<PAGE> 1
ARK FUNDS
Supplement dated April 1, 1998 to Prospectus
dated February 13, 1998 for
the Retail Class Shares
This supplement provides new and additional information beyond that
contained in the Prospectus and should be retained and read in conjunction with
such Prospectus.
1
<PAGE> 2
The disclosure under "Summary -- Purchase, Exchange and Redemption of
Shares" on page 3 is revised as follows:
Investors may purchase Retail Class shares of the Portfolios at their net
asset value plus the applicable sales charge by calling the Fund's distributor
at 1-888-4ARK-FUND and requesting an account application or 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 in good order. See "Purchases, Exchanges and
Redemptions".
2
<PAGE> 3
Effective April 1, 1998, the information under "Fees and Expenses" is
amended as follows:
<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%
Shareholder Services Fees (after
waiver)(2)................................. .06% .06% .06% .06%
Other Expenses(3)............................ .18% .18% .18% .20%
- ---------------------------------------------------------------------------------------------------------
Total Operating Expenses (after
waivers)(4)................................ .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) A portion of the shareholder services fees is being waived for all
Portfolios. Absent such waivers, the shareholder services fees would be
.15%.
(3) Other expenses are estimated based on amounts incurred during the previous
fiscal year and include all expenses except nonrecurring account fees,
brokerage commissions and other capital items, and advisory, 12b-1 and
shareholder services fees.
(4) 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>
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.
3
<PAGE> 4
<TABLE>
<CAPTION>
RETAIL CLASS
---------------------------------------------------------------------------------------------
SHORT- SHORT- U.S. INTERMEDIATE
TERM TERM GOVERNMENT FIXED MARYLAND PENNSYLVANIA
SHAREHOLDER TRANSACTION TREASURY BOND BOND INCOME INCOME TAX-FREE TAX-FREE
EXPENSES PORTFOLIO PORTFOLIO+ PORTFOLIO PORTFOLIO+ PORTFOLIO PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price)............... None 4.50%* 4.50%* 4.50%* 4.50%* 4.50%* 4.50%*
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering
price)........................ None None None None None None None
Maximum Contingent Deferred
Sales Charge.................. None None None None None None None
Exchange Fee.................... None None None None None None None
Redemption Fee.................. None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
net assets)
Advisory Fees (after
waivers)(1)................... .35% .70% .66% .49% .51% .49% .65%
12b-1 Fees (after waivers)(2)... .25% .00% .25% .00% .25% .25% .25%
Shareholder Services Fees (after
waivers)(3)................... .00% .00% .00% .00% .00% .00% .00%
Other Expenses(4)............... .20% .20% .19% .19% .19% .19% .18%
- -------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after
waivers)(5)................... .80% .90% 1.10% .68% .95% .93% 1.08%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Retail Class shares of this Portfolio are not currently being offered.
* A portion of the sales load of 4.50% is currently being waived so that share
purchases will be subject to a maximum sales load of 3.00%. These waivers
will continue in effect through April 30, 1998 and thereafter may be
discontinued at any time.
(1) The adviser has agreed to waive, on a voluntary basis, a portion of its fees
for the Short-Term Bond Portfolio, U.S. Government Bond Portfolio,
Intermediate Fixed Income Portfolio, Income Portfolio and Maryland 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 Short-Term
Bond Portfolio, U.S. Government Bond Portfolio, Intermediate Fixed Income
Portfolio, Income Portfolio, and Maryland Tax-Free Portfolio would be .75%,
.75%, .60%, .60%, and .65%, 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, .30%
for the Short-Term Bond Portfolio, U.S. Government Bond Portfolio,
Intermediate Fixed Income Portfolio, Income Portfolio, Maryland Tax-Free
Portfolio and Pennsylvania Tax-Free Portfolio.
(3) A portion of the shareholder services fees is being waived for all
Portfolios. Absent such waivers, the shareholder services fees would be
.15%.
(4) Other expenses are estimated based on amounts incurred during the previous
fiscal year and include all expenses except nonrecurring account fees,
brokerage commissions and other capital items, and advisory, 12b-1 and
shareholder services fees.
(5) Absent the voluntary fee waivers described above, the total operating
expenses for Retail Class shares of the Short-Term Treasury Portfolio,
Short-Term Bond Portfolio, U.S. Government Bond Portfolio, Intermediate
Fixed Income Portfolio, Income Portfolio, Maryland Tax-Free Portfolio and
Pennsylvania Tax-Free Portfolio would be 1.10%, 1.45%, 1.39%, 1.24%, 1.24%,
1.29% and 1.28%, 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........................ 8 26 44 99
Short-Term Bond Portfolio............................ 39 58 78 137
U.S. Government Bond Portfolio....................... 41 64 88 159
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...................... 41 63 88 158
</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.
