[LOGO OMITTED] ARK FUNDS (R) SEMI ANNUAL REPORT OCTOBER 31, 2000
EMERGING MARKETS EQUITY PORTFOLIO
INTERNATIONAL EQUITY PORTFOLIO
SMALL-CAP EQUITY PORTFOLIO
MID-CAP EQUITY PORTFOLIO
CAPITAL GROWTH PORTFOLIO
BLUE CHIP EQUITY PORTFOLIO
EQUITY INDEX PORTFOLIO
VALUE EQUITY PORTFOLIO
EQUITY INCOME PORTFOLIO
BALANCED PORTFOLIO
INCOME PORTFOLIO
U.S. GOVERNMENT BOND PORTFOLIO
INTERMEDIATE FIXED INCOME PORTFOLIO
MD/PA TAX-FREE PORTFOLIOS
SHORT-TERM BOND PORTFOLIO
SHORT-TERM TREASURY PORTFOLIO
U.S. TREASURY MONEY MARKET PORTFOLIO
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
TAX-FREE MONEY MARKET PORTFOLIO
MONEY MARKET PORTFOLIO
[PYRAMID GRAPHIC OMITTED]
<PAGE>
TABLE OF CONTENTS
--------------------------------------------------
LETTER TO SHAREHOLDERS 1
ECONOMIC AND INVESTMENT REVIEW 2
MONEY MARKET PORTFOLIOS
MANAGEMENT DISCUSSION AND ANALYSIS
STATEMENTS OF NET ASSETS 4
FIXED INCOME PORTFOLIOS
MANAGEMENT DISCUSSION AND ANALYSIS
STATEMENTS OF NET ASSETS 16
EQUITY PORTFOLIOS
MANAGEMENT DISCUSSION AND ANALYSIS
STATEMENTS OF NET ASSETS 42
STATEMENTS OF OPERATIONS 86
STATEMENTS OF CHANGES IN NET ASSETS 90
FINANCIAL HIGHLIGHTS 96
NOTES TO FINANCIAL STATEMENTS 102
INDEPENDENT AUDITORS' REPORT 109
NOTICE TO SHAREHOLDERS 110
<PAGE>
--------------------------------------------------------------------------------
October 31, 2000
DEAR ARK FUNDS SHAREHOLDERS:
We are mid-way through our fiscal year and it is time to update you on the
progress and performance of your ARK mutual funds. Our Annual and Semi Annual
Reports are always a great way for us to touch base with you, and provide you
with the information you need to keep abreast of your investments. This Semi
Annual Report includes fund overviews from each of our portfolio managers, as
well as information on portfolio performance, holdings and diversification as of
October 31, 2000.
We would also like to share with you the highlights from the past six
months. We have welcomed new shareholders and have enjoyed industry recognition.
It has truly been:
A PERIOD OF GROWTH -- As of October 31, 2000, ARK Funds' assets surpassed
$6.4 billion and we now offer 25 mutual funds to meet a variety of investment
needs.
A TIME TO WELCOME NEW SHAREHOLDERS AND A NEW ARK FUND -- We gained new
shareholders and a new ARK Emerging Markets Equity Portfolio through our merger
with the Govett Funds, a sister company. We would like to take this opportunity
to extend a special welcome to all of these new shareholders. We look forward to
helping you meet your investment needs in the years ahead.
A TIME OF INDUSTRY RECOGNITION -- We continue to be pleased with the
performance of the ARK Funds' Portfolios and are happy with the industry
recognition they have received. You may have seen the following media coverage
in the past six months:
o The ARK Balanced Portfolio and Portfolio Manager Chuck Knudsen were
profiled in THE WALL STREET TRANSCRIPT.
o The ARK Small-Cap Equity Portfolio and Portfolio Manager Gil Knight have
been featured on CNNFN.
o The ARK Blue Chip Equity Portfolio Institutional Class and the ARK
Equity Income Portfolio Institutional Class have both been recognized by
THE WALL STREET JOURNAL'S MUTUAL FUND SCORECARD.
o The ARK Small-Cap Equity Portfolio Retail Class A and the ARK Balanced
Portfolio Retail Class A were recognized in the September issue of MONEY
MAGAZINE in their BY THE NUMBERS STOCK FUNDS chart.
As you can see, it continues to be an exciting period of growth and
expansion for the ARK Funds Family, and we are looking forward to what 2001 will
bring. Our goals continue to be asset growth and increased investment choices
for investors. We thank you for investing in the funds and we look forward to
continuing to help you meet your financial goals.
/s/signature omitted
William H. Cowie, Jr.
Chairman
1
-----
<PAGE>
--------------------------------------------------------------------------------
ECONOMIC AND INVESTMENT REVIEW
--------------------------------------------------------------------------------
October 31, 2000
DEAR ARK FUNDS INVESTOR:
[Photo of J. Eric Leo Omitted]
There is an old Chinese proverb -- "May you live in interesting times" --
that seems to reflect the current environment in the financial markets. Judging
from the first half of fiscal year 2001, ended October 31, 2000, the current
fiscal year has the making of a mirror image of the previous one. Last fiscal
year technology stocks ruled and little else worked. In the current fiscal year,
technology stocks have significantly underperformed and the balance of the
market has held up reasonably well in spite of heavy sector rotations. Bonds
have done quite well during this period too, not only outperforming the popular
equity indices, but reversing the previous fiscal year's negative returns by a
significant margin. Investors have overlooked bonds during the past few years of
equity-speculative excess. Their recent outperformance is a testament to the
value of diversification. The bond market, however, was not without its
problems, primarily in the corporate bond arena, where a number of issues were
downgraded due to deteriorating credit quality. The resultant price declines in
these issues weakened the entire corporate sector and had a modest negative
effect on a few of our taxable bond funds. Year-to-date relative performance
continues to be quite solid despite generally above-market technology weightings
in a few of the more growth-oriented ARK Portfolios.
The equity markets are in a period of high tension and uncertainty. The
technology sector is in a major valuation correction that will be healthy in the
long term, but has been extremely painful for growth investors in the short
term. Remember that the equity markets have been bifurcated for the past few
years, when technology stocks rose dramatically while the majority of stocks in
the popular indices such as the S&P 500 languished or declined significantly.
Needless to say, that bifurcation created a wide overvaluation in technology
stocks that is currently being redressed. In previous letters we have
hypothesized that the primary risk for the technology group was that the
infrastructure necessary for the information superhighway to support the new
economy might not be built in time for all to prosper quickly. The information
superhighway, i.e., the Internet, both broadband and wireless, is a necessity
for e-commerce to thrive, and its delay has caused a backup in the demand for
technology products. The business models of many Internet service providers, dot
com companies, and marginally competitive telecommunications access providers,
so highly valued by the markets just a few months ago, have come into question.
A large number of these companies are literally running out of money, sending
out shock waves throughout the economy and the equity markets. Many of these
companies have already and will continue to disappear through either mergers
(take-unders) or bankruptcy. The investment community has been surprised by this
turn of events and has begun to revise expected growth rates and valuation
levels. What will be difficult for investors to recognize during this period is
that the opportunities that so excited investors over the past few years have
not gone away; only the time period has been extended. Greed has turned to fear,
which will ultimately create some excellent investment opportunities over the
next quarter or two.
The effects of the aforementioned compounded the nervousness the financial
markets already had from the impact of slowing U.S. economic growth, the sharp
drop in the Euro currency, and rapidly rising energy prices. These factors
negatively impacted corporate earnings and reduced consumer demand across the
globe. Rising energy prices are a high inflation risk factor and a major reason,
along with rising labor and healthcare costs, why the Federal Reserve elected to
maintain its current cautious posture on interest rates. If inflation remains in
check and the U.S. economy continues to slow into 2001, we would expect a
Federal Reserve shift to at least a neutral bias and eventually to vote to lower
interest rates.
2
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
Needless to say, the surprise wild card, at least in the short term, was
the U.S. Presidential election stalemate. The financial markets were
uncomfortable with the length of the process and the extensive reliance on the
U.S. legal system. Like many Americans we were awed by the turn of events and
the sense it would not come to an attractive end. Now that the process is
complete, the markets will likely write off a "hamstrung administration" as a
"this too shall pass" event and the price a democracy occasionally pays for the
right to free and open elections. The stock market had been favoring Bush, and
expected a win would spark a short-term rally. Unfortunately, the protracted
period of time required to reach a conclusion regarding election results
diminished the potential for a meaningful bounce. On a more optimistic note,
with no one party having close to a mandate for change, perhaps they will take a
bi-partisan approach and end up doing what's best for the country. We suspect
that Americans will be less cavalier in the future about the worth of one vote.
We expect also to see some major improvements in the voting process, the
machines, and training of election personnel.
We believe there is still a 50/50 chance that the equity markets will
rally by year-end. Corporate earnings and overall economic expectations will be
the most important elements, as well as holiday sales and Federal Reserve
policy. We suspect that the valuation correction currently taking its toll on
technology shares will ultimately, perhaps over the next quarter, provide the
base for the re-establishment of the bull market, which could, in our opinion,
last for many years. We believe that technology shares will lead the next leg of
the bull market, but in a much more rational manner. Longer term, the real power
of the next bull market wave will be driven by those companies that effectively
apply technology to enhance their business and their ability to provide custom
products at lower costs, while simultaneously providing higher levels of service
and/or quality.
Sincerely,
/s/signature omitted
J. Eric Leo
CHIEF INVESTMENT OFFICER
ALLIED INVESTMENT ADVISORS, INC.
3
-----
<PAGE>
--------------------------------------------------------------------------------
MONEY MARKET PORTFOLIOS
MANAGEMENT DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
TAX-FREE MONEY MARKET PORTFOLIO
U.S.GOVERNMENT MONEY MARKET PORTFOLIO
U.S. TREASURY MONEY MARKET PORTFOLIO
[PHOTO OMITTED]
JAMES M. HANNAN
----------------------------
PORTFOLIO MANAGER
----------------------------
JAMES M. HANNAN IS A PRINCIPAL OF ALLIED INVESTMENT ADVISORS, INC. HE IS
PORTFOLIO MANAGER OF THE MONEY MARKET PORTFOLIO, TAX-FREE MONEY MARKET
PORTFOLIO, U.S. GOVERNMENT MONEY MARKET PORTFOLIO U.S. TREASURY MONEY MARKET
PORTFOLIO AND THE SHORT-TERM TREASURY PORTFOLIO. HE HAS MORE THAN 13 YEARS OF
INVESTMENT MANAGEMENT EXPERIENCE.
REVIEW AND OUTLOOK
The Federal Reserve (the "Fed") has not changed monetary policy since May
16th of this year, when it raised short-term interest rates by 1/2% to 6.5%.
However, the Fed continues to be more concerned with the risks of inflation than
with the risk of an economic slowdown. The Federal Open Market Committee (FOMC)
released the following statement at the conclusion of their meeting on October
3, 2000: "Against the background of its long-term goals of price stability and
sustainable economic growth . . . the Committee believes the risks continue to
be weighted mainly toward conditions that may generate heightened inflation
pressures in the future."
Clearly, the economy is slowing as the one-two punch of higher oil prices
and higher short-term interest rates around the world are taking effect. For the
quarter ended September 30, 2000, the Gross Domestic Product (GDP) increased at
only a 2.7% rate versus a 5.6% pace for the second quarter of the year. The
labor market is no longer tightening as the unemployment rate has remained
between 3.9% and 4.1% for the last year. Another sign of the slowdown is the
decline in the Purchasing Managers Survey, which registered its lowest reading
since December 1998. Inflation, as measured by the Consumer Price Index (CPI),
is up 3.5% for the past year while the core rate of inflation is up only 2.6%.
The core CPI is up only 0.2% above its five-year average of 2.4%. The economic
slowdown and stable inflation is good news to the Fed and may signal the end of
their tightening cycle, which started in June 1999. As economic statistics have
revealed a slowdown, investors have changed their expectations for future
monetary policy. Currently, we share the market's expectations that the Fed will
leave interest rates unchanged for the remainder of the year. This change in
perception resulted in the one-year LIBOR declining from 7.2% to 6.7% on October
31st.
Our strategy changed as we became more confident in the economic slowdown,
and our opinion for future Fed policy changed from expecting further rate
increases, to a Fed on hold, to potentially lowering short-term interest rates
during the first half of 2001. We extended the average maturity of the
Portfolios by purchasing higher-yielding securities that mature in the fall of
2001. Looking forward, we will focus on purchasing securities maturing during
the first quarter of 2001 to take advantage of any potential spike in year-end
interest rates. As always, we will continue to utilize our relative value
investment process and actively manage the ARK Money Market Portfolios.
4
-----
<PAGE>
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
MONEY MARKET PORTFOLIOS CONTINUED
MONEY MARKET PORTFOLIO
PERFORMANCE AS OF
OCTOBER 31, 2000*
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
iMoneyNet, Inc.
Inst'l Retail Retail Inst'l 1st Tier iMoneyNet, Inc.
Class Class A Class B II Class Institutional+ 1st Tier+
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Seven Day
Effective Yield 6.55% 6.31% 5.59% 6.48% 6.26% 5.91%
</TABLE>
--------------------------------------------------------------------------------
[Line graph omitted--plot points as follows:]
THIRTY-DAY YIELD COMPARISON
<TABLE>
<CAPTION>
ARK Money iMoneyNet, Inc. ARK Money ARK Money
Market Portfolio, First Tier Market Portfolio, iMoneyNet, Inc. ARK Money Market Market Portfolio,
Institutional Institutions Retail First Tier Portfolio, Institutional
Class Only Average+ Class A Average+ Retail Class B Class II
<S> <C> <C> <C> <C> <C> <C>
11/30/99 5.33 5.22 5.10 4.88 4.41 5.26
12/31/99 5.53 5.42 5.3 5.09 4.61 5.46
1/31/00 5.51 5.45 5.28 5.13 4.60 5.44
2/29/00 5.53 5.50 5.30 5.15 4.61 5.46
3/31/00 5.65 5.57 5.42 5.22 4.74 5.58
4/30/00 5.78 5.72 5.55 5.38 4.86 5.71
5/31/00 5.98 5.90 5.75 5.54 5.06 5.91
6/30/00 6.23 6.15 6.00 5.78 5.31 6.15
7/31/00 6.31 6.25 6.08 5.90 5.38 6.24
8/31/00 6.34 6.26 6.11 5.91 5.43 6.27
9/30/00 6.34 6.25 6.11 5.90 5.43 6.27
10/31/00 6.33 6.25 6.10 5.89 5.42 6.26
</TABLE>
TAX-FREE MONEY MARKET PORTFOLIO
PERFORMANCE AS OF
OCTOBER 31, 2000*
--------------------------------------------------------------------------------
iMoneyNet, Inc. iMoneyNet, Inc.
Inst'l Retail Inst'l Tax FreeTF Stockbroker &
Class Class A II Class Institutions + General Purpose +
--------------------------------------------------------------------------------
Seven Day
Effective Yield 4.02% 3.79% 3.95% 3.94% 3.69%
--------------------------------------------------------------------------------
[Line graph omitted--plot points as follows:]
THIRTY-DAY YIELD COMPARISON
<TABLE>
<CAPTION>
ARK Tax-Free
Money Market iMoneyNet, Inc. ARK Tax-Free iMoneyNet, Inc. ARK Tax-Free Money
Portfolio, Tax-Free Money Market Tax-Free Market Portfolio,
Institutional Institutions Portfolio, Stockbroker & General Institutional
Class Only Average+ Retail Class A Purpose Average+ II Class
<S> <C> <C> <C> <C> <C>
11/30/99 3.22 3.23 2.99 2.99 3.15
12/31/99 3.44 3.60 3.21 3.33 3.37
1/31/00 3.08 3.07 2.85 2.85 3.01
2/29/00 3.15 3.22 2.92 2.97 3.08
3/31/00 3.31 3.39 3.08 3.13 3.24
4/30/00 3.62 3.67 3.39 3.43 3.55
5/31/00 4.23 4.37 4.00 4.1 4.16
6/30/00 3.85 3.81 3.62 3.6 3.78
7/31/00 3.65 3.64 3.42 3.43 3.58
8/31/00 3.72 3.76 3.49 3.53 3.65
9/30/00 3.92 3.98 3.69 3.75 3.85
10/31/00 3.99 3.96 3.76 3.72 3.92
</TABLE>
U.S. GOVERNMENT MONEY MARKET
PORTFOLIO PERFORMANCE AS OF
OCTOBER 31, 2000*
--------------------------------------------------------------------------------
iMoneyNet, Inc.
Inst'l Retail Inst'l iMoneyNet, Inc. U.S. Govt
Class Class A II Class Govt. Only+ & Agencies+
--------------------------------------------------------------------------------
Seven Day
Effective Yield 6.46% 6.22% 6.39% 6.08% 5.92%
--------------------------------------------------------------------------------
[Line graph omitted--plot points as follows:]
THIRTY-DAY YIELD COMPARISON
<TABLE>
<CAPTION>
ARK U.S. Government iMoneyNet, Inc. ARK U.S. iMoneyNet, ARK U.S. Government
Money Market Government Government Money Inc. U.S. Money Market Portfolio,
Portfolio, Only Institutions Market Portfolio, Government & Institutional
Institutional Class Only Average+ Retail Class A Agencies Average+ II Class
<S> <C> <C> <C> <C> <C>
11/30/99 5.06 4.92 4.83 4.81 4.99
12/31/99 5.14 4.97 4.91 4.89 5.07
1/31/00 5.26 5.10 5.03 4.98 5.19
1/29/00 5.40 5.26 5.17 5.13 5.33
3/31/00 5.50 5.37 5.27 5.22 5.43
4/30/00 5.66 5.52 5.44 5.37 5.59
5/31/00 5.86 5.64 5.63 5.53 5.79
6/30/00 6.12 5.89 5.89 5.75 6.05
7/31/00 6.19 5.98 5.96 5.86 6.12
8/31/00 6.19 6.03 5.96 5.89 6.12
9/30/00 6.20 6.05 5.97 5.90 6.13
10/31/00 6.23 6.04 6.00 5.90 6.16
</TABLE>
U.S. TREASURY MONEY MARKET
PORTFOLIO PERFORMANCE AS OF
OCTOBER 31, 2000*
--------------------------------------------------------------------------------
iMoneyNet, Inc.
Inst'l Retail Inst'l 100%
Class Class A II Class U.S. Treasury+
--------------------------------------------------------------------------------
Seven Day
Effective Yield 5.94% 5.69% 5.86% 5.58%
--------------------------------------------------------------------------------
[Line graph omitted--plot points as follows:]
THIRTY-DAY YIELD COMPARISON
<TABLE>
<CAPTION>
ARK U.S. Treasury ARK U.S. ARK U.S.
Money Market iMoneyNet, Inc. 100% Treasury Money Treasury Money
Portfolio, U.S. Treasury Market Portfolio, Market Portfolio,
Institutional Class Average+ Retail Class A Institutional II Class
<S> <C> <C> <C> <C>
5/31/99 4.58 4.39 4.51 4.35
6/30/99 4.68 4.59 4.61 4.45
7/31/99 4.83 4.65 4.76 4.60
8/31/99 5.04 4.79 4.97 4.81
9/30/99 5.24 4.97 5.17 5.01
10/31/99 5.29 5.12 5.21 5.06
11/30/99 5.37 5.16 5.30 5.14
12/31/99 5.45 5.28 5.38 5.22
1/31/00 5.55 5.35 5.48 5.32
2/29/00 5.71 5.46 5.64 5.48
3/31/00 5.73 5.55 5.66 5.50
4/30/00 5.71 5.56 5.64 5.48
</TABLE>
* Past performance of the Portfolios is not predictive of future performance.
+ The performance of the iMoneyNet, Inc. indices does not include operating
expenses that are incurred by the Portfolio.
5
-----
<PAGE>
--------------------------------------------------------------------------------
MONEY MARKET PORTFOLIOS
--------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
Repurchase Agreements -- 6%
Taxable Municipal Bonds -- 5%
Certificates of Deposit -- 5%
Commercial Paper -- 33%
Corporate Obligations -- 51%
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
CORPORATE OBLIGATIONS -- 49.5%
AUTOMOTIVE -- 1.0%
FORD CAPITAL
9.500%, 07/01/01 $10,000 $10,155
--------------------------------------------------------------------------------
TOTAL AUTOMOTIVE $10,155
--------------------------------------------------------------------------------
BANKS -- 8.2%
BANK ONE, N.A. ILLINOIS
6.840%, 01/12/01 12,000 12,000
CITI GROUP, MTN (A)
6.650%, 11/01/00 25,000 24,993
FIRST UNION NATIONAL BANK (A)
6.670%, 11/01/00 25,000 25,000
HUNTINGTON BANCS, MTN (A)
6.690%, 11/22/00 10,000 10,000
WELLS FARGO, SER B, MTN
6.875%, 05/10/01 15,250 15,230
--------------------------------------------------------------------------------
TOTAL BANKS $87,223
--------------------------------------------------------------------------------
FINANCIAL SERVICES -- 18.2%
ASSOCIATES N.A., MTN (A)
6.760%, 12/14/00 28,000 28,016
AT&T CAPITAL, SER F, MTN
7.500%, 11/15/00 8,500 8,504
BETA FINANCE, MTN (A) (B)
6.930%, 11/07/00 25,000 25,000
BETA FINANCE, MTN (B)
6.710%, 10/11/01 10,000 10,000
CAPITAL ONE FUNDING,
SER 1995-C (A) (B)
6.650%, 11/02/00 3,000 3,000
CAPITAL ONE FUNDING,
SER 1996-H (A) (B)
6.650%, 11/02/00 3,500 3,500
CIT GROUP, MTN (A)
6.604%, 12/06/00 10,000 9,997
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
GENERAL MOTORS ACCEPTANCE,
MTN
6.750%, 06/05/01 $ 5,000 $ 5,000
GENERAL MOTORS ACCEPTANCE,
MTN (A)
6.910%, 11/01/00 5,000 5,002
7.028%, 01/17/01 10,000 10,014
JOHN DEERE CAPITAL, MTN (A)
6.934%, 01/11/01 4,000 4,005
6.760%, 01/25/01 36,000 36,006
NORWEST FINANCIAL, MTN (A)
6.620%, 11/01/00 25,000 24,991
TEXTRON FINANCIAL (A) (B)
6.750%, 11/01/00 20,000 20,000
--------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $193,035
--------------------------------------------------------------------------------
MISCELLANEOUS BUSINESS SERVICES -- 2.1%
BOB SUMEREL TIRE,
LOC (A) (B)
6.630%, 11/02/00 5,125 5,125
ELSINORE PROPERTIES, LOC (A)
6.650%, 11/03/00 9,900 9,900
REYNOLDS ROAD FITNESS CENTER,
SER 1998, LOC (A) (B)
6.630%, 11/02/00 5,830 5,830
TRAP ROCK INDUSTRY,
DEMAND RB, LOC (A)
6.730%, 11/01/00 1,300 1,300
--------------------------------------------------------------------------------
TOTAL MISCELLANEOUS BUSINESS SERVICES $ 22,155
--------------------------------------------------------------------------------
RETAIL -- 0.8%
DAYTON HUDSON TARGET,
MTN (A)
6.918%, 01/16/01 9,000 9,003
--------------------------------------------------------------------------------
TOTAL RETAIL $ 9,003
--------------------------------------------------------------------------------
SECURITY BROKERS & DEALERS -- 18.3%
BEAR STEARNS (A)
6.750%, 11/01/00 25,000 25,000
CREDIT SUISSE FIRST BOSTON,
MTN (A)
6.620%, 11/09/00 20,000 20,000
GOLDMAN SACHS GROUP, MTN
6.200%, 02/15/01 3,000 2,994
GOLDMAN SACHS GROUP,
MTN (A)
7.243%, 01/08/01 10,000 10,008
GOLDMAN SACHS GROUP,
MTN (A) (B)
6.851%, 12/15/00 10,000 10,000
LEHMAN BROTHERS HOLDINGS
6.125%, 02/01/01 13,400 13,376
6.750%, 09/24/01 27,880 27,890
MERRILL LYNCH, MTN
6.885%, 03/30/01 10,000 10,000
6
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
MERRILL LYNCH, MTN (A)
7.190%, 11/20/00 $ 5,000 $ 5,001
MORGAN STANLEY DEAN WITTER
EURO, MTN (A)
6.940%, 11/10/00 15,000 15,009
MORGAN STANLEY, MTN (A)
6.760%, 12/13/00 25,000 25,012
SALOMON SMITH BARNEY
HOLDINGS, MTN (A)
6.730%, 12/12/00 30,000 30,011
--------------------------------------------------------------------------------
TOTAL SECURITY BROKERS & DEALERS $194,301
--------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS -- 0.9%
VERIZON COMMUNICATIONS (A)
6.820%, 01/05/01 10,000 9,999
--------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS $ 9,999
--------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS
(Cost $525,871) $525,871
--------------------------------------------------------------------------------
ASSET-BACKED SECURITY -- 1.0%
FORD MOTOR AUTO OWNER
TRUST, SER 2000-E
6.581%, 01/15/01 10,944 10,944
--------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITY
(Cost $10,944) $ 10,944
--------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT -- 5.3%
BAYER-HYPO VEREINS BANK EURO
7.040%, 07/17/01 10,000 10,001
COMMERZBANK NY
6.975%, 07/13/01 10,000 9,998
DEUTSCHE BANK
6.890%, 08/20/01 6,000 5,999
UBS STAMFORD CONNECTICUT
6.500%, 01/08/01 20,000 19,998
7.230%, 06/12/01 10,000 9,998
--------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $55,994) $ 55,994
--------------------------------------------------------------------------------
COMMERCIAL PAPER (C) -- 32.3%
BANKS -- 0.9%
UBS FINANCE
6.651%, 11/01/00 10,000 10,000
--------------------------------------------------------------------------------
TOTAL BANKS $ 10,000
--------------------------------------------------------------------------------
DIVERSIFIED OPERATIONS -- 0.1%
GENERAL ELECTRIC
6.410%, 03/01/01 1,000 979
--------------------------------------------------------------------------------
TOTAL DIVERSIFIED OPERATIONS $ 979
--------------------------------------------------------------------------------
ENERGY -- 0.9%
ENRON
6.630%, 11/14/00 5,000 4,988
TEXAS UTILITIES
6.650%, 12/05/00 5,000 4,969
--------------------------------------------------------------------------------
TOTAL ENERGY $ 9,957
--------------------------------------------------------------------------------
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
FINANCIAL SERVICES -- 21.5%
ATLANTIS ONE FUNDING
6.500%, 11/01/00 $10,000 $ 10,000
6.570%, 01/12/01 30,000 29,606
CIESCO
6.470%, 12/05/00 39,600 39,358
CORPORATE ASSET FUNDING
6.500%, 11/01/00 30,000 30,000
DAKOTA CERTIFICATES
6.500%, 11/14/00 40,000 39,906
DELAWARE FUNDING
6.530%, 01/17/01 17,000 16,763
6.530%, 01/19/01 23,000 22,670
EDISON ASSET SECURITIZATION
6.550%, 01/19/01 40,000 39,425
--------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $227,728
--------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 0.5%
CONAGRA
6.650%, 11/15/00 5,000 4,987
--------------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO $ 4,987
--------------------------------------------------------------------------------
LEASING & RENTING -- 8.4%
HOUSEHOLD FINANCE
6.650%, 11/01/00 40,000 40,000
PITNEY BOWES CREDIT
6.480%, 11/16/00 29,000 28,922
TEXTRON FINANCE
6.550%, 01/19/01 20,000 19,712
--------------------------------------------------------------------------------
TOTAL LEASING & RENTING $ 88,634
--------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost $342,285) $342,285
--------------------------------------------------------------------------------
TAXABLE MUNICIPAL BONDS -- 5.9%
CALIFORNIA -- 0.7%
RIVERSIDE COUNTY COP, LOC (A)
6.600%, 11/01/00 7,800 7,800
--------------------------------------------------------------------------------
TOTAL CALIFORNIA $ 7,800
--------------------------------------------------------------------------------
ILLINOIS -- 0.8%
ILLINOIS STATE, HEALTH FACILITIES RB, MBIA (A)
6.600%, 11/01/00 8,500 8,500
--------------------------------------------------------------------------------
TOTAL ILLINOIS $ 8,500
--------------------------------------------------------------------------------
MARYLAND -- 0.5%
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
RB, SER B, LOC (A)
6.650%, 11/01/00 4,900 4,900
--------------------------------------------------------------------------------
TOTAL MARYLAND $ 4,900
--------------------------------------------------------------------------------
NEW JERSEY -- 0.4%
NEW JERSEY STATE, ECONOMIC
DEVELOPMENT AUTHORITY
RB, LOC (A)
6.730%, 11/01/00 4,100 4,100
--------------------------------------------------------------------------------
TOTAL NEW JERSEY $ 4,100
--------------------------------------------------------------------------------
7
-----
<PAGE>
--------------------------------------------------------------------------------
MONEY MARKET PORTFOLIOS
--------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO CONCLUDED
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
NEW YORK -- 1.1%
NEW YORK CITY, GO, SER B11
6.600%, 11/08/00 $12,000 $ 12,000
--------------------------------------------------------------------------------
TOTAL NEW YORK $ 12,000
--------------------------------------------------------------------------------
NORTH CAROLINA -- 0.6%
DURHAM COP, SER B (A)
6.600%, 11/02/00 1,500 1,500
WINSTON-SALEM COP, LOC
6.570%, 11/09/00 5,000 5,000
--------------------------------------------------------------------------------
TOTAL NORTH CAROLINA $ 6,500
--------------------------------------------------------------------------------
PENNSYLVANIA -- 0.0%
PENNSYLVANIA STATE, ECONOMIC
DEVELOPMENT FINANCE AUTHORITY
RB, LOC (A)
6.700%, 11/02/00 425 425
--------------------------------------------------------------------------------
TOTAL PENNSYLVANIA $ 425
--------------------------------------------------------------------------------
TEXAS -- 1.8%
TEXAS STATE GO, VETERANS HOUSING
ASSISTANCE PROGRAM (A)
6.600%, 11/01/00 10,000 10,000
TEXAS STATE GO, VETERANS LAND
REFUNDING PROGRAM (A)
6.600%, 11/01/00 8,920 8,920
--------------------------------------------------------------------------------
TOTAL TEXAS $ 18,920
--------------------------------------------------------------------------------
TOTAL TAXABLE MUNICIPAL BONDS
(Cost $63,145) $ 63,145
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 5.7%
DEUTSCHE BANK
6.560%, dated 10/31/00,
matures 11/01/00, repurchase
price $41,007,471 (collateralized
by U.S. Treasury Obligations:
total market value
$41,820,862) 41,000 41,000
GOLDMAN SACHS GROUP
6.300%, dated 10/31/00,
matures 11/01/00, repurchase
price $19,279,080 (collateralized
by U.S. Treasury Obligations:
total market value
$19,661,284) 19,276 19,276
--------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $60,276) $ 60,276
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.7%
(Cost $1,058,515) $1,058,515
================================================================================
OTHER ASSETS AND LIABILITIES, NET-- 0.3% $ 2,759
================================================================================
MARKET
DESCRIPTION VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 490,364,827 outstanding
shares of beneficial interest $ 490,348
Portfolio Shares of Retail Class A
(unlimited authorization -- no par value)
based on 269,061,013 outstanding shares
of beneficial interest 269,051
Portfolio Shares of Retail Class B
(unlimited authorization -- no par value)
based on 29,783 outstanding shares
of beneficial interest 30
Portfolio Shares of Institutional II Class
(unlimited authorization -- no par
value) based on 301,797,456 outstanding
shares of beneficial interest 301,795
Undistributed net investment income 57
Accumulated net realized loss on investments (7)
================================================================================
TOTAL NET ASSET -- 100.0% $1,061,274
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $1.00
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $1.00
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS B $1.00
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL II CLASS $1.00
================================================================================
(A) VARIABLE RATE SECURITY. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS
THE RATE IN EFFECT ON OCTOBER 31, 2000. THE DATE SHOWN IS THE NEXT
SCHEDULED RESET DATE.
(B) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION NORMALLY QUALIFIED TO INSTITUTIONAL INVESTORS.
(C) DISCOUNT NOTES. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS THE
DISCOUNT YIELD AT THE TIME OF PURCHASE.
COP--CERTIFICATE OF PARTICIPATION
GO--GENERAL OBLIGATION
LOC--SECURITIES ARE HELD IN CONNECTION WITH A LETTER OF CREDIT ISSUED BY A MAJOR
BANK OR OTHER FINANCIAL INSTITUTION.
MTN--MEDIUM TERM NOTE
N.A.--NORTH AMERICAN
RB--REVENUE BOND
SER--SERIES
THE FOLLOWING ORGANIZATIONS HAVE PROVIDED UNDERLYING CREDIT SUPPORT FOR
SECURITES LISTED ABOVE, AS INDICATED.
MBIA--MUNICIPAL BOND INSURANCE ASSOCIATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
8
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
TAX-FREE MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
Tax-Exempt Commercial Paper -- 12%
Participation Notes -- 3%
General Obligations -- 1%
Anticipation Notes -- 6%
Revenue Bonds --78%
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
MUNICIPAL BONDS & NOTES -- 99.5%
ALABAMA -- 0.7%
MOBILE, INDUSTRIAL DEVELOPMENT
BOARD RB, DOCK & WHARF
HOLNAM PROJECT,
SER B, LOC (A)
4.300%, 11/01/00 $ 900 $ 900
--------------------------------------------------------------------------------
TOTAL ALABAMA $ 900
--------------------------------------------------------------------------------
COLORADO -- 0.8%
COLORADO STATE, POSTSECONDARY
EDUCATIONAL FACILITIES AUTHORITY
RB, PRO RODEO HALL OF FAME
PROJECT, LOC (A)
4.500%, 11/02/00 980 980
--------------------------------------------------------------------------------
TOTAL COLORADO $ 980
--------------------------------------------------------------------------------
DISTRICT OF COLUMBIA -- 3.9%
DISTRICT OF COLUMBIA TECP,
NATIONAL ACADEMY OF SCIENCES,
SER B, AMBAC
4.250%, 02/16/01 4,500 4,500
DISTRICT OF COLUMBIA, GENERAL
FUND RECOVERY PROJECT GO,
SER B-1, LOC (A)
4.850%, 11/01/00 400 400
--------------------------------------------------------------------------------
TOTAL DISTRICT OF COLUMBIA $4,900
--------------------------------------------------------------------------------
FLORIDA -- 4.2%
LEE COUNTY, HOUSING FINANCE
AUTHORITY RB, FORESTWOOD
APARTMENTS PROJECT,
SER A, FNMA (A)
4.350%, 11/01/00 1,900 1,900
SUNSHINE STATE TECP,
GOVERNMENT FINANCING
COMMISSION
4.250%, 12/05/00 3,265 3,265
--------------------------------------------------------------------------------
TOTAL FLORIDA $5,165
--------------------------------------------------------------------------------
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
GEORGIA -- 0.8%
DE KALB COUNTY, HOUSING
AUTHORITY RB, WINTERS
CREEK APARTMENTS PROJECT,
FNMA (A)
4.300%, 11/01/00 $1,000 $ 1,000
--------------------------------------------------------------------------------
TOTAL GEORGIA $1,000
--------------------------------------------------------------------------------
ILLINOIS -- 3.4%
ILLINOIS STATE, HEALTH FACILITIES
AUTHORITY RB, ST. LUKE'S
MEDICAL CENTER,
SER B, MBIA (A)
4.400%, 11/01/00 1,000 1,000
ILLINOIS STATE, HEALTH FACILITIES
AUTHORITY RB, SWEDISH
COVENANT HOSPITAL PROJECT,
AMBAC (A)
4.400%, 11/01/00 1,200 1,200
ILLINOIS STATE, HEALTH FACILITIES
AUTHORITY RB, SWEDISH
COVENANT HOSPITAL PROJECT,
SER A, AMBAC (A)
4.400%, 11/01/00 2,000 2,000
--------------------------------------------------------------------------------
TOTAL ILLINOIS $4,200
--------------------------------------------------------------------------------
INDIANA -- 2.4%
CITY OF SULLIVAN TECP, INDIANA
COOPERATIVE FINANCING
4.200%, 12/01/00 3,000 3,000
--------------------------------------------------------------------------------
TOTAL INDIANA $3,000
--------------------------------------------------------------------------------
LOUISIANA -- 0.8%
LAKE CHARLES, HARBOR &
REVENUE DISTRICT RB, CONOCO
PROJECT, SER A, LOC (A)
4.300%, 11/01/00 1,000 1,000
--------------------------------------------------------------------------------
TOTAL LOUISIANA $1,000
--------------------------------------------------------------------------------
MARYLAND -- 29.8%
BALTIMORE COUNTY, GARRISON
FOREST SCHOOL PROJECT
RB, LOC (A)
4.350%, 11/02/00 3,000 3,000
BALTIMORE COUNTY TECP,
MARYLAND POLLUTION CONTROL
AUTHORITY, SPA
4.150%, 11/09/00 4,000 4,000
FREDERICK COUNTY, EDUCATIONAL
FACILITIES RB, MOUNT ST. MARY'S
COLLEGE LOC (A)
4.350%, 11/02/00 4,000 4,000
HOWARD COUNTY BAN, SER A
4.500%, 04/13/01 2,000 2,003
9
-----
<PAGE>
--------------------------------------------------------------------------------
MONEY MARKET PORTFOLIOS
--------------------------------------------------------------------------------
TAX-FREE MONEY MARKET PORTFOLIO CONTINUED
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
MARYLAND STATE, DEPARTMENT OF
HOUSING & COMMUNITY
DEVELOPMENT MUNICIPAL
SECURITIES TRUST RECEIPTS RB,
SER CMC3, LOC (A)
4.450%, 11/01/00 $5,200 $ 5,200
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
AUTHORITY RB, CHARLESTOWN
COMMUNITY, SER A, LOC (A)
4.300%, 11/01/00 4,900 4,900
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
AUTHORITY RB, HOSPITAL &
UNIVERSITY IMPROVEMENTS,
SER A, LOC (A)
4.250%, 11/01/00 1,100 1,100
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
AUTHORITY RB, POOLED LOAN
PROJECT, SER D, LOC (A)
4.300%, 11/02/00 6,048 6,048
MONTGOMERY COUNTY, HOUSING
OPPURTUNITIES RB, BARCLAY
APARTMENTS, ISSUE I, MBIA (A)
4.400%, 11/01/00 2,800 2,800
PRINCE GEORGES COUNTY COP,
EQUIPMENT ACQUISITION,
SER A, MBIA
3.600%, 11/01/00 1,000 1,000
WASHINGTON COUNTY, ECONOMIC
DEVELOPMENT AUTHORITY RB,
ST. JAMES SCHOOL PROJECT,
MANDATORY PUT @ 100
LOC (B)
4.375%, 11/01/00 3,000 3,000
--------------------------------------------------------------------------------
TOTAL MARYLAND $37,051
--------------------------------------------------------------------------------
MASSACHUSETTS -- 2.1%
MASSACHUSETTS STATE, HEALTH &
EDUCATIONAL FACILITIES AUTHORITY
RB, HARVARD UNIVERSITY (A)
3.950%, 11/01/00 700 700
MASSACHUSETTS STATE, WATER
RESOURCES AUTHORITY RB,
SER A, AMBAC (A)
4.050%, 11/01/00 1,900 1,900
--------------------------------------------------------------------------------
TOTAL MASSACHUSETTS $ 2,600
--------------------------------------------------------------------------------
MINNESOTA -- 3.6%
MINNESOTA STATE, SCHOOL DISTRICTS
TAX & AID ANTICIPATION
COP, SER A
4.250%, 02/28/01 3,000 3,000
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
MINNESOTA STATE, TAX & AID
ANTICIPATION INDEBTEDNESS
COP, SER B
5.000%, 08/17/01 $ 1,500 $1,508
--------------------------------------------------------------------------------
TOTAL MINNESOTA $4,508
--------------------------------------------------------------------------------
MISSOURI -- 1.3%
COLUMBIA RB, SERIES A,
LOC (A)
4.350%, 11/01/00 1,500 1,500
MISSOURI STATE, DEVELOPMENT
FINANCE AUTHORITY RB,
SCIENCE CITY UNION STATION,
SER C, LOC (A)
4.750%, 11/01/00 100 100
--------------------------------------------------------------------------------
TOTAL MISSOURI $1,600
--------------------------------------------------------------------------------
MONTANA -- 0.8%
MONTANA STATE, HEALTH
FACILITIES AUTHORITY RB,
SER A, FGIC (A)
4.350%, 11/02/00 1,000 1,000
--------------------------------------------------------------------------------
TOTAL MONTANA $1,000
--------------------------------------------------------------------------------
NEVADA -- 0.7%
CLARK COUNTY, AIRPORT
IMPROVEMENT AUTHORITY RB,
SER A, MBIA LOC (A)
4.250%, 11/01/00 900 900
--------------------------------------------------------------------------------
TOTAL NEVADA $ 900
--------------------------------------------------------------------------------
NEW JERSEY -- 1.5%
NEW JERSEY STATE, MUNICIPAL
SECURITIES TRUST RECEIPTS
RB, SER CB1 (A)
4.300%, 02/15/01 1,800 1,800
--------------------------------------------------------------------------------
TOTAL NEW JERSEY $1,800
--------------------------------------------------------------------------------
NEW YORK -- 7.2%
NEW YORK CITY, MASS TRANSIT
AUTHORITY DEMAND CERTIFICATE
TRUST RB, SER 1993C, FGIC (A)
4.300%, 11/01/00 4,000 4,000
NEW YORK CITY, TRANSITIONAL
FINANCE AUTHORITY RB,
SER A-1, SPA (A)
4.200%, 11/01/00 5,000 5,000
--------------------------------------------------------------------------------
TOTAL NEW YORK $9,000
--------------------------------------------------------------------------------
NORTH CAROLINA -- 7.0%
CHARLOTTE, AIRPORT DEVELOPMENT
AUTHORITY RB, SER A, MBIA (A)
4.250%, 11/01/00 2,800 2,800
CITY OF GREENSBORO, PUBLIC
IMPROVEMENT GO, SER B (A)
4.300%, 11/01/00 1,000 1,000
--------------------------------------------------------------------------------
10
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
DURHAM, WATER & SEWER
SYSTEM RB (A)
4.300%, 11/02/00 $ 2,000 $ 2,000
RALEIGH DURHAM, AIRPORT
AUTHORITY RB, SER A,
LOC (A)
4.650%, 11/01/00 200 200
WINSTON-SALEM TECP
4.250%, 11/08/00 2,700 2,700
--------------------------------------------------------------------------------
TOTAL NORTH CAROLINA $ 8,700
--------------------------------------------------------------------------------
PENNSYLVANIA -- 11.1%
BUCKS COUNTY, INDUSTRIAL
DEVELOPMENT AUTHORITY
RB, LOC (A)
4.350%, 11/01/00 3,100 3,100
CHESTER COUNTY, HEALTH &
EDUCATION FACILITIES AUTHORITY
RB, BARCLAY FRIENDS PROJECT,
SER A LOC (A)
4.300%, 11/01/00 1,000 1,000
CUMBERLAND COUNTY, DICKINSON
COLLEGE RB, SER A, MANDATORY
PUT @ 100, LOC (B)
3.800%, 11/01/00 2,860 2,860
CUMBERLAND COUNTY, MUNICIPAL
AUTHORITY RB, UNITED
METHODIST HOMES FOR THE
AGING PROJECT, MANDATORY
PUT @ 100, LOC (A) (B)
4.900%, 12/01/00 2,890 2,890
DELAWARE VALLEY, REGIONAL
GOVERNMENT FINANCE RB (A)
4.300%, 11/01/00 1,000 1,000
LEHIGH COUNTY, INDUSTRIAL
DEVELOPMENT AUTHORITY RB,
ALLEGHENY ELECTRIC,
SER A, LOC (A)
4.350%, 11/01/00 1,400 1,400
MONTGOMERY COUNTY, INDUSTRIAL
DEVELOPMENT AUTHORITY
RB, LOC (A)
4.250%, 11/07/00 500 500
PENNSYLVANIA STATE, HIGHER
EDUCATION FACILITIES AUTHORITY
RB, COUNCIL OF INDEPENDENT
COLLEGES, SER A3, LOC
4.250%, 04/01/01 1,000 1,000
--------------------------------------------------------------------------------
TOTAL PENNSYLVANIA $13,750
--------------------------------------------------------------------------------
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
TEXAS -- 14.2%
GEORGETOWN, HIGHER EDUCATION
FINANCING AUTHORITY RB,
SOUTHWESTERN UNIVERSITY
PROJECT, SERIES 1984,
LOC (A)
4.400%, 11/01/00 $ 3,000 $ 3,000
GULF COAST COUNTY, WASTE
DISPOSAL AUTHORITY RB,
EXXON PROJECT (A)
4.600%, 11/01/00 1,900 1,900
CITY OF MIDLOTHIAN, INDUSTRIAL
DEVELOPMENT AUTHORITY RB,
BOX-CROW CEMENT PROJECT,
LOC (A)
4.300%, 11/01/00 1,900 1,900
TEXAS MUNICIPAL GAS RB,
FSA (A)
4.400%, 11/01/00 4,000 4,000
TEXAS STATE, HIGHER EDUCATION
AUTHORITY RB, SER B, FGIC (A)
4.400%, 11/01/00 1,865 1,865
TEXAS STATE TRAN
5.250%, 08/31/01 5,000 5,039
--------------------------------------------------------------------------------
TOTAL TEXAS $ 17,704
--------------------------------------------------------------------------------
VERMONT -- 1.6%
VERMONT STATE, EDUCATIONAL &
HEALTH BUILDINGS RB, CAPITAL
ASSET FINANCING PROGRAM,
SER 1, LOC (A)
4.450%, 11/02/00 2,000 2,000
--------------------------------------------------------------------------------
TOTAL VERMONT $ 2,000
--------------------------------------------------------------------------------
WYOMING -- 1.6%
LINCOLN COUNTY, POLLUTION
CONTROL AUTHORITY RB,
EXXON PROJECT (A)
4.600%, 11/01/00 100 100
SWEETWATER COUNTY TECP
4.250%, 11/08/00 1,900 1,900
--------------------------------------------------------------------------------
TOTAL WYOMING $ 2,000
--------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS & NOTES
(Cost $123,758) $123,758
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.5%
(Cost $123,758) $123,758
================================================================================
OTHER ASSETS AND LIABILITIES, NET-- 0.5% $ 611
================================================================================
11
-----
<PAGE>
--------------------------------------------------------------------------------
MONEY MARKET PORTFOLIOS
--------------------------------------------------------------------------------
TAX-FREE MONEY MARKET PORTFOLIO CONCLUDED
MARKET
DESCRIPTION VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 58,741,372 outstanding
shares of beneficial interest $ 58,733
Portfolio Shares of Retail Class A
(unlimited authorization -- no par value)
based on 34,049,617 outstanding shares
of beneficial interest 34,048
Portfolio Shares of Institutional II Class
(unlimited authorization -- no par
value) based on 31,584,579 outstanding
shares of beneficial interest 31,583
Undistributed net investment income 6
Accumulated net realized loss on investments (1)
================================================================================
TOTAL NET ASSETS -- 100.0% $124,369
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $1.00
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $1.00
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL II CLASS $1.00
================================================================================
(A) VARIABLE RATE SECURITY. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS
THE RATE IN EFFECT ON OCTOBER 31, 2000. THE DATE SHOWN IS THE NEXT SCHEDULED
RESET DATE.
(B) MANDATORY PUT SECURITY. THE MANDATORY PUT DATE IS SHOWN AS THE MATURITY DATE
ON THE STATEMENT OF NET ASSETS.
BAN--BOND ANTICIPATION NOTE
COP--CERTIFICATE OF PARTICIPATION
GO--GENERAL OBLIGATION
LOC--SECURITIES ARE HELD IN CONNECTION WITH A LETTER OF CREDIT ISSUED BY A MAJOR
BANK OR OTHER FINANCIAL INSTITUTION.
RB--REVENUE BOND
SER--SERIES
SPA--STANDBY PURCHASE AGREEMENT
TECP--TAX-EXEMPT COMMERCIAL PAPER
TRAN--TAX & REVENUE ANTICIPATION NOTE
THE FOLLOWING ORGANIZATIONS HAVE PROVIDED UNDERLYING CREDIT SUPPORT FOR
SECURITIES LISTED ABOVE, AS INDICATED.
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
FGIC--FINANCIAL GUARANTY INSURANCE CORPORATION
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
FSA--FINANCIAL SECURITY ASSURANCE
MBIA--MUNICIPAL BOND INSURANCE ASSOCIATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
12
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
Repurchase Agreements -- 47%
U.S. Government Agency Obligations -- 53%
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 53.2%
FFCB
5.850%, 12/01/00 $25,000 $ 24,995
FFCB (A)
6.290%, 04/03/01 15,000 14,599
FHLB
6.500%, 03/15/01 25,000 24,981
FHLB (B)
6.480%, 01/18/01 25,000 24,988
FHLB (A)
6.640%, 11/24/00 30,000 29,873
6.465%, 01/10/01 50,000 49,371
6.460%, 01/03/01 50,000 49,435
6.470%, 01/26/01 25,000 24,614
6.300%, 04/16/01 12,900 12,525
FHLMC
6.350%, 01/05/01 149,000 148,875
FHLMC (A)
6.610%, 11/09/00 50,000 49,927
6.440%, 01/11/01 80,000 78,984
6.440%, 01/18/01 10,000 9,860
FHLMC, MTN (C)
6.450%, 01/16/01 25,000 24,681
FNMA (B)
6.470%, 01/04/01 40,000 39,976
FNMA (A)
6.420%, 12/14/00 25,000 24,808
6.300%, 04/12/01 40,000 38,866
FNMA, MTN
6.570%, 02/22/01 25,000 24,995
5.860%, 07/19/01 10,000 9,927
SLMA (B)
6.752%, 01/25/00 25,000 24,996
SLMA, MTN (B)
6.732%, 11/07/00 10,000 9,996
6.929%, 11/15/00 25,000 25,000
6.752%, 11/26/00 25,000 24,993
--------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $791,265) $791,265
--------------------------------------------------------------------------------
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 47.0%
DEUTSCHE BANK
6.560%, dated 10/31/00,
matures 11/01/00, repurchase
price $200,036,444 (collateralized
by U.S. Treasury Obligations:
total market value
$204,000,148) $200,000 $ 200,000
GOLDMAN SACHS GROUP
6.300%-6.550, dated 10/31/00,
matures 11/01/00, repurchase
price $322,061,230 (collateralized
by U.S. Treasury Obligations:
total market value
$328,442,837) 322,003 322,003
SALOMON SMITH BARNEY
6.530%, dated 10/31/00,
matures 11/01/00, repurchase
price $177,032,106 (collateralized
by U.S. Treasury Obligations:
total market value
$180,602,203) 177,000 177,000
--------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $699,003) $ 699,003
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.2%
(Cost $1,490,268) $1,490,268
================================================================================
OTHER ASSETS AND LIABILITIES, NET -- (0.2%) $ (3,096)
================================================================================
13
-----
<PAGE>
--------------------------------------------------------------------------------
MONEY MARKET PORTFOLIOS
--------------------------------------------------------------------------------
U.S. GOVERNMENT MONEY MARKET PORTFOLIO CONCLUDED
MARKET
DESCRIPTION VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 1,214,912,366 outstanding
shares of beneficial interest $ 1,214,815
Portfolio Shares of Retail Class A
(unlimited authorization -- no par value)
based on 157,863,672 outstanding shares
of beneficial interest 157,860
Portfolio Shares of Institutional II Class
(unlimited authorization -- no par
value) based on 114,395,903 outstanding
shares of beneficial interest 114,389
Undistributed net investment income 148
Accumulated net realized loss on investments (40)
================================================================================
TOTAL NET ASSETS -- 100.0% $1,487,172
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $1.00
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $1.00
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL II CLASS $1.00
================================================================================
(A) DISCOUNT NOTES. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS THE
DISCOUNT YIELD AT THE TIME OF PURCHASE.
(B) VARIABLE RATE SECURITY. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS
THE RATE IN EFFECT ON OCTOBER 31, 2000. THE DATE SHOWN IS THE NEXT SCHEDULED
RESET DATE.
(C) ZERO COUPON SECURITY. THE EFFECTIVE YIELD AT TIME OF PURCHASE IS SHOWN AS
THE RATE ON THE STATEMENT OF NET ASSETS.
FFCB--FEDERAL FARM CREDIT BANK
FHLB--FEDERAL HOME LOAN BANK
FHLMC--FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
MTN--MEDIUM TERM NOTE
SLMA--STUDENT LOAN MARKETING ASSOCIATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
14
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
U.S. Treasury Notes -- 39%
U.S. Treasury Bills -- 61%
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 99.7%
U.S. TREASURY BILLS (A)
5.993%, 11/09/00 $ 3,079 $ 3,075
6.020%, 11/09/00 66 66
6.023%, 11/09/00 4,102 4,097
6.031%, 11/09/00 3,278 3,274
6.058%, 11/09/00 5,650 5,642
6.061%, 11/09/00 5,425 5,418
6.071%, 11/09/00 5,054 5,047
6.077%, 11/09/00 522 521
6.142%, 11/09/00 3,012 3,008
6.150%, 11/09/00 832 831
6.194%, 11/09/00 4,935 4,928
6.040%, 12/07/00 986 980
6.052%, 12/07/00 26,566 26,407
6.065%, 12/07/00 5,255 5,223
6.072%, 12/07/00 20,000 19,880
6.118%, 12/07/00 8,629 8,578
6.070%, 12/28/00 3,977 3,939
6.109%, 12/28/00 26,476 26,224
6.118%, 12/28/00 5,115 5,067
6.120%, 12/28/00 27 27
6.179%, 12/28/00 2,987 2,958
6.257%, 12/28/00 16,881 16,715
6.101%, 01/11/01 17,700 17,490
6.139%, 01/11/01 690 682
6.220%, 01/18/01 16,572 16,352
6.226%, 01/18/01 3,504 3,457
6.273%, 01/18/01 2,012 1,985
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
6.129%, 01/25/01 $15,337 $ 15,119
6.085%, 02/08/01 11,398 11,212
6.121%, 03/08/01 30,000 29,371
6.173%, 03/08/01 2,037 1,994
6.197%, 03/15/01 4,375 4,277
6.184%, 03/22/01 1,079 1,054
6.277%, 04/19/01 2,775 2,696
6.296%, 04/19/01 16,426 15,955
U.S. TREASURY NOTES
8.500%, 11/15/00 50,000 50,038
4.500%, 01/31/01 50,000 49,775
5.250%, 01/31/01 50,000 49,867
7.750%, 02/15/01 25,000 25,094
--------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $448,323) $448,323
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.7%
(Cost $448,323) $448,323
================================================================================
OTHER ASSETS AND LIABILITIES, NET-- 0.3% $ 1,239
================================================================================
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 307,632,577 outstanding
shares of beneficial interest 307,609
Portfolio Shares of Retail Class A
(unlimited authorization -- no par value)
based on 20,086,129 outstanding shares
of beneficial interest 20,085
Portfolio Shares of Institutional II Class
(unlimited authorization -- no par
value) based on 121,809,963 outstanding
shares of beneficial interest 121,802
Undistributed net investment income 48
Accumulated net realized gain on investments 18
================================================================================
TOTAL NET ASSETS-- 100.0% $449,562
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $1.00
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $1.00
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL II CLASS $1.00
================================================================================
(A) THE EFFECTIVE YIELD AT TIME OF PURCHASE IS SHOWN AS THE RATE ON THE
STATEMENT OF NET ASSETS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
15
-----
<PAGE>
--------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS
MANAGEMENT DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
SHORT-TERM TREASURY PORTFOLIO
[PHOTO OMITTED]
JAMES M. HANNAN
-----------------------
PORTFOLIO MANAGER
-----------------------
JAMES M. HANNAN IS A PRINCIPAL OF ALLIED INVESTMENT ADVISORS, INC. HE IS
PORTFOLIO MANAGER OF THE MONEY MARKET PORTFOLIOS AND THE SHORT-TERM TREASURY
PORTFOLIO. HE HAS MORE THAN 13 YEARS OF INVESTMENT MANAGEMENT EXPERIENCE.
REVIEW AND OUTLOOK
The Federal Reserve (the "Fed") has not changed monetary policy since May
16th of this year, when it raised short-term interest rates by 1/2% to 6.5%.
However, the Fed continues to be more concerned with the risks of inflation than
with the risk of an economic slowdown. The Federal Open Market Committe (FOMC)
released the following statement at the conclusion of their meeting on October
3, 2000: "Against the background of its long-term goals of price stability and
sustainable economic growth . . . the Committee believes the risks continue to
be weighted mainly toward conditions that may generate heightened inflation
pressures in the future."
