide the Fund and its Portfolios with services. The Board of
Trustees may authorize the Fund to offer other portfolios which may differ in
the types of securities in which their assets may be invested.

The Fund may issue an unlimited number of shares of each of its Portfolios.
Each share of a Portfolio gives a shareholder one vote in Trustee elections and
other matters submitted to a vote of shareholders. All shares of the Fund have
equal voting rights, except that in matters affecting only a particular
Portfolio or class of shares, only shares of that Portfolio or class are
entitled to vote. As a Massachusetts business trust, the Fund is not required to
hold annual shareholder meetings, although special meetings may be called for
the purpose of voting on certain changes in the operations of a Portfolio or the
Fund, or for the election or removal of Trustees under certain circumstances.

The Fund is composed of the following nineteen separately managed
Portfolios: U.S. Treasury Money Market Portfolio, U.S. Government Money Market
Portfolio, Money Market Portfolio, Tax-Free Money Market Portfolio, Short-Term
Treasury Portfolio, Intermediate Fixed Income Portfolio, Income Portfolio,
Maryland Tax-Free Portfolio, Pennsylvania Tax-Free Portfolio, Balanced Portfolio
(formerly Growth and Income Portfolio), Equity Income Portfolio, Equity Index
Portfolio, Blue Chip Equity Portfolio, Large-Cap Value Portfolio, Mid-Cap Equity
Portfolio, Stock Portfolio, Capital Growth Portfolio, Special Equity Portfolio
and International Equity Portfolio. The Maryland Tax-Free Portfolio

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<PAGE> 42

and Pennsylvania Tax-Free Portfolio are non-diversified Portfolios; the
remaining Portfolios are diversified Portfolios.

The Board of Trustees of the Fund has established three classes of shares
of each money market Portfolio and two classes of shares of each other
Portfolio. You may obtain more information on the classes of shares not offered
through this Prospectus from your Investment Professional or by calling
1-800-624-4116 (inside Maryland 1-800-638-7751).

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<PAGE> 43

APPENDIX
- --------------------------------------------------------------------------------

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

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

BANK OBLIGATIONS. Bank obligations include bankers' acceptances which are
negotiable obligations of a bank to pay a draft which has been drawn on it by a
customer; certificates of deposit which are negotiable certificates representing
a commercial bank's obligation to repay funds deposited with it, earning
specified rates of interest over given periods or issued at a discount; and time
deposits which are non-negotiable deposits in a banking institution earning a
specified interest rate over a given period of time.

COMMERCIAL PAPER. Commercial paper is an obligation issued by a bank,
broker-dealer, corporation and other entities for purposes such as financing its
current operations.

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

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

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<PAGE> 44

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

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

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

INDEXED SECURITIES. Indexed securities are derivative securities whose
value depends on the price of securities indices, or other financial indicators.
These include commercial paper and certificates of deposit. These securities may
be positively or negatively indexed; that is, their value may increase or
decrease if the underlying instrument appreciates. Some indexed securities may
be based on underlying instruments whose total value is greater than the value
of the indexed security itself. Some indexed securities may be based on
underlying instruments whose total value is greater than the value of the
indexed instrument itself.

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

MUNICIPAL OBLIGATIONS. Municipal obligations are issued to raise money for
a variety of public or private purposes, including general financing for state
and local governments, or financing for specific projects or public facilities.
They may be issued in anticipation of future revenues, and may be backed by the
full taxing power of a municipality, the revenues from a specific project, or
the credit of a private organization. The value of some or all municipal
securities may be affected by uncertainties in the municipal market related to
legislation or litigation involving the taxation of municipal securities or

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<PAGE> 45

the rights on municipal securities holders. A Portfolio may own a municipal
security directly or through a participation interest.

REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement a
Portfolio sells a portfolio instrument to another party, such as a bank, in
return for cash and agrees to repurchase the instrument at a particular price
and time. While a reverse repurchase agreement is outstanding, a Portfolio will
maintain appropriate liquid assets in a segregated custodial account to cover
its obligation under the agreement. A Portfolio will enter into reverse
repurchase agreements only with parties whose creditworthiness is deemed
satisfactory by the adviser.

SECURITIES LENDING. The Short-Term Treasury Portfolio, Intermediate Fixed
Income Portfolio and Income Portfolio may lend securities to parties such as
broker-dealers or institutional investors. Securities lending allows a Portfolio
to retain ownership of the securities loaned and, at the same time, to earn
income. Since there may be delays in the recovery of loaned securities, or even
a loss or rights in collateral supplied should the borrower fail financially,
loans will be made only to parties whose creditworthiness has been reviewed and
found satisfactory by the Portfolio's adviser.