4
<PAGE> 5
<TABLE>
<CAPTION>
RETAIL CLASS
----------------------------------------------
EQUITY EQUITY BLUE CHIP
BALANCED INCOME INDEX EQUITY
SHAREHOLDER TRANSACTION EXPENSES PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
<S> <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).......................... .56% .64% .06% .60%
12b-1 Fees (after waivers)(2)............................. .25% .25% .25% .25%
Shareholder Services Fees (after waivers)(3).............. .00% .00% .00% .00%
Other Expenses(after waivers)(4).......................... .20% .19% .14% .20%
- ----------------------------------------------------------------------------------------------------------
Total Operating Expenses (after waivers)(5)............... 1.01% 1.08% .45% 1.05%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* A portion of the sales load of 4.75% is currently being waived so that share
purchases will be subject to a maximum sales load of 3.00%. These waivers
will continue in effect through April 30, 1998 and thereafter may be
discontinued at any time.
(1) The adviser has agreed to waive, on a voluntary basis, a portion of its fees
for the Balanced Portfolio, Equity Income Portfolio, Equity Index Portfolio
and Blue Chip Equity 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 Balanced Portfolio, Equity Income Portfolio, Equity
Index Portfolio and Blue Chip Equity Portfolio would be .65%, .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 and Equity Index Portfolio, and .55% for the Blue Chip Equity
Portfolio.
(3) A portion of the shareholder service fees is being waived for all
Portfolios. Absent such waivers, the shareholder services fees would be
.15%.
(4) Other expenses are estimated based on amounts incurred during the previous
fiscal year and include all expenses except nonrecurring account fees,
brokerage commissions and other capital items, and advisory, 12b-1 and
shareholder services fees. The Fund's administrator has agreed to waive, on
a voluntary basis, .13% of its fee for the Equity Index Portfolio. Absent
such waiver, other expenses for the Equity Index Portfolio would be .27%.
(5) Absent the voluntary fee waivers described above, total operating expenses
for Retail Class shares of the Balanced Portfolio, Equity Income Portfolio,
Equity Index Portfolio and Blue Chip Equity Portfolio would be 1.40%, 1.44%,
1.02%, and 1.60%, 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>
Balanced Portfolio......................................... 40 61 84 150
Equity Income Portfolio.................................... 41 63 88 158
Equity Index Portfolio..................................... 34 44 -- --
Blue Chip Equity Portfolio................................. 40 62 86 154
</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.
5
<PAGE> 6
<TABLE>
<CAPTION>
RETAIL CLASS
---------------------------------------------------------------------------------------------
INTERNATIONAL
MID-CAP VALUE CAPITAL SMALL-CAP EQUITY INTERNATIONAL
EQUITY EQUITY STOCK GROWTH EQUITY SELECTION EQUITY
SHAREHOLDER TRANSACTION EXPENSES PORTFOLIO+ PORTFOLIO PORTFOLIO+ PORTFOLIO PORTFOLIO++ PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <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%* 4.75%* 1.50% 4.75%*
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price)... None None None None None None None
Maximum Contingent Deferred Sales
Charge.......................... None None None None None None None
Exchange Fee...................... None None None None None None None
Redemption Fee.................... None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average net
assets)
Advisory Fees (after
waivers)(1)..................... .74% .87% .65% .65% .79% .55% .63%
12b-1 Fees (after waivers)(2)..... .00% .25% .00% .25% .25% .25% .00%
Shareholder Services Fees (after
waivers)(3)..................... .00% .00% .00% .00% .00% .00% .00%
Other Expenses (4)................ .21% .18% .25% .21% .20% .20% .92%
- ---------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after
waivers)(5)..................... .95% 1.30% .90% 1.11% 1.24% 1.00% 1.55%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Retail Class shares of this Portfolio are not currently being offered.
++ Formerly Special Equity Portfolio.
* A portion of the sales load of 4.75% is currently being waived so that share
purchases will be subject to a maximum sales load of 3.00%. These waivers
will continue in effect through April 30, 1998 and thereafter may be
discontinued at any time.
(1) The adviser has agreed to waive, on a voluntary basis, a portion of its fees
for the Mid-Cap Equity Portfolio, Value Equity Portfolio, Stock Portfolio,
Capital Growth Portfolio, Small-Cap Equity Portfolio and International
Equity Selection 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 those
voluntary waivers. The advisers reserve the right to terminate the fee
waivers at any time in their sole discretion. Absent such waivers, the
advisory fees for the Mid-Cap Equity Portfolio, Value Equity Portfolio,
Stock Portfolio, Capital Growth Portfolio, Small-Cap Equity Portfolio,
International Equity Selection Portfolio and International Equity Portfolio
would be .80%, 1.00%, .70%, .70%, .80%, .65% 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, Value
Equity Portfolio, Capital Growth Portfolio, Small-Cap Equity Portfolio,
International Equity Selection Portfolio and International Equity Portfolio
and .55% for the Stock Portfolio.
(3) A portion of the shareholder services fees is being waived for all
Portfolios. Absent such waivers, the shareholder services fees would be
.15%.