Clearly, the economy is slowing as the one-two punch of higher oil prices
and higher short-term interest rates around the world are taking effect. For the
quarter ended September 30, 2000, the Gross Domestic Product (GDP) increased at
only a 2.7% rate versus a 5.6% pace for the second quarter of the year. The
labor market is no longer tightening as the unemployment rate has remained
between 3.9% and 4.1% for the last year. Another sign of the slowdown is the
decline in the Purchasing Managers Survey, which registered its lowest reading
since December 1998. Inflation, as measured by the Consumer Price Index (CPI),
is up 3.5% for the past year while the core rate of inflation is up only 2.6%.
The core CPI is up only 0.2% above its five-year average of 2.4%. The economic
slowdown and stable inflation is good news to the Fed and may signal the end of
their tightening cycle, which started in June 1999. As economic statistics have
revealed a slowdown, investors have changed their expectations for future
monetary policy. Currently, we share the market's expectations that the Fed will
leave interest rates unchanged for the remainder of the year. This change in
perception resulted in two-year U.S. Treasury yields declining from 6.67% on May
31, 2000 to 5.92% on October 31st.
During this period of declining interest rates, we maintained the average
maturity of the Portfolio in a narrow range. Given the inverted yield curve,
where two-year securities are yielding almost 1/2% less than 6-month securities,
we did not see the value of purchasing longer-dated Treasury securities. Looking
forward, we will extend the duration of the Portfolio when either two-year
Treasury yields move higher or we believe the Fed is much closer to easing
monetary policy. As always, we will continue to utilize our relative value
investment process and actively manage the ARK Short-Term Treasury Portfolio.
16
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PERFORMANCE AS OF
OCTOBER 31, 2000
LIPPER SHORT
INSTITUTIONAL RETAIL LEHMAN 1-3 YEAR U.S. TREASURY
CLASS CLASS A GOV'T BOND INDEX FUNDS OBJECTIVE
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN 5.33% 5.11% 6.13% 5.66%
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN 4.90% 4.69% 5.57% 4.95%
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE 5.15% 5.08% N/A N/A
--------------------------------------------------------------------------------
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning March 20, 1996. Retail Class
A shares were offered beginning September 9, 1996.
The performance of the Lehman 1-3 Year Government Bond Index does not include
operating expenses that are incurred by the Portfolio.
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
U.S. Treasury Bills -- 1%
U.S. Treasury Notes -- 99%
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 98.8%
U.S. TREASURY BILLS (A)
6.149%, 11/09/00 $ 16 $ 16
6.287%, 01/18/01 91 90
6.245%, 01/18/01 134 132
6.224%, 01/18/01 219 216
U.S. TREASURY BONDS
11.625%, 11/15/02 2,000 2,213
10.750%, 02/15/03 2,000 2,200
10.750%, 05/15/03 2,000 2,222
U.S. TREASURY NOTES
6.625%, 04/30/02 2,000 2,015
6.500%, 08/31/01 10,000 10,009
6.250%, 02/28/02 4,000 4,004
5.875%, 11/30/01 4,000 3,982
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
5.750%, 04/30/03 $5,000 $ 4,980
5.750%, 11/30/02 3,000 2,988
5.500%, 01/31/03 2,000 1,981
5.500%, 02/28/03 2,000 1,981
5.375%, 02/15/01 3,500 3,488
--------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $42,597) $42,517
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 98.8%
(Cost $42,597) $42,517
================================================================================
OTHER ASSETS AND LIABILITIES, NET-- 1.2% $ 500
================================================================================
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 3,484,255 outstanding
shares of beneficial interest 34,921
Portfolio Shares of Retail Class A
(unlimited authorization -- no par value)
based on 832,680 outstanding shares
of beneficial interest 8,400
Accumulated net realized loss on investments (224)
Net unrealized depreciation on investments (80)
================================================================================
TOTAL NET ASSETS-- 100.0% $43,017
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- INSTITUTIONAL CLASS $9.97
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- RETAIL CLASS A $9.96
================================================================================
(A) THE EFFECTIVE YIELD AT TIME OF PURCHASE IS SHOWN AS THE RATE ON THE
STATEMENT OF NET ASSETS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
17
-----
<PAGE>
--------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS MANAGEMENT DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
SHORT-TERM BOND PORTFOLIO
[PHOTO OMITTED]
STEVEN M. GRADOW
---------------------------
CO-PORTFOLIO MANAGER
---------------------------
STEVEN M. GRADOW IS THE MANAGING DIRECTOR OF FIXED INCOME INVESTMENTS FOR ALLIED
INVESTMENT ADVISORS, INC. HE IS THE PORTFOLIO MANAGER OF THE INCOME PORTFOLIO
AND CO-PORTFOLIO MANAGER OF THE U.S. GOVERNMENT BOND PORTFOLIO AND THE
SHORT-TERM BOND PORTFOLIO. HE HAS MORE THAN 17 YEARS OF INVESTMENT MANAGEMENT
EXPERIENCE.
[PHOTO OMITTED]
WILMER C. STITH III, CFA
---------------------------
CO-PORTFOLIO MANAGER
---------------------------
WILMER C. STITH III IS A VICE PRESIDENT OF ALLIED INVESTMENT ADVISORS, INC. HE
IS CO-PORTFOLIO MANAGER OF THE SHORT-TERM BOND PORTFOLIO AND OVERSEES FIXED
INCOME TRADING. HE HAS MORE THAN NINE YEARS OF INVESTMENT MANAGEMENT EXPERIENCE.
REVIEW AND OUTLOOK
Over the course of the last six months, the ARK Short-Term Bond Portfolio
increased its allocation to short (2-3 year) defensive corporate securities as
well as increased its allocation to longer-dated (5-year) U.S. Treasury
securities. This repositioning of the Portfolio positively contributed to the
Portfolio's return. Relative value was achieved through sector allocation to the
energy sector. With oil and natural gas prices maintaining their upward price
momentum, this recently out-of-favor sector has become sought-after, resulting
in its out-performance versus other corporate sectors.
During this calendar year, we have seen the bond market place a premium on
U.S. Treasury securities, resulting from a growing federal budget surplus and
the subsequent pay down of U.S. Treasury securities. The market initially placed
this "scarcity" premium on long-dated U.S. Treasurys. However, as the
Congressional Budget Office revised future economic growth assumptions, the rate
of anticipated Treasury buybacks by the federal government increased.
Additionally, the U.S. Treasury Department stated that its buyback of U.S.
Treasury securities would include the entire yield curve and not just the long
end. As a result of these developments, investors escalated the "scarcity"
premium on shorter-dated U.S. Treasury securities, resulting in lower yields
(higher prices) in the 5-year part of the U.S. Treasury curve. In anticipation
of this development we increased our allocation to U.S. Treasury securities.
As the year-end approaches, we expect greater market volatility as
uncertainties surrounding inflationary expectations, stemming primarily from
energy costs and future Federal Reserve actions continue. Volatility in
corporate bond prices is at levels not experienced since the Russian default
crisis in the summer of 1998. As we view the best period of credit conditions to
be behind us, we are guarded towards increasing our short-dated corporate
exposure to sectors that are not defensive in nature. Going forward, our
strategy will continue to focus on adding incremental yield in medium-grade
corporate securities in selective sectors, which we view to have sound
underlying credit fundamentals. We expect this allocation to continue to provide
relative value versus high-grade corporate securities. Additionally, our
allocation to AAA-rated asset-backed securities continues to provide a
relatively attractive level of current income versus other sectors in the fixed
income market. We will continue to employ our conservative and disciplined
investment strategy of actively pursuing relative value in both sector
allocation and security selection.
18
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PERFORMANCE AS OF
OCTOBER 31, 2000
LIPPER SHORT
INSTITUTIONAL LEHMAN 1-3 YEAR INVESTMENT-GRADE DEBT
CLASS GOVERNMENT BOND INDEX FUNDS AVERAGE
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN 4.93% 6.13% 5.76%
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN 4.57% 5.57% 4.92%
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE 4.97% N/A N/A
--------------------------------------------------------------------------------
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning March 22, 1998. Inception to
date performance includes the performance of the Marketvest Short-Term Bond Fund
from its inception date of March 31, 1996.
The performance of the Lehman 1-3 Year Government Bond Index does not include
operating expenses that are incurred by the Portfolio.
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
Repurchase Agreements -- 1%
Non-Agency Mortgage-Backed Obligations -- 1%
U.S. Treasury Obligations -- 19%
Asset-Backed Securities -- 21%
U.S. Government Agency Obligations -- 6%
Corporate Obligations -- 52%
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 18.4%
U.S. TREASURY NOTES
7.875%, 08/15/01 $ 200 $ 202
6.500%, 05/15/05 2,000 2,054
6.500%, 08/31/01 1,550 1,551
6.375%, 06/30/02 3,000 3,015
6.250%, 04/30/01 2,000 1,999
6.250%, 10/31/01 3,000 2,998
6.250%, 02/28/02 2,000 2,002
6.000%, 07/31/02 1,000 1,000
5.750%, 08/15/03 500 498
--------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $15,368) $15,319
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 3.5%
FHLMC
4.750%, 12/14/01 3,000 2,943
--------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $2,998) $ 2,943
--------------------------------------------------------------------------------
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS -- 2.6%
FNMA (A)
7.272%, 09/01/27 $ 2 $ 2
SLMA, REMIC (A)
6.971%, 01/25/07 2,148 2,148
--------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS
(Cost $2,145) $2,150
--------------------------------------------------------------------------------
CORPORATE OBLIGATIONS -- 51.6%
BANKS -- 4.3%
BANK ONE, N.A. ILLINOIS
6.840%, 01/12/01 500 500
MBNA, MTN
6.150%, 10/01/03 1,000 964
NATIONAL WESTMINSTER BANK
9.375%, 11/15/03 1,000 1,065
PNC FUNDING
9.875%, 03/01/01 1,000 1,009
--------------------------------------------------------------------------------
TOTAL BANKS $3,538
--------------------------------------------------------------------------------
COMPUTERS & SERVICES -- 2.3%
COMDISCO
5.750%, 02/15/01 1,000 889
SEAGATE TECHNOLOGY
7.125%, 03/01/04 1,000 1,000
--------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES $1,889
--------------------------------------------------------------------------------
ELECTRICAL SERVICES -- 1.2%
TXU
7.375%, 08/01/01 1,000 1,002
--------------------------------------------------------------------------------
TOTAL ELECTRICAL SERVICES $1,002
--------------------------------------------------------------------------------
ENERGY -- 8.3%
ENRON
6.500%, 08/01/02 1,000 994
HUSKY OIL, YB
6.875%, 11/15/03 3,000 2,940
NRG NORTHEAST GENERATING (B)
8.065%, 12/15/04 1,000 1,005
WILLIAMS
6.500%, 11/15/02 2,000 1,985
--------------------------------------------------------------------------------
TOTAL ENERGY $ 6,924
--------------------------------------------------------------------------------
19
-----
<PAGE>
--------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS
--------------------------------------------------------------------------------
SHORT-TERM BOND PORTFOLIO CONTINUED
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
ENTERTAINMENT -- 4.2%
TIME WARNER, MTN (B)
6.100%, 12/30/01 $2,000 $ 1,970
VIACOM
6.750%, 01/15/03 1,500 1,489
--------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $ 3,459
--------------------------------------------------------------------------------
FINANCIAL SERVICES -- 18.0%
ASSOCIATES N.A.
5.750%, 10/15/03 1,000 971
BEAR STEARNS
6.450%, 08/01/02 800 790
CONSECO, MANDATORY
PUT @ 100 (C)
6.400%, 06/15/11 2,000 1,780
CREDIT SUISSE FIRST
BOSTON, MTN (A)
6.620%, 08/09/01 1,000 1,000
FORD MOTOR CREDIT
7.500%, 06/15/03 2,000 2,010
7.600%, 08/01/05 1,000 1,007
GMAC
7.125%, 05/01/03 2,000 2,002
GOLDMAN SACHS GROUP, MTN (A)
6.940%, 01/25/01 1,000 1,000
HOUSEHOLD FINANCE, MTN (A)
6.989%, 10/30/02 1,000 1,000
LEHMAN BROTHERS HOLDINGS
7.750%, 01/15/05 1,000 1,002
LEHMAN BROTHERS HOLDINGS, MTN
6.900%, 01/29/01 400 400
MERRILL LYNCH, MTN
7.180%, 02/11/03 1,000 1,003
7.150%, 09/15/04 1,000 1,001
--------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $14,966
--------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 3.6%
COCA-COLA, PAT (B)
6.000%, 03/15/01 2,000 1,987
CONAGRA
5.500%, 10/15/02 1,000 976
--------------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO $ 2,963
--------------------------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS -- 3.9%
ANADARKO PETROLEUM
6.800%, 07/02/02 1,200 1,190
6.500%, 05/15/05 500 484
PHILLIPS PETROLEUM
9.000%, 06/01/01 1,525 1,536
--------------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS $ 3,210
--------------------------------------------------------------------------------
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS -- 2.3%
SPIEKER PROPERTIES LP
6.875%, 02/01/05 $2,000 $ 1,953
--------------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUSTS $ 1,953
--------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS -- 3.5%
SPRINT CAPITAL
5.875%, 05/01/04 1,000 954
WORLDCOM
6.250%, 08/15/03 2,000 1,960
--------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS $ 2,914
--------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS
(Cost $43,330) $42,818
--------------------------------------------------------------------------------
ASSET-BACKED SECURITIES -- 20.3%
EQCC HOME EQUITY LOAN TRUST,
SER 1998-1, CL A4F
6.459%, 03/15/21 2,000 1,979
EQCC HOME EQUITY LOAN TRUST,
SER 1999-1, CL A2F
5.765%, 06/20/15 1,000 983
EQCC HOME EQUITY LOAN TRUST,
SER 1999-1, CL A3F
5.915%, 11/20/24 1,000 973
EQUICREDIT FUNDING TRUST,
SER 1996-A, CL A3
7.350%, 11/15/19 1,348 1,351
FORD CREDIT AUTO OWNER TRUST,
SER 2000-A, CL A3
6.820%, 06/17/02 1,331 1,332
FORD CREDIT AUTO OWNER TRUST,
SER 2000-C, CL A4
7.240%, 02/15/04 1,000 1,005
GREEN TREE HOME IMPROVEMENT
LOAN TRUST,
SER 1995-F, CL B1
6.750%, 01/15/21 2,000 1,960
GREEN TREE HOME IMPROVEMENT
LOAN TRUST, SER 1996-F,
CL HIB1
7.250%, 11/15/27 2,000 1,973
GREENPOINT MANUFACTURED
HOUSING TRUST,
SER 1999-1, CL A2
6.010%, 08/15/15 500 487
KEY AUTO FINANCE TRUST,
SER 1997-1, CL B
6.400%, 04/15/04 489 488
KEY AUTO FINANCE TRUST,
SER 1999-1, CL A3
5.630%, 07/15/03 1,250 1,244
20
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
PREMIER AUTO TRUST,
SER 1998-4, CL A3
5.690%, 06/08/02 $ 646 $ 643
THE MONEY STORE HOME EQUITY
TRUST, SER 1996-C, CL A4
7.400%, 06/15/21 832 830
THE MONEY STORE HOME EQUITY
TRUST, SER 1997-D, CL AF3
6.345%, 11/15/21 629 626
THE MONEY STORE HOME EQUITY
TRUST, SER 1998-B, CL AF4
6.115%, 06/15/21 1,000 989
--------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost $17,024) $16,863
--------------------------------------------------------------------------------
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS -- 1.1%
ADVANTA MORTGAGE LOAN TRUST,
SER 1997-1, CL A2
7.100%, 04/25/20 3 3
PRUDENTIAL HOME MORTGAGE
SECURITIES TRUST,
SER 1994-25, CL A7
7.500%, 08/25/24 941 930
--------------------------------------------------------------------------------
TOTAL NON-AGENCY MORTGAGE-BACKED OBLIGATIONS
(Cost $967) $933
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 1.4%
CREDIT SUISSE FIRST BOSTON
6.620%, dated 10/31/00,
matures 11/01/00, repurchase
price $1,156,923 (collateralized
by U.S. Government Obligations:
total market value
$1,192,945) 1,157 1,157
--------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $1,157) $ 1,157
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 98.9%
(Cost $82,989) $82,183
================================================================================
OTHER ASSETS AND LIABILITIES, NET-- 1.1% $ 941
================================================================================
MARKET
DESCRIPTION VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 8,506,883 outstanding
shares of beneficial interest $ 85,019
Undistributed net investment income 63
Accumulated net realized loss on investments (1,152)
Net unrealized depreciation on investments (806)
================================================================================
TOTAL NET ASSETS-- 100.0% $83,124
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- INSTITUTIONAL CLASS $ 9.77
================================================================================
(A) VARIABLE RATE SECURITY. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS
THE RATE IN EFFECT ON OCTOBER 31, 2000.
(B) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION NORMALLY QUALIFIED TO INSTITUTIONAL INVESTORS.
(C) MANDATORY PUT SECURITY. THE MANDAORY PUT DATE IS SHOWN AS THE MATURITY DATE
ON THE STATEMENT OF NET ASSETS.
CL--CLASS
FHLMC--FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
LP--LIMITED PARTNERSHIP
MTN--MEDIUM TERM NOTE
N.A.--NORTH AMERICA
PAT--PUTABLE ASSET TRUST
REMIC--REAL ESTATE MORTGAGE INVESTMENT CONDUIT
SER--SERIES
SLMA--STUDENT LOAN MARKETING ASSOCIATION
YB--YANKEE BOND
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
21
-----
<PAGE>
--------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS MANAGEMENT DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
MARYLAND AND PENNSYLVANIA TAX-FREE PORTFOLIOS
[PHOTO OMITTED]
SUSAN L. SCHNAARS, CFA
------------------------------
PORTFOLIO MANAGER
------------------------------
SUSAN L. SCHNAARS, CFA, IS A PRINCIPAL OF ALLIED INVESTMENT ADVISORS, INC. SHE
IS THE PORTFOLIO MANAGER OF THE INTERMEDIATE FIXED INCOME PORTFOLIO, MARYLAND
TAX-FREE PORTFOLIO, AND PENNSYLVANIA TAX-FREE PORTFOLIO. SHE HAS 11 YEARS OF
INVESTMENT MANAGEMENT EXPERIENCE.
REVIEW AND OUTLOOK
The municipal market has performed extremely well over the past six months
due to favorable supply and demand factors. Supply has been low, as higher
interest rates have made refundings unfeasible and borrowing needs are down as
municipalities find themselves flush with cash. The Federal Reserve's bias
toward a tight monetary policy, and a benign inflation story coupled with strong
productivity and the shrinking amount of outstanding U.S. Treasury debt, has
resulted in an inverted Treasury yield curve (albeit not quite as inverted as it
was in April). The municipal yield curve remains positively sloped (although
flatter than one year ago) due to individual investor preference for
shorter-maturity securities and the absence of demand in longer-dated municipals
from this segment's customary buyers -- insurance companies and mutual funds.
The yield differential between shorter- and longer-term maturities has fallen to
a five-year low with an approximately 120 basis point difference between 1- and
30-year municipal securities.
We believe that investors will continue to shift funds into municipal
securities and taxable fixed income securities in search of relative after-tax
value, away from the volatile stock market where they may have experienced
significant gains or realized sizeable profits over the past several years. As
supply is not expected to keep pace with demand, we expect tax-exempt securities
to perform well.
Municipals appeared not to be responding to the candidates' proposals for
tax reform during the 2000 election season. Four years ago municipals
dramatically under-performed their taxable counterparts when candidates' talk of
severe tax reform threatened to jeopardize the tax-exempt status of municipals.
Even if the highest tax bracket were reduced to a mid-thirties percentage, we
believe municipals, at their current levels, will most likely continue to be
attractive to most investors currently involved in the tax-exempt market.
After slightly shortening the duration of the Portfolios earlier this
year, we have held the duration posture steady during the past six months.
Sector exposure has been held relatively stable, with minor adjustments being
made to diversify out of hospital revenue bonds, which continue to underperform
the overall municipal market, into various other revenue-backed issues. Quality
structure has also remained stable, as we do not believe the minor increase in
yield gained by lowering credit quality warrants assuming additional risk as the
economy slows.
We will continue to focus on securities with strong structures and good
call protection as market demand for municipal bonds continues to be strong and
quality spreads remain narrow. The focus of future purchases will be in the
higher quality, 12 to 17 year maturity range due to the advantageous after-tax
relative value of municipals in that segment. We remain focused on maintaining a
high credit quality profile for the Portfolios. Any modification to the
Portfolios reflects our bias to maximize after-tax total return, while providing
a high level of tax-free income.
22
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PERFORMANCE AS OF
OCTOBER 31, 2000
MARYLAND TAX-FREE PORTFOLIO
--------------------------------------------------------------------------------
LEHMAN LEHMAN
7 YEAR 10 YEAR LIPPER MD
MUNI MUNI MUNICIPAL
INST'L RETAIL RETAIL BOND BOND DEBT FUNDS
CLASS CLASS A* CLASS B* INDEX INDEX OBJECTIVE
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN 7.32% 7.06% 6.31% 6.84% 8.23% 7.06%
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN WITH LOAD N/A 2.25% 1.31% N/A N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN 3.64% 3.45% 6.90% 4.69% 5.01% 3.46%
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN WITH LOAD N/A 1.87% 6.07% N/A N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE 4.39% 4.23% 6.57% N/A N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE WITH LOAD N/A 3.02% 5.97% N/A N/A N/A
--------------------------------------------------------------------------------
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning November 15, 1996. Retail
Class A shares were offered beginning January 2, 1997. Performance for the
Retail Class A shares with load reflects the deduction of the 4.50% sales
charge. Retail Class B shares were offered beginning September 9, 1999.
Performance for Retail Class B shares with load reflects the deduction of the
applicable contingent deferred sales charge (CDSC).
* Performance shown prior to the actual inception date of the Retail Class A and
Retail Class B shares represents that of the Institutional Class adjusted for
the sales charge and total operating expenses applicable to Retail Class A
shares and Retail Class B shares. The Retail Class A and Retail Class B annual
returns would have been substantially similar to those of the Institutional
Class because shares of each class are invested in the same portfolio of
securities. Annualized performance since actual inception for Retail Class A
shares is 4.29% without CDSC and 3.04% with CDSC. Annualized performance since
actual inception for Retail Class B shares is 16.02% without CDSC and 12.59%
with CDSC.
The performance of the Lehman 7 Year Municipal Bond Index and the Lehman 10
Year Municipal Bond Index does not include operating expenses that are
incurred by the Portfolio.
PENNSYLVANIA TAX-FREE PORTFOLIO
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
LEHMAN LEHMAN LEHMAN
5 YEAR 7 YEAR 10 YEAR LIPPER PA
MUNI MUNI MUNI INTERMEDIATE
INST'L RETAIL RETAIL BOND BOND BOND MUNICIPAL
CLASS CLASS A* CLASS B* INDEX INDEX INDEX OBJECTIVE
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ONE YEAR
TOTAL RETURN 7.17% 6.99% 6.40% 5.81% 6.84% 8.23% 6.58%
----------------------------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN WITH LOAD N/A 2.13% 1.40% N/A N/A N/A N/A
----------------------------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN 2.92% 2.81% 5.38% 4.42% 4.69% 5.01% 3.45%
----------------------------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN WITH LOAD N/A 1.24% 4.53% N/A N/A N/A N/A
----------------------------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE 3.90% 3.67% 5.08% N/A N/A N/A N/A
----------------------------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE WITH LOAD N/A 2.64% 4.74% N/A N/A N/A N/A
----------------------------------------------------------------------------------------------------
</TABLE>
Past performance of the Portfolio is not predictive of future performance.
For each class, performance presented prior to March 22, 1998, reflects the
performance of the Marketvest Pennsylvania Intermediate Municipal Bond Fund
from its inception date of March 31, 1996. Retail Class A shares were offered
beginning March 23, 1998. Performance for the Retail Class A shares with load
reflects the deduction of the 4.50% sales charge. Retail Class B shares were
offered beginning September 9, 1999. Performance for Retail Class B shares
with load reflects the deduction of the applicable contingent deferred sales
charge (CDSC).
* Performance shown prior to the actual inception dates of Retail Class A shares
and Retail Class B shares represents that of the Institutional Class adjusted
for the sales charge and total operating expenses applicable to Retail Class A
shares and Retail Class B shares. The Retail Class A and Retail Class B annual
returns would have been substantially similar to those of the Institutional
Class because shares of each class are invested in the same portfolio of
securities. Annualized performance since actual inception for Class A shares
is 2.24% without load and 0.46% with load. Annualized performance since actual
inception for Retail Class B shares is 12.93% without CDSC and 9.49% with
CDSC.
The performance of the Lehman 5 Year Municipal Bond Index, Lehman 7 Year
Municipal Bond Index, and Lehman 10 Year Municipal Bond Index does not include
operating expenses that are incurred by the Portfolio.
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
General Obligations -- 33%
Cash Equivalents -- 2%
Revenue Bonds -- 65%
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
MUNICIPAL BONDS & NOTES -- 98.2%
MARYLAND -- 92.5%
ALLEGANY COUNTY, PUBLIC
IMPROVEMENTS GO, AMBAC
5.300%, 03/01/12 $1,190 $1,226
ANNE ARUNDEL COUNTY, PUBLIC
IMPROVEMENTS GO
6.000%, 09/01/06 2,000 2,147
BALTIMORE, AUTO PARKING
RB, FGIC
5.250%, 07/01/17 1,000 999
BALTIMORE, CONVENTION CENTER
RB, MBIA
5.375%, 09/01/11 2,910 3,019
BALTIMORE COUNTY, PUBLIC
IMPROVEMENTS GO
5.500%, 06/01/16 1,500 1,522
5.250%, 06/01/11 1,000 1,027
BALTIMORE GO, SER B, MBIA
7.000%, 10/15/03 1,000 1,070
BALTIMORE, PORT FACILITIES RB,
DUPONT PROJECT
6.500%, 10/01/11 1,000 1,050
BALTIMORE, WATER PROJECT
RB, FSA
5.750%, 07/01/30 3,000 3,034
CALVERT COUNTY, PUBLIC &
SCHOOL IMPROVEMENTS GO
5.750%, 01/01/11 1,900 1,995
CALVERT COUNTY RB,
BALTIMORE GAS, MBIA
5.550%, 07/15/14 2,500 2,547
CARROLL COUNTY, REFUNDING
RB, ASSET
5.375%, 01/01/16 2,000 2,000
CHARLES COUNTY GO
5.700%, 03/01/10 750 784
23
-----
<PAGE>
--------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS
--------------------------------------------------------------------------------
MARYLAND TAX-FREE PORTFOLIO CONTINUED
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
FREDERICK COUNTY GO, SER B
6.300%, 07/01/08 $2,000 $2,090
FREDERICK COUNTY, RETIREMENT
COMMUNITY RB,
BUCKINGHAMS CHOICE
5.900%, 01/01/17 1,000 864
HARFORD COUNTY GO
5.500%, 12/01/08 1,895 2,002
HOWARD COUNTY, PUBLIC
IMPROVEMENTS GO, SER A
5.250%, 02/15/14 1,350 1,362
MARYLAND STATE, NATIONAL PARKS
& PLANNING COMMISSION RB
5.375%, 01/15/14 1,000 1,015
MARYLAND STATE, COMMUNITY
DEVELOPMENT ADMINISTRATION
RB, HOUSING & COMMUNITY
DEVELOPMENT
5.600%, 03/01/17 1,000 1,010
5.050%, 04/01/08 1,000 1,016
MARYLAND STATE, COMMUNITY
DEVELOPMENT ADMINISTRATION
RB, MULTI-FAMILY HOUSING
DEVELOPMENT
5.200%, 12/01/29 2,000 1,965
MARYLAND STATE, ECONOMIC
DEVELOPMENT AUTHORITY RB,
HEALTH CARE FACILITIES, GNMA
4.650%, 12/20/08 855 820
MARYLAND STATE, ECONOMIC
DEVELOPMENT AUTHORITY RB,
LUTHERAN WORLD RELIEF
7.125%, 04/01/19 1,000 1,010
MARYLAND STATE, ECONOMIC
DEVELOPMENT AUTHORITY RB,
STUDENT HOUSING
5.600%, 06/01/10 1,950 1,982
MARYLAND STATE GO
6.100%, 10/15/06 1,500 1,551
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
AUTHORITY RB, CATHOLIC
HEALTH ST. JOSEPH'S, SER A
6.000%, 12/01/13 1,370 1,442
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
AUTHORITY RB,
DAUGHTERS OF CHARITY
4.750%, 11/01/14 1,600 1,478
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
AUTHORITY RB, DOCTORS
COMMUNITY HOSPITAL
5.500%, 07/01/24 $2,500 $1,984
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
AUTHORITY RB, HELIX HEALTH
ISSUE, AMBAC, ETM
5.000%, 07/01/27 2,500 2,281
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
AUTHORITY RB, HOWARD COUNTY
GENERAL HOSPITAL PROJECT
5.500%, 07/01/13 1,000 1,016
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
AUTHORITY RB, JOHNS
HOPKINS MEDICINE, MBIA
5.000%, 07/01/19 1,500 1,429
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
AUTHORITY RB, JOHNS HOPKINS
UNIVERSITY
5.250%, 07/01/17 2,000 1,987
5.125%, 07/01/20 2,000 1,912
4.750%, 05/15/33 2,000 1,685
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
AUTHORITY RB,
KENNEDY KRIEGER
5.125%, 07/01/22 2,000 1,565
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
AUTHORITY RB, LOYOLA
COLLEGE ISSUE
5.000%, 10/01/39 1,500 1,352
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
AUTHORITY RB, LOYOLA COLLEGE
PROJECT, SER A, MBIA
5.375%, 10/01/11 950 980
5.375%, 10/01/26 1,000 971
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
AUTHORITY RB, MEDLANTIC/
HELIX, SER A
5.250%, 08/15/12 1,175 1,182
5.250%, 08/15/11 2,000 2,030
24
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
AUTHORITY RB, MERCY MEDICAL
CENTER PROJECT, AMBAC
5.750%, 07/01/15 $2,000 $2,043
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
AUTHORITY RB, NORTH ARUNDEL
PROJECT, MBIA
6.000%, 07/01/12 500 521
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
AUTHORITY RB, PENINSULA
REGIONAL MEDICAL CENTER PROJECT
5.000%, 07/01/08 1,000 970
MARYLAND STATE, HEALTH &
HIGHER EDUCATION FACILITIES
AUTHORITY RB, PICKERSGILL
PROJECT, SER A
6.000%, 01/01/15 1,500 1,504
MARYLAND STATE, HEALTH &
HIGHER EDUCATION
FACILITIES AUTHORITY RB,
PUMHHERON POINT
5.250%, 10/01/28 1,000 967
MARYLAND STATE, LOCAL FACILITIES
AUTHORITY GO, SECOND SER AA
5.500%, 06/01/08 1,500 1,562
MARYLAND STATE, LOCAL FACILITIES
AUTHORITY GO, THIRD SER
5.000%, 10/15/06 1,000 1,025
MARYLAND STATE, STADIUM
AUTHORITY RB, AMBAC
5.500%, 03/01/12 1,000 1,028
MARYLAND STATE, TRANSPORTATION
AUTHORITY RB
5.750%, 07/01/15 3,000 3,026
MARYLAND STATE, TRANSPORTATION
AUTHORITY RB, BALTIMORE/
WASHINGTON INTERNATIONAL
AIRPORT PROJECT, FGIC
6.000%, 07/01/07 1,000 1,061
MARYLAND STATE, WATER QUALITY
FINANCING ADMINISTRATION RB,
REVOLVING LOAN FUND, SER A
6.550%, 09/01/14 945 980
5.500%, 09/01/12 1,250 1,277
MONTGOMERY COUNTY, PARKING
AUTHORITY RB, SILVER SPRING
PARKING LOT PROJECT,
SER A, FGIC
6.250%, 06/01/09 500 522
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
MONTGOMERY COUNTY, PUBLIC
IMPROVEMENTS GO, SER A
5.800%, 07/01/07 $1,000 $1,070
5.600%, 01/01/16 2,000 2,060
NEW BALTIMORE, SCHOOL
BOARD SYSTEM RB
5.000%, 11/01/13 1,135 1,126
PRINCE GEORGES COUNTY, PUBLIC
IMPROVEMENTS GO, FSA
5.500%, 10/01/10 2,000 2,128
PRINCE GEORGES COUNTY,
PUBLIC IMPROVEMENTS GO,
SER A, MBIA
6.000%, 03/01/07 1,450 1,504
PRINCE GEORGES COUNTY, SOLID
WASTE MANAGEMENT SYSTEM
RB, FSA
5.000%, 06/15/04 1,000 1,015
PRINCE GEORGES COUNTY, WATER
UTILITY IMPROVEMENTS
GO, STORMWATER
MANAGEMENT PROJECT
5.500%, 03/15/13 2,575 2,681
QUEEN ANNES COUNTY, PUBLIC
FACILITIES GO, FGIC
5.400%, 11/15/11 1,000 1,045
QUEEN ANNES COUNTY, SCHOOL
& RECREATIONAL FACILITIES
IMPROVEMENTS GO, FGIC
6.000%, 11/15/08 1,000 1,091
ST. MARY'S COUNTY, ACADEMIC &
AUXILIARY FACILITIES RB, MBIA
5.250%, 09/01/27 2,000 1,900
UNIVERSITY OF MARYLAND,
AUXILIARY FACILITY & TUITION
RB, SER A
5.500%, 04/01/11 1,500 1,536
5.000%, 04/01/10 1,250 1,264
UNIVERSITY OF MARYLAND, LOAN
PROGRAM RB, SECOND SER
6.000%, 06/01/05 500 520
UNIVERSITY OF MARYLAND,
MEDICAL SYSTEMS PROJECT
RB, SER A
5.500%, 04/01/10 2,000 2,075
WASHINGTON COUNTY, PUBLIC
IMPROVEMENTS GO, MBIA
5.800%, 01/01/15 1,250 1,294
WASHINGTON, SUBURBAN
SANITATION DISTRICT GO
6.000%, 06/01/18 1,000 1,080
25
-----
<PAGE>
--------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS
--------------------------------------------------------------------------------
MARYLAND TAX-FREE PORTFOLIO CONCLUDED
PRINCIPAL AMOUNT MARKET
DESCRIPTION (000)/SHARES VALUE (000)
--------------------------------------------------------------------------------
WASHINGTON, SUBURBAN
SANITATION DISTRICT GO,
SEWER IMPROVEMENTS
5.300%, 06/01/08 $1,000 $ 1,026
--------------------------------------------------------------------------------
TOTAL MARYLAND $103,302
--------------------------------------------------------------------------------
PUERTO RICO -- 5.7%
COMMONWEALTH OF PUERTO RICO,
HIGHWAY & TRANSPORTATION
AUTHORITY RB, SER A, MBIA
5.000%, 07/01/38 2,000 1,835
COMMONWEALTH OF PUERTO RICO,
PUBLIC FINANCE AUTHORITY
RB, AMBAC
5.375%, 06/01/19 1,500 1,534
COMMONWEALTH OF PUERTO RICO,
PUBLIC IMPROVEMENTS
GO, MBIA
6.250%, 07/01/12 1,000 1,139
4.875%, 07/01/23 2,000 1,838
--------------------------------------------------------------------------------
TOTAL PUERTO RICO $ 6,346
--------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS & NOTES
(Cost $109,400) $109,648
--------------------------------------------------------------------------------
CASH EQUIVALENT -- 1.7%
DREYFUS TAX-EXEMPT CASH
MANAGEMENT FUND 1,945,910 1,946
--------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $1,946) $ 1,946
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.9%
(Cost $111,346) $111,594
================================================================================
OTHER ASSETS AND LIABILITIES, NET-- 0.1% $ 123
================================================================================
<PAGE>
MARKET
DESCRIPTION VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 9,067,975 outstanding
shares of beneficial interest $ 87,964
Portfolio Shares of Retail Class A
(unlimited authorization -- no par value)
based on 2,374,516 outstanding shares
of beneficial interest 24,591
Portfolio Shares of Retail Class B
(unlimited authorization -- no par value)
based on 33,303 outstanding shares
of beneficial interest 322
Accumulated net realized loss on investments (1,408)
Net unrealized appreciation on investments 248
================================================================================
TOTAL NET ASSETS-- 100.0% $111,717
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- INSTITUTIONAL CLASS $9.74
================================================================================
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $9.73
================================================================================
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($9.73 / 95.50%) $10.19
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- RETAIL CLASS B $9.74
================================================================================
ETM--ESCROWED TO MATURITY
GO--GENERAL OBLIGATION
RB--REVENUE BOND
SER--SERIES
THE FOLLOWING ORGANIZATIONS HAVE PROVIDED UNDERLYING CREDIT SUPPORT FOR
SECURITIES LISTED ABOVE, AS INDICATED.
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
ASSET--ASSET GUARANTY
FGIC--FINANCIAL GUARANTY INSURANCE CORPORATION
FSA--FINANCIAL SECURITY ASSURANCE
GNMA--GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
MBIA--MUNICIPAL BOND INSURANCE ASSOCIATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
26
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PENNSYLVANIA TAX-FREE PORTFOLIO
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
General Obligations -- 15%
Cash Equivalents -- 1%
Revenue Bonds -- 84%
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
MUNICIPAL BONDS & NOTES -- 97.9%
PENNSYLVANIA -- 97.9%
ALLEGHENY COUNTY, INDUSTRIAL
DEVELOPMENT AUTHORITY RB,
USX PROJECT
6.100%, 01/15/18 $5,255 $5,163
ALLENTOWN, SACRED HEART
HOSPITAL RB, SER A
6.500%, 11/15/08 2,665 2,675
BUCKS COUNTY, INDUSTRIAL
DEVELOPMENT AUTHORITY
RB, ETM
10.000%, 05/15/19 4,775 7,246
BURRELL, SCHOOL DISTRICT
GO, FGIC, STAID
5.250%, 11/15/10 4,000 4,125
CHESTER COUNTY, HEALTH &
EDUCATION FACILITIES
AUTHORITY RB, CHESTER
COUNTY HOSPITAL, MBIA
5.625%, 07/01/09 1,985 2,074
5.625%, 07/01/10 1,675 1,744
5.500%, 07/01/07 965 1,005
CHESTER COUNTY, HEALTH &
EDUCATION FACILITIES
AUTHORITY RB, IMMACULATA
COLLEGE, ASSET
5.625%, 10/15/27 2,250 2,182
CHESTER COUNTY, HEALTH &
EDUCATION FACILITIES
AUTHORITY RB, MAIN LINE
HEALTH SYSTEMS, MBIA
5.300%, 05/15/07 3,045 3,121
CUMBERLAND COUNTY, MESSIAH
COLLEGE PROJECT RB, AMBAC
5.125%, 10/01/15 2,800 2,748
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
DAUPHIN COUNTY, PINNACLE
HEALTH SYSTEM PROJECT
RB, MBIA
5.200%, 05/15/09 $ 910 $ 932
DELAWARE COUNTY, CATHOLIC
HEALTH SYSTEMS EAST
RB, SER A
4.875%, 11/15/14 3,910 3,715
DELAWARE COUNTY, COMMUNITY
HOSPITAL AUTHORITY RB
6.000%, 12/15/20 4,000 3,525
DELAWARE COUNTY, DUNWOODY
VILLAGE PROJECT RB
5.550%, 04/01/06 300 303
INDIANA COUNTY, INDUSTRIAL
DEVELOPMENT AUTHORITY
POLLUTION CONTROL RB,
NY STATE ELECTRIC & GAS,
SER A, MBIA
6.000%, 06/01/06 1,500 1,601
LANCASTER COUNTY, HOSPITAL
AUTHORITY RB, MASONIC
HOMES PROJECT
4.750%, 11/15/02 1,000 1,000
LANCASTER COUNTY, SOLID WASTE
MANAGEMENT AUTHORITY
RB, AMBAC
5.375%, 12/15/15 4,000 4,015
LEHIGH COUNTY, MUHLENBERG
HOSPITAL CENTER PROJECT
RB, ETM, GOH
5.750%, 07/15/10 3,000 3,165
LEHIGH COUNTY, PUBLIC
IMPROVEMENTS PROJECT GO,
SER A, CNTY GTD
5.500%, 11/15/11 2,000 2,058
5.550%, 11/15/12 2,100 2,153
LOWER MERION TOWNSHIP,
SCHOOL DISTRICT GO, STAID
5.125%, 05/15/13 3,185 3,197
MCKEAN COUNTY, BRADFORD
HOSPITAL PROJECT RB, ACA
6.100%, 10/01/20 2,500 2,500
MONTGOMERY COUNTY,
HEALTH & HIGHER EDUCATION
AUTHORITY RB
7.250%, 12/01/19 3,000 2,846
MONTGOMERY COUNTY, HEALTH
& HIGHER EDUCATION
AUTHORITY RB, AMBAC
5.500%, 10/01/08 1,275 1,331
5.250%, 10/01/04 2,070 2,114
27
-----
<PAGE>
--------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS
--------------------------------------------------------------------------------
PENNSYLVANIA TAX-FREE PORTFOLIO CONTINUED
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
MONTGOMERY COUNTY, HEALTH
& HIGHER EDUCATION
AUTHORITY RB, BEAVER COLLEGE
PROJECT, CONLEE
5.700%, 04/01/10 $ 500 $ 526
MONTGOMERY COUNTY,
INDUSTRIAL DEVELOPMENT
AUTHORITY RB, RETIREMENT-
LIFE COMMUNITIES
5.250%, 11/15/28 2,500 2,100
NORRISTOWN, SCHOOL DISTRICT
AUTHORITY GO, FGIC, STAID
5.500%, 09/01/14 500 508
NORTHAMPTON COUNTY, HIGHER
EDUCATION AUTHORITY RB,
LEHIGH UNIVERSITY, MBIA
5.750%, 08/15/03 2,710 2,798
PENNSYLVANIA STATE, CONVENTION
CENTER AUTHORITY RB,
ETM, FGIC
6.000%, 09/01/19 5,410 5,748
PENNSYLVANIA STATE, CONVENTION
CENTER AUTHORITY
RB, MBIA
6.750%, 09/01/19 2,500 2,669
PENNSYLVANIA STATE, ECONOMIC
DEVELOPMENT AUTHORITY
RB, AMBAC
6.000%, 07/01/06 3,000 3,206
PENNSYLVANIA STATE, FINANCING
AUTHORITY RB, CAPITAL
IMPROVEMENT PROGRAM
6.600%, 11/01/09 3,500 3,728
PENNSYLVANIA STATE, HIGHER
EDUCATION FACILITIES AUTHORITY
RB, DREXEL UNIVERSITY
6.000%, 05/01/24 4,075 4,111
PENNSYLVANIA STATE, HIGHER
EDUCATION FACILITIES AUTHORITY
RB, GWYNEDD-MERCY
COLLEGE, ASSET
5.600%, 11/01/22 2,600 2,574
PENNSYLVANIA STATE, HIGHER
EDUCATION FACILITIES
AUTHORITY RB, SER B
5.350%, 01/01/08 3,750 3,684
PENNSYLVANIA STATE, HIGHER
EDUCATION FACILITIES AUTHORITY
RB, UNIVERSITY OF PENNSYLVANIA
HEALTH SERVICES PROJECT, SER A
5.500%, 01/01/09 3,000 2,951
PRINCIPAL MARKET
DESCRIPTION AMOUNT VALUE (000)
--------------------------------------------------------------------------------
PENNSYLVANIA STATE, HIGHER
EDUCATION FACILITIES AUTHORITY
RB, UNIVERSITY OF
PENNSYLVANIA PROJECT
5.600%, 01/01/10 $ 500 $ 491
PENNSYLVANIA STATE, HOUSING
FINANCE AGENCY RB, SER A
6.000%, 10/01/13 1,500 1,564
PENNSYLVANIA STATE, INFRASTRUCTURE
INVESTMENT AUTHORITY RB, WATER
UTILITY IMPROVEMENTS, MBIA
5.250%, 09/01/07 1,000 1,034
PENNSYLVANIA, INTERGOVERNMENTAL
COOPERATIVE AUTHORITY RB,
PHILADELPHIA FUNDING
PROGRAM, FGIC
5.400%, 06/15/09 4,845 4,996
PHILADELPHIA GO, FGIC
5.125%, 05/15/14 5,000 4,944
PHILADELPHIA, INDUSTRIAL
DEVELOPMENT AUTHORITY RB,
FRANKLIN INSTITUTE PROJECT
5.200%, 06/15/18 2,100 1,895
5.200%, 06/15/26 3,100 2,534
PHILADELPHIA, INDUSTRIAL
DEVELOPMENT AUTHORITY RB,
GIRARD ESTATE COAL MINING
PROJECT, ETM
5.500%, 11/15/16 3,590 3,621
PHILADELPHIA, INDUSTRIAL
DEVELOPMENT AUTHORITY
RB, SER A, MBIA
6.000%, 02/15/07 1,365 1,462
PHILADELPHIA, JEFFERSON
HEALTH SYSTEMS RB
5.500%, 05/15/05 1,000 1,013
PHILADELPHIA, JUSTICE LEASE
AUTHORITY RB, SER A, MBIA
7.100%, 11/15/06 4,095 4,287
PENNSYLVANIA STATE, PUBLIC
IMPROVEMENTS GO, SECOND
SER, FGIC
5.375%, 11/15/07 5,000 5,225
PHILADELPHIA, TEMPLE UNIVERSITY
HOSPITAL RB, SER A
6.625%, 11/15/23 4,300 4,004
PHILADELPHIA, WATER &
WASTEWATER RB, MBIA
6.250%, 08/01/07 3,000 3,270
6.250%, 08/01/08 2,150 2,362
PHILADELPHIA, WATER &
WASTEWATER RB, SER A,
AMBAC
5.000%, 08/01/22 5,000 4,613
28
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PRINCIPAL AMOUNT MARKET
DESCRIPTION (000)/SHARES VALUE (000)
--------------------------------------------------------------------------------
PITTSBURGH & ALLEGHENY
COUNTIES, PUBLIC AUDITORIUM
RB, AMBAC
5.250%, 02/01/17 $5,000 $ 4,906
RIDLEY PARK, TAYLOR HOSPITAL
RB, SER A, ETM
6.000%, 12/01/05 670 692
SCRANTON-LACKAWANNA,
MERCY HEALTH HOSPITAL
FACILITIES RB, SER B, MBIA
5.625%, 01/01/16 2,000 2,023
UNION COUNTY, HIGHER
EDUCATION FACILITIES RB,
BUCKNELL COLLEGE, MBIA
4.500%, 04/01/18 2,805 2,451
WEST MIFFLIN, AREA SCHOOL
DISTRICT GO, FGIC, STAID
4.875%, 02/15/23 2,500 2,231
--------------------------------------------------------------------------------
TOTAL PENNSYLVANIA $160,759
--------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS & NOTES
(Cost $161,775) $160,759
--------------------------------------------------------------------------------
CASH EQUIVALENT -- 0.5%
BLACKROCK PENNSYLVANIA MUNICPAL
MONEY MARKET PORTFOLIO 809,628 810
--------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $810) $ 810
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 98.4%
(Cost $162,585) $161,569
================================================================================
OTHER ASSETS AND LIABILITIES, NET-- 1.6% $ 2,577
================================================================================
MARKET
DESCRIPTION VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 16,623,728 outstanding
shares of beneficial interest $ 166,739
Portfolio Shares of Retail Class A
(unlimited authorization -- no par value)
based on 333,632 outstanding shares
of beneficial interest 3,592
Portfolio Shares of Retail Class B
(unlimited authorization -- no par value)
based on 5,503 outstanding shares
of beneficial interest 50
Undistributed net investment income 5
Accumulated net realized loss on investments (5,224)
Net unrealized depreciation on investments (1,016)
================================================================================
TOTAL NET ASSETS-- 100.0% $164,146
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- INSTITUTIONAL CLASS $9.68
================================================================================
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $9.67
================================================================================
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($9.67 / 95.50%) $10.13
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- RETAIL CLASS B $9.69
================================================================================
ETM--ESCROWED TO MATURITY
GO--GENERAL OBLIGATION
RB--REVENUE BOND
SER--SERIES
THE FOLLOWING ORGANIZATIONS HAVE PROVIDED UNDERLYING CREDIT SUPPORT FOR
SECURITIES LISTED ABOVE, AS INDICATED.
ACA--AMERICAN CAPITAL ACCESS
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
ASSET--ASSET GUARANTY
CNTY GTD--COUNTY GUARANTEED
CONLEE--COLLEGE CONSTRUCTION LOAN INSURANCE ASSOCIATION
FGIC--FINANCIAL GUARANTY INSURANCE CORPORATION
GOH--GENERAL OBLIGATION OF HOSPITAL
MBIA--MUNICIPAL BOND INSURANCE ASSOCIATION
STAID--STATE AID WITHHOLDING
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
29
-----
<PAGE>
--------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS MANAGEMENT DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
INTERMEDIATE FIXED INCOME PORTFOLIO
[PHOTO OMITTED]
SUSAN L. SCHNAARS, CFA
----------------------------
PORTFOLIO MANAGER
----------------------------
SUSAN L. SCHNAARS, CFA, IS A PRINCIPAL OF ALLIED INVESTMENT ADVISORS, INC. SHE
IS THE PORTFOLIO MANAGER OF THE INTERMEDIATE FIXED INCOME PORTFOLIO, MARYLAND
TAX-FREE PORTFOLIO, AND PENNSYLVANIA TAX-FREE PORTFOLIO. SHE HAS 11 YEARS OF
INVESTMENT MANAGEMENT EXPERIENCE.
REVIEW AND OUTLOOK
Higher interest rates and oil prices are beginning to have a slowing
affect on the economy. The main discussion among investors now seems to be
whether the Federal Reserve has been able to orchestrate a soft landing, or if
the economy will land with a thud. Recent economic releases point to a moderate
inflation picture; however, the labor markets remain tight. The consumer,
benefiting from the wealth effect of the stock market, had been a major force in
driving economic growth, but now that we've seen a fall-off in the equity
market, the markets will continue to look to the consumer as a predictor of
future growth. At this point in time, we believe that the economy may slow to a
more gentle level of growth.
Over the past six months, the yield curve has flattened dramatically,
although it remains slightly inverted when comparing U.S. Treasury securities
with 2- and 30-year maturities. The yield on the 2- and 5-year U.S. Treasury
notes have fallen by approximately 3/4% to 5.92% and 5.81%, respectively, while
the yield on the long bond has fallen less than 1/4%, to 5.78%. The 5-year U.S.
Treasury note actually generated the highest return of the bellwether Treasurys
for the past six months. For the period, the intermediate sector of the bond
market held its ground against longer-duration benchmarks as the U.S. Treasury
buyback program worked its way down the yield curve and as the credit curve
steepened. The higher yielding corporate sector outperformed the Treasury sector
only slightly during the period. Higher quality securities generated nearly 85
basis points more than lower rated issues. Mortgage and asset-backed securities
outpaced the government sector as volatility remained low and interest rates
stabilized.
During the six-month period, we reduced our duration in the corporate
sector, while maintaining the overall exposure to the segment. We eliminated
exposure to several lower quality issuers and reduced our position in AT&T as we
were concerned about how the performance of the company will translate to
bondholders going forward. We increased our exposure to the agency sector,
capturing higher yields in high quality government-supported securities.
Holdings in the mortgage and asset-backed sectors were also increased over the
past six months, and we will look to continue to add to these segments. We
anticipate maintaining the Portfolio's exposure to the corporate segment
awaiting further stabilization in spreads and discriminating among specific
industries and issuers.
Our purchases over the period, both in U.S. Treasurys and selected
spread-sectors, modestly increased the effective duration or interest rate
sensitivity of the Portfolio. After being slightly shorter than the broad
intermediate government/corporate segment of the bond market for a portion of
the period, the overall effective duration of the Portfolio is now neutral to
the index. We continue to be over-
30
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
weighted in the mortgage and asset-backed sectors on an absolute and
duration-weighted basis, however, we are slightly under-weighted in the
corporate sector. We will continue to follow our core strategy, taking advantage
of the excess spread and value offered by the corporate, mortgage and
asset-backed sectors; however, we will be closely following the unfolding
economic slowdown and the impact that it has on corporate earnings and debt
coverage.
PERFORMANCE AS OF
OCTOBER 31, 2000
--------------------------------------------------------------------------------
LEHMAN LEHMAN LIPPER
INTERMEDIATE INTERMEDIATE INTERMEDIATE
INSTITUTIONAL GOV'T/CREDIT GOVERNMENT INVESTMENT
CLASS INDEX BOND INDEX GRADE DEBT
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN 5.34% 6.44% 6.73% 5.84%
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN 4.49% 5.45% 5.62% 4.51%
--------------------------------------------------------------------------------
ANNUALIZED
TOTAL RETURN
INCEPTION TO DATE 4.98% N/A N/A N/A
--------------------------------------------------------------------------------
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning November 15, 1996.
The performance of the Lehman Intermediate Government Bond Index and the
Lehman Intermediate Government/Corporate Bond Index does not include operating
expenses that are incurred by the Portfolio.
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
U.S. Government Mortgage- Backed Obligations -- 17%
U.S. Government Agency Obligations -- 6%
Asset-Backed Securities -- 8%
Repurchase Agreements -- 2%
U.S. Treasury Obligations -- 30%
Corporate Obligations -- 33%
Yankee Bonds -- 3%
Preferred Stock -- 1%
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 29.8%
U.S. TREASURY NOTES
7.875%, 11/15/04 $7,500 $ 8,029
7.500%, 11/15/01 1,000 1,012
6.500%, 05/15/05 2,175 2,234
6.500%, 02/15/10 4,000 4,187
6.250%, 02/28/02 4,550 4,554
6.250%, 02/15/07 6,175 6,298
5.875%, 11/15/05 1,000 1,004
5.625%, 02/15/06 1,000 991
5.625%, 05/15/08 2,000 1,972
5.500%, 03/31/03 4,000 3,961
5.375%, 06/30/03 3,000 2,962
--------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $37,169) $37,204
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 6.1%
FHLB
7.100%, 03/23/05 2,000 1,986
FNMA
6.000%, 05/15/08 3,260 3,136
FNMA, MTN
5.890%, 04/06/04 1,000 977
PRIVATE EXPORT FUNDING,
SER UU
7.950%, 11/01/06 1,495 1,557
--------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $7,829) $ 7,656
--------------------------------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS -- 16.7%
FHLMC
6.500%, 07/01/09 2,687 2,631
FNMA
7.500%, 12/01/29 2,661 2,657
7.500%, 04/01/30 2,571 2,567
7.000%, 06/01/03 241 240
6.500%, 05/01/08 497 487
6.500%, 10/01/08 1,698 1,664
6.000%, 04/01/11 1,810 1,743
31
-----
<PAGE>
--------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS
--------------------------------------------------------------------------------
INTERMEDIATE FIXED INCOME PORTFOLIO CONTINUED
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
FNMA, REMIC
6.500%, 04/25/23 $2,705 $ 2,640
6.250%, 07/25/08 1,590 1,562
6.000%, 11/25/28 1,048 1,032
GNMA
7.000%, 02/15/29 1,069 1,054
SLMA, REMIC (A)
7.094%, 07/25/06 1,609 1,604
7.024%, 04/25/07 1,023 1,020
--------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS
(Cost $20,993) $20,901
--------------------------------------------------------------------------------
CORPORATE OBLIGATIONS -- 32.9%
BANKS -- 6.1%
BANK OF AMERICA, MTN
7.125%, 05/12/05 1,500 1,504
BANK OF NEW YORK
6.625%, 06/15/03 1,500 1,492
BANK ONE, MTN
6.700%, 03/15/02 1,500 1,496
STAR BANK N.A.