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

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

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

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

ZERO COUPON DEBT. Zero coupon debt securities do not make regular interest
payments. Instead, they are sold at a deep discount from their face value. In
calculating its daily dividend, a Portfolio

42
<PAGE> 46

takes into account as income a portion of the difference between these
securities' purchase prices and their face values. Because they do not pay
current income, the prices of zero coupon debt securities can be volatile when
interest rates change.

ADDITIONAL INVESTMENTS FOR THE TAX-FREE MONEY MARKET, MARYLAND TAX-FREE AND
PENNSYLVANIA TAX-FREE PORTFOLIOS
- --------------------------------------------------------------------------------

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

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

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

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

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

43
<PAGE> 47

ARK 1234-9708

<PAGE> 48

ARK FUNDS: INSTITUTIONAL CLASS

Form N-1A Item Number
<TABLE>
<CAPTION>
Part A Prospectus Caption
<S> <C>
1 . . . . . . . . . . . . . . . . . . . . . . Cover Page
2 . . . . . . . . . . . . . . . . . . . . . . Fees and Expenses
3 a,b . . . . . . . . . . . . . . . . . . . . Financial Highlights
c . . . . . . . . . . . . . . . . . . . . . Performance
4 a(i). . . . . . . . . . . . . . . . . . . . General Information
a(ii),b,c . . . . . . . . . . . . . . . . . Investment Objectives and Policies; Risks
to Consider
5 a,b,c,d,e,f . . . . . . . . . . . . . . . . Management of the Fund
g . . . . . . . . . . . . . . . . . . . . . Portfolio Transactions and Valuation
5A . . . . . . . . . . . . . . . . . . . . . *
6 a . . . . . . . . . . . . . . . . . . . . . General Information
b,c,d . . . . . . . . . . . . . . . . . . . *
e . . . . . . . . . . . . . . . . . . . . . General Information
f,g . . . . . . . . . . . . . . . . . . . . Portfolio Transactions and Valuation; Tax Matters
h . . . . . . . . . . . . . . . . . . . . . General Information
7 a . . . . . . . . . . . . . . . . . . . . . Purchases, Exchanges and Redemptions
b(i),(ii) . . . . . . . . . . . . . . . . . Portfolio Transactions and Valuation
b(iii,iv,v),c . . . . . . . . . . . . . . . *
d . . . . . . . . . . . . . . . . . . . . . Purchases, Exchanges and Redemptions
e, f(i),(ii). . . . . . . . . . . . . . . . Management of the Fund
f(iii). . . . . . . . . . . . . . . . . . . *
8 . . . . . . . . . . . . . . . . . . . . . . Purchases, Exchanges and Redemptions
9 . . . . . . . . . . . . . . . . . . . . . . *
</TABLE>

_____________________
* Not applicable.
<PAGE> 49

ARK FUNDS -- INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------
PROSPECTUS
, 1997
- --------------------------------------------------------------------------------

ARK Funds (the "Fund") is an open-end management investment company composed of
separately managed diversified and non-diversified portfolios. The portfolios of
the Fund listed above have an Institutional Class of shares. Institutional Class
shares are offered through this Prospectus only to individuals, institutions and
other entities that have established trust, custodial or money management
relationships with The First National Bank of Maryland ("First Maryland"), its
affiliated banks (including Allied Irish Banks, p.l.c. and its affiliates), or
its correspondent banks or their affiliated banks.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
ENDORSED OR GUARANTEED BY, FIRST MARYLAND OR ANY DEPOSITARY INSTITUTION, AND 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.

This Prospectus is designed to provide investors with information that they
should know before investing. Please read and retain it for future reference. A
Statement of Additional Information dated , 1997 and Annual Report
(including financial statements for the fiscal year ended April 30, 1997) have
been filed with the Securities and Exchange Commission and are incorporated
herein by reference. The Statement of Additional Information and Annual Report
are available upon request without charge by calling 1-800-624-4116 (inside
Maryland 1-800-638-7751).

- --------------------------------------------------------------------------------
TABLE OF CONTENTS

<TABLE>
<S> <C>
Summary...................................... 2
Fees and Expenses............................ 4
Financial Highlights......................... 8
Investment Objectives and Policies........... 10
Additional Investment Policies and
Limitations................................ 21
Risks to Consider............................ 22
Performance.................................. 25
Portfolio Transactions and Valuation......... 26
Purchases, Exchanges and Redemptions......... 27
Management of the Fund....................... 31
Tax Matters.................................. 36
General Information.......................... 37
Appendix..................................... 39
</TABLE>

- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 50

SUMMARY
- --------------------------------------------------------------------------------

The Fund is an open-end management investment company composed of
separately managed diversified and non-diversified portfolios. This Prospectus
provides information with respect to Institutional Class shares of the following
portfolios (the "Portfolios" or a "Portfolio"). The Large-Cap Value Portfolio is
not currently offering Institutional Class shares.