(4) Other expenses are estimated based on amounts incurred during the previous
fiscal year and include all expenses except nonrecurring account fees,
brokerage commissions and other capital items, and advisory, 12b-1 and
shareholder services fees.
(5) Absent the voluntary fee waivers described above, the total operating
expenses for Retail Class shares of the Mid-Cap Equity Portfolio, Value
Equity Portfolio, Stock Portfolio, Capital Growth Portfolio, Small-Cap
Equity Portfolio, International Equity Selection and International Equity
Portfolio would be 1.56%, 1.73%, 1.65%, 1.46%, 1.55%, 1.43% and 2.52%,
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 (1.50% for the
International Equity Selection Portfolio):
<TABLE>
<CAPTION>
1 3 5 10
YR YRS YRS YRS
---- ----- ----- ------
<S> <C> <C> <C> <C>
Mid-Cap Equity Portfolio.................................... 39 59 81 143
Value Equity Portfolio...................................... 43 70 99 182
Stock Portfolio............................................. 39 58 78 137
Capital Growth Portfolio.................................... 41 64 89 161
Small-Cap Equity Portfolio.................................. 42 68 96 175
International Equity Selection Portfolio.................... 25 46 69 136
International Equity Portfolio.............................. 45 77 112 209
</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.
6
<PAGE> 7
The disclosure under "Financial Highlights" is amended as follows:
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table provides information about the financial history of the
Retail Class of each Portfolio (excluding Portfolios which as of October 31,
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 for the year ended April 30, 1997 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. The information for the six months ended October
31, 1997 (unaudited) is included in the Semi-Annual Report. The Annual Report
and the Semi-Annual Report are 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
Net Unrealized from
Asset Gains or Net
Value, Net (Losses) Invest-
Beginning Investment on ment
of Period Income Investments Income
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO
- ------------------------------------
1997a $ 1.00 0.02 -- (0.02)
1997 1.00 0.05 -- (0.05)
1996(1) 1.00 0.02 -- (0.02)
- ----------------------
MONEY MARKET PORTFOLIO
- ----------------------
1997a $ 1.00 0.03 -- (0.03)
1997 1.00 0.05 -- (0.05)
1996 1.00 0.05 -- (0.05)
1995 1.00 0.05 -- (0.05)
1994(2) 1.00 -- -- --
- -------------------------------
TAX-FREE MONEY MARKET PORTFOLIO
- -------------------------------
1997a $ 1.00 0.02 -- (0.02)
1997 1.00 0.03 -- (0.03)
1996 1.00 0.03 -- (0.03)
1995 1.00 0.03 -- (0.03)
1994(3) 1.00 -- -- --
- --------------------------------------
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
- --------------------------------------
1997a $ 1.00 0.02 -- (0.02)
- -----------------------------
SHORT-TERM TREASURY PORTFOLIO
- -----------------------------
1997a $ 9.96 0.27 0.08 (0.26)
1997(4) 9.95 0.27 0.03 (0.28)
- ----------------
INCOME PORTFOLIO
- ----------------
1997a $ 9.94 0.30 0.38 (0.30)
1997 9.91 0.59 0.01 (0.57)
1996 9.72 0.60 0.19 (0.60)
1995 9.62 0.55 0.05 (0.47)
1994(5) 9.69 0.02 (0.06) (0.03)
- ---------------------------
MARYLAND TAX-FREE PORTFOLIO
- ---------------------------
1997a $ 9.87 0.21 0.32 (0.22)
1997(6) 9.96 0.13 (0.07) (0.15)
- -------------------------------
PENNSYLVANIA TAX-FREE PORTFOLIO
- -------------------------------
1997a $ 9.92 0.22 0.30 (0.22)
1997(6) 10.01 0.13 (0.07) (0.15)
<CAPTION>
Ratio of
Distri- Net Net Expenses
butions Asset Assets to
from Value, End of Average
Capital End of Total Period Net
Gains Period Return+ (000) Assets
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO
- ------------------------------------
1997a -- $ 1.00 4.80% $ 29,201 0.68%
1997 -- 1.00 4.71 13,673 0.64
1996(1) -- 1.00 1.82 8,758 0.55*
- ----------------------
MONEY MARKET PORTFOLIO
- ----------------------
1997a -- $ 1.00 5.25% $ 159,387 0.60%
1997 -- 1.00 5.03 128,693 0.59
1996 -- 1.00 5.44 104,703 0.58
1995 -- 1.00 4.69 51,081 0.45
1994(2) -- 1.00 0.42 12 1.16*
- -------------------------------
TAX-FREE MONEY MARKET PORTFOLIO
- -------------------------------
1997a -- $ 1.00 3.22% $ 25,593 0.60%
1997 -- 1.00 3.01 16,495 0.55
1996 -- 1.00 3.53 16,179 0.34
1995 -- 1.00 2.74 2,491 0.75
1994(3) -- 1.00 0.20 50 1.25*
- --------------------------------------
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
- --------------------------------------