6.375%, 03/01/04 1,715 1,674
SUNTRUST BANKS
7.375%, 07/01/06 1,500 1,502
--------------------------------------------------------------------------------
TOTAL BANKS $ 7,668
--------------------------------------------------------------------------------
COMMUNICATION EQUIPMENT -- 1.5%
MOTOROLA
7.600%, 01/01/07 1,850 1,908
--------------------------------------------------------------------------------
TOTAL COMMUNICATION EQUIPMENT $ 1,908
--------------------------------------------------------------------------------
COMPUTERS -- 1.7%
UNISYS
11.750%, 10/15/04 2,000 2,095
--------------------------------------------------------------------------------
TOTAL COMPUTERS $ 2,095
--------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT & SERVICES -- 2.0%
COLUMBUS SOUTHERN POWER, MTN
6.510%, 02/01/08 1,250 1,184
NATIONAL RURAL UTILITIES
7.300%, 09/15/06 1,250 1,264
--------------------------------------------------------------------------------
TOTAL ELECTRICAL EQUIPMENT & SERVICES $ 2,448
--------------------------------------------------------------------------------
ENTERTAINMENT -- 1.9%
COMCAST CABLEVISION, MTN
8.375%, 05/01/07 1,000 1,040
TIME WARNER
9.125%, 01/15/13 1,225 1,369
--------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $ 2,409
--------------------------------------------------------------------------------
FINANCIAL SERVICES -- 11.6%
ASSOCIATES N.A., MTN
8.430%, 11/23/01 1,000 1,017
BEAR STEARNS
7.625%, 02/01/05 800 802
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
CIT GROUP
7.375%, 03/15/03 $1,790 $ 1,794
CITIFINANCIAL
7.750%, 03/01/05 1,285 1,314
CSC HOLDINGS, SER B
8.125%, 08/15/09 1,000 974
FORD MOTOR CREDIT
8.000%, 06/15/02 1,175 1,195
GOLDEN STATE ESCROW
7.125%, 08/01/05 1,000 930
GOLDMAN SACHS GROUP
7.350%, 10/01/09 1,940 1,904
MERRILL LYNCH, MTN
7.200%, 10/15/12 1,500 1,429
PNC FUNDING
7.000%, 09/01/04 1,740 1,712
WELLS FARGO FINANCIAL
6.375%, 09/15/02 1,370 1,358
--------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $14,429
--------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 1.3%
SARA LEE, MTN
6.150%, 06/19/08 1,700 1,589
--------------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO $ 1,589
--------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS -- 1.6%
ROUSE
8.500%, 01/15/03 1,000 1,019
SUSA PARTNERSHIP
7.125%, 11/01/03 1,000 982
--------------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUSTS $ 2,001
--------------------------------------------------------------------------------
6.690%, 08/01/07 1,370 901
TARGET
6.800%, 10/01/01 600 597
--------------------------------------------------------------------------------
TOTAL RETAIL $ 1,498
--------------------------------------------------------------------------------
RETAIL -- 1.6%
DILLARD'S
TELEPHONES & TELECOMMUNICATIONS -- 4.0%
ALLTEL
7.500%, 03/01/06 1,385 1,381
7.125%, 03/01/03 125 124
QWEST COMMUNICATIONS
INTERNATIONAL, SER B
7.250%, 11/01/08 1,000 974
SPRINT CAPITAL
6.125%, 11/15/08 1,500 1,337
WORLDCOM
6.400%, 08/15/05 1,275 1,226
--------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS $ 5,042
--------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS
(Cost $42,602) $41,087
--------------------------------------------------------------------------------
32
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PRINCIPAL AMOUNT MARKET
DESCRIPTION (000)/SHARES VALUE (000)
--------------------------------------------------------------------------------
YANKEE BONDS -- 2.8%
MERITA BANK
6.500%, 01/15/06 $2,060 $ 1,975
CANADIAN NATIONAL RAILWAY (A)
6.450%, 07/15/06 1,545 1,462
--------------------------------------------------------------------------------
TOTAL YANKEE BONDS (COST $3,483) $ 3,437
--------------------------------------------------------------------------------
ASSET-BACKED SECURITIES -- 7.6%
EQCC HOME EQUITY LOAN TRUST,
SER 1999-1, CL A3F
5.915%, 11/20/24 1,535 1,494
FORD CREDIT AUTO OWNER TRUST,
SER 2000-C, CL A4
7.240%, 02/15/04 1,765 1,774
IMC HOME EQUITY LOAN TRUST,
SER 1997-3, CL A4
6.840%, 10/20/13 18 17
KEY AUTO FINANCE TRUST,
SER 1999-1, CL A3
5.630%, 07/15/03 1,915 1,905
PP&L TRANSITION BOND,
SERIES 1999-1, CLASS A1
6.080%, 03/25/03 303 302
PREMIER AUTO TRUST,
SER 1998-4, CL A3
5.690%, 06/08/02 391 389
THE MONEY STORE HOME EQUITY
TRUST, SER 1996-C, CL A4
7.400%, 06/15/21 420 419
THE MONEY STORE HOME EQUITY
TRUST, SER 1997-D, CL AF5
6.555%, 12/15/38 1,780 1,726
THE MONEY STORE HOME EQUITY
TRUST, SER 1998-B, CL AF4
6.115%, 06/15/21 1,530 1,513
--------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost $9,653) $ 9,539
--------------------------------------------------------------------------------
PREFERRED STOCK -- 0.7%
SPG PROPERTIES 20,000 854
--------------------------------------------------------------------------------
TOTAL PREFERRED STOCK
(Cost $1,012) $ 854
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 2.3%
CREDIT SUISSE FIRST BOSTON
6.620%, dated 10/31/00,
matures 11/01/00, repurchase
price $2,873,146 (collateralized
by U.S. Government Obligations:
total market value $2,967,190) 2,873 $ 2,873
--------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $2,873) $ 2,873
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 98.9%
(Cost $125,614) $123,551
================================================================================
OTHER ASSETS AND LIABILITIES, NET-- 1.1% $ 1,354
================================================================================
MARKET
DESCRIPTION VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 13,044,364 outstanding
shares of beneficial interest $127,891
Undistributed net investment income 2
Accumulated net realized loss on investments (925)
Net unrealized depreciation on investments (2,063)
================================================================================
TOTAL NET ASSETS-- 100.0% $124,905
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- INSTITUTIONAL CLASS $ 9.58
================================================================================
(A) VARIABLE RATE SECURITY. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS
THE RATE IN EFFECT ON OCTOBER 31, 2000.
CL--CLASS
FHLB--FEDERAL HOME LOAN BANK
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
FHLMC--FEDERAL HOME LOAN MORTGAGE CORPORATION
GNMA--GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
MTN--MEDIUM TERM NOTE
N.A.--NORTH AMERICA
REMIC--REAL ESTATE MORTGAGE INVESTMENT CONDUIT
SER--SERIES
SLMA--STUDENT LOAN MARKETING ASSOCIATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
33
-----
<PAGE>
--------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS MANAGEMENT DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
U.S. GOVERNMENT BOND PORTFOLIO
[PHOTO OMITTED]
STEVEN M. GRADOW
----------------------------
CO-PORTFOLIO MANAGER
----------------------------
STEVEN M. GRADOW IS THE MANAGING DIRECTOR OF FIXED INCOME INVESTMENTS FOR ALLIED
INVESTMENT ADVISORS, INC. HE IS THE PORTFOLIO MANAGER OF THE INCOME PORTFOLIO
AND CO-PORTFOLIO MANAGER OF THE U.S. GOVERNMENT BOND PORTFOLIO AND THE
SHORT-TERM BOND PORTFOLIO. HE HAS MORE THAN 17 YEARS OF INVESTMENT MANAGEMENT
EXPERIENCE.
[PHOTO OMITTED]
N. BETH VOLK, CFA
----------------------------
CO-PORTFOLIO MANAGER
----------------------------
N. BETH VOLK, CFA, IS A PRINCIPAL OF ALLIED INVESTMENT ADVISORS, INC. SHE IS THE
CO-PORTFOLIO MANAGER OF THE U.S. GOVERNMENT BOND PORTFOLIO AND OVERSEES CREDIT
RESEARCH FOR THE FIXED INCOME GROUP. SHE HAS MORE THAN 19 YEARS OF INVESTMENT
RESEARCH AND MANAGEMENT EXPERIENCE.
REVIEW AND OUTLOOK
An economic slowdown continues to be an underlying theme as we expect the
Federal Reserve to remain on hold as to further actions for the remainder of the
year. Inflation continues to exhibit minimal evidence of acceleration as U.S.
productivity gains have mitigated the shortage of labor pool participants.
Without the gains in productivity, we would have expected substantially larger
increases in unit labor and productivity costs flowing into much higher core
inflation. The bond markets have been well behaved given the increases in
volatility experienced within the equity markets. The outlook for corporate
profits, particularly within the "new economy" sectors have not left the bond
market unscathed. We see substantial increases in credit problems going into a
slower growth environment and favor mortgage- and asset-backed securities over
the corporate sector.
For the six-month period, we made some modest shifts in the composition of
each sector's exposure to duration. While the absolute weighting of government
holdings did not change significantly, we did lengthen the duration of the
instruments in that sector. Within the corporate sector we continue to upgrade
the credit profile of the corporate holdings and reduced the exposure to some
lower quality high-yield bonds. We continue to favor energy, railroad and
telecommunication issues and AAA-rated asset-backed home equity issues.
We continue to overweight the mortgage-backed securities area with the
outlook that prepayments will be modest. We expect interest rates to be
range-bound with little likelihood of a substantial rally. Yield should dominate
total return for the remainder of the year.
34
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PERFORMANCE AS OF
OCTOBER 31, 2000
--------------------------------------------------------------------------------
LEHMAN LIPPER
INTERMEDIATE INTERMEDIATE
INSTITUTIONAL RETAIL GOV'T/CREDIT U.S. GOV'T
CLASS CLASS A* INDEX FUNDS
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN 5.22% 5.06% 6.44% 6.29%
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN WITH LOAD N/A 0.32% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN 4.19% 6.61% 5.45% 4.60%
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN WITH LOAD N/A 4.98% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE 4.88% 6.29% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE WITH LOAD N/A 5.22% N/A N/A
--------------------------------------------------------------------------------
Past performance of the Portfolio is not predictive of future performance.
For each class, performance presented prior to March 22, 1998 reflects the
performance of the Marketvest Intermediate U.S. Government Bond Fund from its
inception date of March 31, 1996. Retail Class A shares were offered beginning
April 1, 1998. Performance for Retail Class A shares with load reflects the
deduction of the 4.50% sales charge.
* Performance shown prior to the actual inception date of the Retail Class A
shares represents that of the Institutional Class adjusted for the sales
charge and total operating expenses applicable to Retail Class A shares. The
Class A annual returns would have been substantially similar to those of the
Institutional Class because shares of each class are invested in the same
portfolio of securities. Annualized performance since actual inception for
Retail Class A shares is 6.83% without load and 4.93% with load.
The performance of the Lehman Intermediate Government/Credit Index does not
include operating expenses that are incurred by the Portfolio.
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
U.S. Government Mortgage-Backed Obligations -- 39%
U.S. Government Agency Obligations -- 11%
Repurchase Agreements -- 1%
U.S. Treasury Obligations -- 17%
Preferred Stock -- 2%
Corporate Obligations -- 24%
Asset-Backed Securities -- 6%
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 16.9%
U.S. TREASURY BONDS
7.500%, 11/15/16 $ 1,500 $ 1,728
6.250%, 05/15/30 3,000 3,195
U.S. TREASURY NOTES
6.750%, 05/15/05 3,000 3,110
5.500%, 01/31/03 5,000 4,954
5.500%, 03/31/03 10,000 9,902
5.375%, 02/15/01 2,000 1,993
--------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $25,275) $24,882
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 11.1%
FHLB
6.400%, 01/19/01 (C) 2,000 1,972
5.375%, 03/02/01 5,000 4,978
FHLMC (A)
0.000%, 12/01/28 1,000 111
FNMA (C)
6.485%, 01/18/01 2,000 1,972
FNMA, MTN
6.470%, 09/25/12 7,500 7,235
--------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $16,645) $16,268
--------------------------------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS -- 39.0%
FHLMC
6.000%, 03/01/13 11,638 11,228
FHLMC, REMIC
6.250%, 01/15/20 3,000 2,968
6.250%, 09/15/23 5,000 4,843
6.000%, 04/15/21 5,000 4,860
35
-----
<PAGE>
--------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS
--------------------------------------------------------------------------------
U.S.GOVERNMENT BOND PORTFOLIO CONTINUED
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
FNMA
7.000%, 09/01/27 $2,771 $ 2,730
7.000%, 03/01/29 2,493 2,444
6.500%, 08/01/28 13,462 12,955
6.500%, 03/01/29 8,268 7,947
6.500%, 05/01/29 2,731 2,625
SLMA, REMIC (B)
7.094%, 07/25/06 1,916 1,910
7.024%, 04/25/07 2,776 2,768
--------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS
(Cost $58,967) $57,278
--------------------------------------------------------------------------------
CORPORATE OBLIGATIONS -- 23.3%
ENTERTAINMENT -- 2.6%
CSC HOLDINGS, SER B
8.125%, 07/15/09 1,000 974
ROYAL CARIBBEAN CRUISES, YB
8.250%, 04/01/05 3,000 2,906
--------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $ 3,880
--------------------------------------------------------------------------------
FINANCIAL SERVICES -- 4.7%
AMVESCAP, YB
6.375%, 05/15/03 2,500 2,437
GOLDEN STATE ESCROW
7.000%, 08/01/03 2,000 1,915
PNC FUNDING
7.500%, 11/01/09 2,500 2,481
--------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $ 6,833
--------------------------------------------------------------------------------
ELECTRIC UTILITIES -- 1.3%
NRG ENERGY
7.500%, 06/01/09 2,000 1,925
--------------------------------------------------------------------------------
TOTAL ELECTRIC UTILITIES $ 1,925
--------------------------------------------------------------------------------
ENERGY -- 5.5%
HUSKY OIL, YB
7.550%, 11/15/16 2,000 1,850
NORSK HYDRO A/S, SER B, YB
9.125%, 07/15/14 4,000 4,509
TENNESSEE GAS PIPELINE
7.000%, 10/15/28 2,000 1,795
--------------------------------------------------------------------------------
TOTAL ENERGY $ 8,154
--------------------------------------------------------------------------------
RAILROADS -- 2.4%
UNION PACIFIC
7.600%, 05/01/05 2,000 2,020
7.375%, 09/15/09 1,500 1,472
--------------------------------------------------------------------------------
TOTAL RAILROADS $ 3,492
--------------------------------------------------------------------------------
PRINCIPAL AMOUNT MARKET
DESCRIPTION (000)/SHARES VALUE (000)
--------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS -- 1.9%
SPIEKER PROPERTIES
6.750%, 01/15/08 $3,000 $ 2,801
--------------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUSTS $ 2,801
--------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS -- 4.9%
ALLTEL
7.600%, 04/01/09 3,000 2,963
AT&T CANADA
7.650%, 09/15/06 1,500 1,468
QWEST COMMUNICATIONS
INTERNATIONAL, SER B
7.250%, 11/01/08 1,000 974
SPRINT CAPITAL
6.125%, 11/15/08 2,000 1,783
--------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS $ 7,188
--------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS
(Cost $36,061) $34,273
--------------------------------------------------------------------------------
ASSET-BACKED SECURITIES -- 5.9%
CONTIMORTGAGE HOME EQUITY
LOAN TRUST, SER 1998-1, CL A6
6.580%, 12/15/18 3,000 2,961
CONTIMORTGAGE HOME EQUITY
LOAN TRUST, SER 1998-2, CL A6
6.360%, 11/15/19 2,500 2,444
EQCC HOME EQUITY LOAN
TRUST, SER 1998-1, CL A4F
6.459%, 03/15/21 1,500 1,484
THE MONEY STORE HOME EQUITY
TRUST, SER 1996-C, CL A4
7.400%, 06/15/21 1,109 1,107
THE MONEY STORE HOME EQUITY
TRUST, SER 1997-D, CL AF3
6.345%, 11/15/21 719 715
--------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost $8,805) $ 8,711
--------------------------------------------------------------------------------
PREFERRED STOCK -- 2.3%
SPG PROPERTIES 80,000 3,418
--------------------------------------------------------------------------------
TOTAL PREFERRED STOCK
(Cost $4,032) $ 3,418
--------------------------------------------------------------------------------
36
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 1.0%
CREDIT SUISSE FIRST BOSTON
6.620%, dated 10/31/00,
matures 11/01/00, repurchase
price $1,417,411 (collateralized by
U.S. Government Obligations:
total market value $1,461,500) $1,417 $ 1,417
--------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $1,417) $ 1,417
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.5%
(Cost $151,202) $146,247
================================================================================
OTHER ASSETS AND LIABILITIES, NET-- 0.5% $ 806
================================================================================
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 15,304,912 outstanding
shares of beneficial interest 156,998
Portfolio Shares of Retail Class A
(unlimited authorization -- no par value)
based on 241,183 outstanding shares
of beneficial interest 2,406
Undistributed net investment income 34
Accumulated net realized loss on investments (7,430)
Net unrealized depreciation on investments (4,955)
================================================================================
TOTAL NET ASSETS-- 100.0% $147,053
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $9.46
================================================================================
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $9.47
================================================================================
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($9.47 / 95.50%) $9.92
================================================================================
(A) ZERO COUPON SECURITY.
(B) VARIABLE RATE SECURITY. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS
THE RATE IN EFFECT ON OCTOBER 31, 2000.
(C) DISCOUNT NOTES. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS THE
DISCOUNT YIELD AT THE TIME OF PURCHASE.
CL--CLASS
FHLB--FEDERAL HOME LOAN BANK
FHLMC--FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
MTN--MEDIUM TERM NOTE
SER--SERIES
SLMA--STUDENT LOAN MARKETING ASSOCIATION
REMIC--REAL ESTATE MORTGAGEINVESTMENT CONDUIT
YB--YANKEE BOND
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
37
-----
<PAGE>
--------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS MANAGEMENT DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
INCOME PORTFOLIO
[PHOTO OMITTED]
STEVEN M. GRADOW
---------------------------
PORTFOLIO MANAGER
---------------------------
STEVEN M. GRADOW IS THE MANAGING DIRECTOR OF FIXED INCOME INVESTMENTS FOR ALLIED
INVESTMENT ADVISORS, INC. HE IS THE PORTFOLIO MANAGER OF THE INCOME PORTFOLIO
AND CO-PORTFOLIO MANAGER OF THE U.S. GOVERNMENT BOND PORTFOLIO AND THE
SHORT-TERM BOND PORTFOLIO. HE HAS MORE THAN 17 YEARS OF INVESTMENT MANAGEMENT
EXPERIENCE.
REVIEW AND OUTLOOK
An economic slowdown continues to be an underlying theme as we expect the
Federal Reserve to remain on hold for the remainder of the year. Inflation
continues to exhibit minimal evidence of acceleration as U.S. productivity gains
have mitigated the shortage of existing labor pool partici-pants. Without the
gains in productivity, we would have expected substantially larger increases in
unit labor and production costs flowing into much higher core inflation. The
bond markets have been well behaved given the increases in volatility
experienced within the equity markets. The outlook for corporate profits,
particularly within the "new economy" sectors have not left the bond market
unscathed. We see substantial increases in credit problems going into a slower
growth environment and favor the mortgage and asset-backed securities sectors
over the corporate sector.
For the six-month period we increased the Portfolio's weighting in higher
quality mortgage and Treasury securities and focused on the shorter end of the
yield curve within the medium-grade corporate market. We reduced the holdings of
high-yield bonds and took profits in long-maturity Treasury strips. We remained
slightly short of the market in terms of overall interest rate posture and
remained particularly defensive as to adding holdings in long corporate issues.
We expect to move to a neutral-to-positive duration stance as the winter months
will validate a continuing slowdown. We expect interest rates to be range-bound
with little likelihood of a substantial rally with a new administration coming
on board in January. Areas within the bond market to expect strong performance
remain the higher quality mortgage and asset-backed securities area together
with general avoidance of the high-yield market. On August 12, 2000, the assets
of the Govett Global Income Fund were transferred into the Income Portfolio.
PERFORMANCE AS OF
OCTOBER 31, 2000
--------------------------------------------------------------------------------
LEHMAN LIPPER CORP.
AGGREGATE A-RATED
INSTITUTIONAL RETAIL RETAIL BOND DEBT
CLASS CLASS A* CLASS B* INDEX FUNDS
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN 5.65% 5.51% 4.73% 7.30% 5.52%
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN WITH LOAD N/A 0.80% -0.23% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN 4.15% 4.01% 3.39% 5.65% 4.06%
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN WITH LOAD N/A 2.41% 2.50% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED 5 YEAR
TOTAL RETURN 5.22% 5.03% 4.31% 6.33% 5.14%
--------------------------------------------------------------------------------
ANNUALIZED 5 YEAR
TOTAL RETURN WITH LOAD N/A 4.07% 3.99% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE 5.60% 5.29% 4.61% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE WITH LOAD N/A 4.62% 4.61% N/A N/A
--------------------------------------------------------------------------------
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning July 16, 1993. Retail Class
A shares were offered beginning April 12, 1994. Performance for Retail Class A
shares with load reflects the deduction of the 4.50% sales charge. Retail
Class B shares were offered beginning September 14, 1998. Performance for
Retail Class B shares with load reflects the deduction of the applicable
contingent deferred sales charge (CDSC).
* Performance shown prior to the actual inception date of the Retail Class A and
Retail Class B shares represents that of the Institutional Class adjusted for
the sales charge and total annual operating expenses applicable to Retail
Class A shares. The Class A annual returns would have been substantially
similar to those of the Institutional Class because shares of each class are
invested in the same portfolio of securities. Annualized performance since
actual inception for Retail Class A shares is 6.01% without CDSC and 5.26%
with CDSC. Annualized performance since actual inception for Retail Class B
shares is 1.77% without CDSC and 0.48% with CDSC.
The performance of the Lehman Aggregate Bond Index does not include operating
expenses that are incurred by the Portfolio.
38
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
Asset-Backed Securities -- 4%
U.S. Treasury Obligations -- 21%
U.S. Government Agency Obligations -- 1%
U.S. Government Mortgage-Backed Obligations -- 29%
Non-Agency Mortgage-Backed Obligations -- 1%
Yankee Bonds-- 3%
Corporate Obligations -- 40%
Preferred Stock -- 1%
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 26.4%
U.S. TREASURY BONDS
10.750%, 08/15/05 $15,000 $ 17,998
6.000%, 02/15/26 5,000 5,011
U.S. TREASURY NOTES
7.875%, 11/15/04 15,000 16,058
6.750%, 05/15/05 15,750 16,328
6.500%, 02/15/10 18,000 18,842
6.000%, 08/15/09 7,000 7,073
5.875%, 11/15/04 11,500 11,504
5.750%, 08/15/10 8,500 8,492
--------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $100,040) $101,306
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 0.7%
FHLB (A)
0.000%, 07/27/18 6,100 1,538
FHLMC (A)
0.000%, 01/26/18 4,480 1,157
--------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $2,582) $ 2,695
--------------------------------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS -- 37.1%
FHLMC
14.750%, 03/01/10 17 20
9.000%, 01/01/02 6 6
8.500%, 11/01/01 10 10
8.500%, 09/01/26 614 628
8.000%, 01/01/08 45 46
FHLMC, GTD
9.000%, 09/15/08 15 15
FNMA
7.000%, 02/01/26 1,924 1,886
7.000%, 03/01/29 1,556 1,526
FNMA (B)
8.000%, 11/01/30 30,500 30,853
7.500%, 11/01/30 73,500 73,339
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
FNMA, REMIC
9.750%, 09/25/18 $ 239 $ 250
6.000%, 07/18/26 10,732 9,976
GNMA
7.500%, 05/15/22 450 451
7.500%, 10/15/23 2,170 2,179
7.500%, 12/15/23 976 979
7.500%, 05/15/24 1,879 1,886
7.500%, 10/15/24 1,584 1,590
7.000%, 02/15/24 2,735 2,698
7.000%, 05/15/24 5,402 5,328
7.000%, 09/20/25 1,053 1,033
GNMA, REMIC
7.750%, 06/16/20 1,000 1,011
SLMA, REMIC (C)
7.094%, 07/25/06 3,193 3,184
7.024%, 04/25/07 3,717 3,706
--------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS
(Cost $142,625) $142,600
--------------------------------------------------------------------------------
CORPORATE OBLIGATIONS -- 50.5%
AUTOMOTIVE -- 0.7%
FORD MOTOR
7.450%, 07/16/31 3,000 2,764
--------------------------------------------------------------------------------
TOTAL AUTOMOTIVE $2,764
--------------------------------------------------------------------------------
BANKS -- 16.6%
AMERICAN EXPRESS CENTURION (C)
6.670%, 07/13/01 10,000 9,999
BANK OF AMERICA (C)
6.780%, 09/06/01 5,000 5,000
6.670%, 03/22/01 5,000 5,000
6.650%, 04/27/01 4,000 4,000
BANK OF NEW YORK (D)
7.780%, 12/01/26 1,500 1,361
BANK ONE (C)
6.780%, 09/27/01 5,000 5,001
BANKAMERICA (D)
8.070%, 12/31/26 2,500 2,366
CIT GROUP, MTN (C)
6.640%, 05/09/01 5,000 5,000
CRESTAR CAPITAL TRUST I
8.160%, 12/15/26 3,500 3,224
FIRST UNION NATIONAL BANK (C)
6.670%, 05/16/01 10,000 10,000
MBNA, MTN (C)
7.241%, 02/09/01 4,400 4,403
MBNA, MTN, SER B (C)
6.980%, 09/13/01 3,650 3,651
ROYAL BANK OF CANADA,
SER CD (C)
6.620%, 03/22/01 5,000 4,986
--------------------------------------------------------------------------------
TOTAL BANKS $63,991
--------------------------------------------------------------------------------
39
-----
<PAGE>
--------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS
--------------------------------------------------------------------------------
INCOME PORTFOLIO CONTINUED
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
COMPUTERS & SERVICES -- 1.4%
SEAGATE TECHNOLOGY
7.370%, 03/01/07 $2,035 $ 1,999
7.125%, 03/01/04 3,500 3,500
--------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES $ 5,499
--------------------------------------------------------------------------------
ENTERTAINMENT -- 1.8%
COMCAST CABLEVISION
8.875%, 05/01/17 2,000 2,175
COMCAST CABLEVISION, MTN
8.375%, 05/01/07 2,725 2,834
TIME WARNER
7.250%, 10/15/17 2,000 1,880
--------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $ 6,889
--------------------------------------------------------------------------------
FINANCIAL SERVICES -- 15.5%
ABBEY NATIONAL CAPITAL
TRUST I
8.963%, 12/29/49 2,000 1,992
CIT HOLDINGS, SER B
6.875%, 02/16/05 3,500 3,310
CSC HOLDINGS
7.875%, 02/15/18 2,500 2,262
CSC HOLDINGS, SER B
8.125%, 07/15/09 1,000 974
FORD MOTOR CREDIT (C)
6.911%, 08/01/02 5,000 4,989
GENERAL MOTORS ACCEPTANCE,
MTN (C)
7.110%, 07/11/01 7,000 7,017
GOLDEN STATE ESCROW
7.125%, 08/01/05 2,000 1,859
7.000%, 08/01/03 4,500 4,309
GOLDMAN SACHS GROUP,
MTN, SER 1 (C)
6.880%, 09/30/02 8,000 7,997
HOUSEHOLD FINANCE,
MTN, SER 1 (C)
6.860%, 10/25/01 5,000 5,005
LEHMAN BROTHERS HOLDINGS
7.875%, 08/15/10 4,000 3,957
LEHMAN BROTHERS HOLDINGS,
MTN, SER F (C)
7.598%, 07/15/02 1,400 1,400
MELLON CAPITAL I, SER A
7.720%, 12/01/26 2,500 2,266
SALOMON SMITH BARNEY
HOLDINGS, MTN, SER H (C)
7.020%, 03/08/02 10,000 10,010
SUSA PARTNERSHIP
7.125%, 11/01/03 2,250 2,211
--------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $59,558
--------------------------------------------------------------------------------
INDUSTRIAL -- 4.5%
ANADARKO PETROLEUM
7.200%, 03/15/29 3,800 3,558
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
HUSKY OIL
7.550%, 11/15/16 $2,100 $ 1,943
J SEAGRAM & SONS
7.500%, 12/15/18 4,000 4,325
NRG ENERGY
7.500%, 06/01/09 4,000 3,850
TENNESSEE GAS PIPELINE
7.000%, 10/15/28 4,000 3,590
--------------------------------------------------------------------------------
TOTAL INDUSTRIAL $ 17,266
--------------------------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS -- 0.3%
NORSK HYDRO A/S, SER B
9.125%, 07/15/14 1,000 1,127
--------------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS $ 1,127
--------------------------------------------------------------------------------
RAILROADS -- 1.3%
UNION PACIFIC
7.600%, 05/01/05 3,000 3,030
7.375%, 09/15/09 2,000 1,963
--------------------------------------------------------------------------------
TOTAL RAILROADS $ 4,993
--------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS -- 0.7%
SPIEKER PROPERTIES
6.750%, 01/15/08 3,000 2,801
--------------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUSTS $ 2,801
--------------------------------------------------------------------------------
RETAIL -- 0.9%
DILLARD'S
7.000%, 12/01/28 3,000 1,691
5.790%, 11/15/01 2,000 1,818
--------------------------------------------------------------------------------
TOTAL RETAIL $ 3,509
--------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS -- 6.8%
ALLTEL
7.600%, 04/01/09 5,000 4,938
QWEST COMMUNICATIONS
INTERNATIONAL, SER B
7.250%, 11/01/08 5,000 4,869
SPRINT CAPITAL
6.900%, 05/01/19 5,000 4,256
VERIZON COMMUNICATIONS (C)
6.820%, 01/05/01 5,000 4,999
WORLDCOM (C)
6.920%, 11/26/01 7,000 7,009
--------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS $ 26,071
--------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS
(Cost $199,382) $194,468
--------------------------------------------------------------------------------
YANKEE BONDS -- 3.3%
AMVESCAP
6.375%, 05/15/03 2,000 1,950
AT&T CANADA
7.650%, 09/15/06 2,000 1,958
CANADIAN NATIONAL RAILWAY
6.450%, 07/15/06 2,000 1,893
DEUTSCHE AUSGLEICHSBANK
7.000%, 06/23/05 250 252
40
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PRINCIPAL AMOUNT MARKET
DESCRIPTION (000)/SHARES VALUE (000)
--------------------------------------------------------------------------------
GULF CANADA RESOURCES
8.250%, 03/15/17 $2,000 $ 2,015
PROVINCE OF ONTARIO
7.375%, 01/27/03 250 254
ROYAL CARIBBEAN CRUISES
7.250%, 08/15/06 5,000 4,556
--------------------------------------------------------------------------------
TOTAL YANKEE BONDS
(Cost $13,456) $12,878
--------------------------------------------------------------------------------
ASSET-BACKED SECURITIES -- 4.7%
CHASE FUNDING MORTGAGE
LOAN, SER 2000-1, CL IA3
7.674%, 10/25/19 4,500 4,541
CITIBANK CREDIT CARD MASTER
TRUST I, SER 1998-9, CL A
5.300%, 01/09/06 2,000 1,917
CONTIMORTGAGE HOME EQUITY
TRUST, SER 1998-1, CL A6
6.580%, 12/15/18 3,000 2,961
IMC HOME EQUITY LOAN
TRUST, SER 1997-3, CL A4
6.840%, 10/20/13 45 45
L.A. ARENA FUNDING,
SER 1, CL A
7.656%, 12/15/26 2,000 1,899
PREMIER AUTO TRUST,
SER 1998-3, CL A3
5.880%, 12/08/01 1,109 1,108
THE MONEY STORE HOME EQUITY
TRUST, SER 1996-C, CL A4
7.400%, 06/15/21 832 830
THE MONEY STORE HOME EQUITY
TRUST, SER 1997-D, CL AF3
6.345%, 11/15/21 719 715
THE MONEY STORE HOME EQUITY
TRUST, SER 1997-D, CL AF5
6.555%, 12/15/38 4,350 4,217
--------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost $18,555) $18,233
--------------------------------------------------------------------------------
NON-AGENCY MORTGAGE-BACKED OBLIGATION -- 1.3%
COUNTRYWIDE FUNDING,
SER 1994-4, CL A12
6.950%, 04/25/24 5,452 5,026
--------------------------------------------------------------------------------
TOTAL NON-AGENCY MORTGAGE-BACKED OBLIGATION
(Cost $5,295) $ 5,026
--------------------------------------------------------------------------------
PREFERRED STOCK -- 1.0%
SPG PROPERTIES 90,000 3,845
--------------------------------------------------------------------------------
TOTAL PREFERRED STOCK
(Cost $4,573) $ 3,845
--------------------------------------------------------------------------------
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 0.1%
CREDIT SUISSE FIRST BOSTON
6.620%, dated 10/31/00,
matures 11/01/00, repurchase
price $238,108 (collateralized
by U.S. Government Obligations:
total market value $247,023) $238 $ 238
--------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $238) $238
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 125.1%
(Cost $486,746) $481,289
================================================================================
OTHER ASSETS AND LIABILITIES, NET -- (25.1%)
Investment Securities Purchased (103,855)
Other Assets and Liabilities, Net 7,166
================================================================================
TOTAL OTHER ASSETS AND LIABILITIES, NET (96,689)
================================================================================
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 38,767,288 outstanding
shares of beneficial interest 388,235
Portfolio Shares of Retail Class A
(unlimited authorization -- no par value)
based on 851,568 outstanding shares
of beneficial interest 13,755
Portfolio Shares of Retail Class B
(unlimited authorization -- no par value)
based on 44,999 outstanding shares
of beneficial interest 455
Undistributed net investment income 44
Accumulated net realized loss on investments (12,432)
Net unrealized depreciation on investments (5,457)
================================================================================
TOTAL NET ASSETS -- 100.0% $384,600
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $9.69
================================================================================
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $9.81
================================================================================
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($9.81 / 95.50%) $10.27
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS B $9.69
================================================================================
(A) ZERO COUPON SECURITY.
(B) WHEN ISSUED SECURITY (TOTAL COST $103,854,531)
(C) VARIABLE RATE SECURITY. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS
THE RATE IN EFFECT ON OCTOBER 31, 2000.
(D) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION NORMALLY QUALIFIED TO INSTITUTIONS.
CL--CLASS
FHLB--FEDERAL HOME LOAN BANK
FHLMC--FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
GNMA--GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
GTD--GUARANTEED MORTGAGE CERTIFICATE
MTN--MEDIUM TERM NOTE
REMIC--REAL ESTATE MORTGAGE INVESTMENT CONDUIT
SER--SERIES
SLMA--STUDENT LOAN MARKETING ASSOCIATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
41
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS
MANAGEMENT DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
BALANCED PORTFOLIO
[PHOTO OMITTED]
CHARLES E. KNUDSEN III, CFA
------------------------------
PORTFOLIO MANAGER
------------------------------
CHARLES E. KNUDSEN III, CFA, IS THE MANAGING DIRECTOR OF ALLIED INVESTMENT
ADVISORS, INC. HE IS THE PORTFOLIO MANAGER OF THE BALANCED PORTFOLIO. HE HAS
MORE THAN 12 YEARS OF INVESTMENT MANAGEMENT EXPERIENCE.
REVIEW AND OUTLOOK
Be careful what you wish for because you just might get it! Since the
first quarter, stock investors have wanted to see signs that economic growth was
slowing so that they could feel more confident the Federal Reserve would stop
raising interest rates, an annoying policy it began late last year. Sure enough,
in June signs began to surface that the economy was easing to a more manageable
3.5% growth rate (versus 5.5% in the first quarter), and the equity markets
celebrated. That is until September, when companies began to announce that the
tougher economic environment in the U.S. and Europe, combined with a much
stronger dollar, were taking a bite out of their bottom lines. Stocks tumbled in
response. The S&P 500 Composite Index ended the period down about 1%. The
NASDAQ, with its heavy weighting in technology stocks, was hit even harder and
was down 12.6% for the six-month period. On the other hand, the bond market
basked in the glow of the sluggish economic data. Interest rates fell slightly,
which helped push the Lehman Aggregate Bond Index up 5.8%, handily beating
stocks.
The ARK Balanced Portfolio weathered the storm relatively well. Holdings
that did well were in diverse industries, ranging from technology (EMC, Jabil
Circuit) to finance (Freddie Mac, AIG) to consumer (Pepsico and Ralston Purina).
Signs that telecommunication equipment spending and semiconductor sales were
easing hurt stocks like Lucent, Motorola and Texas Instruments. In fact, we cut
our technology sector allocation and are now about in line with the S&P 500's
weighting for the first time in several quarters. We moved funds into other
sectors like capital equipment (Honeywell), media (Time Warner), and retail
(Best Buy and Lowe's). We also reduced slightly our equity allocation and are
now about 60% in stocks, 31% in bonds and 9% in cash.
While there is still some uncertainty, we continue to believe that the
overall environment of low inflation and moderate economic growth will still
provide a positive backdrop for financial assets. Regardless of what lies ahead,
we will continue to manage the ARK Balanced Portfolio as we always have, by
seeking attractive, high quality investment opportunities in both the bond and
the stock markets that can provide our investors with attractive, long-term
returns.
42
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PERFORMANCE AS OF
OCTOBER 31, 2000
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
60/40 BLEND
OF THE S&P 500 LEHMAN
INST'L RETAIL RETAIL S&P500 LIPPER COMPOSITE AGGREGATE
CLASS CLASS A* CLASS B* & LEHMAN** BALANCED INDEX BOND
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ONE YEAR
TOTAL RETURN 14.88% 14.67% 13.86% 6.85% 7.88% 6.09% 7.30%
-------------------------------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN WITH LOAD N/A 9.23% 8.86% N/A N/A N/A N/A
-------------------------------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN 17.79% 17.58% 16.32% 13.07% 9.48% 17.60% 5.65%
-------------------------------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN WITH LOAD N/A 15.67% 15.58% N/A N/A N/A N/A
-------------------------------------------------------------------------------------------------------
ANNUALIZED 5 YEAR
TOTAL RETURN 17.07% 16.82% 15.68% 15.61% 12.76% 21.67% 6.33%
-------------------------------------------------------------------------------------------------------
ANNUALIZED 5 YEAR
TOTAL RETURN WITH LOAD N/A 15.68% 15.46% N/A N/A N/A N/A
-------------------------------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE 14.17% 13.76% 12.84% N/A N/A N/A N/A
-------------------------------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE WITH LOAD N/A 13.00% 12.84% N/A N/A N/A N/A
-------------------------------------------------------------------------------------------------------
</TABLE>
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning July 16, 1993. Retail Class
A shares were offered beginning March 9, 1994. Performance for the Retail
Class A shares with load reflects the deduction of the 4.75% sales charge.
Retail Class B shares were offered beginning September 14, 1998. Performance
for Retail Class B shares with load reflects the deduction of the applicable
contingent deferred sales charge (CDSC).
* Performance shown prior to the actual inception date of the Retail Class A and
Retail Class B shares represents that of the Institutional Class adjusted for
the sales charge and total operating expenses applicable to Retail Class A
shares and Retail Class B shares. The Retail Class A &B annual returns would
have been substantially similar to those of the Institutional Class because
shares of each class are invested in the same portfolio of securities.
Annualized performance since actual inception for Retail Class A shares is
14.05% without CDSC and 13.21% with CDSC. Annualized performance since actual
inception for Retail Class B shares is 19.95% without CDSC and 18.80% with
CDSC.
The performance of the S&P 500 Composite Index and Lehman Aggregate Bond Index
does not include operating expenses that are incurred by the Portfolio.
**Benchmark is comprised of two unmanaged index, weighted 60% S&P 500 Composite
Index and 40% Lehman Brothers Aggregate Bond Index. The Portfolio uses a
blended index as a comparison index because it is better suited to the
Portfolio's objective.
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
U.S. Government Agency Obligations -- 1%
Asset-Backed Securities -- 1%
Repurchase Agreements -- 9%
U.S. Treasury Obligations -- 8%
U.S. Government Mortgage-Backed Obligations -- 10%
Corporate Obligations --9%
Non-Agency Mortgage-Backed Obligations -- 1%
Common Stock -- 61%
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- 60.7%
AUTOMOTIVE -- 0.5%
GENTEX* 75,000 $ 1,856
--------------------------------------------------------------------------------
TOTAL AUTOMOTIVE $ 1,856
--------------------------------------------------------------------------------
BANKS -- 3.4%
CHASE MANHATTAN 101,550 4,621
FIRSTAR 150,000 2,953
WELLS FARGO 129,375 5,992
--------------------------------------------------------------------------------
TOTAL BANKS $13,566
--------------------------------------------------------------------------------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 1.2%
CLEAR CHANNEL
COMMUNICATIONS* 40,000 2,402
INTERPUBLIC GROUP 60,000 2,576
--------------------------------------------------------------------------------
TOTAL BROADCASTING, NEWSPAPERS & ADVERTISING $ 4,978
--------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 4.9%
CIENA* 20,000 2,102
CISCO SYSTEMS* 55,000 2,963
COMVERSE TECHNOLOGY* 42,000 4,693
CORNING 20,000 1,530
LUCENT TECHNOLOGIES 90,000 2,098
MOTOROLA 133,500 3,329
NORTEL NETWORKS 65,800 2,994
--------------------------------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT $19,709
--------------------------------------------------------------------------------
COMPUTER SOFTWARE -- 2.1%
MICROSOFT* 40,400 2,783
ORACLE* 170,000 5,610
--------------------------------------------------------------------------------
TOTAL COMPUTER SOFTWARE $ 8,393
--------------------------------------------------------------------------------
COMPUTERS & SERVICES -- 6.2%
AMERICAN POWER CONVERSION* 40,000 517
COMPAQ COMPUTER 80,000 2,433
EMC* 80,000 7,125
HEWLETT-PACKARD 81,000 3,761
JABIL CIRCUIT* 124,100 7,081
SCI SYSTEMS* 90,000 3,870
--------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES $24,787
--------------------------------------------------------------------------------
43
-----
<PAGE>
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
DIVERSIFIED OPERATIONS -- 4.0%
GENERAL ELECTRIC 155,400 $ 8,518
HONEYWELL INTERNATIONAL 60,000 3,229
TYCO INTERNATIONAL 80,000 4,535
--------------------------------------------------------------------------------
TOTAL DIVERSIFIED OPERATIONS $16,282
--------------------------------------------------------------------------------
DRUGS -- 6.6%
ABBOTT LABORATORIES 50,000 2,641
AMGEN* 92,000 5,330
BRISTOL-MYERS SQUIBB 130,000 7,922
PFIZER 165,000 7,126
SCHERING-PLOUGH 71,800 3,711
--------------------------------------------------------------------------------
TOTAL DRUGS $26,730
--------------------------------------------------------------------------------
ENTERTAINMENT -- 2.9%
AT&T - LIBERTY MEDIA* 75,668 1,362
ROYAL CARIBBEAN CRUISES 100,000 2,250
TIME WARNER 35,000 2,657
VIACOM* 27,125 1,543
WALT DISNEY 109,000 3,904
--------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $11,716
--------------------------------------------------------------------------------
FINANCIAL SERVICES -- 4.6%
CITIGROUP 70,000 3,684
FREDDIE MAC 35,000 2,100
MERRILL LYNCH 50,000 3,500
MORGAN STANLEY DEAN WITTER 90,000 7,228
WADDELL & REED FINANCIAL,
CL A 60,000 1,912
--------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $18,424
--------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 3.6%
PEPSICO 142,100 6,883
RALSTON PURINA GROUP 200,000 4,850
SEAGRAM 45,000 2,571
--------------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO $14,304
--------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 1.5%
COLGATE-PALMOLIVE 100,400 5,899
--------------------------------------------------------------------------------
TOTAL HOUSEHOLD PRODUCTS $ 5,899
--------------------------------------------------------------------------------
INSURANCE -- 2.5%
AMERICAN INTERNATIONAL GROUP 103,827 10,175
--------------------------------------------------------------------------------
TOTAL INSURANCE $10,175
--------------------------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES-- 1.7%
GUIDANT* 102,400 5,421
JOHNSON & JOHNSON 15,000 1,382
--------------------------------------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES $ 6,803
--------------------------------------------------------------------------------
MISCELLANEOUS BUSINESS SERVICES-- 1.7%
CONVERGYS* 50,000 2,178
FIRST DATA 96,700 4,847
--------------------------------------------------------------------------------
TOTAL MISCELLANEOUS BUSINESS SERVICES $ 7,025
--------------------------------------------------------------------------------
PAPER & PAPER PRODUCTS -- 0.7%
KIMBERLY-CLARK 45,000 2,970
--------------------------------------------------------------------------------
TOTAL PAPER & PAPER PRODUCTS $ 2,970
--------------------------------------------------------------------------------
SHARES/PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS -- 1.8%
SMITH INTERNATIONAL* 80,000 $ 5,640
HALLIBURTON 40,000 1,482
--------------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS $ 7,122
--------------------------------------------------------------------------------
RETAIL -- 4.4%
BEST BUY* 40,000 2,007
CVS 60,000 3,176
HOME DEPOT 82,600 3,552
LOWE'S 70,000 3,198
RADIOSHACK 15,000 894
TARGET 141,400 3,906
WAL-MART STORES 22,000 998
--------------------------------------------------------------------------------
TOTAL RETAIL $ 17,731
--------------------------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS-- 3.7%
ALTERA* 141,800 5,805
INTEL 112,400 5,058
TEXAS INSTRUMENTS 85,200 4,180
--------------------------------------------------------------------------------
TOTAL SEMI-CONDUCTORS/INSTRUMENTS $ 15,043
--------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS -- 2.7%
ADC TELECOMMUNICATIONS* 50,000 1,069
ALLTEL 62,000 3,995
VOICESTREAM WIRELESS* 27,000 3,550
WILLIAMS COMMUNICATIONS
GROUP* 120,000 2,197
--------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS $ 10,811
--------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $211,282) $244,324
--------------------------------------------------------------------------------
PREFERRED STOCKS -- 0.2%
SPG PROPERTIES 20,000 854
--------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost $939) $ 854
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 8.2%
U.S. TREASURY BONDS
8.000%, 11/15/21 $ 500 618
6.000%, 02/15/26 4,000 4,009
U.S. TREASURY NOTES
7.750%, 02/15/01 4,000 4,015
7.500%, 11/15/01 2,400 2,428
7.500%, 02/15/05 3,500 3,714
7.000%, 07/15/06 2,500 2,635
6.625%, 05/15/07 3,175 3,305
6.500%, 02/15/10 5,000 5,234
6.250%, 02/28/02 2,000 2,002
5.750%, 08/15/10 1,000 999
5.500%, 03/31/03 4,000 3,961
--------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $32,794) $ 32,920
--------------------------------------------------------------------------------
44
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 1.3%
FHLMC
5.750%, 06/15/01 $3,500 $ 3,481
FNMA
6.000%, 05/15/08 1,750 1,684
--------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $5,259) $ 5,165
--------------------------------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS -- 9.7%
FHLMC
11.000%, 01/01/16 58 64
9.500%, 07/01/02 1 1
9.000%, 11/01/01 26 27
9.000%, 08/01/01 7 8
9.000%, 01/01/02 7 7
8.500%, 11/01/01 20 21
8.500%, 09/01/26 68 70
7.000%, 08/01/29 1,709 1,676
6.500%, 04/01/08 583 571
FNMA
8.000%, 12/01/08 205 206
7.500%, 03/01/20 2,928 2,924
7.500%, 01/01/30 5,966 5,990
7.500%, 04/01/30 7,923 7,911
7.000%, 02/01/07 170 169
7.000%, 12/01/25 600 588
7.000%, 02/01/26 1,625 1,593
7.000%, 07/01/29 1,841 1,806
7.000%, 11/01/29 1,124 1,102
7.000%, 08/01/30 5,737 5,624
FNMA, REMIC
9.750%, 09/25/18 80 83
GNMA
7.500%, 10/15/23 1,953 1,961
7.500%, 12/15/23 649 652
7.000%, 02/15/24 1,561 1,540
7.000%, 05/15/24 3,241 3,197
7.000%, 09/20/25 790 775
GNMA, REMIC
7.750%, 06/16/20 300 303
--------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS
(Cost $38,488) $38,869
--------------------------------------------------------------------------------
CORPORATE OBLIGATIONS -- 9.1%
BANKS -- 0.9%
BANK OF NEW YORK (A)
7.780%, 12/01/26 500 454
CIT GROUP
7.375%, 03/15/03 850 852
CITICORP CAPITAL I
7.933%, 02/15/27 250 233
CRESTAR CAPITAL TRUST I
8.160%, 12/15/26 800 737
PNC FUNDING
7.500%, 11/01/09 1,500 1,489
--------------------------------------------------------------------------------
TOTAL BANKS $ 3,765
--------------------------------------------------------------------------------
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
COMPUTERS & SERVICES -- 0.2%
SEAGATE TECHNOLOGY
7.125%, 03/01/04 $1,000 $1,000
--------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES $1,000
--------------------------------------------------------------------------------
ENTERTAINMENT -- 1.2%
COMCAST CABLEVISION
8.875%, 05/01/17 500 544
COMCAST CABLEVISION, MTN
8.375%, 05/01/07 1,000 1,040
ROYAL CARIBBEAN CRUISES
7.250%, 08/15/06 1,400 1,276
TIME WARNER
9.125%, 01/15/13 1,250 1,397
VIACOM
6.750%, 01/15/03 500 496
--------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $4,753
--------------------------------------------------------------------------------
FINANCIAL SERVICES -- 2.6%
ASSOCIATES N.A.
5.500%, 02/15/04 500 478
AT&T CAPITAL, SER F, MTN
7.500%, 11/15/00 1,000 1,000
BEAR STEARNS
7.625%, 02/01/05 1,000 1,003
CIT HOLDINGS, SER B
6.875%, 02/16/05 1,500 1,419
CSC HOLDINGS
7.875%, 02/15/18 750 679
CSC HOLDINGS, SER B
8.125%, 07/15/09 1,000 974
GENERAL ELECTRIC CAPITAL,
SER A, MTN
7.375%, 01/19/10 875 900
GOLDEN STATE ESCROW
7.000%, 08/01/03 1,000 958
HOUSEHOLD FINANCE
7.250%, 05/15/06 1,000 991
LEHMAN BROTHERS HOLDINGS
7.875%, 08/15/10 1,000 989
MELLON CAPITAL I, SER A
7.720%, 12/01/26 600 544
MELLON CAPITAL II, SER B
7.995%, 01/15/27 500 466
--------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $10,401
--------------------------------------------------------------------------------
INDUSTRIAL -- 2.0%
APACHE
7.625%, 07/01/19 1,500 1,478
CANADIAN NATIONAL RAILWAY
6.900%, 07/15/28 500 433
HUSKY OIL, YB
7.550%, 11/15/16 1,225 1,133
HYDRO-QUEBEC, SER IO
8.050%, 07/07/24 500 544
HYDRO-QUEBEC, SER IU
7.500%, 04/01/16 890 903
45
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS
--------------------------------------------------------------------------------
BALANCED PORTFOLIO CONTINUED
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
J SEAGRAM & SONS
7.500%, 12/15/18 $1,000 $ 1,081
NORSK HYDRO A/S, SER B
9.125%, 07/15/14 1,000 1,127
TENNESSEE GAS PIPELINE
7.000%, 10/15/28 1,500 1,346
--------------------------------------------------------------------------------
TOTAL INDUSTRIAL $ 8,045
--------------------------------------------------------------------------------
RAILROADS -- 0.4%
UNION PACIFIC
7.375%, 09/15/09 1,500 1,472
--------------------------------------------------------------------------------
TOTAL RAILROADS $ 1,472
--------------------------------------------------------------------------------
RETAIL -- 0.3%
DILLARD'S
7.850%, 10/01/12 540 364
7.000%, 12/01/28 1,200 677
--------------------------------------------------------------------------------
TOTAL RETAIL $ 1,041
--------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS -- 1.5%
ALLTEL
7.600%, 04/01/09 1,250 1,234
AT&T CANADA
7.625%, 03/15/05 1,500 1,476
QWEST COMMUNICATIONS
INTERNATIONAL, SER B
7.250%, 11/01/08 1,000 974
SPRINT CAPITAL
6.125%, 11/15/08 2,150 1,916
WORLDCOM
7.550%, 04/01/04 500 504
--------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS $ 6,104
--------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS
(Cost $37,617) $36,581
--------------------------------------------------------------------------------
ASSET-BACKED SECURITIES -- 1.2%
CHASE FUNDING MORTGAGE LOAN,
SER 2000-1, CL IA3
7.674%, 10/25/19 1,500 1,514
CONTIMORTGAGE HOME EQUITY
LOAN TRUST, SER 1998-2, CL A6
6.360%, 11/15/19 600 587
CONTIMORTGAGE HOME EQUITY LOAN
TRUST, SER 1998-1, CL A4
6.280%, 01/15/13 450 447
PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
IMC HOME EQUITY LOAN TRUST,
SER 1997-3, CL A4
6.840%, 10/20/13 $ 13 $ 13
PREMIER AUTO TRUST,
SER 1998-3, CL A4
5.960%, 10/08/02 475 471
PREMIER AUTO TRUST,
SER 1998-4, CL A3
5.690%, 06/08/02 323 322
THE MONEY STORE HOME EQUITY
TRUST, SER 1996-C, CL A4
7.400%, 06/15/21 236 235
THE MONEY STORE HOME EQUITY
TRUST, SER 1997-D, CL AF3
6.345%, 11/15/21 157 156
THE MONEY STORE HOME EQUITY
TRUST, SER 1997-D, CL AF5
6.555%, 12/15/38 400 388
THE MONEY STORE HOME EQUITY
TRUST, SER 1998-B, CL AF4
6.115%, 06/15/21 900 890
--------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost $5,024) $ 5,023
--------------------------------------------------------------------------------
NON-AGENCY MORTGAGE-BACKED OBLIGATION -- 0.4%
COUNTRYWIDE FUNDING,
SER 1994-4, CL A12
6.950%, 04/25/24 1,905 1,756
--------------------------------------------------------------------------------
TOTAL NON-AGENCY MORTGAGE-BACKED OBLIGATION
(Cost $1,814) $ 1,756
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 8.4%
CREDIT SUISSE FIRST BOSTON
6.620%, dated 10/31/00,
matures 11/01/00, repurchase
price $33,693,476 (collateralized
by U.S. Government Obligation:
total market value
$34,695,676) 33,687 33,687
--------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $33,687) $ 33,687
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.2%
(Cost $366,904) $399,179
================================================================================
OTHER ASSETS AND LIABILITIES, NET-- 0.8% $ 3,098
================================================================================
46
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
MARKET
DESCRIPTION VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 20,674,619 outstanding
shares of beneficial interest $ 295,553
Portfolio Shares of Retail Class A
(unlimited authorization -- no par value)
based on 2,769,912 outstanding shares
of beneficial interest 37,751
Portfolio Shares of Retail Class B
(unlimited authorization -- no par value)
based on 833, 428 outstanding shares
of beneficial interest 12,887
Undistributed net investment income 738
Accumulated net realized gain on investments 23,073
Net unrealized appreciation on investments 32,275
================================================================================
TOTAL NET ASSETS-- 100.0% $402,277
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $16.58
================================================================================
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $16.51
================================================================================
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($16.51 / 95.25%) $17.33
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- RETAIL CLASS B $16.49
================================================================================
*NON-INCOME PRODUCING SECURITY
(A) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION NORMALLY QUALIFIED TO INSTITUTIONAL INVESTORS.
CL--CLASS
FHLMC--FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
GNMA--GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
MTN--MEDIUM TERM NOTE
N.A.--NORTH AMERICA
REMIC--REAL ESTATE MORTGAGE INVESTMENT CONDUIT
SER--SERIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
47
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS MANAGEMENT DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
EQUITY INCOME PORTFOLIO
[PHOTO OMITTED]
CLYDE L. RANDALL, CFA
--------------------------
CO-PORTFOLIO MANAGER
--------------------------
CLYDE L. RANDALL, CFA, IS A PRINCIPAL OF ALLIED INVESTMENT ADVISORS, INC. HE IS
THE CO-PORTFOLIO MANAGER OF THE BLUE CHIP EQUITY PORTFOLIO AND THE EQUITY INCOME
PORTFOLIO. HE HAS MORE THAN 13 YEARS OF INVESTMENT MANAGEMENT EXPERIENCE.
[PHOTO OMITTED]
ALLEN J. ASHCROFT, JR.
---------------------------
CO-PORTFOLIO MANAGER
--------------------------
ALLEN J. ASHCROFT, JR. IS A PRINCIPAL OF ALLIED INVESTMENT ADVISORS, INC. HE IS
THE CO-PORTFOLIO MANAGER OF THE BLUE CHIP EQUITY PORTFOLIO AND THE EQUITY INCOME
PORTFOLIO. HE HAS MORE THAN 19 YEARS OF INVESTMENT MANAGEMENT EXPERIENCE.
REVIEW AND OUTLOOK
Recent stock market activity has been characterized by a resurgence of
interest in such unloved sectors as utilities and financials, as well as in
under-valued stocks in the consumer and healthcare sectors. In this environment,
equity income funds in general have outperformed after several years of trailing
the technology-driven broad market averages. The ARK Equity Income Portfolio
maintained its broadly diversified stance and has outperformed its benchmark
year-to-date.
The best performing stocks in the past six months came from several
groups: consumer staples -- Pepsico and Heinz; financials -- Hartford and
Waddell & Reed; and utilities -- Excelon (formerly Unicom) and Dynegy. The worst
performers came from the technology and telecommunications sectors. We have
added to our modest positions in "growth-oriented" stocks, and believe this has
benefited the Portfolio's longer-term performance, even though some stocks in
this classification have lagged over the past several months. New positions
include PNC Financial, Santa Fe International, Lucent, and Constellation Energy.
We seek dividend-paying stocks with good fundamental characteristics and
attractive valuations. We seek to be broadly represented in the market, rather
than focusing solely on the sectors with the highest dividend payout. While
equity income has been a difficult fund class during the technology-driven
market, we have been pleased with the results of our strategy in the Portfolio.
PERFORMANCE AS OF
OCTOBER 31, 2000
--------------------------------------------------------------------------------
S&P 500 LIPPER EQUITY
INSTITUTIONAL RETAIL COMPOSITE INCOME FUNDS
CLASS CLASS A INDEX CLASSIFICATION
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN 15.53% 15.41% 6.09% 6.94%
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN WITH LOAD N/A 9.96% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN 9.90% 9.75% 17.60% 8.98%
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN WITH LOAD N/A 7.98% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE 13.71% 12.05% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE WITH LOAD N/A 10.50% N/A N/A
--------------------------------------------------------------------------------
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning November 15, 1996. Retail
Class A shares were offered beginning May 9, 1997. Performance for Retail
Class A shares with load reflects the deduction of the 4.75% sales charge.
The performance of the S&P 500 Composite Index does not include operating
expenses that are incurred by the Portfolio.
48
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
Real Estate Investment Trusts -- 4%
Miscellaneous Business Services -- 3%
Durable Goods -- 10%
Chemicals & Drugs -- 15%
Consumer Non-Durable -- 8%
Repurchase Agreements -- 2%
Technology -- 13%
Energy -- 25%
Convertible Preferred Stock -- 4%
Financial -- 16%
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- 92.9%
AEROSPACE & DEFENSE -- 2.9%
UNITED TECHNOLOGIES 35,000 $ 2,443
--------------------------------------------------------------------------------
TOTAL AEROSPACE & DEFENSE $2,443
--------------------------------------------------------------------------------
AUTOMOTIVE -- 3.6%
FORD MOTOR 52,445 1,370
TRW 40,000 1,680
--------------------------------------------------------------------------------
TOTAL AUTOMOTIVE $3,050
--------------------------------------------------------------------------------
BANKS -- 10.6%
CHASE MANHATTAN 40,000 1,820
FIRSTAR 80,000 1,575
FLEETBOSTON FINANCIAL 50,000 1,900
PNC FINANCIAL SERVICES GROUP 22,000 1,471
WELLS FARGO 50,000 2,316
--------------------------------------------------------------------------------
TOTAL BANKS $9,082
--------------------------------------------------------------------------------
CHEMICALS -- 2.1%
EI DU PONT DE NEMOURS 40,000 1,815
--------------------------------------------------------------------------------
TOTAL CHEMICALS $1,815
--------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 5.0%
KONINKLIJKE PHILIPS
ELECTRONICS, ADR 38,800 1,550
LUCENT TECHNOLOGIES 25,000 583
MOTOROLA 39,000 973
NORTEL NETWORKS 25,000 1,137
--------------------------------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT $4,243
--------------------------------------------------------------------------------
COMPUTERS & SERVICES -- 1.6%
HEWLETT-PACKARD 30,000 1,393
--------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES $1,393
--------------------------------------------------------------------------------
DIVERSIFIED OPERATIONS -- 4.6%
GENERAL ELECTRIC 45,000 2,467
HALLIBURTON 40,000 1,482
--------------------------------------------------------------------------------
TOTAL DIVERSIFIED OPERATIONS $3,949
--------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
DRUGS -- 12.7%
ABBOTT LABORATORIES 60,000 $ 3,169
AMERICAN HOME PRODUCTS 30,000 1,905
BRISTOL-MYERS SQUIBB 45,000 2,742
PFIZER 70,000 3,023
--------------------------------------------------------------------------------
TOTAL DRUGS $10,839
--------------------------------------------------------------------------------
ELECTRICAL SERVICES -- 5.9%
CONSTELLATION ENERGY GROUP 25,000 1,042
DUKE ENERGY 16,000 1,383
EXELON 43,750 2,630
--------------------------------------------------------------------------------
TOTAL ELECTRICAL SERVICES $ 5,055
--------------------------------------------------------------------------------
ELECTRICAL SERVICES & UTILITIES -- 2.0%
MONTANA POWER 60,000 1,695
--------------------------------------------------------------------------------
TOTAL ELECTRICAL SERVICES & UTILITIES $ 1,695
--------------------------------------------------------------------------------
FINANCIAL SERVICES -- 5.6%
HARTFORD FINANCIAL SERVICES 30,000 2,233
WADDELL & REED FINANCIAL, CL A 80,000 2,550
--------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $ 4,783
--------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 6.0%
HJ HEINZ 35,000 1,468
PEPSICO 45,000 2,180
PHILIP MORRIS 40,000 1,465
--------------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO $ 5,113
--------------------------------------------------------------------------------
GAS/NATURAL GAS -- 4.9%
DYNEGY, CL A 50,000 2,316
WILLIAMS 45,000 1,882
--------------------------------------------------------------------------------
TOTAL GAS/NATURAL GAS $ 4,198
--------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 2.7%
COLGATE-PALMOLIVE 40,000 2,350
--------------------------------------------------------------------------------
TOTAL HOUSEHOLD PRODUCTS $ 2,350
--------------------------------------------------------------------------------
MACHINERY -- 1.5%
INGERSOLL RAND 35,000 1,321
--------------------------------------------------------------------------------
TOTAL MACHINERY $ 1,321
--------------------------------------------------------------------------------
MARINE TRANSPORTATION -- 1.9%
KNIGHTSBRIDGE TANKERS 75,000 1,617
--------------------------------------------------------------------------------
TOTAL MARINE TRANSPORTATION $ 1,617
--------------------------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS -- 7.5%
CHEVRON 25,000 2,053
EXXON MOBIL 33,003 2,943
SANTA FE INTERNATIONAL 40,000 1,460
--------------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS $ 6,456
--------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS-- 3.6%
BOSTON PROPERTIES 36,000 1,458
SPIEKER PROPERTIES 30,000 1,661
--------------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUSTS $ 3,119
--------------------------------------------------------------------------------
49
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS
--------------------------------------------------------------------------------
EQUITY INCOME PORTFOLIO CONCLUDED
SHARES/PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
RETAIL -- 1.9%
TARGET 60,000 $ 1,658
--------------------------------------------------------------------------------
TOTAL RETAIL $ 1,658
--------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS -- 6.3%
BELLSOUTH 45,000 2,174
QWEST COMMUNICATIONS
INTERNATIONAL* 25,000 1,216
TELEFONICA, ADR* 35,000 2,028
--------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS $ 5,418
--------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $53,667) $79,597
--------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS -- 4.8%
NISOURCE, 7.750% 22,500 1,084
CVS, TRACES, 6.000% 20,000 1,800
WBK STRYPES TRUST,
10.000% 40,000 1,238
--------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $3,793) $ 4,122
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 2.3%
CREDIT SUISSE FIRST BOSTON
6.620%, dated 10/31/00,
matures 11/01/00, repurchase
price $1,966,051 (collateralized
by U.S. Government Obligations:
total market value
$2,029,317) $1,966 1,966
--------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $1,966) $ 1,966
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.0%
(Cost $59,426) $85,685
================================================================================
OTHER ASSETS AND LIABILITIES, NET-- 0.0% $ --
================================================================================
MARKET
DESCRIPTION VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 6,524,193 outstanding
shares of beneficial interest $ 48,651
Portfolio Shares of Retail Class A
(unlimited authorization -- no par value)
based on 286,143 outstanding shares
of beneficial interest 3,507
Accumulated net realized gain on investments 7,268
Net unrealized appreciation on investments 26,259
================================================================================
TOTAL NET ASSETS-- 100.0% $85,685
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- INSTITUTIONAL CLASS $12.58
================================================================================
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $12.57
================================================================================
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($12.57 / 95.25%) $13.20
================================================================================
*NON-INCOME PRODUCING SECURITY.
ADR--AMERICAN DEPOSITORY RECEIPT
CL--CLASS
STRYPES-- STRUCTURED YIELD PRODUCT EXCHANGE SECURITIES
TRACES--TRUST AUTOMATIC COMMON EXCHANGE SECURITIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
50
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS MANAGEMENT DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
VALUE EQUITY PORTFOLIO
[PHOTO OMITTED]
J. ERIC LEO
-----------------------
PORTFOLIO MANAGER
-----------------------
J. ERIC LEO IS THE CHIEF INVESTMENT OFFICER AND MANAGING DIRECTOR OF EQUITY
INVESTMENTS FOR ALLIED INVESTMENT ADVISORS, INC. HE IS THE PORTFOLIO MANAGER OF
THE VALUE EQUITY PORTFOLIO. HE HAS MORE THAN 26 YEARS OF INVESTMENT MANAGEMENT
EXPERIENCE.
REVIEW AND OUTLOOK
From May 1, 2000 through October 31, 2000, the ARK Value Equity Portfolio
underperformed the S&P 500 Composite Index and the S&P 500/BARRA Value Index. On
a calendar year-to-date basis, higher market volatility has resulted in wide
performance dispersions, with the Portfolio outperforming the S&P 500 Composite
Index, but lagging behind the S&P 500/BARRA Value Index.
Performance was helped by holdings in the energy, healthcare and utility
sectors, but hurt by holdings in the telecommunications and technology sectors.
On the positive side, individual securities that significantly impacted
performance included Questar and El Paso Energy -- both gas pipeline and energy
producers -- and Schering Plough and Abbott Laboratories in the drug sector.
BellSouth and Southwestern Bell rebounded sharply late in the period. On the
negative side the weakness fell heavily on the technology sector, especially on
those that had performed well in the last fiscal year. Corning and Northern
Telecom, in which holdings were reduced during the period, hurt the most because
of their substantial weighting in the Portfolio. Amgen was also weak because of
an ongoing legal issue, which we expect to be favorably resolved in the next few
months. International Flavors & Fragrances and Newell Rubbermaid were defensive
stocks that disappointed Wall Street in sales and earnings growth and suffered
materially.
The ARK Value Equity Portfolio is focused on the purchase of high quality
companies at lower than market (S&P 500) valuation in terms of: price/earnings
ratio (P/E) and price/earnings to growth rate (PEG). In short, the majority of
companies we purchase are expected to develop consistent growth rates of at
least 12 to 15% as well as a solid top line growth over a two- to three-year
period.
We believe the current correction in technology stocks (the second this
calendar year) should help cool some of the excessive valuation issues. The
speculative excesses have for the most part been washed out of the marketplace
at a tremendous cost to investors. We expect to add technology stocks gradually
over the next few months after having reduced holdings in prior months. We also
expect to reduce some holdings in energy stocks in favor of consumer and/or
financial service companies. The economy will be an important factor in stock
price performance going forward, because it will influence decisions the Federal
Reserve makes with regard to interest rate policy, as well as corporate
earnings. With one foot in the old economy and one in the new, we are excited
about the long-term outlook for the Portfolio and for equities in general.
51
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS
--------------------------------------------------------------------------------
VALUE EQUITY PORTFOLIO CONTINUED
PERFORMANCE AS OF
OCTOBER 31, 2000
--------------------------------------------------------------------------------
LIPPER
S&P 500/ LARGE-CAP
BARRA S&P 500 VALUE FUNDS
INSTITUTIONAL RETAIL RETAIL VALUE COMPOSITE CLASSI-
CLASS CLASS A* CLASS B* INDEX INDEX FICATION
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN 12.81% 12.67% 11.86% 9.68% 6.09% 7.11%
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN
WITH LOAD N/A 7.35% 7.18% N/A N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN 12.78% 12.43% 11.05% 13.41% 17.60% 12.15%
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN
WITH LOAD N/A 10.63% 10.24% N/A N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL
RETURN INCEPTION
TO DATE 16.77% 16.71% 15.17% N/A N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL
RETURN INCEPTION TO
DATE WITH LOAD N/A 15.47% 14.91% N/A N/A N/A
--------------------------------------------------------------------------------
Past performance of the Portfolio is not predictive of future performance.
For each class, performance presented prior to March 29, 1998 reflects the
performance of the Marketvest Equity Fund from its inception date of March 31,
1996. Retail Class A shares were offered beginning April 1, 1998. Performance
for Retail Class A shares with load reflects the deduction of the 4.75% sales
charge. Retail Class B shares were offered beginning September 14, 1998.
Performance for Retail Class B shares with load reflects the deduction of the
applicable contingent deferred sales charge (CDSC).
* Performance shown prior to the actual inception date of the Retail Class A and
Retail Class B shares represents that of the Institutional Class adjusted for
the sales charge only. No adjustments have been made for Retail Class 12b-1
fees and expenses. With such adjustments, performance would be lower than
shown. Annualized performance since actual inception for Retail Class A shares
is 7.55% without load and 5.53% with load. Annualized performance since actual
inception for Retail Class B shares is 14.50% without CDSC and 13.28% with
CDSC.
The performance of the S&P 500 Composite Index does not include operating
expenses that are incurred by the Portfolio.
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
Miscellanous Business Services -- 21%
Consumer Non-Durable -- 6%
Chemicals & Drugs -- 12%
Financial -- 12%
Energy -- 13%
Durable Goods -- 8%
Technology -- 28%
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- 99.6%
AEROSPACE & DEFENSE -- 1.1%
RAYTHEON, CL B 125,000 $ 4,273
--------------------------------------------------------------------------------
TOTAL AEROSPACE & DEFENSE $ 4,273
--------------------------------------------------------------------------------
AUTOMOTIVE -- 3.1%
ROCKWELL INTERNATIONAL 125,000 4,914
TRW 175,000 7,350
--------------------------------------------------------------------------------
TOTAL AUTOMOTIVE $12,264
--------------------------------------------------------------------------------
BANKS -- 4.3%
CHASE MANHATTAN 150,000 6,825
WELLS FARGO 220,000 10,189
--------------------------------------------------------------------------------
TOTAL BANKS $17,014
--------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 5.5%
HARRIS 175,000 5,545
MOTOROLA 375,000 9,352
NORTEL NETWORKS 150,000 6,825
--------------------------------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT $21,722
--------------------------------------------------------------------------------
COMPUTERS & SERVICES -- 4.8%
COMPAQ COMPUTER 225,000 6,842
DELL COMPUTER* 135,000 3,982
HEWLETT-PACKARD 80,000 3,715
IBM 45,000 4,432
--------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES $18,971
--------------------------------------------------------------------------------
DIVERSIFIED OPERATIONS -- 10.9%
BAKER HUGHES 75,000 2,578
GENERAL ELECTRIC 135,000 7,400
HALLIBURTON 175,400 6,501
HONEYWELL INTERNATIONAL 200,000 10,763
TYCO INTERNATIONAL 278,224 15,772
--------------------------------------------------------------------------------
TOTAL DIVERSIFIED OPERATIONS $43,014
--------------------------------------------------------------------------------
DRUGS -- 11.7%
ABBOTT LABORATORIES 160,000 8,450
AMERICAN HOME PRODUCTS 225,000 14,287
AMGEN* 200,000 11,587
52
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
BRISTOL-MYERS SQUIBB 90,000 $ 5,484
SCHERING-PLOUGH 125,000 6,461
--------------------------------------------------------------------------------
TOTAL DRUGS $46,269
--------------------------------------------------------------------------------
FINANCIAL SERVICES -- 8.0%
CIT GROUP, CL A 200,000 3,487
CITIGROUP 300,000 15,787
WADDELL & REED
FINANCIAL, CL A 385,000 12,272
--------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $31,546
--------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 3.3%
HJ HEINZ 110,000 4,613
PEPSICO 175,000 8,477
--------------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO $13,090
--------------------------------------------------------------------------------
GAS/NATURAL GAS -- 4.2%
EL PASO ENERGY 105,212 6,595
QUESTAR 365,600 9,894
--------------------------------------------------------------------------------
TOTAL GAS/NATURAL GAS $16,489
--------------------------------------------------------------------------------
LEASING & RENTING -- 0.3%
COMDISCO 100,000 1,231
--------------------------------------------------------------------------------
TOTAL LEASING & RENTING $ 1,231
--------------------------------------------------------------------------------
MACHINERY -- 3.0%
INGERSOLL-RAND 200,000 7,550
PARKER HANNIFIN 100,000 4,138
--------------------------------------------------------------------------------
TOTAL MACHINERY $11,688
--------------------------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES-- 6.3%
BAXTER INTERNATIONAL 100,000 8,219
BECTON DICKINSON 225,000 7,538
EDWARDS LIFESCIENCES* 18,000 242
MEDTRONIC 160,000 8,690
--------------------------------------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES $24,689
--------------------------------------------------------------------------------
MISCELLANEOUS BUSINESS SERVICES-- 3.7%
CONVERGYS* 100,000 4,356
FIRST DATA 200,000 10,025
--------------------------------------------------------------------------------
TOTAL MISCELLANEOUS BUSINESS SERVICES $14,381
--------------------------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS -- 8.8%
BP AMOCO, ADR 214,114 10,906
CHEVRON 84,400 6,931
EXXON MOBIL 133,000 11,862
UNOCAL 150,000 5,119
--------------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS $34,818
--------------------------------------------------------------------------------
RETAIL -- 2.0%
LOWE'S 175,000 7,995
--------------------------------------------------------------------------------
TOTAL RETAIL $ 7,995
--------------------------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS-- 5.8%
APPLIED MATERIALS* 45,000 2,391
CADENCE DESIGN SYSTEMS* 200,000 5,138
INTEL 220,000 9,900
NATIONAL SEMICONDUCTOR* 210,000 5,460
--------------------------------------------------------------------------------
TOTAL SEMI-CONDUCTORS/INSTRUMENTS $22,889
--------------------------------------------------------------------------------
SHARES/PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
STEEL & STEEL WORKS -- 1.1%
ENGELHARD 200,000 $ 4,175
--------------------------------------------------------------------------------
TOTAL STEEL & STEEL WORKS $ 4,175
--------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS -- 11.7%
BELLSOUTH 200,000 9,663
CORNING 165,000 12,623
SBC COMMUNICATIONS 200,000 11,538
SPRINT (FON GROUP) 161,400 4,116
VERIZON COMMUNICATIONS 143,350 8,287
--------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS $ 46,227
--------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $225,359) $392,745
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 0.6%
CREDIT SUISSE FIRST BOSTON
6.620%, dated 10/31/00,
matures 11/01/00, repurchase
price $2,309,948 (collateralized
by U.S. Government Obligations:
total market value
$2,393,047) $2,310 2,310
--------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $2,310) $ 2,310
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.2%
(Cost $227,669) $395,055
================================================================================
OTHER ASSETS AND LIABILITIES, NET-- (0.2%) $(689)
================================================================================
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 27,771,114 outstanding
shares of beneficial interest 167,073
Portfolio Shares of Retail Class A
(unlimited authorization -- no par value)
based on 552,652 outstanding shares
of beneficial interest 7,959
Portfolio Shares of Retail Class B
(unlimited authorization -- no par value)
based on 45,751 outstanding shares
of beneficial interest 662
Undistributed net investment income 39
Accumulated net realized gain on investments 51,247
Net unrealized appreciation on investments 167,386
================================================================================
TOTAL NET ASSETS-- 100.0% $394,366
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- INSTITUTIONAL CLASS $13.90
================================================================================
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $13.89
================================================================================
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($13.89 / 95.25%) $14.58
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- RETAIL CLASS B $13.68
================================================================================
*NON-INCOME PRODUCING SECURITY
ADR--AMERICAN DEPOSITORY RECEIPT
CL--CLASS
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
53
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS MANAGEMENT DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
EQUITY INDEX PORTFOLIO
[PHOTO OMITTED]
CLARENCE W. WOODS, JR.
------------------------------
CO-PORTFOLIO MANAGER
------------------------------
CLARENCE W. WOODS, JR. IS A PRINCIPAL OF AND CHIEF EQUITY TRADER FOR ALLIED
INVESTMENT ADVISORS, INC. HE IS CO-MANAGER OF THE EQUITY INDEX PORTFOLIO. HE HAS
MORE THAN 16 YEARS EXPERIENCE IN THE INVESTMENT INDUSTRY.
[PHOTO OMITTED]
PETER C. HASTINGS
------------------------------
CO-PORTFOLIO MANAGER
------------------------------
PETER C. HASTINGS IS A VICE PRESIDENT OF ALLIED INVESTMENT ADVISORS, INC. HE IS
CO-MANAGER OF THE EQUITY INDEX PORTFOLIO. HE HAS MORE THAN FIVE YEARS EXPERIENCE
IN THE INVESTMENT INDUSTRY.
REVIEW AND OUTLOOK
The last six months have seen incredible volatility in the U.S. equity
markets. It is quite remarkable that after the roller coaster ride investors
have been on, the S&P 500 Composite Index ended down only about 1% for that
period. The big story was the significant correction in technology stocks in
general and those traded on the NASDAQ in particular. The technology-heavy
NASDAQ was down over 12% for the six-month period, and over 5% in October. There
was a significant rotation out of all things Internet-related into stocks with
earnings. Even those technology stocks with earnings were shunned as investors
realized that the growth prospects were not quite as rosy as initially
anticipated. Even when good news came, there was a general lack of enthusiasm to
follow through on a technology rally. Value stocks led, with the healthcare and
finance sectors turning in very solid returns. Also of note were energy stocks,
which were very strong due to recent increases in oil prices. The biggest
surprise continues to be utility companies, which are now the best-performing
sector for the year. The stocks with the most positive impact on the S&P 500
were Philip Morris, Boeing, PE Biosystems and PeopleSoft. The stocks that most
adversely affected the Portfolio were Lucent, Sprint, Teradyne and Apple
Computer.
The ARK Equity Index Portfolio continues to track the performance of the
S&P 500 Composite Index very closely, with many sectors experiencing most of
their relative outperformance over the last few months. The U.S. economy appears
to be in good shape. We believe the Federal Reserve will lean towards an easing
of interest rates rather than a further tightening. A repeat of the S&P 500's
prior years' double-digit performance seems unlikely; however, it is still
possible that the equity markets in general could end the year in positive
territory. As we prepare for 2001, we feel confident that the strong U.S.
economy and new administration in the White House will have a positive effect on
the U.S. equity markets.
54
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PERFORMANCE AS OF
OCTOBER 31, 2000
--------------------------------------------------------------------------------
S&P 500 LIPPER S&P 500
INSTITUTIONAL RETAIL COMPOSITE INDEX OBJECTIVE
CLASS CLASS A INDEX FUNDS AVERAGE
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN 6.27% 6.02% 6.09% 5.48%
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN WITH LOAD N/A 0.96% N/A N/A
--------------------------------------------------------------------------------
THREE YEAR
TOTAL RETURN 17.93% N/A 17.60% 17.00%
--------------------------------------------------------------------------------
THREE YEAR
TOTAL RETURN WITH LOAD N/A N/A N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE 15.53% 16.59% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE WITH LOAD N/A 14.70% N/A N/A
--------------------------------------------------------------------------------
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning October 1, 1997. Retail
Class A shares were offered beginning November 3, 1997. Performance of Retail
Class A shares with load reflects the deduction of the 4.75% sales charge.
The performance of the S&P 500 Composite Index does not include operating
expenses that are incurred by the Portfolio.
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
Financial -- 16%
Technology -- 31%
Cash Equivalents -- 1%
Energy -- 9%
Consumer Non-Durable -- 14%
Chemicals & Drugs -- 10%
Miscellaneous Business Services -- 12%
Durable Goods -- 5%
Repurchase Agreements -- 2%
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- 97.7%
AEROSPACE & DEFENSE -- 1.2%
BF GOODRICH 985 $ 40
BOEING 8,755 594
GENERAL DYNAMICS 2,260 162
LOCKHEED MARTIN 4,590 165
NORTHROP GRUMMAN 720 60
RAYTHEON, CL B 3,580 122
UNITED TECHNOLOGIES 4,560 318
--------------------------------------------------------------------------------
TOTAL AEROSPACE & DEFENSE $1,461
--------------------------------------------------------------------------------
AIR TRANSPORTATION -- 0.4%
AMR* 1,670 55
DELTA AIR LINES 1,530 72
FEDEX* 3,317 155
SOUTHWEST AIRLINES 5,773 165
US AIRWAYS GROUP* 635 24
--------------------------------------------------------------------------------
TOTAL AIR TRANSPORTATION $ 471
--------------------------------------------------------------------------------
APPAREL/TEXTILES -- 0.2%
LIZ CLAIBORNE 670 28
NIKE, CL B 3,115 124
REEBOK INTERNATIONAL* 170 4
RUSSELL 110 2
SPRINGS INDUSTRIES, CL A 60 1
VF 1,375 38
--------------------------------------------------------------------------------
TOTAL APPAREL/TEXTILES $ 197
--------------------------------------------------------------------------------
AUTOMOTIVE -- 0.7%
DANA 1,681 37
DELPHI AUTOMOTIVE SYSTEMS 6,543 103
FORD MOTOR 18,505 483
GENUINE PARTS 1,760 38
NAVISTAR INTERNATIONAL* 545 18
PACCAR 620 26
ROCKWELL INTERNATIONAL 1,890 74
TRW 1,195 50
VISTEON 2,024 36
--------------------------------------------------------------------------------
TOTAL AUTOMOTIVE $ 865
--------------------------------------------------------------------------------
55
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS
--------------------------------------------------------------------------------
EQUITY INDEX PORTFOLIO CONTINUED
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
BANKS -- 4.1%
AMSOUTH BANCORPORATION 4,250 $ 59
BANK OF AMERICA 4,275 205
BANK OF NEW YORK 7,135 411
BANK ONE 2,050 75
BB&T 3,585 114
CHARTER ONE FINANCIAL 2,835 65
COMERICA 1,532 92
FIFTH THIRD BANCORP 4,567 235
FLEETBOSTON FINANCIAL 8,819 335
GOLDEN WEST FINANCIAL 1,875 105
HUNTINGTON BANCSHARES 2,542 37
KEYCORP 5,045 125
MELLON FINANCIAL 4,760 230
NATIONAL CITY 6,910 148
NORTHERN TRUST 2,520 215
OLD KENT FINANCIAL 1,391 39
PNC FINANCIAL SERVICES GROUP 2,840 190
PROVIDIAN FINANCIAL 1,600 166
REGIONS FINANCIAL 2,220 52
SOUTHTRUST 1,900 62
STATE STREET 1,800 225
SUMMIT BANCORP 1,700 64
SUNTRUST BANKS 2,945 144
SYNOVUS FINANCIAL 2,742 59
U S BANCORP 14,800 358
UNION PLANTERS 1,450 49
WACHOVIA 2,200 119
WASHINGTON MUTUAL 5,206 229
WELLS FARGO 16,055 744
--------------------------------------------------------------------------------
TOTAL BANKS $4,951
--------------------------------------------------------------------------------
BEAUTY PRODUCTS -- 0.1%
ALBERTO-CULVER, CL B 170 6
AVON PRODUCTS 2,585 125
INTERNATIONAL FLAVORS &
FRAGRANCES 860 14
--------------------------------------------------------------------------------
TOTAL BEAUTY PRODUCTS $ 145
--------------------------------------------------------------------------------
BROADCASTING, NEWSPAPERS & ADVERTISING-- 0.8%
CLEAR CHANNEL COMMUNICATIONS* 5,785 347
COMCAST* 8,800 359
INTERPUBLIC GROUP 3,200 137
OMNICOM GROUP 1,775 164
--------------------------------------------------------------------------------
TOTAL BROADCASTING, NEWSPAPERS & ADVERTISING $1,007
--------------------------------------------------------------------------------
BUILDING & CONSTRUCTION -- 0.1%
ARMSTRONG HOLDINGS 195 1
CENTEX 480 18
FLUOR 755 26
KAUFMAN & BROAD HOME 120 4
MASCO 4,955 93
PULTE 120 4
--------------------------------------------------------------------------------
TOTAL BUILDING & CONSTRUCTION $ 146
--------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
CHEMICALS -- 0.7%
AIR PRODUCTS & CHEMICALS 2,275 $ 85
AVERY DENNISON 1,240 63
DOW CHEMICAL 7,475 229
EASTMAN CHEMICAL 900 39
EI DU PONT DE NEMOURS 1,975 90
GREAT LAKES CHEMICAL 600 20
HERCULES 800 15
PPG INDUSTRIES 1,990 89
PRAXAIR 1,555 58
ROHM & HAAS 2,564 77
SIGMA-ALDRICH 985 35
UNION CARBIDE 1,370 59
WR GRACE* 360 1
--------------------------------------------------------------------------------
TOTAL CHEMICALS $ 860
--------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 4.5%
ADAPTEC* 1,100 17
CISCO SYSTEMS* 68,650 3,699
COMVERSE TECHNOLOGY* 1,500 168
LUCENT TECHNOLOGIES 32,711 763
MOTOROLA 21,351 532
NETWORK APPLIANCE* 3,000 357
--------------------------------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT $5,536
--------------------------------------------------------------------------------
COMPUTERS & SERVICES -- 7.2%
AMERICAN POWER CONVERSION* 2,500 32
APPLE COMPUTER* 3,615 71
CABLETRON SYSTEMS* 2,120 57
CERIDIAN* 1,650 41
COMPAQ COMPUTER 16,596 505
COMPUTER SCIENCES* 1,920 121
DELL COMPUTER* 25,330 747
ELECTRONIC DATA SYSTEMS 5,125 241
EMC* 21,011 1,871
GATEWAY* 3,550 183
HEWLETT-PACKARD 19,590 910
IBM 17,245 1,699
LEXMARK INTERNATIONAL* 1,500 61
NCR* 1,100 47
PALM* 5,950 319
SEAGATE TECHNOLOGY* 2,330 163
SOLECTRON* 5,900 260
SUN MICROSYSTEMS* 13,030 1,445
UNISYS* 3,270 42
--------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES $ 8,815
--------------------------------------------------------------------------------
COMPUTER SOFTWARE -- 5.7%
ADOBE SYSTEMS 2,200 167
AUTODESK 690 15
BMC SOFTWARE* 2,650 54
CITRIX SYSTEMS* 2,000 44
COMPUTER ASSOCIATES
INTERNATIONAL 1,825 58
MERCURY INTERACTIVE* 900 100
56
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
MICROSOFT* 51,285 $ 3,532
NOVELL* 3,325 30
ORACLE* 54,888 1,811
PARAMETRIC TECHNOLOGY* 2,670 33
PEOPLESOFT* 2,750 120
SIEBEL SYSTEMS* 4,000 420
VERITAS SOFTWARE* 3,900 550
--------------------------------------------------------------------------------
TOTAL COMPUTER SOFTWARE $ 6,934
--------------------------------------------------------------------------------
CONSUMER PRODUCTS -- 0.1%
AMERICAN GREETINGS, CL A 355 6
FORTUNE BRANDS 1,850 54
TUPPERWARE 180 3
--------------------------------------------------------------------------------
TOTAL CONSUMER PRODUCTS $ 63
--------------------------------------------------------------------------------
CONTAINERS & PACKAGING -- 0.0%
BALL 90 3
CROWN CORK & SEAL 970 9
OWENS-ILLINOIS* 1,525 9
--------------------------------------------------------------------------------
TOTAL CONTAINERS & PACKAGING $ 21
--------------------------------------------------------------------------------
DIVERSIFIED OPERATIONS -- 6.4%
BAKER HUGHES 3,220 111
COOPER INDUSTRIES 910 35
CRANE 760 20
DANAHER 1,440 91
EATON 770 52
FMC* 300 23
GENERAL ELECTRIC 97,110 5,323
HALLIBURTON 4,290 159
HONEYWELL INTERNATIONAL 7,841 422
ILLINOIS TOOL WORKS 3,280 182
ITT INDUSTRIES 845 28
MINNESOTA MINING &
MANUFACTURING 3,835 371
NATIONAL SERVICE INDUSTRIES 130 3
TYCO INTERNATIONAL 17,065 967
--------------------------------------------------------------------------------
TOTAL DIVERSIFIED OPERATIONS $ 7,787
--------------------------------------------------------------------------------
DRUGS -- 9.1%
ABBOTT LABORATORIES 15,165 801
ALLERGAN 1,480 124
ALZA* 1,035 84
AMERICAN HOME PRODUCTS 12,665 804
AMGEN* 10,040 582
BIOGEN* 1,850 111
BRISTOL-MYERS SQUIBB 19,175 1,168
ELI LILLY 11,050 988
KING PHARMACEUTICALS* 1,600 72
MEDIMMUNE* 2,300 150
MERCK 22,570 2,030
PFIZER 61,686 2,664
PHARMACIA 12,719 700
SCHERING-PLOUGH 14,370 743
WATSON PHARMACEUTICAL* 800 50
--------------------------------------------------------------------------------
TOTAL DRUGS $11,071
--------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
ELECTRICAL SERVICES -- 2.3%
AES* 4,700 $ 266
AMEREN 1,360 54
AMERICAN ELECTRIC POWER 3,277 136
CINERGY 1,560 48
CMS ENERGY 1,000 27
C P & L ENERGY 1,575 63
CONSOLIDATED EDISON 2,260 80
CONSTELLATION ENERGY GROUP 1,655 69
DOMINION RESOURCES 2,750 164
DTE ENERGY 1,445 52
DUKE ENERGY 3,650 315
EDISON INTERNATIONAL 3,465 83
EXELON 3,916 235
FIRSTENERGY 2,310 60
FLORIDA PROGRESS 825 44
FPL GROUP 1,760 116
GPU 1,400 46
MOLEX 2,187 118
NIAGARA MOHAWK HOLDINGS* 1,980 32
PINNACLE WEST CAPITAL 900 39
POWER-ONE* 700 50
PPL 1,215 50
PUBLIC SERVICE ENTERPRISE
GROUP 2,210 92
RELIANT ENERGY 2,960 122
SEMPRA ENERGY 2,676 55
SOUTHERN 7,210 212
TXU 2,790 103
XCEL ENERGY 3,228 83
--------------------------------------------------------------------------------
TOTAL ELECTRICAL SERVICES $2,814
--------------------------------------------------------------------------------
ENTERTAINMENT -- 0.6%
HARRAH'S ENTERTAINMENT* 1,000 29
WALT DISNEY 20,380 730
--------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $ 759
--------------------------------------------------------------------------------
ENVIRONMENTAL SERVICES -- 0.0%
ALLIED WASTE INDUSTRIES* 1,900 18
--------------------------------------------------------------------------------
TOTAL ENVIRONMENTAL SERVICES $ 18
--------------------------------------------------------------------------------
FINANCIAL SERVICES -- 7.5%
AMERICAN EXPRESS 13,005 780
ASSOCIATES FIRST CAPITAL,
CL A 7,120 264
BEAR STEARNS 1,279 78
CAPITAL ONE FINANCIAL 2,260 143
CHARLES SCHWAB 13,528 475
CIT GROUP, CL A 2,500 44
CITIGROUP 39,854 2,097
COUNTRYWIDE CREDIT 1,215 45
DUN & BRADSTREET* 617 13
EQUIFAX 1,625 56
FANNIE MAE 9,865 760
FRANKLIN RESOURCES 2,500 107
FREDDIE MAC 6,810 409
HOUSEHOLD INTERNATIONAL 4,608 232
H & R BLOCK 1,150 41
57
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS
--------------------------------------------------------------------------------
EQUITY INDEX PORTFOLIO CONTINUED
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
JP MORGAN 5,140 $ 851
LEHMAN BROTHERS HOLDINGS 2,760 178
MBNA 8,830 332
MERRILL LYNCH 7,870 551
MERRILL LYNCH (TELECOM
HOLDERS TRUST) 3,800 256
MOODY'S 1,635 43
MORGAN STANLEY DEAN WITTER 11,000 883
PAINEWEBBER GROUP 1,625 116
STILWELL FINANCIAL 2,400 108
T ROWE PRICE ASSOCIATES 1,300 61
TEXTRON 1,760 89
USA EDUCATION 1,625 91
--------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $9,103
--------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 3.5%
ADOLPH COORS, CL B 285 18
ANHEUSER-BUSCH 8,880 406
ARCHER-DANIELS-MIDLAND 6,406 70
BROWN-FORMAN, CL B 780 47
CAMPBELL SOUP 4,815 141
COCA-COLA 17,790 1,074
COCA-COLA ENTERPRISES 4,900 90
CONAGRA FOODS 5,755 123
GENERAL MILLS 3,425 143
HJ HEINZ 3,960 166
HERSHEY FOODS 1,385 75
KELLOGG 4,475 114
NABISCO GROUP HOLDINGS 3,225 93
PEPSICO 14,195 688
PHILIP MORRIS 4,500 165
QUAKER OATS 1,335 109
RALSTON PURINA GROUP 3,225 78
SARA LEE 9,620 207
UNILEVER NV 5,602 285
UST 1,865 47
WM WRIGLEY JR 1,155 91
--------------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO $4,230
--------------------------------------------------------------------------------
GAS/NATURAL GAS -- 1.0%
COLUMBIA ENERGY GROUP 922 66
DYNEGY, CL A 3,000 139
EASTERN ENTERPRISES 310 20
EL PASO ENERGY 2,580 162
ENRON 7,200 591
KEYSPAN 1,300 46
NICOR 540 19
ONEOK 80 3
PEOPLES ENERGY 100 3
WILLIAMS 4,875 204
--------------------------------------------------------------------------------
TOTAL GAS/NATURAL GAS $1,253
--------------------------------------------------------------------------------
HOME APPLIANCES & PRODUCTS -- 0.2%
LEGGETT & PLATT 2,100 34
MAYTAG 720 21
NEWELL RUBBERMAID 2,800 54
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
SHERWIN-WILLIAMS 1,910 $ 41
WHIRLPOOL 800 35
--------------------------------------------------------------------------------
TOTAL HOME APPLIANCES & PRODUCTS $ 185
--------------------------------------------------------------------------------
HOTELS & LODGING -- 0.1%
HILTON HOTELS 4,120 39
MARRIOTT INTERNATIONAL 2,480 100
--------------------------------------------------------------------------------
TOTAL HOTELS & LODGING $ 139
--------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 0.6%
CLOROX 2,665 119
COLGATE-PALMOLIVE 5,580 328
ECOLAB 1,445 57
GILLETTE 1,800 63
PROCTER & GAMBLE 3,050 218
--------------------------------------------------------------------------------
TOTAL HOUSEHOLD PRODUCTS $ 785
--------------------------------------------------------------------------------
INSURANCE -- 4.3%
AETNA 1,510 87
AFLAC 2,975 217
ALLSTATE 7,185 289
AMERICAN GENERAL 2,815 227
AMERICAN INTERNATIONAL GROUP 22,592 2,214
AON 3,030 126
CHUBB 2,025 171
CIGNA 1,825 223
CINCINNATI FINANCIAL 1,645 60
HARTFORD FINANCIAL SERVICES 2,420 180
HUMANA* 790 10
JEFFERSON-PILOT 1,067 73
LINCOLN NATIONAL 1,980 96
LOEWS 1,150 105
MARSH & MCLENNAN 2,607 341
MBIA 1,080 78
MGIC INVESTMENT 1,235 84
PROGRESSIVE 720 71
SAFECO 1,025 25
ST. PAUL 2,404 123
TORCHMARK 1,475 49
UNITEDHEALTH GROUP 1,775 194
UNUMPROVIDENT 2,545 72
WELLPOINT HEALTH NETWORKS* 600 70
--------------------------------------------------------------------------------
TOTAL INSURANCE $5,185
--------------------------------------------------------------------------------
INTERNET SERVICE PROVIDERS -- 1.2%
AMERICA ONLINE* 21,900 1,104
YAHOO* 5,350 314
--------------------------------------------------------------------------------
TOTAL INTERNET SERVICE PROVIDERS $1,418
--------------------------------------------------------------------------------
LEASING & RENTING -- 0.1%
PITNEY BOWES 2,880 85
--------------------------------------------------------------------------------
TOTAL LEASING & RENTING $ 85
--------------------------------------------------------------------------------
LUMBER & WOOD PRODUCTS -- 0.1%
GEORGIA-PACIFIC GROUP 1,850 50
LOUISIANA-PACIFIC 870 7
WEYERHAEUSER 2,605 122
--------------------------------------------------------------------------------
TOTAL LUMBER & WOOD PRODUCTS $ 179
--------------------------------------------------------------------------------
58
----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
MACHINERY -- 0.7%
BLACK & DECKER 725 $ 27
BRIGGS & STRATTON 80 3
BRUNSWICK 900 17
CATERPILLAR 3,360 118
CUMMINS ENGINE 410 14
DEERE 2,730 100
DOVER 2,110 90
EMERSON ELECTRIC 4,160 305
INGERSOLL-RAND 1,800 68
MCDERMOTT INTERNATIONAL 160 2
PALL 980 21
PARKER HANNIFIN 1,165 48
SNAP-ON 680 17
STANLEY WORKS 1,000 27
TIMKEN 190 3
--------------------------------------------------------------------------------
TOTAL MACHINERY $ 860
--------------------------------------------------------------------------------
MEASURING DEVICES -- 0.5%
AGILENT TECHNOLOGIES* 4,880 226
PE BIOSYSTEMS GROUP 2,040 239
TEKTRONIX 550 39
THERMO ELECTRON* 1,580 46
--------------------------------------------------------------------------------
TOTAL MEASURING DEVICES $ 550
--------------------------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES-- 2.5%
CR BARD 445 19
BAUSCH & LOMB 640 25
BAXTER INTERNATIONAL 2,845 234
BECTON DICKINSON 2,505 84
BIOMET 1,327 48
BOSTON SCIENTIFIC* 4,610 73
GUIDANT* 3,345 177
HCA 6,160 246
HEALTHSOUTH* 3,110 37
JOHNSON & JOHNSON 13,670 1,259
MANOR CARE* 790 13
MEDTRONIC 11,740 638
ST. JUDE MEDICAL* 840 46
TENET HEALTHCARE* 3,075 121
--------------------------------------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES $3,020
--------------------------------------------------------------------------------
METALS & MINING -- 0.2%
BARRICK GOLD 3,855 52
FREEPORT-MCMORAN COPPER
& GOLD, CL B* 1,830 15
HOMESTAKE MINING 1,540 6
INCO* 1,905 29
NEWMONT MINING 1,640 22
PHELPS DODGE 908 42
PLACER DOME 2,805 23
VULCAN MATERIALS 900 38
--------------------------------------------------------------------------------
TOTAL METALS & MINING $ 227
--------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
MISCELLANEOUS BUSINESS SERVICES-- 0.7%
AUTOMATIC DATA PROCESSING 6,020 $ 393
CENDANT* 8,116 97
CONVERGYS* 2,000 87
DELUXE 640 14
FIRST DATA 4,570 229
RYDER SYSTEM 370 7
SAPIENT* 1,500 53
--------------------------------------------------------------------------------
TOTAL MISCELLANEOUS BUSINESS SERVICES $ 880
--------------------------------------------------------------------------------
MOTORCYCLES, BICYCLES & PARTS -- 0.1%
HARLEY-DAVIDSON 3,000 145
--------------------------------------------------------------------------------
TOTAL MOTORCYCLES, BICYCLES & PARTS $ 145
--------------------------------------------------------------------------------
MULTIMEDIA -- 1.7%
SEAGRAM 4,255 243
TIME WARNER 12,990 986
VIACOM* 14,822 843
--------------------------------------------------------------------------------
TOTAL MULTIMEDIA $2,072
--------------------------------------------------------------------------------
OFFICE PRODUCTS & SUPPLIES -- 0.0%
JOHNSON CONTROLS 850 51
--------------------------------------------------------------------------------
TOTAL OFFICE PRODUCTS & SUPPLIES $ 51
--------------------------------------------------------------------------------
PAPER & PAPER PRODUCTS -- 0.6%
BEMIS 560 14
BOISE CASCADE 575 16
FORT JAMES 2,180 72
INTERNATIONAL PAPER 5,390 197
KIMBERLY-CLARK 5,230 345
MEAD 905 26
PACTIV* 1,265 13
POTLATCH 90 3
TEMPLE-INLAND 450 20
WESTVACO 990 28
WILLAMETTE INDUSTRIES 1,085 39
--------------------------------------------------------------------------------
TOTAL PAPER & PAPER PRODUCTS $ 773
--------------------------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS -- 2.5%
ANADARKO PETROLEUM 2,578 165
APACHE 1,310 72
BURLINGTON RESOURCES 2,767 100
CHEVRON 6,365 523
DEVON ENERGY 1,400 71
KERR-MCGEE 1,094 71
NABORS INDUSTRIES* 2,500 127
OCCIDENTAL PETROLEUM 4,205 84
ROWAN* 1,060 27
ROYAL DUTCH PETROLEUM, ADR 21,025 1,248
SCHLUMBERGER 5,365 408
TRANSOCEAN SEDCO FOREX 2,493 132
UNOCAL 2,405 82
--------------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS $3,110
--------------------------------------------------------------------------------
PETROLEUM REFINING -- 3.4%
AMERADA HESS 970 60
ASHLAND 610 20
COASTAL 2,460 186
59
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS
--------------------------------------------------------------------------------
EQUITY INDEX PORTFOLIO CONTINUED
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
CONOCO, CL B 7,025 $ 191
EXXON MOBIL 33,552 2,992
USX-MARATHON GROUP 3,280 89
PHILLIPS PETROLEUM 2,835 175
SUNOCO 735 22
TEXACO 5,420 320
TOSCO 1,625 47
--------------------------------------------------------------------------------
TOTAL PETROLEUM REFINING $4,102
--------------------------------------------------------------------------------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES-- 0.1%
EASTMAN KODAK 3,360 151
POLAROID 140 1
--------------------------------------------------------------------------------
TOTAL PHOTOGRAPHIC EQUIPMENT & SUPPLIES $ 152
--------------------------------------------------------------------------------
PRINTING & PUBLISHING -- 0.6%
RR DONNELLEY & SONS 1,105 24
DOW JONES 1,015 60
GANNETT 2,890 168
HARCOURT GENERAL 565 32
KNIGHT RIDDER 930 47
MCGRAW-HILL 2,325 149
MEREDITH 560 18
NEW YORK TIMES 1,920 71
TRIBUNE 2,977 110
--------------------------------------------------------------------------------
TOTAL PRINTING & PUBLISHING $ 679
--------------------------------------------------------------------------------
PROFESSIONAL SERVICES -- 0.2%
IMS HEALTH 3,150 74
PAYCHEX 3,605 204
--------------------------------------------------------------------------------
TOTAL PROFESSIONAL SERVICES $ 278
--------------------------------------------------------------------------------
RAILROADS -- 0.3%
BURLINGTON NORTHERN SANTA FE 5,195 138
CSX 2,170 55
NORFOLK SOUTHERN 3,775 53
UNION PACIFIC 3,195 150
--------------------------------------------------------------------------------
TOTAL RAILROADS $ 396
--------------------------------------------------------------------------------
RETAIL -- 5.8%
ALBERTSON'S 5,417 128
AUTOZONE* 1,190 32
BED BATH & BEYOND* 3,000 77
BEST BUY* 2,350 118
CIRCUIT CITY STORES-CIRCUIT 2,350 31
CONS STORES* 540 6
COSTCO WHOLESALE* 4,930 181
CVS 4,340 230
DARDEN RESTAURANTS 1,100 25
DILLARDS, CL A 1,080 11
DOLLAR GENERAL 3,793 59
FEDERATED DEPARTMENT STORES* 2,400 78
GAP 9,495 245
HOME DEPOT 22,667 975
K MART* 4,930 29
KOHL'S* 3,250 176
KROGER* 9,265 209
LIMITED 5,484 138
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
LONGS DRUG STORES 120 $ 3
LOWE'S 4,195 192
MAY DEPARTMENT STORES 3,835 101
MCDONALD'S 12,910 400
NORDSTROM 1,175 19
OFFICE DEPOT* 3,300 27
RADIOSHACK 2,075 124
SAFEWAY* 4,855 266
SEARS, ROEBUCK 3,380 100
STAPLES* 5,200 74
STARBUCKS* 2,000 89
TARGET 8,820 244
TIFFANY 1,600 68
TJX 3,420 93
TOYS `R' US* 2,090 36
TRICON GLOBAL RESTAURANTS* 1,532 46
WAL-MART STORES 43,370 1,968
WALGREEN 9,875 451
WENDY'S INTERNATIONAL 1,235 27
WINN-DIXIE STORES 1,450 28
--------------------------------------------------------------------------------
TOTAL RETAIL $7,104
--------------------------------------------------------------------------------
RUBBER & PLASTIC -- 0.1%
COOPER TIRE & RUBBER 230 3
GOODYEAR TIRE & RUBBER 1,545 29
SEALED AIR* 882 42
--------------------------------------------------------------------------------
TOTAL RUBBER & PLASTIC $ 74
--------------------------------------------------------------------------------
SCIENTIFIC INSTRUMENTS -- 0.1%
MILLIPORE 530 28
PERKINELMER 515 62
--------------------------------------------------------------------------------
TOTAL SCIENTIFIC INSTRUMENTS $ 90
--------------------------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS-- 6.0%
ADVANCED MICRO DEVICES* 3,400 77
ALTERA* 3,900 160
ANALOG DEVICES* 3,500 227
APPLIED MATERIALS* 7,970 423
BROADCOM* 2,200 489
CONEXANT SYSTEMS* 2,300 61
INTEL 64,240 2,891
JDS UNIPHASE* 9,000 733
KLA-TENCOR* 2,120 72
LINEAR TECHNOLOGY 3,450 223
LSI LOGIC* 3,360 110
MAXIM INTEGRATED PRODUCTS* 3,150 209
MICRON TECHNOLOGY* 5,500 191
NATIONAL SEMICONDUCTOR* 1,885 49
NOVELLUS SYSTEMS* 1,700 70
SANMINA* 1,700 194
TERADYNE* 2,000 62
TEXAS INSTRUMENTS 16,930 831
THOMAS & BETTS 565 9
XILINX* 3,200 232
--------------------------------------------------------------------------------
TOTAL SEMI-CONDUCTORS/INSTRUMENTS $7,313
--------------------------------------------------------------------------------
60
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
STEEL & STEEL WORKS -- 0.3%
ALCAN ALUMINIUM 2,295 $ 72
ALCOA 8,413 241
ALLEGHENY TECHNOLOGIES 765 15
BETHLEHEM STEEL* 330 1
ENGELHARD 1,130 24
NUCOR 995 35
USX-U.S. STEEL GROUP 915 15
WORTHINGTON INDUSTRIES 290 3
--------------------------------------------------------------------------------
TOTAL STEEL & STEEL WORKS $ 406
--------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS-- 5.8%
ADC TELECOMMUNICATIONS* 7,700 165
ALLTEL 3,035 196
ANDREW* 270 7
AT&T 22,000 510
AVAYA* 2,725 37
BELLSOUTH 18,095 874
CENTURYTEL 1,500 58
CORNING 8,670 663
GLOBAL* 8,605 203
NEXTEL COMMUNICATIONS* 7,490 288
QWEST COMMUNICATIONS
INTERNATIONAL* 13,147 639
SBC COMMUNICATIONS 27,316 1,576
SPRINT (FON GROUP) 2,650 68
SPRINT (PCS GROUP)* 9,084 346
VERIZON COMMUNICATIONS 20,580 1,190
WORLDCOM* 10,620 252
--------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS $7,072
--------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT & SERVICES-- 1.7%
NORTEL NETWORKS 29,209 1,329
QUALCOMM* 7,300 475
SCIENTIFIC-ATLANTA 1,910 131
TELLABS* 3,985 199
--------------------------------------------------------------------------------
TOTAL TELECOMMUNICATIONS EQUIPMENT & SERVICES $2,134
--------------------------------------------------------------------------------
TESTING LABORATORIES -- 0.0%
QUINTILES TRANSNATIONAL* 1,300 18
--------------------------------------------------------------------------------
TOTAL TESTING LABORATORIES $ 18
--------------------------------------------------------------------------------
TOYS -- 0.1%
HASBRO 2,000 21
MATTEL 4,440 57
--------------------------------------------------------------------------------
TOTAL TOYS $ 78
--------------------------------------------------------------------------------
TRANSPORTATION SERVICES -- 0.0%
SABRE HOLDINGS* 1,206 40
--------------------------------------------------------------------------------
TOTAL TRANSPORTATION SERVICES $ 40
--------------------------------------------------------------------------------
UTILITIES -- 0.2%
ENTERGY 2,440 93
PG&E 4,880 131
--------------------------------------------------------------------------------
TOTAL UTILITIES $ 224
--------------------------------------------------------------------------------
SHARES/PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
WHOLESALE -- 0.7%
CARDINAL HEALTH 2,700 $ 256
GENERAL MOTORS 5,270 327
WW GRAINGER 1,105 35
MCKESSON HBOC 2,731 77
SUPERVALU 1,180 18
SYSCO 3,715 194
--------------------------------------------------------------------------------
TOTAL WHOLESALE $ 907
--------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $112,521) $119,238
--------------------------------------------------------------------------------
REGULATED INVESTMENT COMPANY -- 0.6%
STANDARD AND POOR'S 500 INDEX 5,000 715
--------------------------------------------------------------------------------
TOTAL REGULATED INVESTMENT COMPANY
(Cost $678) $ 715
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 2.2%
CREDIT SUISSE FIRST BOSTON
6.620%, dated 10/31/00,
matures 11/01/00, repurchase
price $2,692,970 (collateralized
by U.S. Government Obligations:
total market value
$2,775,712) $2,692 2,692
--------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $2,692) $ 2,692
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.5%
(Cost $115,891) $122,645
================================================================================
OTHER ASSETS AND LIABILITIES, NET-- (0.5%) $ (668)
================================================================================
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 7,824,027 outstanding
shares of beneficial interest 88,275
Portfolio Shares of Retail Class A
(unlimited authorization -- no par value)
based on 513,626 outstanding shares
of beneficial interest 6,474
Undistributed net investment income 65
Accumulated net realized gain on investments 20,409
Net unrealized appreciation on investments 6,754
================================================================================
TOTAL NET ASSETS-- 100.0% $121,977
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- INSTITUTIONAL CLASS $14.63
================================================================================
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $14.60
================================================================================
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($14.60 / 95.25%) $15.33
================================================================================
*NON-INCOME PRODUCING SECURITY
ADR--AMERICAN DEPOSITORY RECEIPT
CL--CLASS
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
61
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS MANAGEMENT DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
BLUE CHIP EQUITY PORTFOLIO
[PHOTO OMITTED]
ALLEN J. ASHCROFT, JR.
-------------------------------
CO-PORTFOLIO MANAGER
-------------------------------
ALLEN J. ASHCROFT, JR. IS A PRINCIPAL OF ALLIED INVESTMENT ADVISORS, INC. HE IS
THE CO-PORTFOLIO MANAGER OF THE BLUE CHIP EQUITY PORTFOLIO AND THE EQUITY INCOME
PORTFOLIO. HE HAS MORE THAN 19 YEARS OF INVESTMENT MANAGEMENT EXPERIENCE.
[PHOTO OMITTED]
CLYDE L. RANDALL, CFA
-------------------------------
CO-PORTFOLIO MANAGER
-------------------------------
CLYDE L. RANDALL, CFA, IS A PRINCIPAL OF ALLIED INVESTMENT ADVISORS, INC. HE IS
THE CO-PORTFOLIO MANAGER OF THE BLUE CHIP EQUITY PORTFOLIO AND THE EQUITY INCOME
PORTFOLIO. HE HAS MORE THAN 13 YEARS OF INVESTMENT MANAGEMENT EXPERIENCE.
REVIEW AND OUTLOOK
Although the Dow Jones Industrial Average ended October almost at its
closing mark of six months ago, this period was certainly marked by high market
volatility. The Dow Jones Industrial Average closed April 2000 at 10,733, and
traded sideways through most of the spring and early summer months before a
late-summer rally lifted the Dow to 11,518 by Labor Day. Shortly thereafter the
volatility began. Over the next six weeks, the Dow dropped more than 1,300
points as technology and telecommunications companies came under selling
pressure. These groups had been the primary catalysts for recent market
appreciation, and when they were pressured, the markets became concerned. This
concern seemed to be short-lived, as several bell-weather technology companies
reported better than expected third quarter earnings. The Dow rallied 1,000
points in only nine trading days to close October 2000 at 10,971. This was
volatility at its "finest".