1997a -- $ 1.00 5.31% $ 7,804 0.63%
- -----------------------------
SHORT-TERM TREASURY PORTFOLIO
- -----------------------------
1997a -- $10.05 3.51%++ $ 17,119 0.78%
1997(4) (0.01) 9.96 3.39 22,937 0.67*
- ----------------
INCOME PORTFOLIO
- ----------------
1997a -- $10.32 6.93%++ $ 5,696 0.94%
1997 -- 9.94 6.32 4,102 0.89
1996 -- 9.91 8.14 4,184 1.02
1995 (0.03) 9.72 6.45 296 1.23
1994(5) -- 9.62 (0.41) 30 1.72*
- ---------------------------
MARYLAND TAX-FREE PORTFOLIO
- ---------------------------
1997a -- $10.18 5.45%++ $ 20,272 0.91%
1997(6) -- 9.87 0.63 7,997 0.91*
- -------------------------------
PENNSYLVANIA TAX-FREE PORTFOLIO
- -------------------------------
1997a -- $10.22 5.32%++ $ 2,011 0.85%
1997(6) -- 9.92 0.60 1,177 0.87*
<CAPTION>
Ratio of Ratio of
Net Expenses
Investment to Average
Income to Net
Average Assets Portfolio Average
Net (Excluding Turnover Commission
Assets Waivers) Rate Rate**
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO
- ------------------------------------
1997a 4.69% 0.83% -- --
1997 4.62 0.83 -- --
1996(1) 4.71* 0.86* -- --
- ----------------------
MONEY MARKET PORTFOLIO
- ----------------------
1997a 5.12% 0.83% -- --
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
- -------------------------------
1997a 3.17% 0.85% -- --
1997 2.97 0.84 -- --
1996 3.33 0.90 -- --
1995 2.68 2.94 -- --
1994(3) 1.20* 32.17* -- --
- --------------------------------------
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
- --------------------------------------
1997a 5.06% 0.83% -- --
- -----------------------------
SHORT-TERM TREASURY PORTFOLIO
- -----------------------------
1997a 5.02% 1.06% 63.59% --
1997(4) 5.07* 0.91* 147.86 --
- ----------------
INCOME PORTFOLIO
- ----------------
1997a 5.92% 1.14% 101.74% --
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
- ---------------------------
1997a 4.43% 1.11% 7.34% --
1997(6) 4.70* 1.10* 11.13 --
- -------------------------------
PENNSYLVANIA TAX-FREE PORTFOLIO
- -------------------------------
1997a 4.39% 1.11% 8.71% --
1997(6) 4.65* 1.12* 32.76 --
</TABLE>
7
<PAGE> 8
<TABLE>
<CAPTION>
Realized Distri-
and butions
Net Unrealized from
Asset Gains or Net
Value, Net (Losses) Invest-
Beginning Investment on ment
of Period Income Investments Income
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------
BALANCED PORTFOLIO
- ------------------
1997a $11.40 0.13 1.55 (0.14)
1997 11.35 0.28 0.56 (0.28)
1996 10.04 0.31 1.68 (0.31)
1995 10.15 0.27 0.05 (0.24)
1994(7) 10.62 0.01 (0.43) (0.05)
- -----------------------
EQUITY INCOME PORTFOLIO
- -----------------------
1997*(10) $11.01 0.14 1.23 (0.15)
- --------------------------
BLUE CHIP EQUITY PORTFOLIO
- --------------------------
1997a $12.38 0.05 1.64 (0.05)
1997(8) 10.33 0.16 2.06 (0.16)
- ------------------------
CAPITAL GROWTH PORTFOLIO
- ------------------------
1997a $11.87 (0.01) 2.55 --
1997 11.56 0.09 1.41 (0.13)
1996 10.18 0.12 2.15 (0.12)
1995 10.18 0.08 0.18 (0.08)
1994(7) 10.89 -- (0.71) --
- --------------------------------------------------------------
SMALL-CAP EQUITY PORTFOLIO (FORMERLY SPECIAL EQUITY PORTFOLIO)
- --------------------------------------------------------------
1997a $ 8.53 (0.04) 2.37 --
1997(8) 15.47 (0.01) (3.72) --
- ------------------------------
INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------
1997a $10.44 0.03 0.28 --
1997(9) 10.63 0.01 -- --
<CAPTION>
Ratio of
Distri- Net Net Expenses
butions Asset Assets to
from Value, End of Average
Capital End of Total Period Net
Gains Period Return+ (000) Assets
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ------------------
BALANCED PORTFOLIO
- ------------------
1997a -- $12.94 14.79%++ $ 10,516 1.00%
1997 (0.51) 11.40 7.66 6,164 0.96
1996 (0.37) 11.35 20.23 3,323 1.09
1995 (0.19) 10.04 3.33 549 1.26
1994(7) -- 10.15 (3.95) 166 1.86*
- -----------------------
EQUITY INCOME PORTFOLIO
- -----------------------
1997*(10) -- $12.23 12.44%++ $ 1,905 1.03%
- --------------------------
BLUE CHIP EQUITY PORTFOLIO
- --------------------------
1997a -- $14.02 13.65%++ $ 28,467 1.04%
1997(8) (0.01) 12.38 21.74 13,211 0.86*
- ------------------------
CAPITAL GROWTH PORTFOLIO
- ------------------------
1997a -- $14.41 21.40%++ $ 10,160 0.09%
1997 (1.06) 11.87 13.39 $5,595 0.56
1996 (0.77) 11.56 23.24 2,111 0.50
1995 (0.18) 10.18 2.74 404 1.23
1994(7) -- 10.18 (6.52) 87 1.92*
- --------------------------------------------------------------
SMALL-CAP EQUITY PORTFOLIO (FORMERLY SPECIAL EQUITY PORTFOLIO)
- --------------------------------------------------------------
1997a -- $10.86 27.32%++ $ 1,623 1.26%
1997(8) (3.21) 8.53 (27.14) 1,075 1.11*
- ------------------------------
INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------
1997a -- $10.75 2.97%++ $ 760 1.55%
1997(9) (0.20) 10.44 (0.15) 373 1.77*
<CAPTION>
Ratio of Ratio of
Net Expenses
Investment to Average
Income to Net
Average Assets Portfolio Average
Net (Excluding Turnover Commission
Assets Waivers) Rate Rate**
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------
BALANCED PORTFOLIO
- ------------------
1997a 2.18% 1.30% 35.19% .0651
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 --
- -----------------------
EQUITY INCOME PORTFOLIO
- -----------------------
1997*(10) 2.31% 1.40% 16.34% .0700
- --------------------------
BLUE CHIP EQUITY PORTFOLIO
- --------------------------
1997a 0.81% 1.49% 12.22% .0700
1997(8) 1.29* 1.25* 46.91 .0727
- ------------------------
CAPITAL GROWTH PORTFOLIO
- ------------------------
1997a (0.12)% 1.39% 94.04% .0682
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 --
- --------------------------------------------------------------
SMALL-CAP EQUITY PORTFOLIO (FORMERLY SPECIAL EQUITY PORTFOLIO)
- --------------------------------------------------------------
1997a (0.84)% 1.56% 209.46% .0660
1997(8) (0.13)* 1.21* 704.41 .0678
- ------------------------------
INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------
1997a 0.80% 2.45% 51.33% .0389
1997(9) 0.16* 2.50* 26.65 .0381
(a) For the six months ended October 31, 1997 (unaudited).
* 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
++ Returns are for the period indicated and have not been
annualized.
(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.
(10) Commenced operations on May 9, 1997.
</TABLE>
As of the date of this Prospectus, the Short-Term Bond Portfolio, U.S.
Government Bond Portfolio, Value Equity Portfolio and International Equity
Selection Portfolio and the Retail Class of the Intermediate Fixed Income
Portfolio, Mid-Cap Equity Portfolio and Stock Portfolio had not yet commenced
operations.
8
<PAGE> 9
The disclosure in the first paragraph on page 19 under the International
Equity Selection Portfolio is revised as follows:
INTERNATIONAL EQUITY SELECTION PORTFOLIO
- --------------------------------------------------------------------------------
The investment objective of the INTERNATIONAL EQUITY SELECTION PORTFOLIO is
to provide long-term capital appreciation. The Portfolio seeks to achieve its
investment objective by investing primarily in shares of other mutual funds (the
"underlying funds"), the portfolios of which consist primarily of equity
securities of non-U.S. issuers. Under normal market conditions, and as an
investment policy, the Portfolio will invest at least 65% of its total assets in
underlying funds that are international equity funds. However, as an operational
policy, the Portfolio anticipates investing substantially all of its assets in
international equity funds. International equity funds are those which invest
primarily in equity securities of companies located in three or more countries
outside the United States. The adviser will attempt to identify and select a
varied portfolio of international equity funds which presents the greatest
long-term capital growth potential based on the adviser's analysis of many
factors. The selection of international equity funds may include international
equity funds that invest primarily in emerging markets or focus their
investments on geographic regions. The selection of underlying funds involves an
initial peer group screening process which assesses fund investment style,
investment objectives and policies, and fund management. Rankings of certain
independent rating services are also considered. Potential underlying funds
which, in the adviser's view, meet these criteria will then be subject to
further evaluation of investment policies, historic total return, size,
volatility, manager tenure and operating expenses over various time periods.
Also, on a macroeconomic level, a fund's geographical diversification is also
considered. The underlying funds may be subject to more, less, the same or
different investment restrictions than the Portfolio, and the adviser will
consider these similarities and differences when making investment decisions.
9
<PAGE> 10
The disclosure under "Purchases, Exchanges and Redemptions" on pages 26 and
27 is revised as follows:
PURCHASES, EXCHANGES AND REDEMPTIONS
- --------------------------------------------------------------------------------
WHO MAY INVEST?