This year, market returns have been driven primarily by technology and
telecommunications related issues; however, recent performance came from quite
an eclectic group of companies. We have found that over long periods, industry
diversification plays a key role in our search for equities that perform well.
It appears that after having been dominated by just two industries, market
performance is now gravitating back towards the norm.
The Portfolio's largest positive contributors to performance have been
Abbott Laboratories, Ralston Purina, and Emerson Electric. Each appreciated over
35% in the last six months. A year ago, Abbott Laboratories was one of our
poorer performers. Now, with a new management team, this company has become one
of our top performing equities. Buying and holding a company such as Abbott
Laboratories, believing its valuation would eventually climb, exemplifies our
investment style. Lucent and Motorola, both of which are telecommunication
companies, negatively impacted the Portfolio. Each was down over 30% in the last
six months. It appears that technology and telecommunication stocks hit the wall
in September, as valuations finally seemed to matter with investors.
Throughout this period the ARK Blue Chip Equity Portfolio remained focused
on our strategy of seeking quality large-cap companies that are recognized
leaders in their markets with solid management teams and a history of delivering
above-average equity performance. This strategy has enabled us to be broadly
diversified among the major sectors of the economy, in dozens of quality
companies, with a long-term investment horizon.
We continue with our positive long-term bias on the equity markets. While
market volatility continues to be of concern, valuations in several industries
now seem to be somewhat compelling. The Federal Reserve appears to be on hold
after a year of continuing interest rate hikes, and its next move may in fact be
to ease rates. Our robust economy also seems to be slowing down after an
unprecedented nine years of expansion, and we will be monitoring it with
watchful eyes.
62
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PERFORMANCE AS OF
OCTOBER 31, 2000
--------------------------------------------------------------------------------
LIPPER
LARGE CAP
S&P 500 VALUE
INSTITUTIONAL RETAIL RETAIL COMPOSITE FUNDS
CLASS CLASS A* CLASS B* INDEX CLASSIFICATION
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN 12.71% 12.60% 11.78% 6.09% 7.11%
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN WITH LOAD N/A 7.28% 6.78% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN 19.84% 19.68% 19.53% 17.60% 12.15%
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN WITH LOAD N/A 17.75% 18.83% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE 21.76% 21.60% 21.02% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE WITH LOAD N/A 20.32% 20.80% N/A N/A
--------------------------------------------------------------------------------
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning April 1, 1996. Retail Class
A shares were offered beginning May 16, 1996. Performance for the Retail Class
A shares with load reflects the deduction of the 4.75% sales charge. Retail
Class B shares were offered beginning July 31, 1998. Performance for Retail
Class B shares with load reflects the deduction of the applicable contingent
deferred sales charge (CDSC).
* Performance shown prior to the actual inception date of the Retail Class A and
Retail Class B shares represents that of the Institutional Class adjusted for
the sales charge and total annual operating expenses applicable to Retail
Class A shares and Retail Class B shares. The Class A &B annual returns would
have been substantially similar to those of the Institutional Class because
shares of each class are invested in the same portfolio of securities.
Annualized performance since actual inception for Retail Class A shares is
21.35% without CDSC and 20.02% with CDSC. Annualized performance since actual
inception for Retail Class B shares is 15.03% without CDSC and 13.91% with
CDSC.
The performance of the S&P 500 Composite Index does not include operating
expenses that are incurred by the Portfolio.
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
Repurchase Agreements -- 4%
Financial -- 13%
Technology -- 30%
Energy -- 10%
Consumer Non-Durable -- 13%
Chemical & Drugs -- 12%
Miscellaneous Business Services -- 12%
Durable Goods -- 6%
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- 96.3%
AUTOMOTIVE -- 2.0%
FORD MOTOR 236,003 $ 6,166
--------------------------------------------------------------------------------
TOTAL AUTOMOTIVE $ 6,166
--------------------------------------------------------------------------------
BANKS -- 7.0%
CHASE MANHATTAN 150,000 6,825
FLEETBOSTON FINANCIAL 175,000 6,650
WELLS FARGO 175,000 8,105
--------------------------------------------------------------------------------
TOTAL BANKS $21,580
--------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 11.3%
CISCO SYSTEMS* 120,000 6,465
KONINKLIJKE PHILIPS
ELECTRONICS, ADR 140,000 5,591
LUCENT TECHNOLOGIES 230,000 5,362
MOTOROLA 225,000 5,611
NOKIA, ADR 160,000 6,840
NORTEL NETWORKS 110,000 5,005
--------------------------------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT $34,874
--------------------------------------------------------------------------------
COMPUTERS & SERVICES -- 5.0%
HEWLETT-PACKARD 100,000 4,644
SCI SYSTEMS* 125,000 5,375
SUN MICROSYSTEMS* 50,000 5,544
--------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES $15,563
--------------------------------------------------------------------------------
COMPUTER SOFTWARE -- 2.2%
MICROSOFT* 100,000 6,887
--------------------------------------------------------------------------------
TOTAL COMPUTER SOFTWARE $ 6,887
--------------------------------------------------------------------------------
DIVERSIFIED OPERATIONS -- 8.6%
GENERAL ELECTRIC 180,000 9,866
HONEYWELL INTERNATIONAL 100,000 5,381
TYCO INTERNATIONAL 200,000 11,337
--------------------------------------------------------------------------------
TOTAL DIVERSIFIED OPERATIONS $26,584
--------------------------------------------------------------------------------
63
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS
--------------------------------------------------------------------------------
BLUE CHIP EQUITY PORTFOLIO CONCLUDED
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
DRUGS -- 11.3%
ABBOTT LABORATORIES 195,000 $ 10,298
AMGEN* 115,000 6,663
PFIZER 230,000 9,933
SCHERING-PLOUGH 160,000 8,270
--------------------------------------------------------------------------------
TOTAL DRUGS $35,164
--------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT -- 2.4%
EMERSON ELECTRIC 100,000 7,344
--------------------------------------------------------------------------------
TOTAL ELECTRICAL EQUIPMENT $7,344
--------------------------------------------------------------------------------
ENERGY -- 2.4%
HALLIBURTON 200,000 7,412
--------------------------------------------------------------------------------
TOTAL ENERGY $7,412
--------------------------------------------------------------------------------
ENTERTAINMENT -- 2.0%
WALT DISNEY 170,000 6,088
--------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $6,088
--------------------------------------------------------------------------------
FINANCIAL SERVICES -- 2.6%
MORGAN STANLEY DEAN WITTER 100,000 8,031
--------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $8,031
--------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 4.8%
PEPSICO 170,000 8,234
RALSTON PURINA GROUP 275,000 6,669
--------------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO $14,903
--------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 2.4%
PROCTER & GAMBLE 105,000 7,501
--------------------------------------------------------------------------------
TOTAL HOUSEHOLD PRODUCTS $7,501
--------------------------------------------------------------------------------
INSURANCE -- 3.6%
AMERICAN INTERNATIONAL GROUP 112,500 11,025
--------------------------------------------------------------------------------
TOTAL INSURANCE $11,025
--------------------------------------------------------------------------------
MACHINERY -- 1.8%
INGERSOLL-RAND 150,000 5,662
--------------------------------------------------------------------------------
TOTAL MACHINERY $5,662
--------------------------------------------------------------------------------
MEASURING DEVICES -- 1.2%
AGILENT TECHNOLOGIES* 80,000 3,705
--------------------------------------------------------------------------------
TOTAL MEASURING DEVICES $3,705
--------------------------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES -- 2.6%
GUIDANT* 150,000 7,941
--------------------------------------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES $7,941
--------------------------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS -- 5.5%
EXXON MOBIL 100,000 8,919
ROYAL DUTCH PETROLEUM, ADR 135,000 8,016
--------------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS $16,935
--------------------------------------------------------------------------------
RETAIL -- 4.0%
HOME DEPOT 150,000 6,450
TARGET 220,000 6,078
--------------------------------------------------------------------------------
TOTAL RETAIL $12,528
--------------------------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS-- 4.1%
ALTERA* 70,000 2,866
INTEL 140,000 6,300
TEXAS INSTRUMENTS 75,000 3,680
--------------------------------------------------------------------------------
TOTAL SEMI-CONDUCTORS/INSTRUMENTS $12,846
--------------------------------------------------------------------------------
SHARES/PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
STEEL & STEEL WORKS -- 2.1%
ALCOA 225,000 $ 6,455
--------------------------------------------------------------------------------
TOTAL STEEL & STEEL WORKS $ 6,455
--------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS -- 7.4%
ADC TELECOMMUNICATIONS* 110,000 2,351
AVAYA* 24,999 336
BELLSOUTH 130,000 6,281
QWEST COMMUNICATIONS
INTERNATIONAL* 138,345 6,727
SBC COMMUNICATIONS 125,000 7,211
--------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS $ 22,906
--------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $221,276) $ 298,100
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 3.6%
CREDIT SUISSE FIRST BOSTON
6.620%, dated 10/31/00,
matures 11/01/00, repurchase
price $11,301,483 (collateralized
by U.S. Government Obligations:
total market value
$11,628,113) $11,299 11,299
--------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $11,299) $ 11,299
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.9%
(Cost $232,575) $ 309,399
================================================================================
OTHER ASSETS AND LIABILITIES, NET -- 0.1% $ 158
================================================================================
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 9,818,565 outstanding
shares of beneficial interest 165,130
Portfolio Shares of Retail Class A
(unlimited authorization -- no par value)
based on 3,215,911 outstanding shares
of beneficial interest 47,285
Portfolio Shares of Retail Class B
(unlimited authorization -- no par value)
based on 600,628 outstanding shares
of beneficial interest 12,577
Undistributed net investment income 64
Accumulated net realized gain on investments 7,677
Net unrealized appreciation on investments 76,824
================================================================================
TOTAL NET ASSETS-- 100.0% $ 309,557
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- INSTITUTIONAL CLASS $22.72
================================================================================
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $22.69
================================================================================
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($22.69 / 95.25%) $23.82
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- RETAIL CLASS B $22.45
================================================================================
*NON-INCOME PRODUCING SECURITY
ADR--AMERICAN DEPOSITORY RECEIPT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
64
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS MANAGEMENT DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
CAPITAL GROWTH PORTFOLIO
[PHOTO OMITTED]
ALLIED INVESTMENT ADVISORS' EQUITY TEAM
-------------------------------------------
THE ARK CAPITAL GROWTH PORTFOLIO IS MANAGED BY ALLIED INVESTMENT ADVISORS'
EQUITY TEAM. THEIR DISCIPLINED APPROACH TO EQUITY INVESTING IS PARTICULARLY
SUITED TO INVESTORS WITH A LONG-TERM INVESTMENT PERSPECTIVE.
REVIEW AND OUTLOOK
The equity markets continued to experience extreme volatility as investors
tried to react to the Federal Reserve's series of interest rate increases in its
attempt to slow the U.S. economy into a "soft landing." The ARK Capital Growth
Portfolio continued to perform well, although its heavy exposure to
large-capitalization technology stocks began to work against the Portfolio late
in the first half of 2000.
Finance and healthcare sectors fared well, with Morgan Stanley Dean
Witter, Merrill Lynch, and Federal Home Loan Banks providing solid gains in
finance, while Bristol Myers, Pfizer and Eli Lilly outperformed in healthcare.
Additions to the Portfolio included Williams Communications and SCI Systems in
telecommunications and electronic manufacturing, respectively. One initial
public offering (IPO), Southern Energy, was purchased to participate in electric
power generation and distribution, an investment category that we feel will
become more important in the near future.
The technology sector has been under pressure in part because marginal
Internet and telecommunication companies, which not many months ago sported huge
valuations and no hint of profitability for years, have begun to close their
doors. Faulty business models and dramatically reduced access to capital are the
primary causes. At the same time, component shortages early in the year resulted
in double ordering, which created too much inventory and a resultant slowing of
order rates. While we do not believe this is an end-of-cycle event, it has
technology investors nervous enough to reduce technology exposure and seek
shelter in other market sectors. We believe it is a temporary phenomenon, but
have allowed cash to build to the 10% level to take advantage of the attractive
opportunities we expect over the next few months.
The markets should be less indecisive once the presidential election
results are confirmed. We believe the economy will witness slower growth,
allowing the Federal Reserve to cease its policy of higher interest rates, which
should help the financial market. We continue to believe that technology capital
spending (60% of total capital spending) will remain robust. Applied technology
will remain the method of choice for increasing productivity and
competitiveness. We feel computer, semiconductors and telecommunication stocks
will again be market leaders as we head into the new year. The ARK Capital
Growth Portfolio will continue seeking investments in fast-growing companies
that provide opportunities to invest in exciting new technologies.
65
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS
--------------------------------------------------------------------------------
CAPITAL GROWTH PORTFOLIO CONTINUED
PERFORMANCE AS OF
OCTOBER 31, 2000
--------------------------------------------------------------------------------
LIPPER
MULTI-CAP
S&P 500 GROWTH
INSTITUTIONAL RETAIL RETAIL COMPOSITE FUNDS
CLASS CLASS A* CLASS B* INDEX CLASSIFICATION
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN 21.54% 21.43% 20.52% 6.09% 34.32%
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN WITH LOAD N/A 15.66% 15.52% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN 29.94% 29.75% 28.11% 17.60% 27.09%
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN WITH LOAD N/A 27.66% 27.50% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED 5 YEAR
TOTAL RETURN 28.35% 28.19% 26.57% 21.67% 23.56%
--------------------------------------------------------------------------------
ANNUALIZED 5 YEAR
TOTAL RETURN WITH LOAD N/A 26.95% 26.41% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE 20.76% 20.40% 19.17% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE WITH LOAD N/A 19.61% 19.17% N/A N/A
--------------------------------------------------------------------------------
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning July 16, 1993. Retail Class
A shares were offered beginning March 9, 1994. Performance for the Retail
Class A shares with load reflects the deduction of the 4.75% sales charge.
Retail Class B shares were offered beginning September 14, 1998. Performance
for Retail Class B shares with load reflects the deduction of the applicable
contingent deferred sales charge.
* Performance shown prior to the actual inception date of the Retail Class A and
Retail Class B shares represents that of the Institutional Class adjusted for
the sales charge and total annual operating expenses applicable to Retail
Class A shares and Retail Class B shares. The Class A &B annual returns would
have been substantially similar to those of the Institutional Class because
shares of each class are invested in the same portfolio of securities.
Annualized performance since actual inception for Retail Class A shares is
21.02% without CDSC and 20.15% with CDSC. Annualized performance since actual
inception for Retail Class B shares is 37.96% without CDSC and 36.98% with
CDSC.
The performance of the S&P 500 Composite Index does not include operating
expenses that are incurred by the Portfolio.
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
Financial -- 15%
Technology -- 37%
Energy -- 3%
Consumer Non-Durable -- 10%
Chemicals & Drugs -- 11%
Miscellaneous Business Services -- 14%
Repurchase Agreements-- 10%
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- 90.2%
BANKS -- 6.8%
CHASE MANHATTAN 130,000 $ 5,915
FLEETBOSTON FINANCIAL 125,000 4,750
WELLS FARGO 150,000 6,947
--------------------------------------------------------------------------------
TOTAL BANKS $17,612
--------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 10.4%
CIENA* 30,000 3,154
CISCO SYSTEMS* 100,000 5,387
COMVERSE TECHNOLOGY* 60,000 6,705
LUCENT TECHNOLOGIES 65,000 1,515
MOTOROLA 200,000 4,987
NOKIA, ADR 50,000 2,137
NORTEL NETWORKS 70,000 3,185
--------------------------------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT $27,070
--------------------------------------------------------------------------------
COMPUTERS & SERVICES -- 12.0%
COMPUTER SCIENCES* 35,000 2,205
EMC* 70,000 6,234
HEWLETT-PACKARD 100,000 4,644
JABIL CIRCUIT* 120,000 6,847
ORACLE* 100,000 3,300
SCI SYSTEMS* 90,000 3,870
VERITAS SOFTWARE* 30,000 4,230
--------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES $31,330
--------------------------------------------------------------------------------
DIVERSIFIED OPERATIONS -- 7.4%
GENERAL ELECTRIC 120,000 6,578
HONEYWELL INTERNATIONAL 129,000 6,942
TYCO INTERNATIONAL 100,000 5,669
--------------------------------------------------------------------------------
TOTAL DIVERSIFIED OPERATIONS $19,189
--------------------------------------------------------------------------------
DRUGS -- 11.1%
AMGEN* 80,000 4,635
BRISTOL-MYERS SQUIBB 140,000 8,531
ELI LILLY 65,000 5,809
PFIZER 137,500 5,938
SCHERING-PLOUGH 75,000 3,877
--------------------------------------------------------------------------------
TOTAL DRUGS $28,790
--------------------------------------------------------------------------------
66
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT & SERVICES -- 0.8%
SOUTHERN ENERGY* 79,000 $ 2,153
--------------------------------------------------------------------------------
TOTAL ELECTRICAL EQUIPMENT & SERVICES $ 2,153
--------------------------------------------------------------------------------
ENTERTAINMENT -- 0.6%
ROYAL CARIBBEAN CRUISES 64,000 1,440
--------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $ 1,440
--------------------------------------------------------------------------------
FINANCIAL SERVICES -- 5.9%
FREDDIE MAC 80,000 4,800
MERRILL LYNCH 80,000 5,600
MORGAN STANLEY DEAN WITTER 60,000 4,819
--------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $15,219
--------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 1.9%
PEPSICO 100,000 4,844
--------------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO $ 4,844
--------------------------------------------------------------------------------
INSURANCE -- 2.0%
MARSH & MCLENNAN 40,000 5,230
--------------------------------------------------------------------------------
TOTAL INSURANCE $ 5,230
--------------------------------------------------------------------------------
MEASURING DEVICES -- 0.3%
AGILENT TECHNOLOGIES* 19,070 883
--------------------------------------------------------------------------------
TOTAL MEASURING DEVICES $883
--------------------------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES -- 2.4%
GUIDANT* 120,000 6,353
--------------------------------------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES $ 6,353
--------------------------------------------------------------------------------
MISCELLANEOUS BUSINESS SERVICES-- 4.3%
CONVERGYS* 140,000 6,099
FIRST DATA 100,000 5,013
--------------------------------------------------------------------------------
TOTAL MISCELLANEOUS BUSINESS SERVICES $11,112
--------------------------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS -- 2.1%
DEVON ENERGY 40,000 2,016
SMITH INTERNATIONAL* 50,000 3,525
--------------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS $ 5,541
--------------------------------------------------------------------------------
RETAIL -- 7.3%
BEST BUY* 70,000 3,513
CVS 100,000 5,294
HOME DEPOT 30,000 1,290
LOWE'S 75,000 3,427
TARGET 200,000 5,525
--------------------------------------------------------------------------------
TOTAL RETAIL $19,049
--------------------------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS-- 7.1%
ALTERA* 170,000 6,959
INTEL 120,000 5,400
NOVELLUS SYSTEMS* 50,000 2,047
TEXAS INSTRUMENTS 85,000 4,170
--------------------------------------------------------------------------------
TOTAL SEMI-CONDUCTORS/INSTRUMENTS $18,576
--------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS-- 7.8%
ADC TELECOMMUNICATIONS* 110,000 2,351
CORNING 60,000 4,590
NEXTEL COMMUNICATIONS* 80,000 3,075
RCN* 75,000 1,331
SHARES/PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
VOICESTREAM WIRELESS* 40,000 $ 5,260
WILLIAMS COMMUNICATIONS
GROUP* 205,000 3,754
--------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS $ 20,361
--------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $174,596) $234,752
--------------------------------------------------------------------------------
WARRANT -- 0.0%
INDIGO WARRANTS*
EXPIRES 10/21/01 499 1
--------------------------------------------------------------------------------
TOTAL WARRANT
(Cost $0) $1
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 9.9%
CREDIT SUISSE FIRST BOSTON
6.620%, dated 10/31/00,
matures 11/01/00, repurchase
price $25,779,251 (collateralized
by U.S. Government Obligations:
total market value
$27,071,979) $25,775 25,775
--------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $25,775) $25,775
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.1%
(Cost $200,371) $260,528
================================================================================
OTHER ASSETS AND LIABILITIES, NET-- (0.1%) $(390)
================================================================================
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 7,808,403 outstanding
shares of beneficial interest 126,391
Portfolio Shares of Retail Class A
(unlimited authorization -- no par value)
based on 2,138,905 outstanding shares
of beneficial interest 37,598
Portfolio Shares of Retail Class B
(unlimited authorization -- no par value)
based on 715,376 outstanding shares
of beneficial interest 15,874
Undistributed net investment income 61
Accumulated net realized gain on investments 20,057
Net unrealized appreciation on investments 60,157
================================================================================
TOTAL NET ASSETS-- 100.0% $260,138
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- INSTITUTIONAL CLASS $24.47
================================================================================
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $24.24
================================================================================
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($24.24 / 95.25%) $25.45
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- RETAIL CLASS B $24.01
================================================================================
*NON-INCOME PRODUCING SECURITY
ADR--AMERICAN DEPOSITORY RECEIPT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
67
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS MANAGEMENT DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
MID-CAP EQUITY PORTFOLIO
[PHOTO OMITTED]
ALLIED INVESTMENT ADVISORS' EQUITY TEAM
---------------------------------------------
THE ARK MID-CAP EQUITY PORTFOLIO IS MANAGED BY ALLIED INVESTMENT ADVISORS'
EQUITY TEAM. THEIR DISCIPLINED APPROACH TO EQUITY INVESTING IS PARTICULARLY
SUITED TO INVESTORS WITH A LONG-TERM INVESTMENT PERSPECTIVE.
REVIEW AND OUTLOOK
The mid-cap equity class continued to outperform other equity classes and
the ARK Mid-Cap Equity Portfolio enjoyed very acceptable results for the first
half of its fiscal year. Stocks such as Veritas Software, Ciena, Cyprus
Semiconductor, Siebel Systems and Triquint Semiconductor, which were solid
leaders last year, remained so over this period. Technology, inclusive of
computer hardware, semiconductors, telecommunications and Internet software,
remains overweighted, although some reductions have recently been made and cash
levels allowed to build in order to take advantage of market weakness.
The equity markets remain volatile, as investors are concerned about
higher wage levels, higher energy prices and slowing economic conditions.
Federal Reserve policy continues to focus on slowing the U.S. economy to a "soft
landing" this year, thereby reducing any inflationary pressures in the system.
The consumer, however, remains fairly confident and this fact lends more belief
to the prospect of a "soft landing" occurring early in 2001.
The stock market appears to be broadening into more mid- and small-cap
names rather than the previous highly narrow list of giants such as Microsoft,
Intel, Sun Microsystems, EMC, and Oracle. We believe this trend will generate
more interest in the mid-cap equity class. Mid-cap companies are also expected
to report adequate earnings gains next year and are generally selling at more
appealing valuations than many large capitalization names. We feel a "soft
landing" will lead to higher investor interest in industries such as retail,
restaurants, banking, insurance and, of course, mid-cap technology and
telecommunications.
PERFORMANCE AS OF
OCTOBER 31, 2000
--------------------------------------------------------------------------------
LIPPER MID-CAP
INSTITUTIONAL RETAIL S&P 400 GROWTH FUNDS
CLASS CLASS A* MID-CAP INDEX CLASSIFICATION
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN 37.66% 37.47% 31.65% 37.80%
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN WITH LOAD N/A 30.92% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN 23.20% 22.62% 19.36% 25.12%
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN WITH LOAD N/A 20.65% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE 24.01% 23.44% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE WITH LOAD N/A 21.92% N/A N/A
--------------------------------------------------------------------------------
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning November 15, 1996. Retail
Class A shares were offered beginning September 1, 1999. Performance for the
Retail Class A shares with load reflects the deduction of the 4.75% sales
charge.
* Performance shown prior to the actual inception date of the Retail Class A
shares represents that of the Institutional Class adjusted for the sales
charge and total annual operating expenses applicable to Retail Class A
shares. The Class A annual returns would have been substantially similar to
those of the Institutional Class because shares of each class are invested in
the same portfolio of securities. Annualized performance since actual
inception for Retail Class A shares is 32.56% without load and 27.13% with
load.
The performance for the S&P 400 Mid-Cap Index does not include operating
expenses that are incurred by the Portfolio.
68
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
Financial -- 12%
Technology -- 32%
Energy -- 11%
Consumer Non-Durable -- 8%
Chemicals & Drugs -- 11%
Miscellanous Business Services -- 16%
Durable Goods -- 6%
Repurchase Agreements -- 4%
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- 96.8%
AEROSPACE & DEFENSE -- 0.4%
HUBBELL 3,816 $ 91
LEAR* 5,600 153
LITTON INDUSTRIES* 3,350 174
--------------------------------------------------------------------------------
TOTAL AEROSPACE & DEFENSE $418
--------------------------------------------------------------------------------
AIR TRANSPORTATION -- 0.1%
AIRBORNE FREIGHT 2,900 29
ALASKA AIR GROUP* 1,000 26
--------------------------------------------------------------------------------
TOTAL AIR TRANSPORTATION $55
--------------------------------------------------------------------------------
APPAREL/TEXTILES -- 0.3%
JONES APPAREL GROUP* 5,400 150
SHAW INDUSTRIES 9,300 173
WESTPOINT STEVENS 3,200 23
--------------------------------------------------------------------------------
TOTAL APPAREL/TEXTILES $346
--------------------------------------------------------------------------------
AUTOMOTIVE -- 0.3%
ARVINMERITOR 2,700 45
FEDERAL SIGNAL 2,882 67
FEDERAL-MOGUL 1,450 5
KAYDON 2,200 48
MODINE MANUFACTURING 1,250 33
SUPERIOR INDUSTRIES
INTERNATIONAL 1,155 39
TELEFLEX 3,200 111
--------------------------------------------------------------------------------
TOTAL AUTOMOTIVE $348
--------------------------------------------------------------------------------
BANKS -- 5.9%
ASSOCIATED BANC-CORP 5,362 129
ASTORIA FINANCIAL 4,000 150
BANKNORTH GROUP 16,500 299
CHARTER ONE FINANCIAL 7,875 181
CITY NATIONAL 4,200 144
COMPASS BANCSHARES 9,000 164
DIME BANCORP 9,500 232
FIRST TENNESSEE NATIONAL 12,000 276
FIRST VIRGINIA BANKS 4,750 197
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
HIBERNIA 13,500 $ 161
MARSHALL & ILSLEY 11,000 498
MERCANTILE BANKSHARES 5,075 191
NATIONAL COMMERCE BANCORP 19,065 405
NORTH FORK BANCORPORATION 46,000 929
PACIFIC CENTURY FINANCIAL 4,000 51
PROVIDENT FINANCIAL GROUP 3,500 106
SILICON VALLEY BANCSHARES* 4,500 208
SOVEREIGN BANCORP 14,600 121
TCF FINANCIAL 6,500 263
WELLS FARGO 8,875 411
WILMINGTON TRUST 1,900 100
ZIONS BANCORPORATION 15,000 862
--------------------------------------------------------------------------------
TOTAL BANKS $6,078
--------------------------------------------------------------------------------
BROADCASTING, NEWSPAPERS & ADVERTISING-- 2.3%
CHRIS-CRAFT INDUSTRIES* 2,663 196
COX COMMUNICATIONS* 10,000 441
HISPANIC BROADCASTING* 9,000 281
L90* 20,000 121
STAN LEE MEDIA* 57,000 520
UNIVISION COMMUNICATIONS* 20,000 765
--------------------------------------------------------------------------------
TOTAL BROADCASTING, NEWSPAPERS & ADVERTISING $2,324
--------------------------------------------------------------------------------
BUILDING & CONSTRUCTION -- 0.2%
MARTIN MARIETTA MATERIALS 5,000 192
--------------------------------------------------------------------------------
TOTAL BUILDING & CONSTRUCTION $ 192
--------------------------------------------------------------------------------
CHEMICALS -- 0.5%
AIRGAS* 6,000 40
CABOT 5,000 110
CABOT MICROELECTRONICS* 1,402 62
HB FULLER 590 20
IMC GLOBAL 8,500 110
LUBRIZOL 2,900 63
SOLUTIA 12,000 153
--------------------------------------------------------------------------------
TOTAL CHEMICALS $ 558
--------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 4.3%
3COM* 40,000 710
ASPECT COMMUNICATIONS* 10,000 165
COMVERSE TECHNOLOGY* 15,000 1,676
HARRIS 7,000 222
JUNIPER NETWORKS* 250 49
POLYCOM* 6,000 390
POWERWAVE TECHNOLOGIES* 3,400 164
SAWTEK* 5,000 254
SIRIUS SATELLITE RADIO* 8,000 402
VISHAY INTERTECHNOLOGY* 13,950 418
--------------------------------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT $4,450
--------------------------------------------------------------------------------
COMPUTERS & SERVICES -- 8.0%
AMERICAN POWER CONVERSION* 15,500 201
ARROW ELECTRONICS* 7,000 224
AVNET 7,350 198
AVOCENT* 1,500 106
69
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS
--------------------------------------------------------------------------------
MID-CAP EQUITY PORTFOLIO CONTINUED
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
BROCADE COMMUNICATIONS
SYSTEM* 5,000 $ 1,137
CDW COMPUTER CENTERS* 10,000 644
CIRRUS LOGIC* 5,000 216
DIEBOLD 3,854 100
INFOCUS* 5,000 221
JABIL CIRCUIT* 30,000 1,712
QUANTUM - DLT & STORAGE* 5,000 75
SCI SYSTEMS* 19,900 856
SOLECTRON* 16,000 704
SUNGARD DATA SYSTEMS* 15,000 767
SYMBOL TECHNOLOGIES 11,516 523
VERTEX INTERACTIVE* 40,000 600
--------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES $ 8,284
--------------------------------------------------------------------------------
COMPUTER SOFTWARE -- 4.9%
INFORMIX* 18,000 76
INTUIT* 17,500 1,075
LEGATO SYSTEMS* 10,400 93
NETWORK ASSOCIATES* 22,000 423
RATIONAL SOFTWARE* 20,000 1,194
SYMANTEC* 10,000 391
VERITAS SOFTWARE* 13,000 1,833
--------------------------------------------------------------------------------
TOTAL COMPUTER SOFTWARE $ 5,085
--------------------------------------------------------------------------------
CONCRETE & MINERAL PRODUCTS-- 0.2%
FERRO 1,575 32
SOUTHDOWN 2,800 198
--------------------------------------------------------------------------------
TOTAL CONCRETE & MINERAL PRODUCTS $ 230
--------------------------------------------------------------------------------
DRUGS -- 10.0%
AMERISOURCE HEALTH* 5,800 252
BIOGEN* 10,000 602
CARTER-WALLACE 2,400 66
CHIRON* 19,564 847
FOREST LABORATORIES* 15,868 2,103
GENZYME - GENERAL DIVISION* 8,024 570
ICN PHARMACEUTICALS 5,000 190
IDEC PHARMACEUTICALS* 9,000 1,765
IVAX* 15,000 652
MEDIMMUNE* 11,100 726
MILLENNIUM PHARMACEUTICALS* 20,000 1,451
MYLAN LABORATORIES 15,000 420
PERRIGO* 6,050 40
SEPRACOR* 9,300 634
--------------------------------------------------------------------------------
TOTAL DRUGS $10,318
--------------------------------------------------------------------------------
ELECTRICAL SERVICES & UTILITIES-- 6.4%
ALLEGHENY ENERGY 8,729 357
ALLETE 3,650 79
ALLIANT ENERGY 5,500 167
CALPINE* 16,500 1,302
CONECTIV 8,687 156
DPL 10,000 284
DQE 10,000 349
ENERGY EAST 7,300 147
HAWAIIAN ELECTRIC INDUSTRIES 1,475 49
IDACORP 1,650 81
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
IPALCO ENTERPRISES 4,742 $ 106
KANSAS CITY POWER & LIGHT 3,250 78
LG&E ENERGY 10,150 249
MONTANA POWER 10,000 282
NISOURCE 8,700 217
NORTHEAST UTILITIES 10,000 204
NSTAR 5,000 193
NU HORIZONS ELECTRONICS* 73,200 1,180
OGE ENERGY 6,106 126
POTOMAC ELECTRIC POWER 10,150 232
PUGET SOUND ENERGY 4,200 103
SCANA 8,750 232
TECO ENERGY 9,372 261
WISCONSIN ENERGY 8,000 150
--------------------------------------------------------------------------------
TOTAL ELECTRICAL SERVICES & UTILITIES $6,584
--------------------------------------------------------------------------------
ELECTRICAL TECHNOLOGY -- 0.2%
ENERGIZER HOLDINGS* 10,000 197
--------------------------------------------------------------------------------
TOTAL ELECTRICAL TECHNOLOGY $ 197
--------------------------------------------------------------------------------
ENTERTAINMENT -- 0.9%
INTERNATIONAL GAME TECHNOLOGY* 6,600 242
MANDALAY RESORT GROUP* 7,500 156
PARK PLACE ENTERTAINMENT* 30,000 382
SIX FLAGS* 6,500 102
--------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $ 882
--------------------------------------------------------------------------------
FINANCIAL SERVICES -- 3.9%
E*TRADE GROUP* 28,000 408
AG EDWARDS 8,018 407
FEDERATED INVESTORS, CL B 12,500 364
GREENPOINT FINANCIAL 8,200 244
LEGG MASON 4,600 239
NATIONAL DISCOUNT BROKERS
GROUP* 7,500 365
STILWELL FINANCIAL 18,400 825
T ROWE PRICE ASSOCIATES 19,000 889
WADDELL & REED FINANCIAL,
CL A 10,000 319
--------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $4,060
--------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 1.4%
DEAN FOODS 3,575 114
FLOWERS INDUSTRIES 5,656 87
HORMEL FOODS 7,600 128
INTERSTATE BAKERIES 5,200 73
LANCASTER COLONY 1,848 44
MCCORMICK 5,750 182
RJ REYNOLDS TOBACCO
HOLDINGS 10,000 358
SUIZA FOODS* 2,500 116
TYSON FOODS, CL A 17,510 196
UNIVERSAL FOODS* 2,400 47
WHITMAN 5,300 69
--------------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO $1,414
--------------------------------------------------------------------------------
FORESTRY -- 0.1%
RAYONIER 2,100 74
--------------------------------------------------------------------------------
TOTAL FORESTRY $ 74
--------------------------------------------------------------------------------
70
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
GAS/NATURAL GAS -- 0.8%
AGL RESOURCES 2,150 $ 44
KINDER MORGAN 5,750 222
MCN ENERGY GROUP 4,100 101
NATIONAL FUEL GAS 1,425 76
QUESTAR 5,800 157
UTILICORP UNITED 4,425 118
WASHINGTON GAS & LIGHT 2,000 51
--------------------------------------------------------------------------------
TOTAL GAS/NATURAL GAS $ 769
--------------------------------------------------------------------------------
HOME BUILDERS -- 0.1%
CLAYTON HOMES 11,701 108
--------------------------------------------------------------------------------
TOTAL HOME BUILDERS $ 108
--------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 0.2%
DIAL 11,700 131
RPM 3,890 35
--------------------------------------------------------------------------------
TOTAL HOUSEHOLD PRODUCTS $ 166
--------------------------------------------------------------------------------
INSURANCE -- 2.5%
AFLAC 5,460 399
ALLMERICA FINANCIAL 9,000 568
AMBAC FINANCIAL GROUP 5,000 399
AMERICAN FINANCIAL GROUP 4,500 96
FIRST HEALTH GROUP* 2,800 109
HSB GROUP 1,350 53
OHIO CASUALTY 5,000 42
OLD REPUBLIC INTERNATIONAL 10,000 260
OXFORD HEALTH PLANS* 3,500 118
PACIFICARE HEALTH SYSTEMS* 3,153 33
PMI GROUP INC. 2,550 188
PROTECTIVE LIFE 4,900 113
UNITRIN 5,000 155
--------------------------------------------------------------------------------
TOTAL INSURANCE $2,533
--------------------------------------------------------------------------------
LEASING & RENTING -- 0.2%
COMDISCO 17,500 215
--------------------------------------------------------------------------------
TOTAL LEASING & RENTING $ 215
--------------------------------------------------------------------------------
LEISURE PRODUCTS -- 0.8%
ELECTRONIC ARTS* 15,500 775
--------------------------------------------------------------------------------
TOTAL LEISURE PRODUCTS $ 775
--------------------------------------------------------------------------------
LUMBER & WOOD PRODUCTS -- 0.1%
GEORGIA-PACIFIC (TIMBER GROUP) 5,000 142
--------------------------------------------------------------------------------
TOTAL LUMBER & WOOD PRODUCTS $ 142
--------------------------------------------------------------------------------
MACHINERY -- 1.3%
COOPER CAMERON* 7,000 382
DONALDSON 2,200 50
FLOWSERVE* 2,137 43
GRANT PRIDECO* 15,000 278
KENNAMETAL 1,600 47
LAM RESEARCH* 7,500 145
PENTAIR 1,574 47
SPX* 3,000 371
--------------------------------------------------------------------------------
TOTAL MACHINERY $1,363
--------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
MANUFACTURING -- 0.1%
TRINITY INDUSTRIES 3,200 $ 77
--------------------------------------------------------------------------------
TOTAL MANUFACTURING $ 77
--------------------------------------------------------------------------------
MARINE TRANSPORTATION -- 0.1%
ALEXANDER & BALDWIN 1,900 47
--------------------------------------------------------------------------------
TOTAL MARINE TRANSPORTATION $ 47
--------------------------------------------------------------------------------
MEASURING DEVICES -- 1.2%
BECKMAN COULTER 2,250 158
WATERS* 15,000 1,088
--------------------------------------------------------------------------------
TOTAL MEASURING DEVICES $1,246
--------------------------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES-- 3.4%
BERGEN BRUNSWIG, CL A 5,112 46
DENTSPLY INTERNATIONAL 3,900 135
EXPRESS SCRIPTS, CL A* 4,000 269
GILEAD SCIENCES* 3,500 301
HEALTH MANAGEMENT
ASSOCIATES, CL A* 25,000 495
LINCARE HOLDINGS* 3,200 135
MINIMED* 9,400 686
ORATEC INTERVENTIONS* 5,000 50
STERIS* 5,300 80
STRYKER 19,000 895
SYBRON INTERNATIONAL* 7,800 193
TRIGON HEALTHCARE* 1,500 108
VISX* 7,000 150
--------------------------------------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES $3,543
--------------------------------------------------------------------------------
METALS & MINING -- 0.3%
MINERALS TECHNOLOGIES 1,900 59
VULCAN MATERIALS 5,925 249
--------------------------------------------------------------------------------
TOTAL METALS & MINING $ 308
--------------------------------------------------------------------------------
MISCELLANEOUS BUSINESS SERVICES-- 7.6%
ACNIELSEN* 3,000 72
ACXIOM* 15,000 604
AFFILIATED COMPUTER SERVICES,
CL A* 3,500 195
CHECKFREE* 5,000 249
CINTAS 16,950 786
CONCORD EFS* 18,050 746
CONVERGYS* 20,700 902
CSG SYSTEMS INTERNATIONAL* 2,700 125
DST SYSTEMS* 11,000 678
FISERV* 12,818 672
GTECH HOLDINGS* 1,000 17
MANPOWER 7,000 244
MACROMEDIA* 3,800 293
NIKU* 5,000 79
NOVA* 5,500 86
RETEK* 6,000 237
REYNOLDS & REYNOLDS, CL A 4,100 73
ROBERT HALF INTERNATIONAL* 13,200 403
SEQUOIA SOFTWARE* 10,000 50
SOTHEBY'S HOLDINGS, CL A* 4,300 117
71
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS
--------------------------------------------------------------------------------
MID-CAP EQUITY PORTFOLIO CONTINUED
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
TRANSACTION SYSTEMS
ARCHITECTS, CL A* 2,300 $ 31
VIAD 6,900 147
WESTWOOD ONE* 30,000 568
WIND RIVER SYSTEMS* 10,000 411
--------------------------------------------------------------------------------
TOTAL MISCELLANEOUS BUSINESS SERVICES $7,785
--------------------------------------------------------------------------------
MISCELLANEOUS MANUFACTURING-- 0.5%
HARSCO 13,500 273
HILLENBRAND INDUSTRIES 6,000 278
--------------------------------------------------------------------------------
TOTAL MISCELLANEOUS MANUFACTURING $ 551
--------------------------------------------------------------------------------
MOTORCYCLES, BICYCLES & PARTS -- 0.9%
HARLEY-DAVIDSON 20,000 964
--------------------------------------------------------------------------------
TOTAL MOTORCYCLES, BICYCLES & PARTS $ 964
--------------------------------------------------------------------------------
OFFICE FURNITURE & FIXTURES-- 0.2%
HON INDUSTRIES 2,400 58
HERMAN MILLER 5,900 154
--------------------------------------------------------------------------------
TOTAL OFFICE FURNITURE & FIXTURES $ 212
--------------------------------------------------------------------------------
PAPER & PAPER PRODUCTS -- 0.1%
BOWATER 2,650 143
--------------------------------------------------------------------------------
TOTAL PAPER & PAPER PRODUCTS $ 143
--------------------------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS -- 3.0%
BJ SERVICES* 9,200 482
ENSCO INTERNATIONAL 10,500 349
GLOBAL MARINE* 14,075 373
NOBLE AFFILIATES 4,400 161
NOBLE DRILLING* 15,000 623
OCEAN ENERGY* 7,000 97
SMITH INTERNATIONAL* 10,000 705
TIDEWATER 4,855 224
VALERO ENERGY 3,300 109
--------------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS $3,123
--------------------------------------------------------------------------------
PETROLEUM REFINING -- 0.7%
LYONDELL CHEMICAL 10,000 144
MURPHY OIL 2,400 139
TOSCO 11,800 338
ULTRAMAR DIAMOND SHAMROCK 4,800 126
--------------------------------------------------------------------------------
TOTAL PETROLEUM REFINING $ 747
--------------------------------------------------------------------------------
PRINTING & PUBLISHING -- 1.4%
AH BELO, SER A 7,200 138
HARTE-HANKS COMMUNICATIONS 5,000 111
HOUGHTON MIFFLIN 1,380 51
LEE ENTERPRISES 1,850 51
MEDIA GENERAL, CL A 1,100 42
READERS DIGEST ASSOCIATION,
CL A 7,500 275
SCHOLASTIC* 600 48
VALASSIS COMMUNICATIONS* 10,000 278
WASHINGTON POST, CL B 850 454
--------------------------------------------------------------------------------
TOTAL PRINTING & PUBLISHING $1,448
--------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
PROFESSIONAL SERVICES -- 0.6%
APOLLO GROUP, CL A* 7,000 $ 274
DEVRY* 5,000 185
MARCHFIRST* 20,000 116
--------------------------------------------------------------------------------
TOTAL PROFESSIONAL SERVICES $ 575
--------------------------------------------------------------------------------
RETAIL -- 2.4%
ABERCROMBIE & FITCH, CL A* 12,000 283
BEST BUY* 11,000 552
BJ'S WHOLESALE CLUB* 6,000 198
BOB EVANS FARMS 3,000 56
BRINKER INTERNATIONAL* 4,849 190
CBRL GROUP 3,500 63
DOLLAR TREE STORES* 7,750 303
FAMILY DOLLAR STORES 10,000 194
FASTENAL 1,650 95
LANDS' END* 3,350 86
LONE STAR STEAKHOUSE & SALOON 3,000 25
OUTBACK STEAKHOUSE* 5,700 162
PAPA JOHN'S INTERNATIONAL* 2,500 63
WILLIAMS-SONOMA* 7,600 158
--------------------------------------------------------------------------------
TOTAL RETAIL $ 2,428
--------------------------------------------------------------------------------
RUBBER & PLASTIC -- 0.7%
CARLISLE 1,200 50
SONOCO PRODUCTS 7,550 146
WEATHERFORD INTERNATIONAL* 15,000 548
--------------------------------------------------------------------------------
TOTAL RUBBER & PLASTIC $ 744
--------------------------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS-- 12.2%
ALTERA* 26,000 1,064
ANALOG DEVICES* 14,000 910
ATMEL* 55,400 828
CADENCE DESIGN SYSTEMS* 22,000 565
CYPRESS SEMICONDUCTOR* 18,250 683
EMS TECHNOLOGIES* 25,000 397
INTEGRATED DEVICE TECHNOLOGY* 12,000 676
INTERNATIONAL RECTIFIER* 5,000 223
LATTICE SEMICONDUCTOR* 5,000 146
LINEAR TECHNOLOGY 18,000 1,162
MAXIM INTEGRATED PRODUCTS* 12,500 829
MICREL* 7,500 339
MICROCHIP TECHNOLOGY* 17,250 546
NEW FOCUS* 5,800 368
NVIDIA* 5,400 336
QLOGIC* 8,500 822
SANMINA* 5,000 572
SEMTECH* 10,000 323
SYNOPSYS* 6,000 209
TRIQUINT SEMICONDUCTOR* 8,000 307
VITESSE SEMICONDUCTOR* 18,800 1,315
--------------------------------------------------------------------------------
TOTAL SEMI-CONDUCTORS/INSTRUMENTS $12,620
--------------------------------------------------------------------------------
SPECIALTY CONSTRUCTION -- 0.2%
QUANTA SERVICES* 6,100 189
--------------------------------------------------------------------------------
TOTAL SPECIALTY CONSTRUCTION $ 189
--------------------------------------------------------------------------------
72
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
SHARES/PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
SPECIALTY MACHINERY -- 0.3%
AMERICAN STANDARD* 6,000 $ 275
--------------------------------------------------------------------------------
TOTAL SPECIALTY MACHINERY $ 275
--------------------------------------------------------------------------------
STEEL & STEEL WORKS -- 0.2%
AK STEEL HOLDING 3,500 32
CARPENTER TECHNOLOGY 1,100 34
PRECISION CASTPARTS 2,100 79
--------------------------------------------------------------------------------
TOTAL STEEL & STEEL WORKS $ 145
--------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS-- 2.8%
ADTRAN* 4,500 171
BROADWING* 17,700 500
COMMSCOPE* 5,600 142
COPPER MOUNTAIN NETWORKS* 10,000 114
DOBSON COMMUNICATIONS* 28,000 364
MASTEC* 2,500 72
TELEPHONE & DATA SYSTEMS 6,400 675
TRANSWITCH* 9,500 549
WINSTAR COMMUNICATIONS* 15,000 293
--------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS $ 2,880
--------------------------------------------------------------------------------
TESTING LABORATORIES -- 0.8%
INCYTE GENOMICS* 5,000 183
QUEST DIAGNOSTICS* 7,000 674
--------------------------------------------------------------------------------
TOTAL TESTING LABORATORIES $ 857
--------------------------------------------------------------------------------
TRANSPORTATION SERVICES -- 0.7%
CH ROBINSON WORLDWIDE 5,500 301
CNF TRANSPORTATION 4,400 117
GALILEO INTERNATIONAL 10,000 198
GATX 2,550 107
--------------------------------------------------------------------------------
TOTAL TRANSPORTATION SERVICES $ 723
--------------------------------------------------------------------------------
WATER UTILITIES -- 0.1%
AMERICAN WATER WORKS 5,600 137
--------------------------------------------------------------------------------
TOTAL WATER UTILITIES $ 137
--------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $77,606) $ 99,735
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 3.6%
CREDIT SUISSE FIRST BOSTON
6.620%, dated 10/31/00,
matures 11/01/00, repurchase
price $3,728,969 (collateralized
by U.S. Government Obligations:
total market value
$3,841,687) $3,728 3,728
--------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $3,728) $ 3,728
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.4%
(Cost $81,334) $103,463
================================================================================
OTHER ASSETS AND LIABILITIES, NET-- (0.4%) $ (429)
================================================================================
MARKET
DESCRIPTION VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 5,386,371 outstanding
shares of beneficial interest $ 57,755
Portfolio Shares of Retail Class A
(unlimited authorization -- no par value)
based on 162,829 outstanding shares
of beneficial interest 2,878
Accumulated net investment loss (1)
Accumulated net realized gain on investments 20,273
Net unrealized appreciation on investments 22,129
================================================================================
TOTAL NET ASSETS-- 100.0% $103,034
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- INSTITUTIONAL CLASS $18.57
================================================================================
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $18.54
================================================================================
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($18.54 / 95.25%) $19.46
================================================================================
*NON-INCOME PRODUCING SECURITY
CL--CLASS
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
73
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS MANAGEMENT DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
SMALL-CAP EQUITY PORTFOLIO
[PHOTO OMITTED]
H. GILES KNIGHT
-------------------------
PORTFOLIO MANAGER
-------------------------
H. GILES KNIGHT IS A PRINCIPAL OF ALLIED INVESTMENT ADVISORS, INC. HE IS THE
PORTFOLIO MANAGER OF THE SMALL-CAP EQUITY PORTFOLIO. HE HAS MORE THAN 29 YEARS
OF INVESTMENT MANAGEMENT EXPERIENCE.
REVIEW AND OUTLOOK
Stock market volatility continued to be intense during the past six months
as investors favored one equity class after another; and while the Dow Jones
Industrial Average showed positive returns, other groups such as the NASDAQ
Composite lagged. What is clear is that the Federal Reserve's intention to slow
the U.S. economy is succeeding, and high valuation stocks in computer software,
telecommunications, Internet dot coms and business-to-consumer (B to C) stocks
have suffered severely.
The ARK Small-Cap Equity Portfolio has responded to this pressure of
prolonged higher interest rates by reducing technology holdings sharply and
increasing holdings in healthcare, finance and energy. Health South, Health
Management Associates, Caremark RX and Rightchoice Management Care were medical
industry additions to the Portfolio. LaBranche, Stanhope Financial, Eaton Vance
and Dime Bancorp were examples of financial holdings added. Barrett Resources,
Pride International and Cross Timbers are investments selected from the oil
services, exploration, and production sector.
Looking ahead, we believe the equity markets will calm down somewhat in
the absence of presidential party politics, although the Federal Reserve will in
all probability remain steadfast in maintaining its current interest rate policy
until next year. Given this outlook, "stockpicking" and industry selection will
become of paramount importance. However, small- and mid-cap stocks have
historically been the equities of choice at the time of a Fed monetary ease,
which is expected in 2001. On September 17, 2000, the assets of the Govett
Smaller Companies Fund were transferred into the Small-Cap Equity Portfolio.
74
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PERFORMANCE AS OF
OCTOBER 31, 2000
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
LIPPER MID-CAP
INSTITUTIONAL RETAIL RUSSELL 2000 RUSSELL GROWTH FUNDS
CLASS CLASS A GROWTH INDEX 2000 INDEX CLASSIFICATION*
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ONE YEAR
TOTAL RETURN 38.40% 38.42% 16.16% 17.41% 37.80%
--------------------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN WITH LOAD N/A 31.85% N/A N/A N/A
--------------------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN 38.83% 38.67% 8.11% 5.94% 25.12%
--------------------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN WITH LOAD N/A 36.44% N/A N/A N/A
--------------------------------------------------------------------------------------------
ANNUALIZED 5 YEAR
TOTAL RETURN 28.35% N/A 11.65% 12.39% 21.04%
--------------------------------------------------------------------------------------------
ANNUALIZED 5 YEAR
TOTAL RETURN WITH LOAD N/A N/A N/A N/A N/A
--------------------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE 29.18% 22.50% N/A N/A N/A
--------------------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE WITH LOAD N/A 21.17% N/A N/A N/A
--------------------------------------------------------------------------------------------
</TABLE>
Past performance of the Portfolio is not predictive of future performance.
Institutional Class shares were offered beginning July 13, 1995. Retail Class
A shares were offered beginning May 16, 1996. Performance for Retail Class A
shares with load reflects the deduction of the 4.75% sales charge.
The performance of the Frank Russell 2000 Growth Index and the Frank Russell
2000 Index does not include operating expenses that are incurred by the
Portfolio.
* Lipper has reclassified the Small-Cap Equity Portfolio into its new mid-cap
comparison category.
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(UNAUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
Financial -- 18%
Technology -- 10%
Energy -- 16%
Consumer Non-Durable -- 3%
Chemicals & Drugs -- 7%
Miscellaneous Business Services -- 36%
Durable Goods -- 8%
Repurchase Agreements -- 2%
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- 98.8%
AEROSPACE & DEFENSE -- 1.1%
TELEDYNE TECHNOLOGIES* 65,000 $ 1,629
--------------------------------------------------------------------------------
TOTAL AEROSPACE & DEFENSE $ 1,629
--------------------------------------------------------------------------------
BANKS -- 3.5%
BANKNORTH GROUP 150,000 2,719
DIME BANCORP 100,000 2,444
--------------------------------------------------------------------------------
TOTAL BANKS $ 5,163
--------------------------------------------------------------------------------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 1.3%
TRUE NORTH COMMUNICATIONS 50,000 1,884
--------------------------------------------------------------------------------
TOTAL BROADCASTING, NEWSPAPERS & ADVERTISING $ 1,884
--------------------------------------------------------------------------------
COMPUTERS & SERVICES -- 3.8%
BALTIMORE TECHNOLOGIES, ADR* 75,000 1,200
INFOCUS* 65,000 2,872
JABIL CIRCUIT* 10,000 571
VERTEX INTERACTIVE* 60,000 900
--------------------------------------------------------------------------------
TOTAL COMPUTERS & SERVICES $ 5,543
--------------------------------------------------------------------------------
DRUGS -- 6.9%
CIMA LABS* 92,700 5,098
DURECT* 50,200 750
GELTEX PHARMACEUTICALS* 52,500 2,605
NOVEN PHARMACEUTICALS* 15,000 668
SUPERGEN* 6,000 77
VICAL* 43,000 914
--------------------------------------------------------------------------------
TOTAL DRUGS $10,112
--------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT & SERVICES-- 2.7%
NU HORIZONS ELECTRONICS* 113,000 1,822
PROTON ENERGY SYSTEMS* 500 13
SOUTHERN ENERGY* 79,000 2,153
--------------------------------------------------------------------------------
TOTAL ELECTRICAL EQUIPMENT & SERVICES $ 3,988
--------------------------------------------------------------------------------
ELECTRICAL TECHNOLOGY -- 2.5%
C&D TECHNOLOGIES 61,600 3,642
--------------------------------------------------------------------------------
TOTAL ELECTRICAL TECHNOLOGY $ 3,642
--------------------------------------------------------------------------------
75
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS
--------------------------------------------------------------------------------
SMALL-CAP EQUITY PORTFOLIO CONTINUED
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
ENTERTAINMENT -- 0.8%
STAN LEE MEDIA* 135,500 $ 1,236
--------------------------------------------------------------------------------
TOTAL ENTERTAINMENT $ 1,236
--------------------------------------------------------------------------------
ENVIRONMENTAL SERVICES -- 1.0%
WASTE CONNECTIONS* 60,000 1,534
--------------------------------------------------------------------------------
TOTAL ENVIRONMENTAL SERVICES $ 1,534
--------------------------------------------------------------------------------
FINANCIAL SERVICES -- 11.8%
BLACKROCK* 55,000 2,344
EATON VANCE 50,000 2,491
LABRANCHE* 90,000 3,566
LEGG MASON 50,000 2,597
PAINEWEBBER GROUP 30,000 2,137
SOUTHWEST SECURITIES GROUP 82,000 2,316
WADDELL & REED FINANCIAL,
CL A 60,000 1,913
--------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES $17,364
--------------------------------------------------------------------------------
INSURANCE -- 3.2%
STANCORP FINANCIAL GROUP 72,000 2,934
SUN LIFE FINANCIAL SERVICES
OF CANADA* 85,000 1,743
--------------------------------------------------------------------------------
TOTAL INSURANCE $ 4,677
--------------------------------------------------------------------------------
MACHINERY -- 5.7%
GRANT PRIDECO* 140,000 2,599
KULICKE & SOFFA INDUSTRIES* 392,500 5,765
--------------------------------------------------------------------------------
TOTAL MACHINERY $ 8,364
--------------------------------------------------------------------------------
MARINE SERVICES -- 1.1%
TRICO MARINE SERVICES* 100,000 1,663
--------------------------------------------------------------------------------
TOTAL MARINE SERVICES $ 1,663
--------------------------------------------------------------------------------
MARINE TRANSPORTATION -- 0.2%
NORDIC AMERICAN TANKER
SHIPPING 17,700 378
--------------------------------------------------------------------------------
TOTAL MARINE TRANSPORTATION $ 378
--------------------------------------------------------------------------------
MEASURING DEVICES -- 1.3%
BRUKER DALTONICS* 6,100 209
NANOGEN* 32,500 504
PE BIOSYSTEMS GROUP 10,000 1,170
--------------------------------------------------------------------------------
TOTAL MEASURING DEVICES $ 1,883
--------------------------------------------------------------------------------
MEDICAL LABORATORIES -- 11.8%
CELGENE* 31,000 1,996
CHARLES RIVER LABORATORIES
INTERNATIONAL* 60,000 1,575
COMMUNITY HEALTH SYSTEMS* 60,000 1,691
GENOME THERAPEUTICS* 50,000 747
LIFEPOINT HOSPITALS* 145,000 5,619
QUORUM HEALTH GROUP* 160,000 2,140
UNIVERSAL HEALTH SERVICES* 42,500 3,565
--------------------------------------------------------------------------------
TOTAL MEDICAL LABORATORIES $17,333
--------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES-- 19.8%
BIOMET 70,500 $ 2,551
CAREMARK RX* 200,000 2,500
DIAGNOSTIC PRODUCTS 30,000 1,369
EDWARDS LIFESCIENCES* 235,000 3,158
HEALTH MANAGEMENT
ASSOCIATES, CL A* 150,000 2,972
HEALTHSOUTH* 250,000 3,000
ICOS* 75,000 3,853
INTERMUNE PHARMACEUTICALS* 24,900 1,245
MEADE INSTRUMENTS* 45,000 824
MEDAREX* 24,000 1,467
PHARMANETICS* 55,000 894
REHABCARE GROUP* 50,000 2,159
RIGHTCHOICE MANAGED CARE* 90,300 2,495
VIVUS* 175,000 569
--------------------------------------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES $29,056
--------------------------------------------------------------------------------
OIL DRILLING & REFINING -- 8.8%
BARRETT RESOURCES* 109,500 3,983
CROSS TIMBERS OIL 165,000 3,104
PARKER DRILLING* 129,400 776
PATINA OIL & GAS 27,900 490
PRIDE INTERNATIONAL* 75,000 1,898
VINTAGE PETROLEUM 125,000 2,641
--------------------------------------------------------------------------------
TOTAL OIL DRILLING & REFINING $12,892
--------------------------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS -- 2.7%
DEVX ENERGY* 130,000 910
SMITH INTERNATIONAL* 15,000 1,058
STOLT OFFSHORE* 160,000 1,910
W-H ENERGY SERVICES* 3,000 42
--------------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS $ 3,920
--------------------------------------------------------------------------------
PROFESSIONAL SERVICES -- 0.5%
VASTERA* 39,000 692
--------------------------------------------------------------------------------
TOTAL PROFESSIONAL SERVICES $ 692
--------------------------------------------------------------------------------
RESTAURANTS -- 0.6%
WENDY'S INTERNATIONAL 40,000 870
--------------------------------------------------------------------------------
TOTAL RESTAURANTS $ 870
--------------------------------------------------------------------------------
RETAIL -- 0.2%
TUESDAY MORNING* 54,000 236
--------------------------------------------------------------------------------
TOTAL RETAIL $ 236
--------------------------------------------------------------------------------
RUBBER & PLASTIC -- 0.2%
DECKERS OUTDOOR* 50,100 250
--------------------------------------------------------------------------------
TOTAL RUBBER & PLASTIC $ 250
--------------------------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS-- 2.1%
NVIDIA* 15,000 932
PARK ELECTROCHEMICAL 25,000 1,653
VIASYSTEMS GROUP* 34,200 485
--------------------------------------------------------------------------------
TOTAL SEMI-CONDUCTORS/INSTRUMENTS $3,070
--------------------------------------------------------------------------------
76
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
SHARES/PRINCIPAL MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS-- 3.8%
ADC TELECOMMUNICATIONS* 83,920 $ 1,794
ANDREW* 75,000 1,973
FORSOFT* 55,000 486
INRANGE TECHNOLOGIES* 15,000 549
VOICESTREAM WIRELESS* 6,500 855
--------------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS $ 5,657
--------------------------------------------------------------------------------
TESTING LABORATORIES -- 1.4%
QUINTILES TRANSNATIONAL* 150,000 2,091
--------------------------------------------------------------------------------
TOTAL TESTING LABORATORIES $ 2,091
--------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $129,781) $145,127
--------------------------------------------------------------------------------
WARRANTS -- 0.0%
SPARTA PHARMACEUTICALS*
EXPIRES 08/23/01 13,334 --
SUPERGEN*
EXPIRES 08/12/01 2,125 --
--------------------------------------------------------------------------------
TOTAL WARRANTS
(Cost $5) $ --
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 1.8%
CREDIT SUISSE FIRST BOSTON
6.620%, dated 10/31/00,
matures 11/01/00, repurchase
price $2,577,949 (collateralized
by U.S. Government Obligations:
total market value $2,682,686) $2,577 2,577
--------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $2,577) $ 2,577
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.6%
(Cost $132,363) $147,704
================================================================================
OTHER ASSETS AND LIABILITIES, NET-- (0.6%) $ (831)
================================================================================
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 4,375,579 outstanding
shares of beneficial interest 64,771
Portfolio Shares of Retail Class A
(unlimited authorization -- no par value)
based on 3,965,099 outstanding shares
of beneficial interest 71,914
Accumulated net realized loss on investments (5,153)
Net unrealized appreciation on investments 15,341
================================================================================
TOTAL NET ASSETS-- 100.0% $146,873
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- INSTITUTIONAL CLASS $17.68
================================================================================
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $17.53
================================================================================
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($17.53 / 95.25%) $18.40
================================================================================
*NON-INCOME PRODUCING SECURITY
ADR--AMERICAN DEPOSITORY RECEIPT
CL--CLASS
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
77
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS MANAGEMENT DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
(FORMERLY INTERNATIONAL EQUITY SELECTION PORTFOLIO)
[PHOTO OMITTED]
LOUISE MCGUIGAN
-------------------------
PORTFOLIO MANAGER
-------------------------
LOUISE MCGUIGAN HAS MORE THAN EIGHT YEARS OF EXPERIENCE IN INTERNATIONAL
INVESTMENT MARKETS. SHE IS THE HEAD OF AIB GOVETT, INC.'S EAFEPRODUCT LINE, AND
IS THE PORTFOLIO MANAGER FOR THE ARKINTERNATIONAL EQUITY PORTFOLIO.
REVIEW AND OUTLOOK
The equity market background during the last six months was extremely
volatile, with market sentiment focusing on the outlook for global economic
growth and the inflation and interest rate conditions prevailing globally. The
coordinated global economic growth seen in late 1999 and early 2000 closed the
Organization for Economic Cooperation and Development (OECD) output gap for the
first time in almost a decade. Simultaneously, the price of oil continued its
strong rise. Markets worried about the inflationary repercussions of such
developments. Central Banks had already responded to these conditions and in
Europe and Japan continued to do so. The benchmark Morgan Stanley Capital
International Europe Australia Far East and Emerging Markets (MSCI EAFE+ EMG)
Index fell by 10.15% in U.S. dollar terms over the six months ending October 31.
Additionally, following the strong run in equity markets in late 1999 and
early 2000, valuations were demanding. This applied particularly to many
technology-related stocks, whose valuations came under particular scrutiny. The
combination of these factors resulted in underperformance by the technology and
telecommunication sectors.
The Portfolio was underweighted in technology at the start of the period,
having lightened positions shortly beforehand. The telecommunication weighting
in the Portfolio was higher than that of the MSCI EAFE+EMG Index at the start of
the period. The Portfolio's weighting in both technology and telecommunication
was reduced early in the period, with particular emphasis on stocks whose
valuations were at a significant premium to the overall market. Profits were
taken on media stocks Vivendi and UPC and on technology stock Nokia. Later,
positions in stocks within the technology and telecommunication sectors were
rebuilt, after significant weakness. The Portfolio's sectoral mix now reflects
an overweight position in the technology and telecommunication sectors. This
position is based on our view that the quality companies in both of these
sectors became oversold during extreme market nervousness late in the period and
have good medium-term prospects.
The emerging markets weighting in the Portfolio was slightly higher than
its benchmark's weighting at the start of the period. The concerns regarding the
peaking of global growth weighed on this asset class and the area was a weaker
performer than the developed markets over the period. The Portfolio currently
has a neutral weighting to emerging markets. The exposure will be monitored with
the magnitude of the global slowdown the main determinant of the short-term
weighting of this group of markets.
The current cash position on the Portfolio is less than 1.5%, reflecting
our greater level of comfort with equity markets at current levels than was the
case at the start of the period, when cash represented more than 6% of the value
of the Portfolio.
78
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
On August 8, 2000, the International Equity Selection Portfolio
(currently the International Equity Portfolio) changed its investment policy of
investing in mutual funds to investing directly in equity securities. On August
12, 2000 Govett International Equity Fund was reorganized into the Portfolio.
AIBGovett, Inc. (AIBGovett), the investment advisor to the Govett Fund and an
affiliate of Allied Investment Advisors (AIA), has entered into an agreement
with AIA under which AIB Govett will subadvise the ARKInternational Equity
Portfolio. Additional information about AIBGovett is contained in theARK Funds
Prospectus.
PERFORMANCE AS OF
OCTOBER 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
INSTITUTIONAL RETAIL MSCI EAFE MSCI EAFE &
CLASS* CLASS A** INDEX EMG INDEX
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN -8.95% -9.25% -2.90% -3.28%
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN WITH LOAD N/A -13.58% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN 6.84% 6.59% 9.42% 8.52%
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN WITH LOAD N/A 4.88% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED 5 YEAR
TOTAL RETURN 7.41% 7.26% 8.65% 7.82%
--------------------------------------------------------------------------------
ANNUALIZED 5 YEAR
TOTAL RETURN WITH LOAD N/A 6.22% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE 8.53% 8.45% N/A N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE WITH LOAD N/A 7.85% N/A N/A
--------------------------------------------------------------------------------
Past performance of the Portfolio is not predictive of future performance.
* Institutional Class Shares of the Govett International Equity Fund were
offered beginning July 24, 1998. Performance results prior to that date are
for the Class A Retail Shares of the Govett Fund, which began offering shares
on January 7, 1992 and was reorganized into the Portfolio on August 12, 2000.
The investment objectives and policies of the Govett Fund and revised
investment objectives and policies of the Portfolio are substantially similar.
There was no sales charge applicable to Class A Retail shares of the Govett
Fund. Annualized performance since actual inception for Institutional shares
is 1.24%.
**Class A Retail Shares of the Govett Fund were offered beginning on January 7,
1992. They were reorganized into the Portfolio on August 12, 2000. There was
no sales charge applicable to Class ARetail Shares of the Govett Fund.
The performance of the MSCI EAFE Index does not include operating expenses
that are incurred by the Portfolio.
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(AUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
Mutual Funds -- 1%
Foreign Preferred Stocks -- 1%
Foreign Common Stocks -- 97%
Common Stocks -- 1%
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- 0.9%
UNITED STATES -- 0.9%
COMVERSE TECHNOLOGY* 4,120 $ 460
--------------------------------------------------------------------------------
TOTAL UNITED STATES $ 460
--------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $343) $ 460
--------------------------------------------------------------------------------
FOREIGN COMMON STOCKS -- 96.1%
BRAZIL -- 1.9%
COMPANHIA BRASILEIRA DE
DISTRIBUICAO GRUPO PAO
DE ACUCAR, ADR 10,730 382
CVRD-COMPANHIA VALE DO
RIO DOCE, ADR 13,960 326
PETROLEO BRASILEIRO, ADR* 10,000 291
--------------------------------------------------------------------------------
TOTAL BRAZIL $ 999
--------------------------------------------------------------------------------
CHINA -- 0.4%
PETROCHINA 980,000 206
--------------------------------------------------------------------------------
TOTAL CHINA $ 206
--------------------------------------------------------------------------------
FINLAND -- 2.6%
NOKIA 32,875 1,351
--------------------------------------------------------------------------------
TOTAL FINLAND $1,351
--------------------------------------------------------------------------------
FRANCE -- 15.8%
ACCOR 9,456 382
AIR LIQUIDE 3,165 374
AVENTIS 15,011 1,081
AXA 8,877 1,174
BNP PARIBAS 8,210 707
CAP GEMINI 1,925 307
FRANCE TELECOM 6,890 719
GROUPE DANONE 6,138 857
LAFARGE 5,584 412
STMICROELECTRONICS 10,131 511
TOTAL FINA ELF 6,789 970
VIVENDI 11,855 851
--------------------------------------------------------------------------------
TOTAL FRANCE $8,345
--------------------------------------------------------------------------------
79
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS
--------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO CONTINUED
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
GERMANY -- 8.7%
DEUTSCHE BANK 12,908 $ 1,061
DEUTSCHE TELEKOM 26,135 976
E.ON 9,002 457
HENKEL KGAA 7,440 446
MG TECHNOLOGIES 9,813 105
SIEMENS 9,928 1,262
VOLKSWAGEN 5,788 289
--------------------------------------------------------------------------------
TOTAL GERMANY $ 4,596
--------------------------------------------------------------------------------
HONG KONG -- 0.8%
HUTCHISON WHAMPOA 31,808 395
--------------------------------------------------------------------------------
TOTAL HONG KONG $ 395
--------------------------------------------------------------------------------
HUNGARY -- 0.7%
MATAV RT, ADR 16,000 376
--------------------------------------------------------------------------------
TOTAL HUNGARY $ 376
--------------------------------------------------------------------------------
ITALY -- 0.7%
SAN PAOLO-IMI SPA 23,190 375
--------------------------------------------------------------------------------
TOTAL ITALY $ 375
--------------------------------------------------------------------------------
INDIA -- 0.7%
ICICI* 114,000 181
MAHANAGAR TELEPHONE
NIGAM, GDR 33,000 195
--------------------------------------------------------------------------------
TOTAL INDIA $ 376
--------------------------------------------------------------------------------
JAPAN -- 22.8%
ACOM 4,200 340
BANK OF TOKYO-MITSUBISHI 11,000 132
FUJI HEAVY INDUSTRIES 37,000 258
FUJITSU 27,000 481
HITACHI 55,000 589
ITO-YOKADO 18,000 813
MATSUSHITA ELECTRIC
INDUSTRIAL 34,000 987
MAZDA MOTOR 78,000 151
MURATA MANUFACTURING 7,700 921
NIPPON STEEL 338,000 548
NIPPON TELEGRAPH & TELEPHONE 75 682
NTT DOCOMO 10 246
PROMISE 8,700 653
SAKURA BANK 29,000 211
SHIN-ETSU CHEMICAL 14,000 574
SMC 5,000 707
SOFTBANK 1,300 78
SONY 9,400 751
SUMITOMO BANK 39,000 473
SUMITOMO CHEMICAL 154,000 759
SUMITOMO MARINE & FIRE 95,000 579
TAKEDA CHEMICAL INDUSTRIES 17,000 1,119
--------------------------------------------------------------------------------
TOTAL JAPAN $12,052
--------------------------------------------------------------------------------
MEXICO -- 1.8%
TELEFONOS DE MEXICO, ADR 7,200 388
WALMART DE MEXICO, SER C* 249,800 568
--------------------------------------------------------------------------------
TOTAL MEXICO $ 956
--------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
NETHERLANDS -- 8.4%
EQUANT* 3,161 $ 106
FORTIS 18,922 577
ING GROEP 15,581 1,069
KONINKLIJKE AHOLD 27,619 801
ROYAL DUTCH PETROLEUM 6,567 389
ROYAL KPN 27,899 564
VNU 20,338 957
--------------------------------------------------------------------------------
TOTAL NETHERLANDS $4,463
--------------------------------------------------------------------------------
RUSSIA -- 0.2%
SURGUTNEFTEGAZ, ADR* 10,000 129
--------------------------------------------------------------------------------
TOTAL RUSSIA $ 129
--------------------------------------------------------------------------------
SOUTH AFRICA -- 0.7%
EDGARS CONSOLIDATED STORES 314 1
SAPPI 53,300 365
--------------------------------------------------------------------------------
TOTAL SOUTH AFRICA $ 366
--------------------------------------------------------------------------------
SOUTH KOREA -- 1.1%
KOREA ELECTRIC POWER, ADR 17,000 207
SAMSUNG ELECTRONICS, GDR 5,364 396
--------------------------------------------------------------------------------
TOTAL SOUTH KOREA $ 603
--------------------------------------------------------------------------------
SPAIN -- 1.9%
TELEFONICA* 49,343 940
TELEFONICA, ADR* 1,400 81
--------------------------------------------------------------------------------
TOTAL SPAIN $1,021
--------------------------------------------------------------------------------
SWEDEN -- 3.8%
ATLAS COPCO 12,474 264
FORENINGSSPARBANKEN 33,454 479
NORDIC BALTIC HOLDING 25,401 190
SANDVIK 7,900 174
TELEFONAKTIEBOLAGET LM
ERICSSON, CL B 69,496 922
--------------------------------------------------------------------------------
TOTAL SWEDEN $2,029
--------------------------------------------------------------------------------
SWITZERLAND -- 5.5%
NESTLE 265 549
NOVARTIS 293 444
ROCHE HOLDING 39 356
SWISSCOM 1,430 363
UBS 6,794 941
ZURICH FINANCIAL SERVICES 480 232
--------------------------------------------------------------------------------
TOTAL SWITZERLAND $2,885
--------------------------------------------------------------------------------
TAIWAN -- 1.3%
ASUSTEK COMPUTER INC, GDR 82,016 449
SILICONWARE PRECISION
INDUSTRIES, ADR* 61,776 247
--------------------------------------------------------------------------------
TOTAL TAIWAN $ 696
--------------------------------------------------------------------------------
TURKEY -- 1.1%
AKSIGORTA 14,900,000 295
YAPI VE KREDI BANKASI* 31,603,980 273
--------------------------------------------------------------------------------
TOTAL TURKEY $ 568
--------------------------------------------------------------------------------
80
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
UNITED KINGDOM -- 15.2%
3I GROUP 3,526 $ 80
ABBEY NATIONAL 8,350 115
ANGLO AMERICAN 1,542 84
ASTRAZENECA 4,831 226
BARCLAYS 12,356 354
BARRATT DEVELOPMENTS 35,482 147
BILLITON 26,960 103
BP AMOCO 65,034 552
BRITISH TELECOMMUNICATIONS 28,025 329
CABLE & WIRELESS 15,627 221
CONDUIT, GDR* 3,320 51
DIAGEO 31,174 294
DIMENSION DATA HOLDINGS* 11,077 97
EMI GROUP 8,758 66
GLAXO WELLCOME 26,325 758
GRANADA COMPASS* 22,041 190
HALIFAX GROUP 18,728 147
HSBC HOLDINGS 23,905 341
IMPERIAL CHEMICAL INDUSTRIES 12,711 78
LLOYDS TSB GROUP 34,322 350
LOGICA 3,771 112
MARCONI 12,879 163
PEARSON 4,669 125
PRUDENTIAL 26,314 354
RAILTRACK GROUP 14,001 217
REUTERS GROUP 12,771 249
RMC GROUP 7,427 66
ROYAL BANK OF SCOTLAND GROUP 6,410 144
SCOTTISH POWER 15,291 115
SEMA GROUP 7,920 100
SERCO GROUP PLC 3,006 28
SEVERN TRENT WATER 13,391 143
SHELL TRANSPORT & TRADING 19,128 154
SMITHKLINE BEECHAM 6,137 79
SMITHS INDUSTRIES 5,820 62
TESCO 34,028 130
UNILEVER 22,772 154
VODAFONE GROUP 253,279 1,055
--------------------------------------------------------------------------------
TOTAL UNITED KINGDOM $ 8,033
--------------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(Cost $55,236) $50,820
--------------------------------------------------------------------------------
FOREIGN PREFERED STOCKS -- 0.8%
BRAZIL -- 0.5%
BRASIL TELECOM PARTICIPACOES 25,829,000 280
--------------------------------------------------------------------------------
TOTAL BRAZIL $ 280
--------------------------------------------------------------------------------
GERMANY -- 0.3%
SAP 824 167
--------------------------------------------------------------------------------
TOTAL GERMANY $ 167
--------------------------------------------------------------------------------
TOTAL FOREIGN PREFERED STOCKS
(Cost $552) $ 447
--------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
OFF-SHORE MONEY MARKET FUND -- 0.9%
DREYFUS CASH MANAGEMENT
FUND 463,896 $ 464
--------------------------------------------------------------------------------
TOTAL OFF-SHORE MONEY MARKET FUND
(Cost $464) $464
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 98.7%
(Cost $56,595) $52,191
================================================================================
OTHER ASSETS AND LIABILITIES, NET-- 1.3% $682
================================================================================
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 3,816,776 outstanding
shares of beneficial interest 44,701
Portfolio Shares of Retail Class A
(unlimited authorization -- no par value)
based on 982,319 outstanding shares
of beneficial interest 10,220
Undistributed net investment income (128)
Accumulated net realized gain on investments 2,488
Net unrealized depreciation on investments (4,408)
================================================================================
TOTAL NET ASSETS-- 100.0% $52,873
================================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- INSTITUTIONAL CLASS $11.02
================================================================================
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $11.01
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($11.01 / 95.25%) $11.56
================================================================================
* NON-INCOME PRODUCING SECURITY
ADR--AMERICAN DEPOSITORY RECEIPT
CL--CLASS
GDR--GLOBAL DEPOSITORY RECEIPT
SER--SERIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
81
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS MANAGEMENT DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
EMERGING MARKETS EQUITY PORTFOLIO
[PHOTO OMITTED]
CALUM GRAHAM
--------------------
PORTFOLIO MANAGER
--------------------
CALUM GRAHAM IS A DIRECTOR OF EMERGING MARKETS AND A DIRECTOR OF AIBGOVETT ASSET
MANAGEMENT LIMITED. HE IS THE PORTFOLIO MANAGER FOR THE ARK EMERGING MARKETS
EQUITY PORTFOLIO. MR. GRAHAM HAS MORE THAN EIGHT YEARS OF EMERGING MARKETS
INVESTMENT EXPERIENCE.
REVIEW AND OUTLOOK
Emerging markets experienced a difficult six months, as a combination of
doubts over the impact of U.S. monetary tightening, further oil price rises, and
a strengthening U.S. dollar led to drops in most markets.
Asian markets were worst hit. Export concerns over the effect of slower
U.S. growth, particularly in electronic products, led to significant falls in
Korea and Taiwan. Looking ahead, we will seek to add selectively to the quality
blue chip electronics companies in Korea and Taiwan, whose shares have clearly
been oversold. More positively, the Portfolios holdings in Hong Kong and China
have performed well against a background of economic recovery and strong inflows
into Chinese stocks since the Morgan Stanley Capital International Index
increased its China weightings earlier this year. We also like Malaysia, where
domestic demand has been consistently strong.
Relatively modest falls were recorded in the major Latin American markets.
Continued economic recovery and monetary easing provided support in Brazil,
while the July Mexican election result underlined the positive background there.
We remain positive on the prospects -- both economies are growing well and are
financially more robust than they have been for years. The change in U.S.
interest rate expectations has had an extremely positive effect on sentiment
towards Brazil, which remains the single largest weighting in the Portfolio. We
are more neutrally weighted to Mexico as its economy is more exposed to any
slowdown in the U.S.
The markets of emerging Europe, the Middle East, and Africa weathered the
heightened instability better than their Asian counterparts, particularly the
Israeli market, which was the only emerging market to record a gain during the
past six months. This was driven almost entirely by its U.S.-listed technology
stocks that continue to deliver strong earnings. The South African market also
performed well, particularly the resources sector, to which the Portfolio has
important exposure. Elsewhere, the Eastern European markets, which are primarily
made up of telecommunications companies, have been caught up in worries over the
rising costs of investment in the European telecommunications market. The
Portfolio has trimmed positions in this sector, and increased investment in the
undervalued banking stocks in the Czech Republic and Hungary.
As of August 12, 2000, the assets of the Govett Emerging Markets Equity
Fund were transferred to the newly organized ARKEmerging Markets Equity
Portfolio. AIB Govett, Inc. (AIB Govett), the investment advisor to the Govett
Fund and an affiliate of AIA, has entered into an agreement with AIA under which
AIBGovett will subadvise the ARK Emerging Markets Equity Portfolio. Additional
information about AIB Govett is contained in the ARK Funds prospectus.
82
-----
<PAGE>
--------------------------------------------------------------------------------
ARK FUNDS SEMI ANNUAL REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
PERFORMANCE AS OF
OCTOBER 31, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
RETAIL MSCI EMERGING
CLASS A* MARKETS INDEX
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN -11.34% -7.59%
--------------------------------------------------------------------------------
ONE YEAR
TOTAL RETURN WITH LOAD -15.55% N/A%
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN -9.13% -1.24%
--------------------------------------------------------------------------------
ANNUALIZED 3 YEAR
TOTAL RETURN WITH LOAD -10.59% N/A
--------------------------------------------------------------------------------
ANNUALIZED 5 YEAR
TOTAL RETURN -4.72% -1.73%
--------------------------------------------------------------------------------
ANNUALIZED 5 YEAR
TOTAL RETURN WITH LOAD -5.65% N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE 1.98% N/A
--------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
INCEPTION TO DATE WITH LOAD 1.42% N/A
--------------------------------------------------------------------------------
Past performance of the Portfolio is not predictive of future performance.
* Retail Class A shares were offered beginning January 7, 1992. Performance
results shown are for the Class A Retail shares of the Govett Emerging Markets
Equity Fund, which was reorganized into the Portfolio on August 12, 2000.
Performance for the Retail Class A shares with load reflects the deduction of
the 4.75% sales charge. The investment objectives and policies of the Govett
Fund and the Portfolio are substantially similar. There was no sales charge
applicable to Class A Retail shares of the Govett Fund.
The performance of the MSCI Emerging Markets Index does not include operating
expenses that are incurred by the Portfolio.
STATEMENT OF NET ASSETS
AS OF OCTOBER 31, 2000
(AUDITED)
% OF TOTAL PORTFOLIO INVESTMENTS
[Pie chart omitted--plot points as follows:]
Foreign Preferred Stocks -- 10%
Foreign Common Stocks-- 88%
Common Stocks-- 2%
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
FOREIGN COMMON STOCKS -- 88.9%
BRAZIL -- 9.7%
COMPANHIA BRASILEIRA DE
DISTRIBUICAO GRUPO PAO
DE ACUCAR, ADR 4,930 $176
COMPANHIA DE BEBIDAS
DAS AMERICAS, ADR* 5,500 124
EMBRATEL PARTICIPACOES, ADR 5,000 81
PETROLEO BRASILEIRO, ADR* 4,000 116
TELECOMUNICACOES
BRASILEIRAS, ADR 1,410 103
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
TELEMIG CELULAR
PARTICIPACOES, ADR 2,092 $110
UNIBANCO, GDR 6,900 174
--------------------------------------------------------------------------------
TOTAL BRAZIL $884
--------------------------------------------------------------------------------
CZECH REPUBLIC -- 1.3%
CESKY TELECOM* 4,298 57
KOMERCNI BANKA, GDR* 8,500 60
--------------------------------------------------------------------------------
TOTAL CZECH REPUBLIC $117
--------------------------------------------------------------------------------
GREECE -- 1.1%
COSMOTE MOBILE COMMUNICATIONS* 13,360 100
--------------------------------------------------------------------------------
TOTAL GREECE $100
--------------------------------------------------------------------------------
HONG KONG -- 7.8%
CHINA MOBILE (HONG KONG)* 14,000 90
HSBC HOLDINGS 10,600 147
HUTCHISON WHAMPOA 10,000 124
NEW WORLD INFRASTRUCTURE* 100,200 91
PETROCHINA COMPANY, CL H 992,000 209
YUE YUEN INDUSTRIAL
HOLDINGS 29,000 54
--------------------------------------------------------------------------------
TOTAL HONG KONG $715
--------------------------------------------------------------------------------
HUNGARY -- 2.4%
GEDEON RICHTER RT., GDR 1,392 67
MATAX RT., ADR 4,284 101
OTP BANK RT., GDR 1,000 46
--------------------------------------------------------------------------------
TOTAL HUNGARY $214
--------------------------------------------------------------------------------
INDIA -- 6.9%
HINDALCO INDUSTRIES 6,893 105
HINDUSTAN LEVER 500 2
HINDUSTAN LEVER* 38,000 144
ICICI* 46,000 73
ITC 3,300 54
MAHANAGAR TELEPHONE NIGAM* 22,000 66
RANBAXY LABORATORIES* 7,800 116
SATYAM COMPUTER SERVICES* 9,500 62
SSI 250 11
--------------------------------------------------------------------------------
TOTAL INDIA $633
--------------------------------------------------------------------------------
ISRAEL -- 4.5%
CHECK POINT SOFTWARE
TECHNOLOGIES* 1,170 185
NICE SYSTEMS, ADR* 1,300 61
ORBOTECH* 3,050 161
--------------------------------------------------------------------------------
TOTAL ISRAEL $407
--------------------------------------------------------------------------------
MALAYSIA -- 3.3%
AMMB HOLDINGS BERHAD 93,400 105
RESORTS WORLD BERHAD 114,000 200
--------------------------------------------------------------------------------
TOTAL MALAYSIA $305
--------------------------------------------------------------------------------
MEXICO -- 12.2%
CEMEX, ADR 5,270 111
FOMENTO ECONOMICO MEXICANO 32,541 124
GRUPO FINANCIERO
BANAMEX ACCIVAL* 60,000 93
83
-----
<PAGE>
--------------------------------------------------------------------------------
EQUITY PORTFOLIOS
--------------------------------------------------------------------------------
EMERGING MARKETS EQUITY PORTFOLIO CONCLUDED
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
GRUPO MODELO, SER C 38,500 $ 103
GRUPO TELEVISA, GDR* 2,260 122
TELEFONOS DE MEXICO, SER L 148,694 401
WALMART DE MEXICO, SER C* 70,750 161
--------------------------------------------------------------------------------
TOTAL MEXICO $1,115
--------------------------------------------------------------------------------
POLAND -- 1.0%
AGORA, GDR* 5,000 91
--------------------------------------------------------------------------------
TOTAL POLAND $ 91
--------------------------------------------------------------------------------
RUSSIA -- 2.5%
LUKOIL HOLDINGS, ADR 1,779 95
MOBILE TELESYSTEMS, ADR* 2,118 59
SURGUTNEFTEGAZ, ADR 6,073 78
--------------------------------------------------------------------------------
TOTAL RUSSIA $ 232
--------------------------------------------------------------------------------
SOUTH AFRICA -- 6.0%
ANGLO AMERICAN 1,800 98
BOE LIMITED 206,000 105
DIMENSION DATA HOLDINGS* 8,668 75
JD GROUP 17,000 85
MASSMART HOLDINGS 57,145 94
NEDCOR LIMITED 5,000 94
--------------------------------------------------------------------------------
TOTAL SOUTH AFRICA $ 551
--------------------------------------------------------------------------------
SOUTH KOREA -- 12.0%
HYUNDAI MOTOR 8,400 96
KOOKMIN BANK 8,000 91
KOREA ELECTRIC POWER 8,270 185
KOREA TELECOM, ADR 3,100 114
KOREA TELECOM FREETEL* 1,830 65
LG CHEMICAL 8,466 83
POHANG IRON & STEEL 3,000 174
SAMSUNG ELECTRO-MECHANICS* 2,900 93
SAMSUNG ELECTRONICS 504 63
SK TELECOM 590 126
--------------------------------------------------------------------------------
TOTAL SOUTH KOREA $1,090
--------------------------------------------------------------------------------
TAIWAN -- 9.8%
ACER COMMUNICATIONS
& MULTIMEDIA 61,200 73
ASUSTEK COMPUTER 25,737 128
FAR EASTERN TEXTILE 175,840 145
SHINKONG SYNTHETIC FIBERS* 1 --
SILICONWARE PRECISION
INDUSTRIES* 163,020 124
SYSTEX* 19,000 32
TAIWAN CELLULAR* 26,000 54
UNITED MICROELECTRONICS* 110,540 195
UNIVERSAL SCIENTIFIC
INDUSTRIES* 59,600 53
VIA TECHNOLOGIES* 9,000 65
WINBOND ELECTRONICS* 25,000 24
--------------------------------------------------------------------------------
TOTAL TAIWAN $ 893
--------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
--------------------------------------------------------------------------------
TURKEY -- 8.4%
AK ENERJI ELEKTRIK URETIM* 1,185,000 $ 48
AKSIGORTA 6,206,916 123
NETAS TELEKOMUNIK 1,602,801 204
TUPRAS TURKIYE
PETROL RAFINE 2,500,000 114
VESTEL ELEKTRONIK SANAYI* 479,786 98
YAPI VE KREDI BANKASI* 20,984,522 181
--------------------------------------------------------------------------------
TOTAL TURKEY $ 768
--------------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(Cost $9,012) $8,115
--------------------------------------------------------------------------------
FOREIGN PREFERRED STOCKS -- 9.5%
BRAZIL -- 9.5%
BANCO ITAU 1,199,000 93
PETROLEO BRASILEIRO 12,129 321
TELESP CELULAR
PARTICIPACOES 4,167,454 49
TELE NORTE LESTE
PARTICIPACOES* 11,733,627 256
CVRD-COMPANHIA VALE
DO RIO DOCE 6,320 146
--------------------------------------------------------------------------------
TOTAL BRAZIL $ 865
--------------------------------------------------------------------------------
TOTAL FOREIGN PREFERRED STOCKS
(Cost $532) $ 865
--------------------------------------------------------------------------------
COMMON STOCK -- 2.2%
COMVERSE TECHNOLOGY* 1,800 201
--------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost $161) $ 201
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.6%
(Cost $9,705) $9,181
================================================================================
OTHER ASSETS AND LIABILITIES, NET-- (0.6%) $ (57)
================================================================================
NET ASSETS:
Portfolio Shares of Retail Class A (unlimited
authorization -- no par value)
based on 988,857 outstanding shares
of beneficial interest 20,477
Accumulated net realized loss on investments (10,829)
Net unrealized depreciation on investments (524)
================================================================================
TOTAL NET ASSETS-- 100.0% $9,124
================================================================================
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE-- RETAIL CLASS A $9.23
================================================================================
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($9.23 / 95.25%) $9.69
================================================================================
* NON-INCOME PRODUCING SECURITY
ADR--AMERICAN DEPOSITORY RECEIPT
CL--CLASS
DEMAT--DEMATERIALIZATION SHARES
GDR--GLOBAL DEPOSITORY RECEIPT
SER--SERIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
84
-----
<PAGE>
This page is intentionally left blank
85
-----
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS (000) (UNAUDITED)
FOR THE PERIOD ENDED OCTOBER 31, 2000
<CAPTION>
TAX-FREE U.S. GOVERNMENT U.S. TREASURY SHORT-TERM SHORT-TERM MARYLAND
MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET TREASURY BOND TAX-FREE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------- --------------- ------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $35,836 $ 3,010 $49,218 $13,296 $ 1,241 $ 2,902+ $ 3,093
------- ------- ------- ------- ------- ------- -------
Total Investment Income 35,836 3,010 49,218 13,296 1,241 2,902 3,093
------- ------- ------- ------- ------- ------- -------
EXPENSES:
Administrator Fees 700 92 977 285 29 58 74
Investment Advisory Fees 1,345 176 1,878 547 78 336 370
Less: Waiver of Investment
Advisory Fees (700) (113) (827) (131) -- (22) (91)
Custodian Fees 105 17 164 49 7 11 12
Transfer Agency Fees 54 7 75 22 3 5 6
Professional Fees 55 8 70 22 2 4 6
Registration Fees 31 10 -- 24 6 5 6
Distribution Fees--
Retail Class A 338 52 167 25 19 -- 38
Less: Waiver of Distribution
Fees-- Retail Class A -- -- -- -- (7) -- (6)
Distribution Fees--
Retail Class B -- -- 84 -- -- -- 1
Distribution Fees--
Institutional II Class 235 27 -- 94 -- -- --
Printing Fees 61 9 88 20 3 5 8
Trustee Fees 10 2 15 4 -- 1 1
Amortization of Deferred
Organization Costs -- -- -- -- 2 4 --
Miscellaneous Fees 11 3 39 6 -- 2 2
Shareholder Servicing Fees --
Institutional Class 369 47 943 220 26 67 66
Less: Waiver of Shareholder
Servicing
Fees--Institutional Class (172) (22) (440) (103) (16) (40) (13)
Shareholder Servicing Fees--
Retail Class A 203 32 100 15 7 -- 19
Less: Waiver of Shareholder
Servicing
Fees--Retail Class A (122) (19) (60) (9) (7) -- (19)
Shareholder Servicing Fees--
Retail Class B -- -- -- -- -- -- --
Total Expenses 2,523 328 3,273 1,090 152 436 480
------- ------- ------- ------- ------- ------- -------
Net Investment Income 33,313 2,682 45,945 12,206 1,089 2,466 2,613
------- ------- ------- ------- ------- ------- -------
Net Realized Gain (Loss) on
Investments -- -- -- 43 (92) (799) (382)
Net Change in Unrealized
Appreciation on Investments -- -- -- -- 574 2,152 3,428
------- ------- ------- ------- ------- ------- -------
Net Realized and Unrealized
Gain on Investments -- -- -- 43 482 1,353 3,046
------- ------- ------- ------- ------- ------- -------
Net Increase in Net Assets
Resulting from Operations $33,313 $ 2,682 $45,945 $12,249 $ 1,571 $ 3,819 $ 5,659
======= ======= ======= ======= ======= ======= =======
<CAPTION>
PENNSYLVANIA INTERMEDIATE U.S. GOVERNMENT
TAX-FREE FIXED INCOME BOND INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ --------------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 4,467 $ 4,027+ $ 5,303+ $13,187+
------- ------- ------- -------
Total Investment Income 4,467 4,027 5,303 13,187
------- ------- ------- -------
EXPENSES:
Administrator Fees 107 79 103 242
Investment Advisory Fees 535 363 594 1,115
Less: Waiver of Investment
Advisory Fees -- (67) (71) (167)
Custodian Fees 11 15 22 38
Transfer Agency Fees 8 6 8 19
Professional Fees 7 6 7 19
Registration Fees 8 10 4 20
Distribution Fees--
Retail Class A 5 -- 4 10
Less: Waiver of Distribution
Fees-- Retail Class A (1) -- (1) (2)
Distribution Fees--
Retail Class B 1 -- -- 2
Distribution Fees--
Institutional II Class -- -- -- --
Printing Fees 8 8 10 22
Trustee Fees 2 1 2 4
Amortization of Deferred
Organization Costs 7 -- 4 --
Miscellaneous Fees 3 2 3 4
Shareholder Servicing Fees
Institutional Class 121 91 117 273
Less: Waiver of Shareholder
Servicing
Fees--Institutional Class (32) (24) (31) (55)
Shareholder Servicing Fees--
Retail Class A 2 -- 2 5
Less: Waiver of Shareholder
Servicing
Fees--Retail Class A (2) -- (2) (5)
Shareholder Servicing Fees--
Retail Class B -- -- -- 1
Total Expenses 790 490 775 1,545
------- ------- ------- -------
Net Investment Income 3,677 3,537 4,528 11,642
------- ------- ------- -------
Net Realized Gain (Loss) on
Investments (434) (832) (2,651) (228)
Net Change in Unrealized
Appreciation on Investments 5,394 2,837 5,677 7,523
------- ------- ------- -------
Net Realized and Unrealized
Gain on Investments 4,960 2,005 3,026 7,295
------- ------- ------- -------
Net Increase in Net Assets
Resulting from Operations $ 8,637 $ 5,542 $ 7,554 $18,937
======= ======= ======= =======
<FN>
+ Includes income from securities lending program. See Notes to the Financial Statements for additional information.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
86 & 87
---------
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (000) (UNAUDITED)
FOR THE PERIOD ENDED OCTOBER 31, 2000
EQUITY VALUE EQUITY BLUE CHIP
BALANCED INCOME EQUITY INDEX EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 902 $ 942 $ 2,647 $ 808 $ 1,567
Less: Foreign Taxes Withheld (3) -- (15) (7) (27)
Interest 5,138 94 51 56 447
-------- -------- -------- -------- --------
Total Investment Income 6,037 1,036 2,683 857 1,987
-------- -------- -------- -------- --------
EXPENSES:
Administrator Fees 264 57 274 95 203
Less: Waiver of Administrator Fees -- -- -- (34) --
Investment Advisory Fees 1,319 305 2,108 146 1,092
Less: Waiver of Investment
Advisory Fees (183) (26) (274) (85) (156)
Less: Reimbursement by Investment
Advisor -- -- -- -- --
Custodian Fees 38 17 52 27 24
Transfer Agency Fees 23 4 21 7 51
Professional Fees 16 5 18 7 14
Registration Fees 64 4 -- 8 25
Distribution Fees-- Retail Class A 90 7 16 15 206
Less: Waiver of Distribution Fees --
Retail Class A (34) (3) (6) (6) (112)
Distribution Fees-- Retail Class B 47 -- 2 -- 47
Distribution Fees --
Institutional II Class -- -- -- -- --
Printing Fees 19 5 24 11 18
Trustee Fees 3 1 4 1 2
Amortization of Deferred
Organization Costs -- 1 5 1 2
Miscellaneous Fees 6 1 5 2 1
Shareholder Servicing Fees --
Institutional Class 261 63 310 103 169
Less: Waiver of Shareholder
Servicing Fees-- Institutional
Class (12) (3) (14) (103) (7)
Shareholder Servicing Fees--
Retail Class A 34 3 6 6 56
Less: Waiver of Shareholder
Servicing Fees-- Retail Class A (34) (3) (6) (6) (56)
Shareholder Servicing Fees--
Retail Class B 16 -- 1 -- 15
-------- -------- -------- -------- --------
Total Expense 1,937 438 2,546 195 1,594
-------- -------- -------- -------- --------
Net Investment Income (Loss) 4,100 598 137 662 393
-------- -------- -------- -------- --------
Net Realized Gain (Loss) on
Investments 2,035 3,634 763 18,156 (6,772)
Net Realized (Loss) on
Foreign Currency Transactions -- -- -- -- --
Net Change in Unrealized
Appreciation (Depreciation)
on Investments (9,912) 539 (6,821) (19,460) (5,352)
Net Change in Unrealized
Appreciation (Depreciation)
on Foreign Currency -- -- -- -- --
-------- -------- -------- -------- --------
Net Realized and Unrealized
Gain (Loss) on Investments (7,877) 4,173 (6,058) (1,304) (12,124)
-------- -------- -------- -------- --------
Net Increase (Decrease) in Net
Assets Resulting from
Operations $ (3,777) $ 4,771 $ (5,921) $ (642) $(11,731)
======== ======== ======== ======== ========
<CAPTION>
CAPITAL MID-CAP SMALL-CAP
GROWTH EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 737 $ 323 $ 116
Less: Foreign Taxes Withheld (1) -- --
Interest 992 70 265
-------- -------- --------
Total Investment Income 1,728 393 381
-------- -------- --------
EXPENSES:
Administrator Fees 175 66 69
Less: Waiver of Administrator Fees -- -- --
Investment Advisory Fees 942 404 425
Less: Waiver of Investment
Advisory Fees (67) (30) (5)
Less: Reimbursement by Investment
Advisor -- -- --
Custodian Fees 15 17 19
Transfer Agency Fees 22 5 6
Professional Fees 12 5 4
Registration Fees 17 8 11
Distribution Fees-- Retail Class A 109 3 52
Less: Waiver of Distribution Fees --
Retail Class A (41) (1) (20)
Distribution Fees-- Retail Class B 60 -- --
Distribution Fees --
Institutional II Class -- -- --
Printing Fees 16 6 5
Trustee Fees 2 1 1
Amortization of Deferred
Organization Costs -- 1 --
Miscellaneous Fees 4 2 1
Shareholder Servicing Fees --
Institutional Class 149 74 60
Less: Waiver of Shareholder
Servicing Fees-- Institutional
Class (7) (3) (3)
Shareholder Servicing Fees--
Retail Class A 41 1 20
Less: Waiver of Shareholder
Servicing Fees-- Retail Class A (41) (1) (20)
Shareholder Servicing Fees--
Retail Class B 20 -- --
-------- -------- --------
Total Expense 1,428 558 625
-------- -------- --------
Net Investment Income (Loss) 300 (165) (244)
-------- -------- --------
Net Realized Gain (Loss) on
Investments (2,919) 12,448 (20,151)
Net Realized (Loss) on
Foreign Currency Transactions -- -- --
Net Change in Unrealized
Appreciation (Depreciation)
on Investments (15,102) (8,763) 10,588
Net Change in Unrealized
Appreciation (Depreciation)
on Foreign Currency -- -- --
-------- -------- --------
Net Realized and Unrealized
Gain (Loss) on Investments (18,021) 3,685 (9,563)
-------- -------- --------
Net Increase (Decrease) in Net
Assets Resulting from
Operations $(17,721) $ 3,520 $ (9,807)
======== ======== ========
<CAPTION>
INTERNATIONAL EMERGING MARKETS
EQUITY PORTFOLIO EQUITY PORTFOLIO
--------------- ---------------- --------------------------------
(AUDITED)(1)(2) (1/1/99-12/31/99) (AUDITED)(1)(2) (1/1/99-12/31/99)
--------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 260 $ 378 $ 132 308
Less: Foreign Taxes Withheld (33) (36) (12) (14)
Interest 56 11 -- 22
-------- -------- --------- -----
Total Investment Income 283 353 120 316
-------- -------- --------- -----
EXPENSES:
Administrator Fees 81 111 56 88
Less: Waiver of Administrator Fees -- -- -- --
Investment Advisory Fees 231 188 117 154
Less: Waiver of Investment
Advisory Fees (87) (145) (93) (154)
Less: Reimbursement by Investment
Advisor -- -- (124) (191)
Custodian Fees 83 43 56 85
Transfer Agency Fees 32 51 86 121
Professional Fees 28 70 30 81
Registration Fees 9 16 7 21
Distribution Fees-- Retail Class A 34 42 42 54
Less: Waiver of Distribution Fees --
Retail Class A (4) -- (3) --
Distribution Fees-- Retail Class B -- -- -- --
Distribution Fees --
Institutional II Class -- -- -- --
Printing Fees 5 4 9 --
Trustee Fees 19 34 20 32
Amortization of Deferred
Organization Costs -- -- -- --
Miscellaneous Fees 20 10 20 13
Shareholder Servicing Fees --
Institutional Class 14 -- -- --
Less: Waiver of Shareholder
Servicing Fees-- Institutional
Class -- -- -- --
Shareholder Servicing Fees--
Retail Class A 4 -- -- --
Less: Waiver of Shareholder
Servicing Fees-- Retail Class A (4) -- -- --
Shareholder Servicing Fees--
Retail Class B -- -- -- --
-------- -------- --------- --------
Total Expense 465 424 223 304
-------- -------- --------- --------
Net Investment Income (Loss) (182) (71) (103) 12
-------- -------- --------- --------
Net Realized Gain (Loss) on
Investments 3,040 2,229 2,110 1,335
Net Realized (Loss) on
Foreign Currency Transactions (177) 8 (84) (126)
Net Change in Unrealized
Appreciation (Depreciation)
on Investments (9,740) 2,595 (6,726) 7,013
Net Change in Unrealized
Appreciation (Depreciation)
on Foreign Currency (3) (1) 16 20
-------- -------- --------- --------
Net Realized and Unrealized
Gain (Loss) on Investments (6,880) 4,831 (4,684) 8,242
-------- -------- --------- --------
Net Increase (Decrease) in Net
Assets Resulting from
Operations $ (7,062) $ 4,760 $ (4,787) $ 8,254
======== ======== ======== ========
<FN>
(1)For the ten-month period from 1/1/00 through 10/31/00
(2)The operations of the Portfolio prior to August 12, 2000 are those of the former Govett Fund. See Note 8.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
88 & 89
---------
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (000) (UNAUDITED)
FOR THE YEAR OR PERIOD INDICATED
<TABLE>
<CAPTION>
MONEY MARKET TAX-FREE MONEY U.S. GOVERNMENT MONEY
PORTFOLIO MARKET PORTFOLIO MARKET PORTFOLIO
------------------------- ------------------------ ----------------------------
5/1/00 5/1/99 5/1/00 5/1/99 5/1/00 5/1/99
to 10/31/00 to 4/30/00 to 10/31/00 to 4/30/00 to 10/31/00 to 4/30/00
------------ ---------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 33,313 $ 52,780 $ 2,682 $ 4,908 $ 45,945 $ 82,159
Net Realized Gain (Loss) on