- --------------------------------------------------------------------------------
Retail Class shares are designed for all investors seeking professionally
managed mutual funds. Retail Class shares are sold on a continuous basis by the
Fund's distributor, SEI Investments Distribution Co. (the "Distributor"). The
principal office of the Distributor is Oaks, Pennsylvania 19456. If you wish to
purchase Retail Class shares, you may contact your investment professional or
telephone the Fund at 1-888-4ARK-FUND. Investors in Retail Class shares may also
establish a brokerage account with a qualified securities broker or financial
institution (an "Investment Professional"), such as First Maryland Brokerage
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.
PURCHASES BY MAIL. Shares may be purchased 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.
10
<PAGE> 11
PURCHASES BY WIRE. Shares may be purchased by wiring money to:
State Street Bank and Trust Company
Boston, MA
ABA 011000028
Account Number: 99051609
Attention: [ARK Portfolio Name]
Further Credit to: [Account Name and Number]
The wire instructions must include the 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 the Fund's transfer agent is notified 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 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. Investors wishing to redeem shares 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. Investors may have the
proceeds sent either by mail or wire.
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 shareholder 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 shareholder's account is registered with the
Fund. There is no minimum for telephone redemptions paid by check.
Investors 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
11
<PAGE> 12
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 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. Investors 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
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
12
<PAGE> 13
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. Investors 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. Investors 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.
Investors 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, investors must have their dividends automatically reinvested. Investors
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. 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 a shareholder 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
13
<PAGE> 14
IRA accounts. For more information about IRA accounts and to obtain an Account
Application, call 1-888-4ARK-FUND.
HOW TO PURCHASE THROUGH INVESTMENT PROFESSIONALS
- --------------------------------------------------------------------------------
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.
HOW DO I INVEST?
- --------------------------------------------------------------------------------
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.
If you have established an account through an Investment Professional, it
is the responsibility of your Investment Professional to transmit your order to
purchase and redeem shares to the
14
<PAGE> 15
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 the Distributor reserve the right to reject any purchase
order.
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 above. 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. For information on how to
open an account, please see "Purchases, Exchanges and Redemptions" above.
The third paragraph under "Purchases, Exchanges and Redemptions -- How Do I
Exchange Shares?" on page 30 has been revised as follows:
An exchange between the Retail Class and the Institutional Class or
Institutional II Class 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. Investors who have been
issued Institutional Class shares in a merger or a reorganization or who are
currently Personal Trust Customers who will be receiving a distribution from
their trust account may exchange their Institutional Class shares for Retail
Class shares of any Portfolio or Portfolios of the Fund. These exchanges will be
made on the basis of the net asset value of the shares exchanged. 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.
AK1111
15
<PAGE> 16
ARK FUNDS
Supplement dated April 1, 1998 to Prospectus
dated February 13, 1998 for
the Institutional Class Shares
This supplement provides new and additional information beyond that
contained in the Prospectus and should be retained and read in conjunction with
such Prospectus.
1
<PAGE> 17
Effective April 1, 1998, the information under "Fees and Expenses" is
amended as follows:
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
----------------------------------------------------------
U.S. TREASURY U.S. GOVERNMENT MONEY TAX-FREE
MONEY MARKET MONEY MARKET MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- --------------- --------- ------------
<S> <C> <C> <C> <C>
Advisory Fees (after waivers)(1)............. .19% .14% .11% .09%
Shareholder Services Fees (after
waivers)(2)................................ .06% .06% .06% .06%
Other Expenses(3)............................ .18% .18% .18% .20%
---- ---- ---- ----
Total Operating Expenses (after
waivers)(4)................................ .43% .38% .35% .35%
==== ==== ==== ====
</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) A portion of the shareholder services fees is being waived for the
Portfolios. Absent such waivers, the shareholder services fees would be
.15%.
(3) Other expenses are estimated based on amounts incurred during the previous
fiscal year and include all expenses except nonrecurring account fees,
brokerage commissions and other capital items, and advisory and shareholder
services fees.
(4) Absent the voluntary fee waivers described above, total operating expenses
for Institutional 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 .58%, .58% .58% and .60%, respectively.
EXAMPLE
- --------------------------------------------------------------------------------
An investor in Institutional 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....................... 4 14 24 54
U.S. Government Money Market Portfolio..................... 4 12 21 48
Money Market Portfolio..................................... 4 11 20 44
Tax-Free Money Market Portfolio............................ 4 11 20 44
</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.