Investments -- -- -- (1) -- (8)
Net Change in Unrealized Appreciation
(Depreciation) on Investments -- -- -- -- -- --
Net Increase (Decrease) in Net Assets
---------- ---------- -------- -------- ---------- ----------
from Operations 33,313 52,780 2,682 4,907 45,945 82,151
---------- ---------- -------- -------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Institutional Class (15,435) (26,445) (1,227) (2,320) (38,601) (69,711)
Retail Class A (8,207) (13,178) (778) (1,407) (3,951) (6,664)
Retail Class B (1) (1) -- -- -- --
Institutional II Class (9,677) (13,156) (685) (1,180) (3,406) (5,784)
Net Capital Gains
Institutional Class -- -- -- -- -- --
Retail Class A -- -- -- -- -- --
Retail Class B -- -- -- -- -- --
Institutional Class II -- -- -- -- -- --
---------- ---------- -------- -------- ---------- ----------
Total Distributions (33,320) (52,780) (2,690) (4,907) (45,958) (82,159)
---------- ---------- -------- -------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Institutional Class:
Shares Issued 460,559 863,114 34,077 81,666 1,319,786 2,438,888
Shares Issued in Lieu of Cash
Distributions 1,321 1,006 -- -- -- --
Shares Redeemed (480,682) (882,061) (39,003) (95,896) (1,519,632) (2,452,173)
---------- ---------- -------- -------- ---------- ----------
Total Institutional Class Share
Transactions (18,802) (17,941) (4,926) (14,230) (199,846) (13,285)
---------- ---------- -------- -------- ---------- ----------
Retail Class A:
Shares Issued 81,575 306,915 12,678 110,876 160,497 586,782
Shares Issued in Lieu of Cash
Distributions 7,815 11,825 671 1,101 -- --
Shares Redeemed (71,463) (314,096) (25,267) (99,516) (123,211) (570,240)
---------- ---------- -------- -------- ---------- ----------
Total Retail Class A Share Transactions 17,927 4,644 (11,918) 12,461 37,286 16,542
---------- ---------- -------- -------- ---------- ----------
Retail Class B:
Shares Issued 6 23 -- -- -- --
Shares Issued in Lieu of Cash
Distributions 1 1 -- -- -- --
Shares Redeemed -- (23) -- -- -- --
---------- ---------- -------- -------- ---------- ----------
Total Retail Class B Share Transactions 7 1 -- -- -- --
---------- ---------- -------- -------- ---------- ----------
Institutional II Class:
Shares Issued 632,950 1,160,221 41,439 86,449 265,129 483,872
Shares Issued in Lieu of Cash
Distributions -- -- -- -- -- 5
Shares Redeemed (631,755) (1,088,667) (45,110) (94,768) (235,237) (541,518)
---------- ---------- -------- -------- ---------- ----------
Total Institutional II Class Share
Transactions 1,195 71,554 (3,671) (8,319) 29,892 (57,641)
---------- ---------- -------- -------- ---------- ----------
Increase (Decrease) in Net Assets from
Shareholder Transactions 327 58,258 (20,515) (10,088) (132,668) (54,384)
---------- ---------- -------- -------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS 320 58,258 (20,523) (10,088) (132,681) (54,392)
NET ASSETS:
Beginning of period 1,060,954 1,002,696 144,892 154,980 1,619,853 1,674,245
---------- ---------- -------- -------- ---------- ----------
End of period $1,061,274 $1,060,954 $124,369 $144,892 $1,487,172 $1,619,853
========== ========== ======== ======== ========== ==========
SHARES ISSUED AND REDEEMED:
Institutional Class:
Shares Issued 460,559 863,114 34,077 81,666 1,319,786 2,438,888
Shares Issued in Lieu of Cash
Distributions 1,321 1,006 -- -- -- --
Shares Redeemed (480,682) (882,061) (39,003) (95,896) (1,519,632) (2,452,173)
---------- ---------- -------- -------- ---------- ----------
Total Institutional Class Share
Transactions (18,802) (17,941) (4,926) (14,230) (199,846) (13,285)
---------- ---------- -------- -------- ---------- ----------
Retail Class A:
Shares Issued 81,575 306,915 12,678 110,876 160,497 586,782
Shares Issued in Lieu of Cash
Distributions 7,815 11,825 671 1,101 -- --
Shares Redeemed (71,463) (314,096) (25,267) (99,516) (123,211) (570,240)
---------- ---------- -------- -------- ---------- ----------
Total Retail Class A Share Transactions 17,927 4,644 (11,918) 12,461 37,286 16,542
---------- ---------- -------- -------- ---------- ----------
Retail Class B:
Shares Issued 6 23 -- -- -- --
Shares Issued in Lieu of Cash
Distributions 1 1 -- -- -- --
Shares Redeemed -- (23) -- -- -- --
---------- ---------- -------- -------- ---------- ----------
Total Retail Class B Share Transactions 7 1 -- -- -- --
---------- ---------- -------- -------- ---------- ----------
Institutional II Class:
Shares Issued 632,950 1,160,221 41,436 86,449 265,129 483,872
Shares Issued in Lieu of Cash
Distributions -- -- -- -- -- 5
Shares Redeemed (631,756) (1,088,667) (45,110) (94,768) (235,237) (541,518)
---------- ---------- -------- -------- ---------- ----------
Total Institutional II Class Share
Transactions 1,194 71,554 (3,674) (8,319) 29,892 (57,641)
---------- ---------- -------- -------- ---------- ----------
Net Increase (Decrease) in Share
Transactions 326 58,258 (20,518) (10,088) (132,668) (54,384)
========== ========== ======== ======== ========== ==========
<CAPTION>
U.S. TREASURY MONEY SHORT-TERM SHORT-TERM
MARKET PORTFOLIO TREASURY PORTFOLIO BOND PORTFOLIO
------------------------ ------------------------ --------------------
5/1/00 5/1/99 5/1/00 5/1/99 5/1/00 5/1/99
to 10/31/00 to 4/30/00 to 10/31/00 to 4/30/00 to 10/31/00 to 4/30/00
----------- ---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 12,206 $ 19,658 $ 1,089 $ 2,163 $ 2,466 $ 4,973
Net Realized Gain (Loss) on
Investments 43 12 (92) (78) (799) (320)
Net Change in Unrealized Appreciation
(Depreciation) on Investments -- -- 574 (672) 2,152 (2,817)
Net Increase (Decrease) in Net Assets
-------- -------- -------- -------- -------- --------
from Operations 12,249 19,670 1,571 1,413 3,819 1,836
-------- -------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Institutional Class (8,211) (13,487) (867) (1,618) (2,468) (4,969)
Retail Class A (542) (978) (222) (545) -- --
Retail Class B -- -- -- -- -- --
Institutional II Class (3,446) (5,202) -- -- -- --
Net Capital Gains
Institutional Class -- -- -- (60) -- (67)
Retail Class A -- -- -- (20) -- --
Retail Class B -- -- -- -- -- --
Institutional Class II -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total Distributions (12,199) (19,667) (1,089) (2,243) (2,468) (5,036)
-------- -------- -------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Institutional Class:
Shares Issued 378,686 515,143 2,414 10,814 6,262 29,734
Shares Issued in Lieu of Cash
Distributions 4 6 91 192 1,230 2,687
Shares Redeemed (349,598) (526,546) (3,035) (9,619) (17,904) (48,163)
-------- -------- -------- -------- -------- --------
Total Institutional Class Share
Transactions 29,092 (11,397) (530) 1,387 (10,412) (15,742)
-------- -------- -------- -------- -------- --------
Retail Class A:
Shares Issued 22,526 75,494 322 2,699 -- --
Shares Issued in Lieu of Cash
Distributions 373 658 207 530 -- --
Shares Redeemed (21,430) (77,167) (2,145) (7,199) -- --
-------- -------- -------- -------- -------- --------
Total Retail Class A Share Transactions 1,469 (1,015) (1,616) (3,970) -- --
-------- -------- -------- -------- -------- --------
Retail Class B:
Shares Issued -- -- -- -- -- --
Shares Issued in Lieu of Cash
Distributions -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total Retail Class B Share Transactions -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Institutional II Class:
Shares Issued 193,206 377,012 -- -- -- --
Shares Issued in Lieu of Cash
Distributions -- -- -- -- -- --
Shares Redeemed (200,819) (386,854) -- -- -- --
-------- -------- -------- -------- -------- --------
Total Institutional II Class Share
Transactions (7,613) (9,842) -- -- -- --
-------- -------- -------- -------- -------- --------
Increase (Decrease) in Net Assets from
Shareholder Transactions 22,948 (22,254) (2,146) (2,583) (10,412) (15,742)
-------- -------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS 22,998 (22,251) (1,664) (3,413) (9,061) (18,942)
NET ASSETS:
Beginning of period 426,564 448,815 44,681 48,094 92,185 111,127
-------- -------- -------- -------- -------- --------
End of period $449,562 $426,564 $ 43,017 $ 44,681 $ 83,124 $ 92,185
======== ======== ======== ======== ======== ========
SHARES ISSUED AND REDEEMED:
Institutional Class:
Shares Issued 378,686 515,143 243 1,092 643 3,032
Shares Issued in Lieu of Cash
Distributions 5 6 9 19 127 274
Shares Redeemed (349,598) (526,546) (306) (971) (1,840) (4,906)
-------- -------- -------- -------- -------- --------
Total Institutional Class Share
Transactions 29,093 (11,397) (54) 140 (1,070) (1,600)
-------- -------- -------- -------- -------- --------
Retail Class A:
Shares Issued 22,526 75,494 33 270 -- --
Shares Issued in Lieu of Cash
Distributions 373 658 21 53 -- --
Shares Redeemed (21,430) (77,167) (216) (725) -- --
-------- -------- -------- -------- -------- --------
Total Retail Class A Share Transactions 1,469 (1,015) (162) (402) -- --
-------- -------- -------- -------- -------- --------
Retail Class B:
Shares Issued -- -- -- -- -- --
Shares Issued in Lieu of Cash
Distributions -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total Retail Class B Share Transactions -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Institutional II Class:
Shares Issued 193,206 377,012 -- -- -- --
Shares Issued in Lieu of Cash
Distributions -- -- -- -- -- --
Shares Redeemed (200,819) (386,854) -- -- -- --
-------- -------- -------- -------- -------- --------
Total Institutional II Class Share
Transactions (7,613) (9,842) -- -- -- --
-------- -------- -------- -------- -------- --------
Net Increase (Decrease) in Share
Transactions 22,949 (22,254) (216) (262) (1,070) (1,600)
======== ======== ======== ======== ======== ========
<CAPTION>
MARYLAND PENNSYLVANIA INTERMEDIATE FIXED
TAX-FREE PORTFOLIO TAX-FREE PORTFOLIO INCOME PORTFOLIO
-------------------- -------------------- --------------------
5/1/00 5/1/99 5/1/00 5/1/99 5/1/00 5/1/99
o 10/31/00 to 4/30/00 to 10/31/00 to 4/30/00 to 10/31/00 to 4/30/00
---------- ---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 2,613 $ 5,557 $ 3,677 $ 8,359 $ 3,537 $ 5,958
Net Realized Gain (Loss) on
Investments (382) (1,021) (434) (4,790) (832) (205)
Net Change in Unrealized Appreciation
(Depreciation) on Investments 3,428 (7,849) 5,394 (12,547) 2,837 (5,262)
Net Increase (Decrease) in Net Assets
-------- -------- -------- -------- -------- --------
from Operations 5,659 (3,313) 8,637 (8,978) 5,542 491
-------- -------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Institutional Class (2,031) (4,199) (3,601) (8,167) (3,542) (5,959)
Retail Class A (579) (1,357) (68) (190) -- --
Retail Class B (3) (1) (2) (2) -- --
Institutional II Class -- -- -- -- -- --
Net Capital Gains
Institutional Class -- (401) -- (624) -- (94)
Retail Class A -- (137) -- (40) -- --
Retail Class B -- -- -- -- -- --
Institutional Class II -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total Distributions (2,613) (6,095) (3,671) (9,023) (3,542) (6,053)
-------- -------- -------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Institutional Class:
Shares Issued 5,616 17,060 7,524 31,011 15,821 40,307
Shares Issued in Lieu of Cash
Distributions 148 473 58 670 679 964
Shares Redeemed (7,695) (17,744) (12,245) (77,970) (8,149) (21,574)
-------- -------- -------- -------- -------- --------
Total Institutional Class Share
Transactions (1,931) (211) (4,663) (46,289) 8,351 19,697
-------- -------- -------- -------- -------- --------
Retail Class A:
Shares Issued 1,072 8,139 217 8,207 -- --
Shares Issued in Lieu of Cash
Distributions 430 1,254 51 190 -- --
Shares Redeemed (4,990) (13,447) (174) (8,708) -- --
-------- -------- -------- -------- -------- --------
Total Retail Class A Share Transactions (3,488) (4,054) 94 (311) -- --
-------- -------- -------- -------- -------- --------
Retail Class B:
Shares Issued 268 50 2 187 -- --
Shares Issued in Lieu of Cash
Distributions 3 1 1 2 -- --
Shares Redeemed -- -- (142) -- -- --
-------- -------- -------- -------- -------- --------
Total Retail Class B Share Transactions 271 51 (139) 189 -- --
-------- -------- -------- -------- -------- --------
Institutional II Class:
Shares Issued -- -- -- -- -- --
Shares Issued in Lieu of Cash
Distributions -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total Institutional II Class Share
Transactions -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Increase (Decrease) in Net Assets from
Shareholder Transactions (5,148) (4,214) (4,708) (46,411) 8,351 19,697
-------- -------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS (2,102) (13,622) 258 (64,412) 10,351 14,135
NET ASSETS:
Beginning of period 113,819 127,441 163,888 228,300 114,554 100,419
-------- -------- -------- -------- -------- --------
End of period $111,717 $113,819 $164,146 $163,888 $124,905 $114,554
======== ======== ======== ======== ======== ========
SHARES ISSUED AND REDEEMED:
Institutional Class:
Shares Issued 586 1,776 786 3,270 1,669 4,196
Shares Issued in Lieu of Cash
Distributions 15 49 6 70 72 101
Shares Redeemed (803) (1,862) (1,287) (8,164) (857) (2,253)
-------- -------- -------- -------- -------- --------
Total Institutional Class Share
Transactions (202) (37) (495) (4,824) 884 2,044
-------- -------- -------- -------- -------- --------
Retail Class A:
Shares Issued 112 825 23 858 -- --
Shares Issued in Lieu of Cash
Distributions 45 130 5 20 -- --
Shares Redeemed (518) (1,392) (18) (928) -- --
-------- -------- -------- -------- -------- --------
Total Retail Class A Share Transactions (361) (437) 10 (50) -- --
-------- -------- -------- -------- -------- --------
Retail Class B:
Shares Issued 28 5 -- 20 -- --
Shares Issued in Lieu of Cash
Distributions -- -- -- -- -- --
Shares Redeemed -- -- (14) -- -- --
-------- -------- -------- -------- -------- --------
Total Retail Class B Share Transactions 28 5 (14) 20 -- --
-------- -------- -------- -------- -------- --------
Institutional II Class:
Shares Issued -- -- -- -- -- --
Shares Issued in Lieu of Cash
Distributions -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total Institutional II Class Share
Transactions -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Net Increase (Decrease) in Share
Transactions (535) (469) (499) (4,854) 884 2,044
======== ======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
90 & 91
-------
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (000) (UNAUDITED)
FOR THE YEAR OR PERIOD INDICATED
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME BALANCED
BOND PORTFOLIO PORTFOLIO PORTFOLIO
-------------------- -------------------- --------------------
5/1/00 5/1/99 5/1/00 5/1/99 5/1/00 5/1/99
to 10/31/00 to 4/30/00 to 10/31/00 to 4/30/00 to 10/31/00 to 4/30/00
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income (Loss) $ 4,528 $ 11,125 $ 11,642 $ 20,635 $ 4,100 $ 4,016
Net Realized Gain (Loss)
on Investments (2,651) (2,751) (228) (5,446) 2,035 23,312
Net Change in Unrealized
Appreciation (Depreciation)
on Investments 5,677 (8,673) 7,523 (15,567) (9,912) 7,859
-------- -------- -------- -------- -------- --------
Net Increase (Decrease)
in Net Assets from Operations 7,554 (299) 18,937 (378) (3,777) 35,187
-------- -------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Institutional Class (4,460) (10,963) (11,311) (20,146) (3,543) (2,977)
Retail Class A (65) (134) (269) (400) (438) (532)
Retail Class B -- -- (12) (20) (80) (57)
Net Capital Gains
Institutional Class -- -- -- -- -- (6,347)
Retail Class A -- -- -- -- -- (1,468)
Retail Class B -- -- -- -- -- (286)
-------- -------- -------- -------- -------- --------
Total Distributions (4,525) (11,097) (11,592) (20,566) (4,061) (11,667)
-------- -------- -------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Institutional Class:
Shares Issued 1,472 15,267 30,748 61,253 15,947 238,125
Shares Issued in Lieu of Cash
Distributions 1,156 3,036 8,076 13,799 3,522 9,288
Shares Redeemed (27,677) (95,534) (13,490) (67,796) (18,294) (34,794)
-------- -------- -------- -------- -------- --------
Total Institutional Class Share
Transactions (25,049) (77,231) 25,334 7,256 1,175 212,619
-------- -------- -------- -------- -------- --------
Retail Class A:
Proceeds from Govett Merger -- -- 3,395 -- -- --
Shares Issued 199 1,392 123 782 6,641 14,922
Shares Issued in Lieu of Cash
Distributions 50 124 180 360 423 1,953
Shares Redeemed (388) (1,246) (1,294) (3,443) (3,551) (5,886)
-------- -------- -------- -------- -------- --------
Total Retail Class A
Share Transactions (139) 270 2,404 (2,301) 3,513 10,989
-------- -------- -------- -------- -------- --------
Retail Class B:
Shares Issued -- -- 62 296 3,532 7,784
Shares Issued in Lieu of Cash
Distributions -- -- 10 18 79 341
Shares Redeemed -- -- (74) (141) (605) (633)
-------- -------- -------- -------- -------- --------
Total Retail Class B
Share Transactions -- -- (2) 173 3,006 7,492
-------- -------- -------- -------- -------- --------
Increase (Decrease) in Net
Assets from Shareholder
Transactions (25,188) (76,961) 27,736 5,128 7,694 231,100
-------- -------- -------- -------- -------- --------
NET INCREASE (DECREASE)
IN NET ASSETS (22,159) (88,357) 35,081 (15,816) (144) 254,620
NET ASSETS:
Beginning of period 169,212 257,569 349,519 365,335 402,421 147,801
-------- -------- -------- -------- -------- --------
End of period $147,053 $169,212 $384,600 $349,519 $402,277 $402,421
======== ======== ======== ======== ======== ========
SHARES ISSUED AND REDEEMED:
Institutional Class:
Shares Issued 157 1,611 3,228 6,333 944 14,127
Shares Issued in Lieu of Cash
Distributions 124 321 842 1,427 209 595
Shares Redeemed (2,968) (10,040) (1,404) (7,011) (1,088) (2,198)
-------- -------- -------- -------- -------- --------
Total Institutional Class Share
Transactions (2,687) (8,108) 2,666 749 65 12,524
-------- -------- -------- -------- -------- --------
Retail Class A:
Shares issued from Govett Merger -- -- 348 -- -- --
Shares Issued 22 145 12 79 395 968
Shares Issued in Lieu of Cash
Distributions 5 13 19 37 25 126
Shares Redeemed (42) (131) (133) (350) (210) (380)
-------- -------- -------- -------- -------- --------
Total Retail Class A Share
Transactions (15) 27 246 (234) 210 714
-------- -------- -------- -------- -------- --------
Retail Class B:
Shares Issued -- -- 7 30 210 502
Shares Issued in Lieu of Cash
Distributions -- -- 1 2 5 22
Shares Redeemed -- -- (8) (15) (36) (40)
-------- -------- -------- -------- -------- --------
Total Retail Class B Share
Transactions -- -- -- 17 179 484
-------- -------- -------- -------- -------- --------
Net Increase (Decrease)
in Share Transactions (2,702) (8,081) 2,912 532 454 13,722
======== ======== ======== ======== ======== ========
<CAPTION>
EQUITY INCOME VALUE EQUITY
PORTFOLIO PORTFOLIO
------------------- ---------------------
5/1/00 5/1/99 5/1/00 5/1/99
to 10/31/00 to 4/30/00 to 10/31/00 to 4/30/00
------- -------- -------- --------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income (Loss) $ 598 $ 1,692 $ 137 $ 768
Net Realized Gain (Loss)
on Investments 3,634 5,839 763 72,783
Net Change in Unrealized
Appreciation (Depreciation)
on Investments 539 (3,327) (6,821) (27,927)
------- -------- -------- --------
Net Increase (Decrease)
in Net Assets from Operations 4,771 4,204 (5,921) 45,624
------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Institutional Class (575) (1,633) (91) (848)
Retail Class A (22) (59) -- (5)
Retail Class B -- -- -- --
Net Capital Gains
Institutional Class -- (3,176) -- (75,007)
Retail Class A -- (120) -- (968)
Retail Class B -- -- -- (86)
------- -------- -------- --------
Total Distributions (597) (4,988) (91) (76,914)
------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Institutional Class:
Shares Issued 2,313 2,573 14,884 28,880
Shares Issued in Lieu of Cash
Distributions 10 3,201 26 52,387
Shares Redeemed (7,712) (22,640) (51,636) (158,506)
------- -------- -------- --------
Total Institutional Class Share
Transactions (5,389) (16,866) (36,726) (77,239)
------- -------- -------- --------
Retail Class A:
Proceeds from Govett Merger -- -- -- --
Shares Issued 342 474 1,803 5,487
Shares Issued in Lieu of Cash
Distributions 21 172 -- 670
Shares Redeemed (289) (933) (1,527) (1,849)
------- -------- -------- --------
Total Retail Class A
Share Transactions 74 (287) 276 4,308
------- -------- -------- --------
Retail Class B:
Shares Issued -- -- 115 451
Shares Issued in Lieu of Cash
Distributions -- -- -- 86
Shares Redeemed -- -- (61) (86)
------- -------- -------- --------
Total Retail Class B
Share Transactions -- -- 54 451
------- -------- -------- --------
Increase (Decrease) in Net
Assets from Shareholder
Transactions (5,315) (17,153) (36,396) (72,480)
------- -------- -------- --------
NET INCREASE (DECREASE)
IN NET ASSETS (1,141) (17,937) (42,408) (103,770)
NET ASSETS:
Beginning of period 86,826 104,763 436,774 540,544
------- -------- -------- --------
End of period $85,685 $ 86,826 $394,366 $436,774
======= ======== ======== ========
SHARES ISSUED AND REDEEMED:
Institutional Class:
Shares Issued 185 219 534 2,052
Shares Issued in Lieu of Cash
Distributions 1 290 2 4,036
Shares Redeemed (620) (1,944) (3,147) (10,974)
------- -------- -------- --------
Total Institutional Class Share
Transactions (434) (1,435) (2,611) (4,886)
------- -------- -------- --------
Retail Class A:
Shares issued from Govett Merger -- -- -- --
Shares Issued 27 41 117 381
Shares Issued in Lieu of Cash
Distributions 2 15 -- 52
Shares Redeemed (23) (80) (97) (133)
------- -------- -------- --------
Total Retail Class A Share
Transactions 6 (24) 20 300
------- -------- -------- --------
Retail Class B:
Shares Issued -- -- 7 30
Shares Issued in Lieu of Cash
Distributions -- -- -- 7
Shares Redeemed -- -- (3) (6)
------- -------- -------- --------
Total Retail Class B Share
Transactions -- -- 4 31
------- -------- -------- --------
Net Increase (Decrease)
in Share Transactions (428) (1,459) (2,587) (4,555)
======= ======== ======== ========
<CAPTION>
EQUITY INDEX BLUE CHIP EQUITY
PORTFOLIO PORTFOLIO
--------------------- ---------------------
5/1/00 5/1/99 5/1/00 5/1/99
to 10/31/00 to 4/30/00 to 10/31/00 to 4/30/00
-------- -------- -------- --------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income (Loss) $ 662 $ 1,230 $ 393 $ 785
Net Realized Gain (Loss)
on Investments 18,156 4,081 (6,772) 14,155
Net Change in Unrealized
Appreciation (Depreciation)
on Investments (19,460) 6,778 (5,352) 30,755
-------- -------- -------- --------
Net Increase (Decrease)
in Net Assets from Operations (642) 12,089 (11,731) 45,695
-------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Institutional Class (663) (1,143) (367) (538)
Retail Class A (28) (50) (81) (131)
Retail Class B -- -- -- --
Net Capital Gains
Institutional Class -- (2,577) -- (2,889)
Retail Class A -- (143) -- (1,091)
Retail Class B -- -- -- (115)
-------- -------- -------- --------
Total Distributions (691) (3,913) (448) (4,764)
-------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Institutional Class:
Shares Issued 6,154 76,893 31,383 82,264
Shares Issued in Lieu of Cash
Distributions 518 3,343 125 2,930
Shares Redeemed (42,118) (23,701) (11,146) (32,344)
-------- -------- -------- --------
Total Institutional Class Share
Transactions (35,446) 56,535 20,362 52,850
-------- -------- -------- --------
Retail Class A:
Proceeds from Govett Merger -- -- -- --
Shares Issued 814 3,049 6,467 13,891
Shares Issued in Lieu of Cash
Distributions 28 192 80 1,200
Shares Redeemed (696) (1,227) (4,094) (9,289)
-------- -------- -------- --------
Total Retail Class A
Share Transactions 146 2,014 2,453 5,802
-------- -------- -------- --------
Retail Class B:
Shares Issued -- -- 3,784 6,763
Shares Issued in Lieu of Cash
Distributions -- -- -- 115
Shares Redeemed -- -- (454) (523)
-------- -------- -------- --------
Total Retail Class B
Share Transactions -- -- 3,330 6,355
-------- -------- -------- --------
Increase (Decrease) in Net
Assets from Shareholder
Transactions (35,300) 58,549 26,145 65,007
-------- -------- -------- --------
NET INCREASE (DECREASE)
IN NET ASSETS (36,633) 66,725 13,966 105,938
NET ASSETS:
Beginning of period 158,610 91,885 295,591 189,653
-------- -------- -------- --------
End of period $121,977 $158,610 $309,557 $295,591
======== ======== ======== ========
SHARES ISSUED AND REDEEMED:
Institutional Class:
Shares Issued 414 5,337 1,330 3,861
Shares Issued in Lieu of Cash
Distributions 35 232 5 137
Shares Redeemed (2,820) (1,641) (479) (1,521)
-------- -------- -------- --------
Total Institutional Class Share
Transactions (2,371) 3,928 856 2,477
-------- -------- -------- --------
Retail Class A:
Shares issued from Govett Merger -- -- -- --
Shares Issued 55 216 275 649
Shares Issued in Lieu of Cash
Distributions 2 13 3 56
Shares Redeemed (47) (85) (174) (435)
-------- -------- -------- --------
Total Retail Class A Share
Transactions 10 144 104 270
-------- -------- -------- --------
Retail Class B:
Shares Issued -- -- 162 319
Shares Issued in Lieu of Cash
Distributions -- -- -- 5
Shares Redeemed -- -- (19) (25)
-------- -------- -------- --------
Total Retail Class B Share
Transactions -- -- 143 299
-------- -------- -------- --------
Net Increase (Decrease)
in Share Transactions (2,361) 4,072 1,103 3,046
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
92 & 93
-------
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (000) (UNAUDITED)
FOR THE YEAR OR PERIOD INDICATED
<TABLE>
<CAPTION>
CAPITAL GROWTH MID-CAP EQUITY SMALL-CAP EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
----------------------- ----------------------- -----------------------
5/1/00 5/1/99 5/1/00 5/1/99 5/1/00 5/1/99
to 10/31/00 to 4/30/00 to 10/31/00 to 4/30/00 to 10/31/00 to 4/30/00
----------- ---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income (Loss) $ 300 $ (408) $ (165) $ (198) $ (244) $ (304)
Net Realized Gain (Loss)
on Investments (2,919) 33,108 12,448 11,692 (20,151) 43,819
Net Realized Loss on Foreign
Currency Transactions -- -- -- -- -- --
Net Change in Unrealized
Appreciation (Depreciation)
on Investments (15,102) 40,192 (8,763) 14,550 10,588 (4,360)
Net Change in Unrealized
Appreciation (Depreciation)
on Foreign Currency
Transactions -- -- -- -- -- --
-------- -------- -------- ------- -------- -------
Net Increase (Decrease) in
Net Assets from Operations (17,721) 72,892 3,520 26,044 (9,807) 39,155
-------- -------- -------- ------- -------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Institutional Class -- -- -- -- -- --
Retail Class A -- -- -- -- -- --
Retail Class B -- -- -- -- -- --
Return of Capital
Institutional Class -- -- -- -- (460) --
Retail Class A -- -- -- -- (69) --
Net Capital Gains
Institutional Class -- (10,574) -- (9,259) -- (11,450)
Retail Class A -- (2,900) -- (40) (13,786) (930)
Retail Class B -- (600) -- -- (2,066) --
-------- -------- -------- ------- -------- -------
Total Distributions -- (14,074) -- (9,299) (16,381) (12,380)
-------- -------- -------- ------- -------- -------
CAPITAL SHARE TRANSACTIONS:
Institutional Class:
Proceeds from Govett Merger -- -- -- -- -- --
Shares Issued 29,682 86,807 8,634 13,963 8,281 26,251
Shares Issued in Lieu of
Cash Distributions -- 9,997 -- 9,191 14,035 11,275
Shares Redeemed (19,714) (37,657) (4,355) (11,190) (5,961) (12,185)
-------- -------- -------- ------- -------- -------
Total Institutional Class Share
Transactions 9,968 59,147 4,279 11,964 16,355 25,341
-------- -------- -------- ------- -------- -------
Retail Class A:
Proceeds from Govett Merger -- -- -- -- 62,433 --
Shares Issued 8,273 18,664 1,979 1,064 2,217 7,791
Shares Issued in Lieu of
Cash Distributions -- 2,855 -- 27 2,105 911
Shares Redeemed (4,983) (3,968) (158) (34) (2,716) (961)
-------- -------- -------- ------- -------- -------
Total Retail Class A
Share Transactions 3,290 17,551 1,821 1,057 64,039 7,741
-------- -------- -------- ------- -------- -------
Retail Class B:
Shares Issued 4,793 9,728 -- -- -- --
Shares Issued in Lieu of
Cash Distributions -- 595 -- -- -- --
Shares Redeemed (593) (677) -- -- -- --
-------- -------- -------- ------- -------- -------
Total Retail Class B
Share Transactions 4,200 9,646 -- -- -- --
-------- -------- -------- ------- -------- -------
Increase (Decrease) in Net Assets
from Shareholder Transactions 17,458 86,344 6,100 13,021 80,394 33,082
-------- -------- -------- ------- -------- -------
NET INCREASE (DECREASE) IN
NET ASSETS (263) 145,162 9,620 29,766 54,206 59,857
NET ASSETS:
Beginning of period 260,401 115,239 93,414 63,648 92,667 32,810
-------- -------- -------- ------- -------- -------
End of period $260,138 $260,401 $103,034 $93,414 $146,873 $92,667
======== ======== ======== ======= ======== =======
SHARES ISSUED AND REDEEMED:
Institutional Class:
Shares Issued from Govett Merger -- -- -- -- -- --
Shares Issued 1,159 3,808 469 871 393 1,094
Shares Issued in Lieu of
Cash Distributions -- 450 -- 627 762 555
Shares Redeemed (770) (1,651) (232) (679) (281) (563)
-------- -------- -------- ------- -------- -------
Total Institutional Class
Share Transactions 389 2,607 237 819 874 1,086
-------- -------- -------- ------- -------- -------
Retail Class A:
Shares issued from Govett Merger -- -- -- -- 3,398 --
Shares Issued 323 833 106 65 103 314
Shares Issued in Lieu of
Cash Distributions -- 130 -- 2 115 45
Shares Redeemed (209) (177) (8) (2) (141) (48)
-------- -------- -------- ------- -------- -------
Total Retail Class A
Share Transactions 114 786 98 65 3,475 311
-------- -------- -------- ------- -------- -------
Retail Class B:
Shares Issued 190 435 -- -- -- --
Shares Issued in Lieu of
Cash Distributions -- 27 -- -- -- --
Shares Redeemed (24) (29) -- -- -- --
-------- -------- -------- ------- -------- -------
Total Retail Class B
Share Transactions 166 433 -- -- -- --
-------- -------- -------- ------- -------- -------
Net Increase (Decrease) in
Share Transactions 669 3,826 335 884 4,349 1,397
======== ======== ======== ======= ======== =======
<CAPTION>
INTERNATIONAL EQUITY EMERGING MARKETS EQUITY
PORTFOLIO PORTFOLIO
(AUDITED)(1)(2) (AUDITED)(1)
------------------------------------------ ------------------------------------------
1/1/00 1/1/99 1/1/98 1/1/00 1/1/99 1/1/98
to 10/31/00 to 12/31/99 to 12/31/98 to 10/31/00 to 12/31/99 to 12/31/98
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income (Loss) $ (182) $ (71) $ (92) $ (103) $ 12 $ 7
Net Realized Gain (Loss)
on Investments 3,040 2,229 2,926 2,110 1,335 (7,679)
Net Realized Loss on Foreign
Currency Transactions (177) 8 -- (84) (126) --
Net Change in Unrealized
Appreciation (Depreciation)
on Investments (9,740) 2,595 112 (6,726) 7,013 (914)
Net Change in Unrealized
Appreciation (Depreciation)
on Foreign Currency
Transactions (3) (1) -- 16 20 --
------- ------- ------- ------- ------- -------
Net Increase (Decrease) in
Net Assets from Operations (7,062) 4,760 2,946 (4,787) 8,254 (8,586)
------- ------- ------- ------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Institutional Class -- -- -- -- -- --
Retail Class A -- -- -- -- -- --
Retail Class B -- -- -- -- -- --
Return of Capital
Institutional Class -- -- -- -- -- --
Retail Class A -- -- -- -- -- --
Net Capital Gains
Institutional Class (1,227) (898) (792) -- -- --
Retail Class A (1,923) (1,386) (1,796) -- -- (338)
Retail Class B -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total Distributions (3,150) (2,284) (2,588) -- -- (338)
------- ------- ------- ------- ------- -------
CAPITAL SHARE TRANSACTIONS:
Institutional Class:
Proceeds from Govett Merger 40,471 -- -- -- -- --
Shares Issued 2,067 2 6,075 -- -- --
Shares Issued in Lieu of
Cash Distributions 1,224 898 790 -- -- --
Shares Redeemed (4,129) (127) (52) -- -- --
------- ------- ------- ------- ------- -------
Total Institutional Class Share
Transactions 39,633 773 6,813 -- -- --
------- ------- ------- ------- ------- -------
Retail Class A:
Proceeds from Govett Merger 3,419 -- -- -- -- --
Shares Issued 354 814 1,655 1,303 1,150 5,030
Shares Issued in Lieu of
Cash Distributions 1,828 1,307 1,696 -- -- 313
Shares Redeemed (3,286) (3,133) (5,574) (5,451) (6,079) (14,584)
------- ------- ------- ------- ------- -------
Total Retail Class A
Share Transactions 2,315 (1,012) (2,223) (4,148) (4,929) (9,241)
------- ------- ------- ------- ------- -------
Retail Class B:
Shares Issued -- -- -- -- -- --
Shares Issued in Lieu of
Cash Distributions -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total Retail Class B
Share Transactions -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Increase (Decrease) in Net Assets
from Shareholder Transactions 41,948 (239) 4,590 (4,148) (4,929) (9,241)
------- ------- ------- ------- ------- -------
NET INCREASE (DECREASE) IN
NET ASSETS 31,736 2,237 4,948 (8,935) 3,325 18,165
NET ASSETS:
Beginning of period 21,137 18,900 13,952 18,059 14,734 32,899
------- ------- ------- ------- ------- -------
End of period $52,873 $21,137 $18,900 $ 9,124 $18,059 $14,734
======= ======= ======= ======= ======= =======
SHARES ISSUED AND REDEEMED:
Institutional Class:
Shares Issued from Govett Merge 3,354 -- -- -- -- --
Shares Issued 175 -- 395 -- -- --
Shares Issued in Lieu of
Cash Distributions 99 54 53 -- -- --
Shares Redeemed (301) (8) (4) -- -- --
------- ------- ------- ------- ------- -------
Total Institutional Class
Share Transactions 3,327 46 444 -- -- --
------- ------- ------- ------- ------- -------
Retail Class A:
Shares issued from Govett Merge 284 -- -- -- -- --
Shares Issued 28 50 100 108 110 555
Shares Issued in Lieu of
Cash Distributions 149 78 110 -- -- 25
Shares Redeemed (216) (198) (347) (453) (627) (1,417)
------- ------- ------- ------- ------- -------
Total Retail Class A
Share Transactions 245 (70) (137) (345) (517) (837)
------- ------- ------- ------- ------- -------
Retail Class B:
Shares Issued -- -- -- -- -- --
Shares Issued in Lieu of
Cash Distributions -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total Retail Class B
Share Transactions -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Net Increase (Decrease) in
Share Transactions 3,572 (24) 307 (345) (517) (837)
======= ======= ======= ======= ======= =======
<FN>
(1) The operations of the Portfolios prior to August 12, 2000 are those of the
former Govett Funds. See Note 8
(2) Share activity for the period prior to August 12, 2000 have been restated to
reflect the conversion ratio used in the merger.
</FN>
</TABLE>
94 & 95
-------
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED OCTOBER 31, 2000
(UNAUDITED) AND THE PERIODS ENDED APRIL 30.
<TABLE>
<CAPTION>
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS RATIO OF
VALUE, NET UNREALIZED FROM NET FROM NET ASSET NET ASSETS EXPENSES
BEGINNING INVESTMENT GAINS OR (LOSSES) INVESTMENT CAPITAL VALUE, END TOTAL END OF TO AVERAGE
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN(A) PERIOD (000) NET ASSETS
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------
MONEY MARKET PORTFOLIO
------------------------
INSTITUTIONAL CLASS
2000 $1.00 0.03 -- (0.03) -- $1.00 3.19%+ $ 490,424 0.39%
2000 1.00 0.05 -- (0.05) -- 1.00 5.37 509,229 0.38
1999 1.00 0.05 -- (0.05) -- 1.00 5.17 527,132 0.38
1998 1.00 0.05 -- (0.05) -- 1.00 5.55 226,439 0.33
1997 1.00 0.05 -- (0.05) -- 1.00 5.36 318,919 0.28
1996 1.00 0.06 -- (0.06) -- 1.00 5.78 348,343 0.25
RETAIL CLASS A
2000 $1.00 0.03 -- (0.03) -- $1.00 3.08%+ $ 269,016 0.62%
2000 1.00 0.05 -- (0.05) -- 1.00 5.13 251,140 0.61
1999 1.00 0.05 -- (0.05) -- 1.00 4.91 246,496 0.62
1998 1.00 0.05 -- (0.05) -- 1.00 5.25 188,048 0.62
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
RETAIL CLASS B
2000 $1.00 0.03 -- (0.03) -- $1.00 2.72%+ $ 30 1.31%
2000 1.00 0.04 -- (0.04) -- 1.00 4.41 23 1.31
1999 (1) 1.00 0.01 -- (0.01) -- 1.00 3.86* 22 1.30*
INSTITUTIONAL II CLASS
2000 $1.00 0.03 -- (0.03) -- $1.00 3.16%+ $ 301,804 0.46%
2000 1.00 0.05 -- (0.05) -- 1.00 5.30 300,562 0.45
1999 1.00 0.05 -- (0.05) -- 1.00 5.11 229,046 0.43
1998 1.00 0.05 -- (0.05) -- 1.00 5.47 82,293 0.41
1997 1.00 0.05 -- (0.05) -- 1.00 5.25 62,960 0.38
1996 (2) 1.00 0.04 -- (0.04) -- 1.00 4.33+ 28,790 0.36*
---------------------------------
TAX-FREE MONEY MARKET PORTFOLIO
---------------------------------
INSTITUTIONAL CLASS
2000 $1.00 0.02 -- (0.02) -- $1.00 1.98%+ $ 58,743 0.38%
2000 1.00 0.03 -- (0.03) -- 1.00 3.17 63,666 0.37
1999 1.00 0.03 -- (0.03) -- 1.00 2.99 77,896 0.36
1998 1.00 0.03 -- (0.03) -- 1.00 3.45 90,446 0.32
1997 1.00 0.03 -- (0.03) -- 1.00 3.29 69,091 0.28
1996 1.00 0.04 -- (0.04) -- 1.00 3.61 74,739 0.22
RETAIL CLASS A
2000 $1.00 0.02 -- (0.02) -- $1.00 1.86%+ $ 34,043 0.61%
2000 1.00 0.03 -- (0.03) -- 1.00 2.94 45,970 0.60
1999 1.00 0.03 -- (0.03) -- 1.00 2.74 33,509 0.60
1998 1.00 0.03 -- (0.03) -- 1.00 3.16 25,144 0.61
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
INSTITUTIONAL II CLASS
2000 $1.00 0.02 -- (0.02) -- $1.00 1.94%+ $ 31,583 0.45%
2000 1.00 0.03 -- (0.03) -- 1.00 3.10 35,256 0.44
1999 1.00 0.03 -- (0.03) -- 1.00 2.94 43,575 0.41
1998 1.00 0.03 -- (0.03) -- 1.00 3.37 29,474 0.40
1997 1.00 0.03 -- (0.03) -- 1.00 3.19 16,727 0.38
1996 (3) 1.00 0.02 -- (0.02) -- 1.00 2.62+ 9,387 0.33*
</TABLE>
[table continued]
RATIO
RATIO OF NET OF EXPENSES
INVESTMENT TO AVERAGE
INCOME NET ASSETS
TO AVERAGE (EXCLUDING
NET ASSETS WAIVERS)
------------------------------------------
------------------------
MONEY MARKET PORTFOLIO
------------------------
INSTITUTIONAL CLASS
2000 6.25% 0.59%
2000 5.25 0.58
1999 5.01 0.60
1998 5.41 0.50
1997 5.23 0.43
1996 5.62 0.44
RETAIL CLASS A
2000 6.02% 0.84%
2000 5.02 0.83
1999 4.79 0.85
1998 5.13 0.85
1997 4.92 0.83
1996 5.25 0.77
RETAIL CLASS B
2000 5.35% 1.44%
2000 4.39 1.44
1999 (1) 3.76* 1.44*
INSTITUTIONAL II CLASS
2000 6.18% 0.59%
2000 5.20 0.58
1999 4.97 0.57
1998 5.33 0.55
1997 5.14 0.53
1996 (2) 5.37* 0.55*
---------------------------------
TAX-FREE MONEY MARKET PORTFOLIO
---------------------------------
INSTITUTIONAL CLASS
2000 3.88% 0.61%
2000 3.12 0.60
1999 2.95 0.60
1998 3.39 0.51
1997 3.23 0.44
1996 3.54 0.45
RETAIL CLASS A
2000 3.65% 0.86%
2000 2.90 0.85
1999 2.66 0.85
1998 3.11 0.86
1997 2.97 0.84
1996 3.33 0.90
INSTITUTIONAL II CLASS
2000 3.80% 0.61%
2000 3.04 0.60
1999 2.87 0.57
1998 3.31 0.56
1997 3.14 0.54
1996 (3) 3.35* 0.58*
The accompanying notes are an integral part of the financial statements.
96
------------
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED OCTOBER 31, 2000
(UNAUDITED) AND THE PERIODS ENDED APRIL 30.
<TABLE>
<CAPTION>
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS RATIO OF
VALUE, NET UNREALIZED FROM NET FROM NET ASSET NET ASSETS EXPENSES
BEGINNING INVESTMENT GAINS OR (LOSSES) INVESTMENT CAPITAL VALUE, END TOTAL END OF TO AVERAGE
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN(A) PERIOD (000) NET ASSETS
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
----------------------------------------
INSTITUTIONAL CLASS
2000 $ 1.00 0.03 -- (0.03) -- $ 1.00 3.13%+ $1,214,916 0.41%
2000 1.00 0.05 -- (0.05) -- 1.00 5.16 1,414,772 0.41
1999 1.00 0.05 -- (0.05) -- 1.00 5.00 1,428,064 0.40
1998 1.00 0.05 -- (0.05) -- 1.00 5.42 1,285,840 0.35
1997 1.00 0.05 -- (0.05) -- 1.00 5.22 1,250,778 0.32
1996 1.00 0.05 -- (0.05) -- 1.00 5.64 1,043,758 0.31
RETAIL CLASS A
2000 $ 1.00 0.03 -- (0.03) -- $ 1.00 3.01%+ $ 157,863 0.64%
2000 1.00 0.05 -- (0.05) -- 1.00 4.92 120,578 0.64
1999 1.00 0.05 -- (0.05) -- 1.00 4.75 104,037 0.64
1998 (4) 1.00 0.04 -- (0.04) -- 1.00 5.19* 78,265 0.67*
INSTITUTIONAL II CLASS
2000 $ 1.00 0.03 -- (0.03) -- $ 1.00 3.09%+ $ 114,393 0.48%
2000 1.00 0.05 -- (0.05) -- 1.00 5.08 84,503 0.48
1999 1.00 0.05 -- (0.05) -- 1.00 4.95 142,144 0.45
1998 1.00 0.05 -- (0.05) -- 1.00 5.33 91,629 0.44
1997 1.00 0.05 -- (0.05) -- 1.00 5.12 37,284 0.42
1996 (3) 1.00 0.04 -- (0.04) -- 1.00 4.11+ 17,027 0.41*
-------------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO
-------------------------------------
INSTITUTIONAL CLASS
2000 $ 1.00 0.03 -- (0.03) -- $ 1.00 2.85%+ $ 307,692 0.47%
2000 1.00 0.05 -- (0.05) -- 1.00 4.73 278,568 0.45
1999 1.00 0.04 -- (0.04) -- 1.00 4.58 289,930 0.45
1998 1.00 0.05 -- (0.05) -- 1.00 5.08 262,687 0.40
1997 1.00 0.05 -- (0.05) -- 1.00 5.00 225,924 0.37
1996 1.00 0.05 -- (0.05) -- 1.00 5.32 275,259 0.36
RETAIL CLASS A
2000 $ 1.00 0.03 -- (0.03) -- $ 1.00 2.73%+ $ 20,089 0.70%
2000 1.00 0.04 -- (0.04) -- 1.00 4.49 18,618 0.68
1999 1.00 0.04 -- (0.04) -- 1.00 4.33 19,632 0.69
1998 1.00 0.05 -- (0.05) -- 1.00 4.77 35,302 0.70
1997 1.00 0.05 -- (0.05) -- 1.00 4.71 13,673 0.64
1996 (5) 1.00 0.02 -- (0.02) -- 1.00 1.82+ 8,758 0.55*
INSTITUTIONAL II CLASS
2000 $ 1.00 0.03 -- (0.03) -- $ 1.00 2.81%+ $ 121,781 0.54%
2000 1.00 0.05 -- (0.05) -- 1.00 4.66 129,378 0.52
1999 1.00 0.04 -- (0.04) -- 1.00 4.53 139,253 0.50
1998 1.00 0.05 -- (0.05) -- 1.00 4.99 94,844 0.48
1997 1.00 0.05 -- (0.05) -- 1.00 4.89 63,496 0.47
1996 (3) 1.00 0.04 -- (0.04) -- 1.00 3.87+ 47,220 0.47*
-------------------------------
SHORT-TERM TREASURY PORTFOLIO
-------------------------------
INSTITUTIONAL CLASS
2000 $ 9.86 0.25 0.11 (0.25) -- $ 9.97 3.65%+ $ 34,725 0.64%
2000 10.03 0.46 (0.15) (0.46) (0.02) 9.86 3.11 34,877 0.64
1999 10.05 0.48 0.03 (0.48) (0.05) 10.03 5.24 34,088 0.63
1998 9.96 0.53 0.10 (0.53) (0.01) 10.05 6.48 24,929 0.55
1997 9.96 0.50 -- (0.49) (0.01) 9.96 5.13 21,563 0.55
1996 (6) 10.00 0.06 (0.04) (0.06) -- 9.96 0.16+ 18,823 0.55*
RETAIL CLASS A
2000 $ 9.85 0.23 0.12 (0.24) -- $ 9.96 3.55%+ $ 8,292 0.83%
2000 10.03 0.44 (0.16) (0.44) (0.02) 9.85 2.80 9,804 0.82
1999 10.05 0.47 0.03 (0.47) (0.05) 10.03 5.04 14,006 0.82
1998 9.96 0.52 0.09 (0.51) (0.01) 10.05 6.23 14,410 0.78
1997 (7) 9.95 0.27 0.03 (0.28) (0.01) 9.96 3.39+ 22,937 0.67*
</TABLE>
[table continued]
RATIO
RATIO OF NET OF EXPENSES
INVESTMENT TO AVERAGE
INCOME (LOSS) NET ASSETS PORTFOLIO
TO AVERAGE (EXCLUDING TURNOVER
NET ASSETS WAIVERS) RATE
-------------------------------------------------------------------
----------------------------------------
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
----------------------------------------
INSTITUTIONAL CLASS
2000 6.12% 0.59% --
2000 5.05 0.59 --
1999 4.86 0.59 --
1998 5.29 0.49 --
1997 5.10 0.43 --
1996 5.45 0.44 --
RETAIL CLASS A
2000 5.91% 0.84% --
2000 4.85 0.84 --
1999 4.62 0.84 --
1998 (4) 4.98* 0.87* --
INSTITUTIONAL II CLASS
2000 6.06% 0.59% --
2000 4.91 0.59 --
1999 4.76 0.56 --
1998 5.21 0.55 --
1997 5.01 0.53 --
1996 (3) 5.25* 0.56* --
-------------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO
-------------------------------------
INSTITUTIONAL CLASS
2000 5.59% 0.60% --
2000 4.63 0.58 --
1999 4.47 0.59 --
1998 4.96 0.48 --
1997 4.88 0.43 --
1996 5.18 0.45 --
RETAIL CLASS A
2000 5.36% 0.85% --
2000 4.34 0.83 --
1999 4.31 0.84 --
1998 4.66 0.85 --
1997 4.62 0.83 --
1996 (5) 4.71* 0.86* --
INSTITUTIONAL II CLASS
2000 5.52% 0.60% --
2000 4.58 0.58 --
1999 4.39 0.56 --
1998 4.88 0.54 --
1997 4.79 0.53 --
1996 (3) 4.98* 0.55* --
-------------------------------
SHORT-TERM TREASURY PORTFOLIO
-------------------------------
INSTITUTIONAL CLASS
2000 4.93% 0.73% 30.03%
2000 4.60 0.73 80.49
1999 4.79 0.72 70.64
1998 5.26 0.60 124.24
1997 5.11 0.60 147.86
1996 (6) (0.55)* 0.60* --
RETAIL CLASS A
2000 4.73% 1.13% 30.03%
2000 4.39 1.12 80.49
1999 4.61 1.12 70.64
1998 5.02 1.07 124.24
1997 (7) 5.07* 0.91* 147.86
97
-------
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED OCTOBER 31, 2000
(UNAUDITED) AND THE PERIODS ENDED APRIL 30.
<TABLE>
<CAPTION>
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS RATIO OF
VALUE, NET UNREALIZED FROM NET FROM NET ASSET NET ASSETS EXPENSES
BEGINNING INVESTMENT GAINS OR (LOSSES) INVESTMENT CAPITAL VALUE, END TOTAL END OF TO AVERAGE
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN(A) PERIOD (000) NET ASSETS
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
---------------------------
SHORT-TERM BOND PORTFOLIO
---------------------------
INSTITUTIONAL CLASS
2000 $ 9.63 0.28 0.13 (0.27) -- $ 9.77 4.30%+ $ 83,124 0.97%
2000 9.94 0.50 (0.30) (0.50) (0.01) 9.63 2.01 92,185 0.97
1999 9.95 0.51 (0.01) (0.51) -- 9.94 5.15 111,127 0.97
1998 9.96 0.09 (0.01) (0.09) -- 9.95 0.82+ 131,669 0.97*
1998++ 9.95 0.57 0.01 (0.57) -- 9.96 5.98 133,544 0.82
1997++ (8) 10.00 0.49 (0.05) (0.49) -- 9.95 4.49+ 146,178 0.90*
-----------------------------
MARYLAND TAX-FREE PORTFOLIO
-----------------------------
INSTITUTIONAL CLASS
2000 $ 9.48 0.22 0.26 (0.22) -- $ 9.74 5.14%+ $ 88,291 0.81%
2000 10.21 0.44 (0.69) (0.44) (0.04) 9.48 (2.37) 87,845 0.81
1999 10.14 0.45 0.14 (0.45) (0.07) 10.21 5.86 95,046 0.76
1998 9.87 0.47 0.33 (0.47) (0.06) 10.14 8.15 83,215 0.68
1997 (9) 10.00 0.22 (0.13) (0.22) -- 9.87 0.89+ 79,608 0.67*
RETAIL CLASS A
2000 $ 9.48 0.21 0.26 (0.22) -- $ 9.73 4.96%+ $ 23,102 0.94%
2000 10.21 0.43 (0.69) (0.43) (0.04) 9.48 (2.50) 25,924 0.94
1999 10.14 0.43 0.14 (0.43) (0.07) 10.21 5.69 32,395 0.93
1998 9.87 0.44 0.34 (0.45) (0.06) 10.14 7.91 25,283 0.90
1997(10) 9.96 0.13 (0.07) (0.15) -- 9.87 0.63+ 7,997 0.91*
RETAIL CLASS B
2000 $ 9.48 0.18 0.26 (0.18) -- $ 9.74 4.71%+ $ 324 1.70%
2000(11) 9.75 1.51 (0.23) (1.51) (0.04) 9.48 13.17+ 50 1.68*
--------------------------------
PENNSYLVANIA TAX-FREE PORTFOLIO
--------------------------------
INSTITUTIONAL CLASS
2000 $ 9.38 0.21 0.30 (0.21) -- $ 9.68 5.53%+ $160,868 0.95%
2000 10.23 0.42 (0.81) (0.42) (0.04) 9.38 (3.88) 160,664 0.96
1999 10.14 0.41 0.15 (0.41) (0.06) 10.23 5.56 224,480 0.92
1998 10.28 0.07 (0.14) (0.07) -- 10.14 (0.66)+ 215,182 0.84*
1998++ 10.09 0.40 0.19 (0.40) -- 10.28 6.68 195,322 0.80
1997++(8) 10.00 0.40 0.09 (0.40) -- 10.09 5.03+ 221,393 0.83*
RETAIL CLASS A
2000 $ 9.38 0.21 0.29 (0.21) -- $ 9.67 5.34%+ $ 3,225 1.09%
2000 10.22 0.40 (0.80) (0.40) (0.04) 9.38 (3.95) 3,036 1.09
1999 10.13 0.39 0.15 (0.39) (0.06) 10.22 5.39 3,820 1.10
1998 (12) 10.26 0.04 (0.13) (0.04) -- 10.13 (0.94)+ 2,577 1.01*
RETAIL CLASS B
2000 $ 9.39 0.17 0.30 (0.17) -- $ 9.69 5.06%+ $ 53 1.84%
2000(11) 9.71 1.20 (0.28) (1.20) (0.04) 9.39 9.37 + 188 1.84*
-------------------------------------
INTERMEDIATE FIXED INCOME PORTFOLIO
-------------------------------------
INSTITUTIONAL CLASS
2000 $ 9.42 0.28 0.16 (0.28) -- $ 9.58 4.72%+ $124,905 0.81%
2000 9.93 0.53 (0.50) (0.53) (0.01) 9.42 0.32 114,554 0.81
1999 10.00 0.55 (0.02) (0.55) (0.05) 9.93 5.40 100,419 0.77
1998 9.80 0.60 0.23 (0.60) (0.03) 10.00 8.65 84,328 0.69
1997 (9) 10.00 0.28 (0.20) (0.28) -- 9.80 0.78+ 76,326 0.68*
</TABLE>
[table continued]
RATIO
RATIO OF NET OF EXPENSES
INVESTMENT TO AVERAGE
INCOME (LOSS) NET ASSETS PORTFOLIO
TO AVERAGE (EXCLUDING TURNOVER
NET ASSETS WAIVERS) RATE
---------------------------------------------------
---------------------------
SHORT-TERM BOND PORTFOLIO
---------------------------
INSTITUTIONAL CLASS
2000 5.50% 1.11% 78.50%
2000 5.09 1.11 65.58
1999 5.14 1.11 91.22
1998 5.14* 1.16* 108.18
1998++ 5.78 1.01 135.00
1997++ (8) 5.47* 1.08* 112.00
-----------------------------
MARYLAND TAX-FREE PORTFOLIO
-----------------------------
INSTITUTIONAL CLASS
2000 4.60% 1.00% 11.68%
2000 4.57 1.00 24.29
1999 4.35 0.99 30.83
1998 4.62 0.77 22.40
1997 (9) 4.95* 0.72* 11.13
RETAIL CLASS A
2000 4.47% 1.30% 11.68%
2000 4.43 1.30 24.29
1999 4.18 1.29 30.83
1998 4.39 1.15 22.40
1997(10) 4.70* 1.10* 11.13
RETAIL CLASS B
2000 3.72% 1.86% 11.68%
2000(11) 3.82* 1.85* 24.29
--------------------------------
PENNSYLVANIA TAX-FREE PORTFOLIO
--------------------------------
INSTITUTIONAL CLASS
2000 4.46% 0.99% 5.87%
2000 4.32 1.00 30.92
1999 4.01 1.00 43.46
1998 3.84* 0.91* 3.50
1998++ 4.43 1.00 57.00
1997++(8) 4.41* 1.02* 86.00
RETAIL CLASS A
2000 4.32% 1.29% 5.87%
2000 4.23 1.29 30.92
1999 3.84 1.30 43.46
1998 (12) 3.72* 1.24* 3.50
RETAIL CLASS B
2000 3.58% 1.84% 5.87%
2000(11) 3.63* 1.84* 30.92
-------------------------------------
INTERMEDIATE FIXED INCOME PORTFOLIO
-------------------------------------
INSTITUTIONAL CLASS
2000 5.83% 0.96% 9.25%
2000 5.52 0.96 29.28
1999 5.49 0.95 52.87
1998 6.02 0.87 41.63
1997 (9) 5.55* 0.83* 17.18
The accompanying notes are an integral part of the financial statements.
98
-------
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED OCTOBER 31, 2000
(UNAUDITED) AND THE PERIODS ENDED APRIL 30.
<TABLE>
<CAPTION>
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS RATIO OF
VALUE, NET UNREALIZED FROM NET FROM NET ASSET NET ASSETS EXPENSES
BEGINNING INVESTMENT GAINS OR (LOSSES) INVESTMENT CAPITAL VALUE, END TOTAL END OF TO AVERAGE
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN(A) PERIOD (000) NET ASSETS
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-------------------------------
U.S. GOVERNMENT BOND PORTFOLIO
-------------------------------
INSTITUTIONAL CLASS
2000 $ 9.27 0.27 0.19 (0.27) -- $ 9.46 5.01%+ $144,770 0.97%
2000 9.78 0.51 (0.51) (0.51) -- 9.27 0.04 166,837 0.96
1999 9.85 0.54 (0.07) (0.54) -- 9.78 4.82 255,329 0.93
1998 9.85 0.10 -- (0.10) -- 9.85 1.02+ 265,616 0.88*
1998++ 9.82 0.67 0.03 (0.67) -- 9.85 7.40 264,565 0.79
1997++ (8) 10.00 0.59 (0.18) (0.59) -- 9.82 4.18+ 259,042 0.85*
RETAIL CLASS A
2000 $ 9.28 0.26 0.19 (0.26) -- $ 9.47 4.93%+ $ 2,283 1.11%
2000 9.79 0.50 (0.51) (0.50) -- 9.28 (0.09) 2,375 1.10
1999 9.85 0.54 (0.06) (0.54) -- 9.79 4.93 2,240 1.12
1998 (13) 9.88 0.81 (0.03) (0.81) -- 9.85 7.86+ 30 1.05*
------------------
INCOME PORTFOLIO
------------------
INSTITUTIONAL CLASS
2000 $ 9.51 0.30 0.18 (0.30) -- $ 9.69 4.80%+ $375,810 0.83%
2000 10.08 0.56 (0.57) (0.56) -- 9.51 (0.01) 343,260 0.82
1999 10.25 0.59 (0.17) (0.59) -- 10.08 4.22 356,482 0.78
1998 9.82 0.61 0.43 (0.61) -- 10.25 10.84 322,304 0.73
1997 9.80 0.59 0.02 (0.59) -- 9.82 6.51 242,966 0.68
1996 9.60 0.61 0.20 (0.61) -- 9.80 8.46 180,962 0.73
RETAIL CLASS A
2000 $ 9.62 0.29 0.20 (0.30) -- $ 9.81 4.81%+ $ 8,354 0.96%
2000 10.20 0.56 (0.58) (0.56) -- 9.62 (0.18) 5,830 0.95
1999 10.37 0.58 (0.16) (0.59) -- 10.20 4.08 8,573 0.95
1998 9.94 0.58 0.44 (0.59) -- 10.37 10.47 6,889 0.95
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
RETAIL CLASS B
2000 $ 9.51 0.26 0.18 (0.26) -- $ 9.69 4.34%+ $ 436 1.70%
2000 10.08 0.48 (0.57) (0.48) -- 9.51 (0.85) 429 1.71
1999 (14) 10.40 0.35 (0.32) (0.35) -- 10.08 0.35+ 280 1.70*
--------------------
BALANCED PORTFOLIO
--------------------
INSTITUTIONAL CLASS
2000 $16.90 0.18 (0.33) (0.17) -- $16.58 (0.88)%+ $342,788 0.91%
2000 14.64 0.28 2.90 (0.26) (0.66) 16.90 22.39 348,332 0.90
1999 13.24 0.28 2.03 (0.28) (0.63) 14.64 18.17 118,395 0.85
1998 11.43 0.30 3.04 (0.30) (1.23) 13.24 30.95 96,858 0.79
1997 11.38 0.33 0.53 (0.30) (0.51) 11.43 7.85 76,987 0.74
1996 10.04 0.34 1.71 (0.34) (0.37) 11.38 20.90 102,233 0.75
RETAIL CLASS A
2000 $16.84 0.16 (0.33) (0.16) -- $16.51 (0.94)%+ $ 45,744 1.02%
2000 14.59 0.28 2.88 (0.25) (0.66) 16.84 22.26 43,098 1.01
1999 13.20 0.26 2.02 (0.26) (0.63) 14.59 17.97 26,927 1.01
1998 11.40 0.27 3.04 (0.28) (1.23) 13.20 30.67 15,074 1.02
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
RETAIL CLASS B
2000 $16.82 0.10 (0.32) (0.11) -- $16.49 (1.34)%+ $ 13,745 1.77%
2000 14.60 0.16 2.87 (0.15) (0.66) 16.82 21.32 10,991 1.77
1999 (14) 12.58 0.16 2.67 (0.18) (0.63) 14.60 23.13+ 2,479 1.75*
</TABLE>
[table continued]
RATIO
RATIO OF NET OF EXPENSES
INVESTMENT TO AVERAGE
INCOME (LOSS) NET ASSETS PORTFOLIO
TO AVERAGE (EXCLUDING TURNOVER
NET ASSETS WAIVERS) RATE
---------------------------------------------------
-------------------------------
U.S. GOVERNMENT BOND PORTFOLIO
-------------------------------
INSTITUTIONAL CLASS
2000 5.70% 1.10% 18.04%
2000 5.38 1.09 6.62
1999 5.43 1.10 102.27
1998 6.04* 1.06* 13.77
1998++ 6.88 0.98 431.00
1997++ (8) 6.54* 1.03* 255.00
RETAIL CLASS A
2000 5.56% 1.40% 18.04%
2000 5.26 1.40 6.62
1999 5.11 1.41 102.27
1998 (13) 6.02* 1.33* 13.77
------------------
INCOME PORTFOLIO
------------------
INSTITUTIONAL CLASS
2000 6.25% 0.95% 182.56%
2000 5.82 0.94 328.20
1999 5.77 0.94 50.41
1998 6.05 0.77 154.87
1997 6.19 0.68 271.60
1996 6.00 0.73 107.33
RETAIL CLASS A
2000 6.17% 1.25% 182.56%
2000 5.67 1.24 328.20
1999 5.59 1.24 50.41
1998 5.82 1.16 154.87
1997 5.96 1.09 271.60
1996 5.54 1.37 107.33
RETAIL CLASS B
2000 5.37% 1.79% 182.56%
2000 4.97 1.80 328.20
1999 (14) 4.71* 1.79* 50.41
--------------------
BALANCED PORTFOLIO
--------------------
INSTITUTIONAL CLASS
2000 2.05% 1.01% 14.64%
2000 1.95 1.00 54.46
1999 2.12 1.00 56.70
1998 2.44 0.83 71.58
1997 2.79 0.74 124.22
1996 3.19 0.75 107.56
RETAIL CLASS A
2000 1.95% 1.41% 14.64%
2000 1.84 1.40 54.46
1999 1.94 1.40 56.70
1998 2.20 1.33 71.58
1997 2.56 1.19 124.22
1996 2.51 1.55 107.56
RETAIL CLASS B
2000 1.21% 1.86% 14.64%
2000 1.10 1.86 54.46
1999 (14) 0.99* 1.84* 56.70
99
--------
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED OCTOBER 31, 2000
(UNAUDITED) AND THE PERIODS ENDED APRIL 30.
<TABLE>
<CAPTION>
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS RATIO OF
VALUE, NET UNREALIZED FROM NET FROM NET ASSET NET ASSETS EXPENSES
BEGINNING INVESTMENT GAINS OR (LOSSES) INVESTMENT CAPITAL VALUE, END TOTAL END OF TO AVERAGE
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN(A) PERIOD (000) NET ASSETS
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-------------------------
EQUITY INCOME PORTFOLIO
-------------------------
INSTITUTIONAL CLASS
2000 $12.00 0.09 0.58 (0.09) -- $12.58 5.57%+ $ 82,088 1.00%
2000 12.05 0.20 0.38 (0.20) (0.43) 12.00 5.40 83,473 0.98
1999 12.52 0.25 0.22 (0.25) (0.69) 12.05 4.17 101,104 0.91
1998 10.67 0.31 3.06 (0.31) (1.21) 12.52 33.04 106,643 0.84
1997 (9) 10.00 0.12 0.67 (0.12) -- 10.67 7.88+ 83,947 0.83*
RETAIL CLASS A
2000 $11.99 0.08 0.58 (0.08) -- $12.57 5.52%+ $ 3,597 1.11%
2000 12.04 0.22 0.38 (0.22) (0.43) 11.99 5.29 3,353 1.09
1999 12.52 0.23 0.21 (0.23) (0.69) 12.04 3.92 3,659 1.08
1998 (15) 11.01 0.28 2.73 (0.29) (1.21) 12.52 28.73+ 3,428 1.07*
------------------------
VALUE EQUITY PORTFOLIO
------------------------
INSTITUTIONAL CLASS
2000 $14.11 0.01 (0.22) -- -- $13.90 (1.47)%+ $386,065 1.20%
2000 15.22 0.26 1.40 (0.26) (2.51) 14.11 10.87 428,675 1.20
1999 14.59 0.08 1.36 (0.09) (0.72) 15.22 10.48 536,827 1.14
1998 14.00 0.01 0.62 (0.01) (0.03) 14.59 4.51+ 645,202 1.08*
1998++ 11.91 0.15 3.45 (0.15) (1.36) 14.00 31.64 577,154 1.00
1997++ (8) 10.00 0.14 2.10 (0.14) (0.19) 11.91 22.77+ 540,889 1.05*
RETAIL CLASS A
2000 $14.10 -- (0.21) -- -- $13.89 (1.49)%+ $ 7,675 1.31%
2000 15.22 0.14 1.40 (0.15) (2.51) 14.10 10.72 7,516 1.32
1999 14.60 0.05 1.36 (0.07) (0.72) 15.22 10.29 3,553 1.31
1998 (13) 14.55 -- 0.05 -- -- 14.60 0.34+ 227 1.26*
RETAIL CLASS B
2000 $13.94 (0.04) (0.22) -- -- $13.68 (1.87)%+ $ 626 2.06%
2000 15.16 (0.07) 1.36 -- (2.51) 13.94 9.93 583 2.07
1999 (14) 12.93 0.01 2.97 (0.03) (0.72) 15.16 23.70+ 164 2.07*
------------------------
EQUITY INDEX PORTFOLIO
------------------------
INSTITUTIONAL CLASS
2000 $14.83 0.07 (0.20) (0.07) -- $14.63 (0.85)%+ $114,478 0.25%
2000 13.87 0.14 1.26 (0.14) (0.30) 14.83 10.25 151,157 0.25
1999 11.59 0.14 2.41 (0.14) (0.13) 13.87 22.37 86,911 0.23
1998 (16) 10.00 0.08 1.58 (0.07) -- 11.59 16.71+ 45,531 0.20*
RETAIL CLASS A
2000 $14.79 0.05 (0.18) (0.06) -- $14.60 (0.91)%+ $ 7,499 0.50%
2000 13.84 0.11 1.25 (0.11) (0.30) 14.79 9.95 7,453 0.50
1999 11.57 0.11 2.40 (0.11) (0.13) 13.84 22.05 4,974 0.48
1998 (17) 9.78 0.06 1.80 (0.07) -- 11.57 19.08+ 1,417 0.45*
----------------------------
BLUE CHIP EQUITY PORTFOLIO
----------------------------
INSTITUTIONAL CLASS
2000 $23.60 0.04 (0.88) (0.04) -- $22.72 (3.57)%+ $223,097 0.96% %
2000 20.00 0.08 3.97 (0.07) (0.38) 23.60 20.45 211,534 0.97
1999 17.01 0.10 3.41 (0.12) (0.40) 20.00 21.07 129,720 0.91
1998 12.39 0.14 4.70 (0.13) (0.09) 17.01 39.34 67,060 0.81
1997 10.12 0.17 2.28 (0.17) (0.01) 12.39 24.41 35,690 0.70
1996 (8) 10.00 -- 0.12 -- -- 10.12 1.20+ 11,456 0.65*
RETAIL CLASS A
2000 $23.57 0.02 (0.87) (0.03) -- $22.69 (3.63)%+ $ 72,975 1.06% %
2000 19.98 0.06 3.95 (0.04) (0.38) 23.57 20.29 73,347 1.08
1999 16.98 0.09 3.40 (0.09) (0.40) 19.98 20.96 56,771 1.07
1998 12.38 0.10 4.69 (0.10) (0.09) 16.98 38.93 43,300 1.04
1997 (18) 10.33 0.16 2.06 (0.16) (0.01) 12.38 21.74+ 13,211 0.86*
RETAIL CLASS B
2000 $23.38 (0.04) (0.89) -- -- $22.45 (3.98)%+ $ 13,485 1.81% %
2000 19.93 (0.07) 3.90 -- (0.38) 23.38 19.39 10,710 1.83
1999 (19) 17.07 0.01 3.28 (0.03) (0.40) 19.93 19.62+ 3,162 1.84*
</TABLE>
[table continued]
RATIO
RATIO OF NET OF EXPENSES
INVESTMENT TO AVERAGE
INCOME (LOSS) NET ASSETS PORTFOLIO
TO AVERAGE (EXCLUDING TURNOVER
NET ASSETS WAIVERS) RATE
---------------------------------------------------
-------------------------
EQUITY INCOME PORTFOLIO
-------------------------
INSTITUTIONAL CLASS
2000 1.37% 1.07% 12.80%
2000 1.83 1.05 41.43
1999 2.10 1.04 56.03
1998 2.58 0.97 39.88
1997 (9) 2.47* 0.93* 34.38
RETAIL CLASS A
2000 1.27% 1.47% 12.80%
2000 1.72 1.45 41.43
1999 1.93 1.44 56.03
1998 (15) 2.39* 1.45* 39.88
------------------------
VALUE EQUITY PORTFOLIO
------------------------
INSTITUTIONAL CLASS
2000 0.07% 1.34% 4.17%
2000 0.16 1.34 25.00
1999 0.58 1.34 32.21
1998 0.65* 1.20* 4.34
1998++ 1.17 1.20 30.00
1997++ (8) 1.48* 1.26* 37.00
RETAIL CLASS A
2000 (0.06)% 1.74% 4.17%
2000 (0.01) 1.75 25.00
1999 0.29 1.74 32.21
1998 (13) 0.62* 1.67* 4.34
RETAIL CLASS B
2000 (0.80)% 2.19% 4.17%
2000 (0.77) 2.20 25.00
1999 (14) (0.67)* 2.20* 32.21
------------------------
EQUITY INDEX PORTFOLIO
------------------------
INSTITUTIONAL CLASS
2000 0.92% 0.52% 30.71%
2000 1.03 0.59 58.81
1999 1.20 0.61 34.04
1998 (16) 1.43* 0.62* 49.56
RETAIL CLASS A
2000 0.66% 0.97% 30.71%
2000 0.78 0.99 58.81
1999 0.92 1.00 34.04
1998 (17) 1.02* 1.08* 49.56
----------------------------
BLUE CHIP EQUITY PORTFOLIO
----------------------------
INSTITUTIONAL CLASS
2000 0.31% 1.07% 14.07%
2000 0.39 1.08 40.58
1999 0.63 1.07 38.78
1998 0.96 0.89 26.32
1997 1.55 0.90 46.91
1996 (8) 1.52* 1.38* 0.97
RETAIL CLASS A
2000 0.21% 1.61% 14.07%
2000 0.28 1.63 40.58
1999 0.49 1.62 38.78
1998 0.71 1.50 26.32
1997 (18) 1.29* 1.25* 46.91
RETAIL CLASS B
2000 (0.55)% 1.91% 14.07%
2000 (0.49) 1.93 40.58
1999 (19) (0.43)* 1.94* 38.78
The accompanying notes are an integral part of the financial statements.
100
--------
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED OCTOBER 31, 2000
(UNAUDITED UNLESS OTHERWISE NOTED) AND THE PERIODS ENDED APRIL 30 OR
DECEMBER 31.
<TABLE>
<CAPTION>
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS RATIO OF
VALUE, NET UNREALIZED FROM NET FROM RETURN NET ASSET NET ASSETS
BEGINNING INVESTMENT GAINS OR (LOSSES) INVESTMENT CAPITAL OF VALUE, END TOTAL END OF
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS CAPITAL OF PERIOD RETURN(A) PERIOD (000)
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
----------------------------
CAPITAL GROWTH PORTFOLIO
----------------------------
INSTITUTIONAL CLASS
2000 $26.13 0.04 (1.70) -- -- -- $24.47 (6.35)%+ $191,110
2000 18.71 (0.03) 9.31 -- (1.86) -- 26.13 51.36 193,827
1999 14.90 (0.01) 4.33 -- (0.51) -- 18.71 29.51 90,042
1998 11.92 0.02 4.96 (0.04) (1.96) -- 14.90 45.19 50,615
1997 11.60 0.11 1.41 (0.14) (1.06) -- 11.92 13.46 34,170
1996 10.20 0.16 2.17 (0.16) (0.77) -- 11.60 23.62 39,560
RETAIL CLASS A
2000 $25.89 0.03 (1.68) -- -- -- $24.24 (6.37)%+ $ 51,855
2000 18.58 (0.05) 9.22 -- (1.86) -- 25.89 51.12 52,445
1999 14.82 (0.03) 4.30 -- (0.51) -- 18.58 29.34 23,035
1998 11.87 -- 4.93 (0.02) (1.96) -- 14.82 44.90 14,401
1997 11.56 0.09 1.41 (0.13) (1.06) -- 11.87 13.39 5,595
1996 10.18 0.12 2.15 (0.12) (0.77) -- 11.56 23.24 2,111
RETAIL CLASS B
2000 $25.74 (0.04) (1.69) -- -- -- $24.01 (6.72)%+ $ 17,173
2000 18.61 (0.13) 9.12 -- (1.86) -- 25.74 50.03 14,129
1999 (14) 13.53 (0.04) 5.63 -- (0.51) -- 18.61 41.88+ 2,162
-------------------------
MID-CAP EQUITY PORTFOLIO
-------------------------
INSTITUTIONAL CLASS
2000 $17.92 (0.03) 0.68 -- -- -- $18.57 3.63%+ $100,015
2000 14.70 (0.04) 5.30 -- (2.04) -- 17.92 38.90 92,253
1999 14.11 0.01 1.16 (0.01) (0.57) -- 14.70 8.76 63,648
1998 10.17 0.04 4.61 (0.04) (0.67) -- 14.11 46.92 55,280
1997 (9) 10.00 0.03 0.17 (0.03) -- -- 10.17 1.98+ 27,059
RETAIL CLASS A
2000 (20) $17.90 (0.02) 0.66 -- -- -- $18.54 3.58%+ $ 3,019
2000 (20) 15.22 (0.02) 4.74 -- (2.04) -- 17.90 34.04+ 1,161
----------------------------
SMALL-CAP EQUITY PORTFOLIO
----------------------------
INSTITUTIONAL CLASS
2000 $23.24 (0.03) (1.50) -- (3.90) (0.13) $17.68 (7.27)%+ $ 77,381
2000 12.65 (0.08) 15.39 -- (4.72) -- 23.24 126.42 81,375
1999 11.86 (0.05) 1.17 -- (0.33) -- 12.65 9.89 30,562
1998 8.53 (0.02) 3.97 -- (0.62) -- 11.86 47.93 27,372
1997 14.72 (0.01) (2.97) -- (3.21) -- 8.53 (23.43) 17,746
1996 (21) 10.00 0.09 4.72 (0.09) -- -- 14.72 48.34+ 33,621
RETAIL CLASS A
2000 $23.07 (0.02) (1.49) -- (3.90) (0.13) $17.53 (7.23)%+ $ 69,492
2000 12.59 (0.05) 15.25 -- (4.72) -- 23.07 126.13 11,292
1999 11.83 (0.07) 1.16 -- (0.33) -- 12.59 9.66 2,248
1998 8.53 (0.06) 3.98 -- (0.62) -- 11.83 47.57 1,853
1997 (18) 15.47 (0.01) (3.72) -- (3.21) -- 8.53 (27.14)+ 1,075
-------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO (AUDITED)
-------------------------------------------
INSTITUTIONAL CLASS
2000 $17.18 (0.01) (2.92) -- (3.23) -- $11.02 (18.85)%+ $ 42,058
For the years ended December 31:
1999 15.05 (0.03) 4.18 -- (2.02) -- 17.18 28.25 8,419
1998 (22) 17.28 (0.03) (0.17) -- (2.03) -- 15.05 (1.15)+ 6,678
RETAIL CLASS A
2000 $17.25 (0.08) (2.93) -- (3.23) -- $11.01 (19.09)%+ $ 10,815
For the years ended December 31:
1999 15.15 (0.08) 4.21 -- (2.03) -- 17.25 27.95 12,718
1998 14.78 (0.11) 2.92 -- (2.44) -- 15.15 19.12 12,223
1997 15.18 (0.33) 0.24 -- (0.31) -- 14.78 (0.71) 13,952
1996 15.28 (0.15) 1.97 (0.27) (1.65) -- 15.18 12.13 25,822
1995 13.78 (0.11) 1.62 -- (0.01) -- 15.28 11.01 28,546
--------------------------------------------
EMERGING MARKETS EQUITY PORTFOLIO (AUDITED)
--------------------------------------------
RETAIL CLASS A
2000 $13.54 (0.20) (4.11) -- -- -- $ 9.23 (31.83)%+$ 9,124
For the years ended December 31:
1999 7.96 -- 5.58 -- -- -- 13.54 70.10 18,059
1998 12.24 0.02 (4.15) (0.15) -- -- 7.96 (34.18) 14,734
1997 13.66 (0.11) (1.31) -- -- -- 12.24 (10.40) 32,899
1996 12.24 (0.13) 1.61 (0.06) -- -- 13.66 12.08 56,814
1995 13.29 (0.06) (0.98) (0.01) -- -- 12.24 (7.84) 75,887
</TABLE>
[table continued]
RATIO OF NET RATIO
INVESTMENT TO AVERAGE OF EXPENSES
EXPENSES INCOME (LOSS) NET ASSETS PORTFOLIO
TO AVERAGE TO AVERAGE (EXCLUDING TURNOVER
NET ASSETS NET ASSETS WAIVERS) RATE
--------------------------------------------------------------
----------------------------
CAPITAL GROWTH PORTFOLIO
----------------------------
INSTITUTIONAL CLASS
2000 0.99% 0.29% 1.04% 25.96%
2000 1.00 (0.18) 1.06 113.74
1999 0.94 (0.07) 1.04 118.46
1998 0.84 0.13 0.88 174.55
1997 0.39 0.92 0.85 246.14
1996 0.24 1.26 0.84 578.57
RETAIL CLASS A
2000 1.09% 0.19% 1.44% 25.96%
2000 1.11 (0.29) 1.46 113.74
1999 1.09 (0.23) 1.44 118.46
1998 1.06 (0.10) 1.37 174.55
1997 0.56 0.74 1.30 246.14
1996 0.50 1.05 1.65 578.57
RETAIL CLASS B
2000 1.84% (0.56)% 1.89% 25.96%
2000 1.86 (1.04) 1.91 113.74
1999 (14) 1.87* (1.09)* 1.92* 118.46
-------------------------
MID-CAP EQUITY PORTFOLIO
-------------------------
INSTITUTIONAL CLASS
2000 1.10% (0.32)% 1.16% 32.39%
2000 1.11 (0.26) 1.18 55.90
1999 1.06 0.04 1.18 61.81
1998 0.97 0.31 1.06 38.30
1997 (9) 0.90* 0.65* 0.95* 14.74
RETAIL CLASS A
2000 (20) 1.21% (0.43)% 1.57% 32.39%
2000 (20) 1.23* (0.31)* 1.59* 55.90
----------------------------
SMALL-CAP EQUITY PORTFOLIO
----------------------------
INSTITUTIONAL CLASS
2000 1.15% (0.42)% 1.17% 225.90%
2000 1.19 (0.49) 1.21 753.31
1999 1.16 (0.48) 1.23 733.14
1998 0.98 (0.24) 1.02 410.72
1997 0.95 (0.12) 0.95 704.41
1996 (21) 0.91* 0.60* 0.91* 286.80
RETAIL CLASS A
2000 1.26% 4.28% 1.57% 225.90%
2000 1.30 (0.49) 1.61 753.31
1999 1.32 (0.64) 1.63 733.14
1998 1.21 (0.46) 1.36 410.72
1997 (18) 1.11* (0.13)* 1.21* 704.41
-------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO (AUDITED)
-------------------------------------------
INSTITUTIONAL CLASS
2000 1.71% (0.51)% 1.96% 196.30%
For the years ended December 31:
1999 2.00 (0.17) 2.98 41.00
1998 (22) 1.75 (0.47) 2.90 109.00
RETAIL CLASS A
2000 2.46% (1.21)% 3.11% 196.30%
For the years ended December 31:
1999 2.35 (0.52) 3.34 41.00
1998 2.45 (0.62) 3.30 109.00
1997 2.50 (1.01) 3.12 51.00
1996 2.39 (1.06) 3.09 84.00
1995 2.50 (0.64) 2.75 101.00
--------------------------------------------
EMERGING MARKETS EQUITY PORTFOLIO (AUDITED)
--------------------------------------------
RETAIL CLASS A
2000 1.91% (0.88)% 3.80% 63.40%
For the years ended December 31:
1999 1.85 0.08 4.31 63.00
1998 2.50 0.03 4.09 121.00
1997 2.50 (0.54) 2.91 120.00
1996 2.38 (0.62) 2.62 122.00
1995 2.50 (0.49) 2.78 115.00
+ Returns are for the period indicated and have not been annualized.
++ Period ended February 28.
* Annualized
(A) Total return for the retail class does not include the one-time sales
charge.
(1) Commenced operations on January 22, 1999.
(2) Commenced operations on July 21, 1995.
(3) Commenced operations on July 28, 1995.
(4) Commenced operations on July 7, 1997.
(5) Commenced operations on December 15, 1995.
(6) Commenced operations on March 20, 1996.
(7) Commenced operations on September 9, 1996.
(8) Commenced operations on April 1, 1996.
(9) Commenced operations on November 18, 1996.
(10) Commenced operations on January 2, 1997.
(11) Commenced operations on September 9, 1999.
(12) Commenced operations on March 23, 1998.
(13) Commenced operations on April 1, 1998.
(14) Commenced operations on September 14, 1998.
(15) Commenced operations on May 9, 1997.
(16) Commenced operations on October 1, 1997.
(17) Commenced operations on November 3, 1997.
(18) Commenced operations on May 16, 1996.
(19) Commenced operations on July 31, 1998.
(20) Commenced operations on September 1, 1999.
(21) Commenced operations on July 13, 1995.
(22) Commenced operations on July 24, 1998.
101
--------
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION
ARK Funds (the "Fund") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment
company organized as a Massachusetts business trust pursuant to a
Declaration of Trust dated October 22, 1992, and amended and restated on
March 19, 1993.
The Fund consists of twenty-five separate investment Portfolios
(individually, a "Portfolio" and collectively, the "Portfolios"):
Money Market Portfolio
Tax-Free Money Market Portfolio
U.S. Government Money Market Portfolio
U.S. Treasury Money Market Portfolio
(collectively, the "Money Market Portfolios")
Short-Term Treasury Portfolio Short-Term Bond Portfolio Maryland Tax-Free
Portfolio Pennsylvania Tax-Free Portfolio Intermediate Fixed Income
Portfolio U.S. Government Bond Portfolio Income Portfolio Balanced
Portfolio Equity Income Portfolio Value Equity Portfolio Equity Index
Portfolio Blue Chip Equity Portfolio Capital Growth Portfolio Mid-Cap
Equity Portfolio Small-Cap Equity Portfolio International Equity Portfolio
(formerly the International Equity Selection Portfolio)
Emerging Markets Equity Portfolio
U.S. Treasury Cash Management Portfolio
U.S. Government Cash Management Portfolio
Prime Cash Management Portfolio
Tax-Free Cash Management Portfolio
(collectively, the "Cash Management Portfolios")
The Fund may issue an unlimited number of shares of each of its Portfolios.
The Financial Statements of the Cash Management Portfolios are not
presented herein, but are presented separately.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported therein. Although actual results
could differ from these estimates, any such differences are expected to be
immaterial to the net assets of the Portfolios.
The following is a summary of significant accounting policies followed by
the Portfolios.
SECURITY VALUATION -- Securities of the Portfolios are generally valued by
independent pricing services. Securities listed on a securities exchange
for which market quotations are readily available are valued at the last
reported sale price on the principal exchange on which they are traded on
the valuation date or, if there is no such reported sale on the valuation
date, at the most recently quoted bid price. Unlisted securities for which
market quotations are readily available are valued at the most recently
quoted bid price. Debt obligations exceeding sixty days to maturity for
which market quotations are readily available are valued at the most
recently quoted bid price. Debt obligations with sixty days or less to
maturity may be valued at their amortized cost.
When market quotations are not readily available, securities are valued at
fair value as determined under procedures established by the Board of
Trustees.
Investment securities held by the Money Market Portfolios are stated at
their amortized cost, which approximates market value. Under the amortized
cost method, any discount or premium is amortized ratably to the maturity
of the security and is included in interest income.
INCOME TAXES -- It is the intention of each Portfolio to qualify as a
regulated investment company and to distribute all of its taxable income.
Accordingly, no provision for federal income taxes is considered necessary.
NET ASSET VALUE PER SHARE -- The net asset value per share of each class of
each Portfolio is calculated every business day. It is computed by dividing
the total assets of each class of the Portfolio, less the class-related
liabilities, by the number of outstanding shares of each class of the
Portfolio.
CLASSES -- Each class of shares has equal rights as to earnings, assets and
voting privileges, except that each class bears different distribution and
shareholder service expenses. Each class of shares has exclusive voting
rights with respect to matters that affect just
102
-----
<PAGE>
that class. Class-specific expenses are borne by the applicable class.
Other expenses, income and realized and unrealized gains/losses are
allocated to the respective classes on the basis of relative daily net
assets.
ORGANIZATIONAL COSTS -- All eligible organizational costs associated with
the start-up of the Portfolios prior to December 15, 1998 are being
amortized on a straight-line basis over a period of sixty months. If any or
all of the shares representing initial capital of a Portfolio are redeemed
by any holder thereof prior to the end of the amortization period, the
proceeds will be reduced by the unamortized organizational cost balance in
the same proportion as the number of shares redeemed bears to the initial
shares outstanding immediately preceding the redemption.
REPURCHASE AGREEMENTS -- Securities pledged as collateral for repurchase
agreements are held by the custodian bank until maturity of the repurchase
agreements. Provisions of the repurchase agreements and procedures adopted
by the Board of Trustees require that the market value of the collateral,
including accrued interest thereon, is sufficient in the event of default
by the counterparty. If the counterparty defaults and the value of the
collateral declines or if the counterparty enters an insolvency proceeding,
realization of the collateral by the Portfolio may be delayed or limited.
SHORT SALES -- The Portfolios may sell a security that they own "short
against the box" in anticipation of a decline in the market value of that
security. As collateral for this transaction, the Portfolio must deposit
liquid securities with the broker/dealer through which it made the short
sale. A gain, limited to the price at which the Portfolio sold the security
short, or a loss, the difference between the proceeds received and the
market value of the security, will be recognized upon termination of the
short sale.
DOLLAR ROLL TRANSACTIONS -- The Income and U.S. Government Bond Portfolios
engage in dollar roll transactions with respect to mortgage-related
securities issued by GNMA, Fannie Mae and FHLMC. In a dollar roll
transaction, a Portfolio sells a mortgage-related security to a financial
institution, such as a bank or broker/dealer, and simultaneously agrees to
repurchase a substantially similar (i.e., same type, coupon and maturity)
security from the institution at a later date at an agreed-upon price. The
mortgage-related securities that are repurchased will bear the same
interest rate as those sold, but generally will be collateralized by
different pools of mortgages with different prepayment histories.
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS -- The Portfolios may
purchase securities on a "when-issued" basis and may purchase or sell
securities on a "forward commitment" basis. These transactions, which
involve a commitment by a Portfolio to purchase or sell particular
securities with payment and delivery taking place at a future date (perhaps
one or two months later), permit the Portfolio to lock in a price or yield
on a security it owns or intends to purchase, regardless of future changes
in interest rates. When-issued and forward commitment transactions involve
the risk, however, that the yield obtained in a transaction (and therefore
the value of the security) may be less favorable than the yield available
in the market when the securities delivery takes place. The Portfolios
maintain cash, U.S. Government securities, or liquid, high-grade debt
obligations in an amount sufficient to meet the purchase price in a
segregated account until the settlement date. No Portfolio intends to
engage in when-issued purchases and forward commitments for speculative
purposes.
DISTRIBUTIONS -- Dividends from net investment income are declared daily
and paid monthly for the Money Market Portfolios, the Short-Term Treasury
Portfolio, Short-Term Bond Portfolio, Maryland Tax-Free Portfolio,
Pennsylvania Tax-Free Portfolio, Intermediate Fixed Income Portfolio, U.S.
Government Bond Portfolio and Income Portfolio. The Equity Income Portfolio
declares and pays dividends monthly; the Balanced Portfolio, Value Equity
Portfolio, Equity Index Portfolio, Blue Chip Equity Portfolio and Mid-Cap
Equity Portfolio declare and pay dividends quarterly; and the Capital
Growth Portfolio, Small-Cap Equity Portfolio, International Equity
Portfolio, and Emerging Markets Equity Portfolio declare and pay dividends
annually from net investment income. Distributions from net capital gains,
if any, are declared and paid at least annually by each Portfolio.
Distributions from net investment income and net realized capital gains are
determined in accordance with U.S. federal income tax regulations, which
may differ from those amounts determined under generally accepted
accounting principles. These book/tax differences are either temporary or
permanent in nature. To the extent these differences are permanent, they
are charged or credited to paid-in capital in the period that the
difference arises.
103
-----
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
On the Statements of Net Assets, the following adjustments were made:
ACCUMULATED UNDISTRIBUTED
NET REALIZED NET INVESTMENT PAID-IN-
PORTFOLIO GAIN (LOSS) INCOME CAPITAL
(000) (000) (000)
--------------------------------------------------------------------------------
Pennsylvania Tax-Free $ (1) $ 1 $ --
--------------------------------------------------------------------------------
Income 226 -- (226)
--------------------------------------------------------------------------------
Equity Index -- 2 (2)
--------------------------------------------------------------------------------
Capital Growth 239 (239) --
--------------------------------------------------------------------------------
Mid-Cap Equity (303) 303 --
--------------------------------------------------------------------------------
Small-Cap Equity 827 1,047 (1,874)
--------------------------------------------------------------------------------
Emerging Markets Equity -- 220 (220)
--------------------------------------------------------------------------------
OTHER -- Security transactions are accounted for on the date the security
is purchased or sold (trade date). Net realized capital gains and losses on
the sale of investment securities are determined using the identified cost
method with the exception of the Money Market Portfolios, for which
original issue discounts and purchase premiums on securities held by the
Portfolios are accreted and amortized ratably to maturity using the
effective interest method. Dividend income is recognized on the ex-dividend
date, and interest income is recognized using the accrual method.
3. INVESTMENT ADVISORY AND ADMINISTRATIVE FEES AND OTHER TRANSACTIONS WITH
AFFILIATES
Allied Investment Advisors, Inc. (AIA) is the investment adviser to each of
the Portfolios. Allied Investment Advisors, Inc. is an affiliate of
Allfirst Trust Company, N.A., the Custodian and Sub-Administrator of each
of the Portfolios. Pursuant to an investment advisory contract on behalf of
each Portfolio, Allied Investment Advisors, Inc. is entitled to receive
fees for its advisory services at the annual rates shown in the following
table based on the average net assets of the Portfolio.
PORTFOLIO ANNUAL RATE
--------------------------------------------------------------------------------
Money Market 0.25%
--------------------------------------------------------------------------------
Tax-Free Money Market 0.25%
--------------------------------------------------------------------------------
U.S. Government Money Market 0.25%
--------------------------------------------------------------------------------
U.S. Treasury Money Market 0.25%
--------------------------------------------------------------------------------
Short-Term Treasury 0.35%
--------------------------------------------------------------------------------
Short-Term Bond 0.75%
--------------------------------------------------------------------------------
Maryland Tax-Free 0.65%
--------------------------------------------------------------------------------
Pennsylvania Tax-Free 0.65%
--------------------------------------------------------------------------------
Intermediate Fixed Income 0.60%
--------------------------------------------------------------------------------
U.S. Government Bond 0.75%
--------------------------------------------------------------------------------
Income 0.60%
--------------------------------------------------------------------------------
Balanced 0.65%
--------------------------------------------------------------------------------
Equity Income 0.70%
--------------------------------------------------------------------------------
Value Equity 1.00%
--------------------------------------------------------------------------------
Equity Index 0.20%
--------------------------------------------------------------------------------
Blue Chip Equity 0.70%
--------------------------------------------------------------------------------
Capital Growth 0.70%
--------------------------------------------------------------------------------
Mid-Cap Equity 0.80%
--------------------------------------------------------------------------------
Small-Cap Equity 0.80%
--------------------------------------------------------------------------------
International Equity 1.00%
--------------------------------------------------------------------------------
Emerging Markets Equity 1.00%
--------------------------------------------------------------------------------
Allied Investment Advisors, Inc. has agreed to waive a portion of its fees
or reimburse expenses on certain Portfolios in order to limit total
operating expenses of such Portfolios. A portion of these waivers is
voluntary and may be discontinued at any time.
AIB Govett, Inc. (AIB Govett), an indirect majority owned subsidiary of
AIB, is the Subadvisor for the International Equity Portfolio and the
Emerging Markets Equity Portfolio. It provides day-to-day management
services and makes investment decisions on behalf of these Portfolios in
accordance with their respective investment policies. In accordance with an
investment subadvisory agreement, AIA pays AIB Govett subadvisory fees from
the fees it receives from the International Equity Portfolio and the
Emerging Markets Equity Portfolio.
SEI Investments Mutual Funds Services (the "Administrator") serves as
administrator and transfer agent for the Fund under an Administration
Agreement and Transfer Agency Agreement. The Administrator is entitled to
receive an annual fee of 0.13% of each Portfolio's average net assets, paid
monthly, for services performed under the administration agreement. The
Administrator has voluntarily agreed to waive a portion of its
administrative fees on certain Portfolios in order to limit total operating
expenses of such Portfolios. The waiver is voluntary and may be
discontinued at any time. Pursuant to a separate agreement between Allfirst
Trust Company, N.A. and the Administrator, Allfirst Trust Company, N.A.
performs sub-administration services on behalf of the Portfolios, for which
it receives an annual fee, paid by the Administrator, of up to 0.0275% of
each Portfolio's net assets.
4. DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
The Fund's Board of Trustees has adopted an Amended and Restated
Distribution and Shareholder Services Plan on behalf of Retail Class A
shares of each Portfolio; a Restated Distribution and Shareholder Services
Plan on behalf of Retail Class B shares of the Money Market, Maryland
Tax-Free, Pennsylvania Tax-Free, Income, Balanced, Value Equity, Blue Chip
Equity and Capital Growth Portfolios; and an Amended and Restated
Distribution and Service Plan on behalf of the Institutional II Class
shares of each Money Market Portfolio pursuant to Rule 12b-1 under the 1940
Act. In addition, the Board of Trustees has adopted a Shareholder Services
Plan on behalf of the Institutional Class shares of the
104
-----
<PAGE>
Portfolios (the "Plans"). Under the Plans, SEI Investments Distribution Co.
("SIDCO") acts as Distributor for the Fund pursuant to a Distribution
Agreement on behalf of each Portfolio. The Plans permit payment of up to
0.75% of the average net assets of the Retail Class A, Retail Class B and
Institutional II Class shares of each Portfolio. The Trustees have
authorized payment of a fee to SIDCO of: 0.25% of the average net assets of
the Retail Class A shares of each Money Market Portfolio; 0.30% of average
net assets of the Retail Class A shares of the Maryland Tax-Free Portfolio,
Pennsylvania Tax-Free Portfolio, Income Portfolio, Intermediate Fixed
Income Portfolio, Short-Term Bond Portfolio, and U.S. Government Bond
Portfolio; 0.40% of average net assets of the Retail Class A shares of the
Short-Term Treasury Portfolio, Balanced Portfolio, Equity Income Portfolio,
Value Equity Portfolio, Capital Growth Portfolio, Mid-Cap Equity Portfolio,
Small-Cap Equity Portfolio, International Equity Portfolio, Equity Index
Portfolio, and Emerging Markets Equity Portfolio; 0.55% of average net
assets of the Retail Class A shares of the Blue Chip Equity Portfolio;
0.75% of the average net assets of the Retail Class B shares of the Money
Market Portfolio, Maryland Tax-Free Portfolio, Pennsylvania Tax-Free
Portfolio, Income Portfolio, Balanced Portfolio, Value Equity Portfolio,
Blue Chip Equity Portfolio and Capital Growth Portfolio; and 0.15% of
average net assets of the Institutional II Class shares of each Money
Market Portfolio. SIDCO has voluntarily agreed to waive a portion of its
fee on certain Portfolios in order to limit total operating expenses of
such Portfolios. The waiver is voluntary and may be discontinued at any
time. Prior to August 12, 2000, the Govett International Equity Fund and
the Govett Emerging Markets Equity Fund paid the prior distributor 0.35% of
the average net assets of theClass A Retail shares.
The shareholder services fees paid under the Plans are to compensate
qualified intermediaries for shareholder services and account maintenance.
Under the respective Plans, the Retail Class A and Retail Class B shares of
a Portfolio may pay an annual fee of up to 0.25% of the average net assets
of the respective class shares attributable to their customers and the
Institutional Class shares of a Portfolio may pay an annual fee of up to
0.15% of the average net assets of the Institutional Class shares
attributable to their customers. Currently, the Trustees have approved a
fee for the Retail Class A shares of 0.15%, a fee for the Retail Class B
shares of 0.25%, and a fee of 0.08% of the average net assets of the
Institutional Class shares of each Money Market Portfolio; 0.11% of the
average net assets of the Institutional Class shares of the Intermediate
Fixed Income, Pennsylvania Tax-Free and U.S. Government Bond Portfolios;
0.12% of the average net assets of the Institutional Class shares of the
Income and Maryland Tax-Free Portfolios; and 0.15% of the average net
assets of the Institutional Class shares of the Balanced, Blue Chip Equity,
Capital Growth, Equity Income, International Equity, Emerging Markets
Equity, Mid-Cap Equity, Small-Cap Equity and Value Equity Portfolios. In
addition, a portion of the fee is being waived for the Retail Class A
shares and Institutional Class shares of each Portfolio. The waiver is
voluntary and may be discontinued at any time.
A contingent deferred sales charge (CDSC) is imposed on certain redemptions
of Retail Class B shares. The CDSC varies depending on the number of years
from the time of payment for the purchase of Retail Class B shares until
the redemption of such shares.
YEARS CONTINGENT DEFERRED
PURCHASES MADE SALES CHARGE
--------------------------------------------------------------------------------
First ....................... 5%
Second ...................... 4%
Third ....................... 3%
Fourth ...................... 3%
Fifth ....................... 2%
Sixth ....................... 1%
Seventh and Following ....... None
5. INVESTMENT TRANSACTIONS
The cost of securities purchased and the proceeds from the sale of
securities, other than short-term investments, during the period ended
October 31, 2000, were as follows:
PURCHASES SALES
PORTFOLIO (000) (000)
-------------------------------------------------------------------------------
Short-Term Treasury $ 11,334 $ 13,385
-------------------------------------------------------------------------------
Short-Term Bond 51,268 48,780
--------------------------------------------------------------------------------
Maryland Tax-Free 12,812 18,936
--------------------------------------------------------------------------------
Pennsylvania Tax-Free 9,288 13,943
--------------------------------------------------------------------------------
Intermediate Fixed Income 21,298 10,229
--------------------------------------------------------------------------------
U.S. Government Bond 25,550 43,058
--------------------------------------------------------------------------------
Income 673,967 651,184
--------------------------------------------------------------------------------
Balanced 56,609 53,834
--------------------------------------------------------------------------------
Equity Income 10,810 16,806
--------------------------------------------------------------------------------
Value Equity 17,288 42,862
--------------------------------------------------------------------------------
Equity Index 43,435 77,560
--------------------------------------------------------------------------------
Blue Chip Equity 70,914 41,533
--------------------------------------------------------------------------------
Capital Growth 76,893 61,402
--------------------------------------------------------------------------------
Mid-Cap Equity 35,020 31,825
--------------------------------------------------------------------------------
Small-Cap Equity 218,115 212,342
--------------------------------------------------------------------------------
International Equity 63,518 54,226
--------------------------------------------------------------------------------
Emerging Markets Equity 8,691 12,777
--------------------------------------------------------------------------------
105
-----
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
For federal income tax purposes, the cost of securities owned at October
31, 2000, was not materially different from the amounts reported for
financial reporting purposes. The aggregate gross unrealized appreciation
and depreciation of securities at October 31, 2000, for each Portfolio is
as follows:
NET
UNREALIZED
APPRECIATED DEPRECIATED APPRECIATION/
SECURITIES SECURITIES (DEPRECIATION)
PORTFOLIO (000) (000) (000)
--------------------------------------------------------------------------------
Short-Term Treasury $ 142 $ (222) $ (80)
--------------------------------------------------------------------------------
Short-Term Bond 186 (992) (806)
--------------------------------------------------------------------------------
Maryland Tax-Free 2,364 (2,116) 248
--------------------------------------------------------------------------------
Pennsylvania Tax-Free 2,699 (3,715) (1,016)
--------------------------------------------------------------------------------
Intermediate Fixed Income 406 (2,469) (2,063)
--------------------------------------------------------------------------------
U.S. Government Bond 147 (5,102) (4,955)
--------------------------------------------------------------------------------
Income 2,857 (8,314) (5,457)
--------------------------------------------------------------------------------
Balanced 58,688 (26,413) 32,275
--------------------------------------------------------------------------------
Equity Income 28,810 (2,551) 26,259
--------------------------------------------------------------------------------
Value Equity 171,033 (3,647) 167,386
--------------------------------------------------------------------------------
Equity Index 20,040 (13,286) 6,754
--------------------------------------------------------------------------------
Blue Chip Equity 87,603 (10,779) 76,824
--------------------------------------------------------------------------------
Capital Growth 72,753 (12,596) 60,157
--------------------------------------------------------------------------------
Mid-Cap Equity 31,794 (9,665) 22,129
--------------------------------------------------------------------------------
Small-Cap Equity 24,852 (9,511) 15,341
--------------------------------------------------------------------------------
International Equity 1,495 (5,899) (4,404)
--------------------------------------------------------------------------------
Emerging Markets Equity 1,417 (1,941) (524)
--------------------------------------------------------------------------------
At October 31, 2000, the following Portfolios had capital loss
carryforwards and post-October losses:
POST
CAPITAL LOSS OCTOBER 31, 1999
CARRYFORWARD DEFERRED
AMOUNT EXPIRATION LOSSES
PORTFOLIO (000) DATE (000)
-------------------------------------------------------------------------------
Money Market $ 7 2007 $ --
-------------------------------------------------------------------------------
Tax-Free Money Market 1 2008 --
U.S. Government
Money Market 25 2005 --
5 2006 --
11 2007 --
-------------------------------------------------------------------------------
Short-Term Treasury 224 2008 --
-------------------------------------------------------------------------------
Short-Term Bond 320 2008 --
Maryland Tax-Free 343 2007 --
1,028 2008 --
Pennsylvania Tax-Free 2,230 2007 --
2,864 2008 --
-------------------------------------------------------------------------------
Intermediate Fixed Income 912 2008 --
U.S. Government Bond 724 2006 1,855
919 2007 --
1,280 2008 --
Income 2,025 2002 --
170 2003 --
1,412 2004 --
745 2005 --
6,729 2007 --
1,351 2008 --
Small-Cap Equity 4,237 2006 --
Emerging Markets
Equity 10,026 2006 --
755 2007 --
6. SECURITIES LENDING TRANSACTIONS
In order to generate additional income, certain Portfolios may lend
portfolio securities representing up to one-third of the value of total
assets (which includes collateral received for securities on loan) to
broker/dealers, banks or other institutional borrowers of securities. As
with other extensions of credit, there may be risks of delay in recovery of
the securities or even loss of rights in the collateral should the borrower
of the security fail financially. The market value of the securities on
loan at October 31, 2000, income generated from the program during the
period ended October 31, 2000, and the collateral purchased with cash
received and held at October 31, 2000, with respect to such loans were as
follows:
INCOME RECEIVED
MARKET VALUE OF FROM SECURITIES
LOANED SECURITIES LENDING
PORTFOLIO (000) (000)
--------------------------------------------------------------------------------
Short-Term Bond $10,048 $ 10
--------------------------------------------------------------------------------
Intermediate Fixed
Income 27,362 14
--------------------------------------------------------------------------------
U.S. Government
Bond 24,646 27
--------------------------------------------------------------------------------
Income 114,087 138
--------------------------------------------------------------------------------
MONEY OTHER FIXED
REPURCHASE MARKET INCOME
COLLATERAL AGREEMENTS INSTRUMENTS SECURITIES CASH TOTAL
PORTFOLIO (000) (000) (000) (000) (000)
--------------------------------------------------------------------------------
Short-Term
Bond $ 5,939 $52 $ 4,576 $ 209 $ 10,776
--------------------------------------------------------------------------------
Intermediate
Fixed
Income 20,970 34 7,000 68 28,072
--------------------------------------------------------------------------------
U.S. Government
Bond 9,079 70 15,778 379 25,306
--------------------------------------------------------------------------------
Income 75,985 495 39,998 1,044 117,522
--------------------------------------------------------------------------------
7. CONCENTRATION OF CREDIT RISK
The Maryland Tax-Free Portfolio and Pennsylvania Tax-Free Portfolio invest
in debt instruments of municipal issuers. Although these Portfolios monitor
investment concentration, the issuers' ability to meet their obligations
may be affected by economic developments in a specific state or region.
The Maryland Tax-Free Portfolio and Pennsylvania Tax-Free Portfolio invest
in securities that include revenue bonds and general obligation bonds. At
October 31, 2000, the percentage of portfolio investments by each revenue
source was as follows:
106
-----
<PAGE>
MARYLAND PENNSYLVANIA
TAX-FREE PORTFOLIO TAX-FREE PORTFOLIO
--------------------------------------------------------------------------------
REVENUE BONDS:
--------------------------------------------------------------------------------
Education 16% 17%
--------------------------------------------------------------------------------
Health Care 21 21
--------------------------------------------------------------------------------
Transportation 6 --
--------------------------------------------------------------------------------
Utility 4 7
--------------------------------------------------------------------------------
Housing 3 1
--------------------------------------------------------------------------------
Public Facility 5 14
--------------------------------------------------------------------------------
Industrial -- 14
--------------------------------------------------------------------------------
Other 9 11
--------------------------------------------------------------------------------
General Obligations 36 15
--------------------------------------------------------------------------------
100% 100%
--------------------------------------------------------------------------------
8. FUND MERGERS
On August 12, 2000, the Govett Global Income Fund, the Govett International
Equity Fund and the Govett Emerging Markets Equity Fund were reorganized
into the Income Portfolio, the International Equity Portfolio (formerly
International Equity Selection Portfolio) and the Emerging Markets Equity
Portfolio, respectively. On September 16, 2000 the Govett Smaller Companies
Fund was reorganized into the Small-Cap Equity Portfolio. Shares of the
Govett Funds were exchanged for shares of the respective ARK Portfolios in
a tax-free exchange.
The acquired net assets consisted primarily of the following components:
ACQUIRED
NET UNREALIZED ACQUIRED
APPRECIATION NET ASSETS
--------------------------------------------------------------------------------
Income Portfolio 4,228 3,394,864
--------------------------------------------------------------------------------
Small-Cap Equity Portfolio 7,269,962 62,433,270
--------------------------------------------------------------------------------
International Equity Portfolio -- 43,889,830
--------------------------------------------------------------------------------
Emerging Markets
Equity Portfolio 1,852,298 12,154,505
--------------------------------------------------------------------------------
9. SHAREHOLDER VOTING RESULTS
At a shareholder meeting held on June 29, 2000, the shareholders of the ARK
Funds voted to elect seven trustees and to ratify KPMG as the Independent
Accountants. The results of the voting were as follows:
PROPOSAL NO. 1: ELECTION OF SEVEN TRUSTEES
--------------------------------------------------------------------------------
1. WILLIAM H. COWIE, JR.
--------------------------------------------------------------------------------
FOR 99.59% of 62.86% of shares
shares voted outstanding
--------------------------------------------------------------------------------
FOR ALL EXCEPT 0.00% of 0.00% of shares
shares voted outstanding
--------------------------------------------------------------------------------
ABSTAIN 0.41% of 0.25% of shares
shares voted outstanding
--------------------------------------------------------------------------------
2. DAVID D. DOWNES JR.
--------------------------------------------------------------------------------
FOR 99.60% of 62.87% of shares
shares voted outstanding
--------------------------------------------------------------------------------
FOR ALL EXCEPT 0.00% of 0.00% of shares
shares voted outstanding
--------------------------------------------------------------------------------
ABSTAIN 0.40% of 0.25% of shares
shares voted outstanding
--------------------------------------------------------------------------------
3. VICTOR GARLAND
--------------------------------------------------------------------------------
FOR 99.22% of 62.63% of shares
shares voted outstanding
--------------------------------------------------------------------------------
FOR ALL EXCEPT 0.00% of 0.00% of shares
shares voted outstanding
--------------------------------------------------------------------------------
ABSTAIN 0.78% of 0.49% of shares
shares voted outstanding
--------------------------------------------------------------------------------
4. RICK A. GOLD
--------------------------------------------------------------------------------
FOR 99.60% of 62.87% of shares
shares voted outstanding
--------------------------------------------------------------------------------
FOR ALL EXCEPT 0.00% of 0.00% of shares
shares voted outstanding
--------------------------------------------------------------------------------
ABSTAIN 0.40% of 0.25% of shares
shares voted outstanding
--------------------------------------------------------------------------------
5. CHARLOTTE A. KERR
--------------------------------------------------------------------------------
FOR 99.21% of 62.62% of shares
shares voted outstanding
--------------------------------------------------------------------------------
FOR ALL EXCEPT 0.00% of 0.00% of shares
shares voted outstanding
--------------------------------------------------------------------------------
ABSTAIN 0.79% of 0.40% of shares
shares voted outstanding
--------------------------------------------------------------------------------
107
-----
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
6. THOMAS SCHWEIZER
--------------------------------------------------------------------------------
FOR 99.20% of 62.62% of shares
shares voted outstanding
--------------------------------------------------------------------------------
FOR ALL EXCEPT 0.00% of 0.00% of shares
shares voted outstanding
--------------------------------------------------------------------------------
ABSTAIN 0.80% of 0.40% of shares
shares voted outstanding
--------------------------------------------------------------------------------
7. RICHARD B. SEIDEL
--------------------------------------------------------------------------------
FOR 99.60% of 62.87% of shares
shares voted outstanding
--------------------------------------------------------------------------------
FOR ALL EXCEPT 0.00% of 0.00% of shares
shares voted outstanding
--------------------------------------------------------------------------------
ABSTAIN 0.40% of 0.25% of shares
shares voted outstanding
--------------------------------------------------------------------------------
PROPOSAL NO. 2: RATIFICATION OF KPMG AS
INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
FOR 99.34% of 62.71% of shares
shares voted outstanding
--------------------------------------------------------------------------------
AGAINST 0.38% of 0.24% of shares
shares voted outstanding
--------------------------------------------------------------------------------
ABSTAIN 0.27% of 0.17% of shares
shares voted outstanding
--------------------------------------------------------------------------------
At a shareholder meeting held on August 8, 2000, the shareholders of the
ARK International Equity Selection Portfolio (currently the ARK
International Equity Portfolio) voted to approve a change in the Porfolio's
investment policy, an increase in the investment advisory fee, and an
investment sub-advisory contract.
PROPOSAL 1. To approve a change in investment policy whereby the Portfolio
would seek its investment objective by investing directly in the
securities of companies located in countries other than the United
States, rather than shares of mutual funds investing in these companies.
The vote of the shareholders upon this proposal was as follows:
--------------------------------------------------------------------------------
FOR 99.98% of 80.84% of shares
shares voted outstanding
--------------------------------------------------------------------------------
FOR ALL EXCEPT 0.00% of 0.00% of shares
shares voted outstanding
--------------------------------------------------------------------------------
ABSTAIN 0.01% of 0.01% of shares
shares voted outstanding
--------------------------------------------------------------------------------
PROPOSAL 2. To approve an increase in the investment advisory fee payable
by the Portfolio to Allied Investment Advisors, Inc. The vote of the
shareholders upon this proposal was as follows:
--------------------------------------------------------------------------------
FOR 99.88% of 80.76% of shares
shares voted outstanding
--------------------------------------------------------------------------------
FOR ALL EXCEPT 0.09% of 0.08% of shares
shares voted outstanding
--------------------------------------------------------------------------------
ABSTAIN 0.01% of 0.01% of shares
shares voted outstandin
--------------------------------------------------------------------------------
PROPOSAL 3. To approve an investment sub-advisory contract with AIB Govett,
Inc. The vote of the shareholders upon this proposal was as follows:
--------------------------------------------------------------------------------
FOR 99.92% of 80.80% of shares
shares voted outstanding
--------------------------------------------------------------------------------
FOR ALL EXCEPT 0.01% of 0.01% of shares
shares voted outstanding
--------------------------------------------------------------------------------
ABSTAIN 0.05% of 0.04% of shares
shares voted outstanding
--------------------------------------------------------------------------------
108
-----
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Trustees and Shareholders
ARK Funds:
We have audited the accompanying statements of net assets of Emerging Markets
Equity Portfolio and International Equity Portfolio (formerly, ARK International
Equity Selection Portfolio), portfolios of ARK Funds, (the "Portfolios"), as of
October 31, 2000 and the related statements of operations, statements of changes
in net assets and financial highlights for the ten-month period then ended.
These financial statements and financial highlights are the responsibility of
the Portfolios' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The statements
of operations for the year ended December 31, 1999, the statements of changes in
net assets for each of the years in the two-year period then ended and the
financial highlights for each of the years ended prior to January 1, 2000 were
audited by other auditors whose report dated February 11, 2000, expressed an
unqualified opinion thereon.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2000 by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Emerging Markets Equity Portfolio and International Equity Portfolio, as of
October 31, 2000, the results of their operations, the changes in their net
assets and the financial highlights for the ten-month period then ended in
conformity with accounting principles generally accepted in the United States of
America.
/S/SIGNATURE
Boston, Massachusetts
December 13, 2000
109
-----
<PAGE>
NOTICE TO SHAREHOLDERS (UNAUDITED)
For taxpayers filing on a calendar year basis, this notice is for informational
purposes only.
For the fiscal year ended October 31, 2000, each Portfolio is designating the
following items with regard to distributions paid during the year.
<TABLE>
<CAPTION>
LONG TERM (20% RATE) ORDINARY
CAPITAL GAINS INCOME TAX-EXEMPT
DISTRIBUTIONS DISTRIBUTIONS INCOME QUALIFYING
PORTFOLIO (TAX BASIS) (TAX BASIS) DISTRIBUTION TOTAL DIVIDENDS(1)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Money Market Portfolio 0% 100% 0% 100% 0%
---------------------------------------------------------------------------------------------------------------------------
Tax-Free Money Market 0% 0% 100% 100% 0%
---------------------------------------------------------------------------------------------------------------------------
U.S. Government Money Market 0% 100% 0% 100% 0%
---------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money Market 0% 100% 0% 100% 0%
---------------------------------------------------------------------------------------------------------------------------
Short-Term Treasury 4% 96% 0% 100% 0%
---------------------------------------------------------------------------------------------------------------------------
Maryland Tax Free 9% 1% 90% 100% 0%
---------------------------------------------------------------------------------------------------------------------------
Pennsylvania Tax Free 7% 1% 92% 100% 0%
---------------------------------------------------------------------------------------------------------------------------
Intermediate Fixed Income 2% 98% 0% 100% 0%
---------------------------------------------------------------------------------------------------------------------------
Income 0% 100% 0% 100% 0%
---------------------------------------------------------------------------------------------------------------------------
Balanced 43% 57% 0% 100% 16%
---------------------------------------------------------------------------------------------------------------------------
Equity Income 69% 31% 0% 100% 98%
---------------------------------------------------------------------------------------------------------------------------
Equity Index 42% 58% 0% 100% 59%
---------------------------------------------------------------------------------------------------------------------------
Blue Chip Equity 83% 17% 0% 100% 89%
---------------------------------------------------------------------------------------------------------------------------
Capital Growth 60% 40% 0% 100% 0%
---------------------------------------------------------------------------------------------------------------------------
Mid Cap Equity 98% 2% 0% 100% 59%
---------------------------------------------------------------------------------------------------------------------------
Small-Cap Equity 1% 99% 0% 100% 1%
---------------------------------------------------------------------------------------------------------------------------
Emerging Markets Equity 0% 0% 0% 0% 0%
---------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Qualifying dividends represent dividends that qualify for the corporate dividends received deduction.
</FN>
</TABLE>
110
-----
<PAGE>
NOTES
111
-----
<PAGE>
NOTES
112
-----
<PAGE>
INVESTMENT ADVISOR
--------------------------------------------------------------------------------
Allied Investment Advisors, Inc.
Baltimore, Maryland
INVESTMENT SUBADVISOR
--------------------------------------------------------------------------------
AIBGovett, Inc.
San Francisco, California
TRUSTEES
--------------------------------------------------------------------------------
William H. Cowie, Jr.
David D. Downes
Victor Garland
Rick A. Gold
Charlotte R. Kerr
Thomas Schweizer
Richard B. Seidel
ADMINISTRATOR
--------------------------------------------------------------------------------
SEI Investments Mutual Funds Services
Oaks, Pennsylvania
DISTRIBUTOR
--------------------------------------------------------------------------------
SEI Investments Distribution Co.
Oaks, Pennsylvania
LEGAL COUNSEL
--------------------------------------------------------------------------------
Kirkpatrick & Lockhart LLP Washington, D.C.
INDEPENDENT AUDITORS
--------------------------------------------------------------------------------
KPMG LLP
Boston, Massachusetts
CUSTODIAN
--------------------------------------------------------------------------------
Allfirst Trust Co., N.A.
Baltimore, Maryland
--------------------------------------------------------------------------------
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the ARK Funds. The report is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus for each of the portfolios included.
Shares of the portfolios are not deposits of any bank 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.
--------------------------------------------------------------------------------
<PAGE>
[LOGO OMITTED] ARK FUNDS (REGISTRATION MARK)
101-624
25 South Charles Street
Baltimore, MD 21201
We are pleased to send you our Semi Annual Report for the period ended 10/31/00.
This report contains important information about your investments in the ARK
Funds. Since we are required by law to send a semi annual report to each person
listed as a shareholder, you (or your household) may receive more than one
report.
----------------
FIRST-CLASS MAIL
U.S. POSTAGE
PAID
LANCASTER, PA
PERMIT 1793
----------------
This material must be preceded or accompanied by a current prospectus.
ARK-F-005-02