2
<PAGE> 18
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
-----------------------------------------------------------------------------------------------
SHORT-TERM SHORT-TERM U.S. GOVERNMENT INTERMEDIATE MARYLAND PENNSYLVANIA
TREASURY BOND BOND FIXED INCOME INCOME TAX-FREE TAX-FREE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ---------- --------------- ------------ --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees (after
waivers)(1).............. .35% .70% .66% .49% .51% .49% .65%
Shareholder Services Fees
(after waivers)(2)....... .06% .06% .06% .06% .06% .06% .06%
Other Expenses(3).......... .20% .20% .19% .19% .19% .19% .18%
---- ---- ---- ---- ---- ---- ----
Total Operating Expenses
(after waivers)(4)....... .61% .96% .91% .74% .76% .74% .89%
==== ==== ==== ==== ==== ==== ====
</TABLE>
(1) The adviser has agreed to waive, on a voluntary basis, a portion of its fees
for the Short-Term Bond Portfolio, U.S. Government Bond Portfolio,
Intermediate Fixed Income Portfolio, Income Portfolio and Maryland 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 Short-Term
Bond Portfolio, U.S. Government Bond Portfolio, Intermediate Fixed Income
Portfolio, Income Portfolio and Maryland Tax-Free Portfolio would be .75%,
.75%, .60%, .60% and .65%, respectively.
(2) A portion of the shareholder services fees is being waived for the
Portfolios. Absent such waivers, the shareholder services fees would be
.15%.
(3) Other expenses are estimated based on amounts incurred during the previous
fiscal year and include all expenses except nonrecurring account fees,
brokerage commissions and other capital items, and advisory and shareholder
services fees.
(4) Absent the voluntary fee waivers described above, the total operating
expenses for Institutional Class shares of the Short-Term Treasury
Portfolio, Short-Term Bond Portfolio, U.S. Government Bond Portfolio,
Intermediate Fixed Income Portfolio, Income Portfolio, Maryland Tax-Free
Portfolio and Pennsylvania Tax-Free Portfolio would be .70%, 1.15%, 1.09%,
.94%, .94%, .99%, and .98%, respectively.
EXAMPLE
- --------------------------------------------------------------------------------
An investor in Institutional 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>
Short-Term Treasury Portfolio............................... 6 20 34 76
Short-Term Bond Portfolio................................... 10 31 53 118
U.S. Government Bond Portfolio.............................. 9 29 50 112
Intermediate Fixed Income Portfolio......................... 8 24 41 92
Income Portfolio............................................ 8 24 42 94
Maryland Tax-Free Portfolio................................. 8 24 41 92
Pennsylvania Tax-Free Portfolio............................. 9 28 49 110
</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.
3
<PAGE> 19
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
---------------------------------------------
EQUITY EQUITY BLUE CHIP
BALANCED INCOME INDEX EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Advisory Fees (after waivers)(1)........................... .56% .64% .06% .60%
Shareholder Services Fees (after waivers)(2)............... .06% .06% .00% .06%
Other Expenses (after waivers)(3).......................... .20% .19% .14% .20%
---- ---- ---- ----
Total Operating Expenses (after waivers)(4)................ .82% .89% .20% .86%
==== ==== ==== ====
</TABLE>
(1) The adviser has agreed to waive, on a voluntary basis, a portion of its fees
for the Balanced Portfolio, Equity Income Portfolio, Equity Index Portfolio
and Blue Chip Equity 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 Balanced Portfolio, Equity Income Portfolio, Equity
Index Portfolio and Blue Chip Equity Portfolio would be .65%, .70%, .20% and
.70%, respectively.
(2) A portion of the shareholder services fees is being waived for the
Portfolios. Absent such waivers, the shareholder services fees would be
.15%.
(3) Other expenses are estimated based on amounts incurred during the previous
fiscal year and include all expenses except nonrecurring account fees,
brokerage commissions and other capital items, and advisory and shareholder
services fees. The Fund's administrator has agreed to waive, on a voluntary
basis, .13% of its fee for the Equity Index Portfolio. Absent such waiver,
other expenses for the Equity Index Portfolio would be .27%.
(4) Absent the voluntary fee waivers described above, total operating expenses
for Institutional Class shares of the Balanced Portfolio, Equity Income
Portfolio, Equity Index Portfolio and Blue Chip Equity Portfolio would be
1.00%, 1.04%, .62% and 1.05%, respectively.
EXAMPLE
- --------------------------------------------------------------------------------
An investor in Institutional 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>
Balanced Portfolio......................................... 8 26 46 101
Equity Income Portfolio.................................... 9 28 49 110
Equity Index Portfolio..................................... 2 6 -- --
Blue Chip Equity Portfolio................................. 9 27 48 106
</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.
4
<PAGE> 20
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
---------------------------------------------------------------------------------------------
MID-CAP VALUE CAPITAL SMALL-CAP INTERNATIONAL INTERNATIONAL
EQUITY EQUITY STOCK GROWTH EQUITY EQUITY SELECTION EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO* PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ---------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees (after
waivers)(1)..................... .74% .87% .65% .65% .79% .55% .63%
Shareholder Services Fees (after
waivers)(2)..................... .06% .06% .06% .06% .06% .06% .00%
Other Expenses(3)................. .21% .18% .25% .21% .20% .20% .92%
----- ---- ---- ----- ----- ---- -----
Total Operating Expenses (after
waivers)(4)..................... 1.01% 1.11% .96% .92% 1.05% .81% 1.55%
===== ==== ==== ===== ===== ==== =====
</TABLE>
* Formerly Special Equity Portfolio.
(1) The adviser has agreed to waive, on a voluntary basis, a portion of its fees
for the Mid-Cap Equity Portfolio, Value Equity Portfolio, Stock Portfolio,
Capital Growth Portfolio, Small-Cap Equity Portfolio and International
Equity Selection 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 those
voluntary waivers. The advisers reserve the right to terminate the fee
waivers at any time in their sole discretion. Absent such waivers, the
advisory fees for the Mid-Cap Equity Portfolio, Value Equity Portfolio,
Stock Portfolio, Capital Growth Portfolio, Small-Cap Equity Portfolio,
International Equity Selection Portfolio and International Equity Portfolio
would be .80%, 1.00%, .70%, .70%, .80%, .65% and .80%, respectively.
(2) A portion of the shareholder services fees is being waived for the
Portfolios. Absent such waivers, the shareholder services fees would be
.15%.
(3) Other expenses are estimated based on amounts incurred during the previous
fiscal year and include all expenses except nonrecurring account fees,
brokerage commissions and other capital items, and advisory and shareholder
services fees.
(4) Absent the voluntary fee waivers described above, the total operating
expenses for Institutional Class shares of the Mid-Cap Equity Portfolio,
Value Equity Portfolio, Stock Portfolio, Capital Growth Portfolio, Small-Cap
Equity Portfolio, International Equity Selection Portfolio and International
Equity Portfolio would be 1.16%, 1.33%, 1.10%, 1.06%, 1.15%, 1.00%, and
2.12%, respectively.
EXAMPLE
- --------------------------------------------------------------------------------
An investor in Institutional 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>
Mid-Cap Equity Portfolio.................................... 10 32 56 124
Value Equity Portfolio...................................... 11 35 61 135
Stock Portfolio............................................. 10 31 53 118
Capital Growth Portfolio.................................... 9 29 51 113
Small-Cap Equity Portfolio.................................. 11 33 58 128
International Equity Selection Portfolio.................... 8 26 45 100
International Equity Portfolio.............................. 16 49 84 185
</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.
5
<PAGE> 21
The disclosure in the first paragraph on page 21 under the International
Equity Selection Portfolio is revised as follows:
INTERNATIONAL EQUITY SELECTION PORTFOLIO
- --------------------------------------------------------------------------------
The investment objective of the INTERNATIONAL EQUITY SELECTION PORTFOLIO is
to provide long-term capital appreciation. The Portfolio seeks to achieve its
investment objective by investing primarily in shares of other mutual funds (the
"underlying funds"), the portfolios of which consist primarily of equity
securities of non-U.S. issuers. Under normal market conditions, and as an
investment policy, the Portfolio will invest at least 65% of its total assets in
underlying funds that are international equity funds. However, as an operational
policy, the Portfolio anticipates investing substantially all of its assets in
international equity funds. International equity funds are those which invest
primarily in equity securities of companies located in three or more countries
outside the United States. The adviser will attempt to identify and select a
varied portfolio of international equity funds which presents the greatest
long-term capital growth potential based on the adviser's analysis of many
factors. The selection of international equity funds may include international
equity funds that invest primarily in emerging markets or focus their
investments on geographic regions. The selection of underlying funds involves an
initial peer group screening process which assesses fund investment style,
investment objectives and policies, and fund management. Rankings of certain
independent rating services are also considered. Potential underlying funds
which, in the adviser's view, meet these criteria will then be subject to
further evaluation of investment policies, historic total return, size,
volatility, manager tenure and operating expenses over various time periods.
Also, on a macroeconomic level, a fund's geographical diversification is also
considered. The underlying funds may be subject to more, less, the same or
different investment restrictions than the Portfolio, and the adviser will
consider these similarities and differences when making investment decisions.
The disclosure in the first paragraph under "Distribution Options" on page
32 is revised as follows:
DISTRIBUTION OPTIONS
- --------------------------------------------------------------------------------
Each money market Portfolio declares dividends daily and pays them monthly.
Income dividends for the Short-Term Treasury Portfolio, Short-Term Bond
Portfolio, U.S. Government Bond 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, Blue Chip Equity Portfolio, Mid-Cap Equity
Portfolio, Value Equity Portfolio and Stock Portfolio dividends are declared and
paid quarterly; and for the Capital Growth Portfolio, Small-Cap Equity Portfolio
(formerly Special Equity Portfolio), International Equity Selection Portfolio
and International Equity Portfolio dividends are declared and paid annually.
Commencing March 1, 1998, income dividends on Short-Term Treasury Portfolio,
Short-Term Bond Portfolio, U.S. Government Bond Portfolio, Intermediate Fixed
Income Portfolio, Income Portfolio, Maryland Tax-Free Portfolio and Pennsylvania
Tax-Free Portfolio will be declared daily and paid monthly. Income dividends for
all other Portfolios will be declared and paid monthly, quarterly or annually,
as the case may be. Net realized capital gains, if any, for any Portfolio are
declared and paid at least annually.
AK2222
6
