1
As filed with the Securities and Exchange Commission on January 16, 1998
Registration No. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------------------
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[x]
PRE-EFFECTIVE AMENDMENT NO. ___ [ ]
POST-EFFECTIVE AMENDMENT NO. ___ [ ]
(Check Appropriate Box or Boxes.)
-----------------------------
ARK FUNDS*
(Exact Name of Registrant as Specified in Charter)
One Freedom Valley Drive
Oaks, PA 19456
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code: (610) 676-1000
Kathryn L. Stanton
Vice President and Secretary
ARK Funds
One Freedom Valley Drive
Oaks, PA 19456
(Name and Address of Agent for Service)
Copies to:
Alan C. Porter, Esq. Matthew G. Maloney, Esq.
Piper & Marbury L.L.P. Dickstein Shapiro Morin & Oshinsky LLP
1200 Nineteenth Street, N.W. 2101 L Street, N.W.
Washington, DC 20036-2430 Washington, DC 20037-1526
It is proposed that this filing will become effective on February __, 1998
pursuant to Rule 488.
No filing fee is required because an indefinite number of shares have
previously been registered pursuant to Rule 24f-2 under the Investment Company
Act of 1940. Pursuant to Rule 429, this Registration Statement relates to
shares previously registered on Form N-1A (File No. 33-53690).
-----------------------------
* Relating to shares of ARK Pennsylvania Tax-Free Portfolio.
===============================================================================
2
ARK FUNDS
CROSS REFERENCE SHEET
PART A
Item No. Heading
- -------- -------
1. Beginning of Registration Statement and
Outside Front Cover Page of Prospectus . . . . . . . . . . . . . Cover Page
2. Beginning and Outside Back Cover Page
of Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . Fees and Expenses
3. Fee Table, Synopsis Information and
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Comparative Fee
Tables; Risk Factors
4. Information about the Transaction . . . . . . . . . . . . . . . Summary; Risk Factors;
Information Relating to the
Proposed Reorganizations
5. Information about the Registrant . . . . . . . . . . . . . . . . Summary; Risk Factors;
Additional Information About
ARK Funds; Management's
Discussion of Acquiring Fund
Performance; Prospectus for the
ARK Funds, incorporated herein
by reference
6. Information about the Company
Being Acquired . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Risk Factors;
Additional Information About
Marketvest Funds
7. Voting Information . . . . . . . . . . . . . . . . . . . . . . . Summary; Information Relating
to Voting Matters
8. Interest of Certain Persons and Experts . . . . . . . . . . . . Not Applicable
9. Additional Information Required for Reoffering
by Persons Deemed to be Underwriters . . . . . . . . . . . . . . Not Applicable
3
MARKETVEST FUNDS, INC.
MARKETVEST FUNDS
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
February __, 1998
Dear Shareholder:
On November 11, 1997, the boards of the Marketvest Funds, Inc. and
Marketvest Funds (collectively, the "Marketvest Funds") met to consider and
approve a proposal for reorganizing each portfolio of the Marketvest Funds,
with a portfolio of ARK Funds having similar investment objectives and
policies. The reorganizations are being proposed following the acquisition of
Dauphin Deposit Bank and Trust Company by First Maryland Bancorp in July 1997.
After carefully studying the merits of the proposal, the respective boards of
the Marketvest Funds determined that the reorganization of each portfolio of
the Marketvest Funds with a corresponding ARK Funds portfolio is in the best
interests of the shareholders of the Marketvest Funds.
Since the boards of the Marketvest Funds have approved combining the
Marketvest Funds with ARK Funds portfolios that have similar investment
objectives and policies, you and your fellow shareholders are being asked to
approve the proposal at a joint special meeting of Marketvest Funds'
shareholders to be held at Federated Investors Tower, 19th Floor, Pittsburgh,
Pennsylvania, on March 4, 1998. A proxy card is enclosed for use in the joint
special meeting. This card represents shares you held as of the record date,
February 4, 1998. IT IS IMPORTANT THAT YOU COMPLETE, SIGN AND RETURN YOUR
PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE.
If you and the other shareholders of your fund approve the proposed
reorganization of your fund and certain other conditions are satisfied, you
will be able to continue your investment program through ownership in an ARK
Funds portfolio with similar investment objectives and policies. As a
shareholder of an ARK Funds portfolio, you will enjoy access, through the
exchange privilege, to a much larger family of funds, including types of funds
that Marketvest Funds currently do not offer. This will provide you with a
convenient way to diversify your investments.
4
I encourage you to review the attached materials in detail. Some of your
questions are answered on the next page. Some important facts about the
proposed reorganizations are outlined below.
- The reorganizations will not affect the value of your account.
There are no sales charges on the reorganizations.
- The reorganizations are not expected to result in any federal
income tax to any of the Marketvest Funds or their shareholders.
Since all of the Marketvest Funds are required to vote, we have grouped
the funds on one proxy statement to reduce costs. If you hold shares in more
than one fund, you will receive a proxy card for each fund you own. Please
vote each proxy card you receive.
Because the boards believe the proposed reorganizations will benefit all
shareholders, they encourage you to vote for the proposal. Should you have any
additional questions, we invite you to call the Marketvest Funds toll free at
1-800-MKT-VEST.
EDWARD C. GONZALES
President
- 2 -
5
Q. WHY HAVE I RECEIVED THIS PACKAGE?
A. In July 1997, Dauphin Deposit Bank and Trust Company was acquired by
First Maryland Bancorp. First Maryland Bancorp is the parent company of Allied
Investment Advisors, Inc., investment adviser to ARK Funds. Subsequent to this
merger, the Marketvest Funds entered into an Agreement and Plan of
Reorganization with ARK Funds. Under the agreement, the assets of the
Marketvest Funds and ARK Funds will be combined, and your Marketvest Fund
shares will be exchanged for shares of an ARK portfolio having similar
investment objectives and policies. The boards of the Marketvest Funds have
approved the proposed reorganizations. You, as a Marketvest Fund shareholder,
are now being asked to approve the proposed reorganization of your fund with
the corresponding ARK Funds portfolio.
Q. WHY ARE THE REORGANIZATIONS BEING PROPOSED?
A. The boards of the Marketvest Funds believe that combining Marketvest
Funds and the ARK Funds could result in more efficient operations. Also, as a
result of these transactions, shareholders of the Marketvest Funds will
become part of a larger mutual-fund family with more fund portfolios including
some types of funds that Marketvest Funds currently do not offer. As an ARK
Funds shareholder, you will have access to these funds through the ARK Funds'
exchange privilege.
Q. HOW WILL THIS AFFECT ME AS A MARKETVEST FUND SHAREHOLDER?
A. You will become a shareholder of an ARK Funds portfolio with similar
investment objectives and policies as the Marketvest Fund you currently hold.
As an ARK Funds shareholder, you will have access to the wider array of fund
portfolios offered by ARK Funds.
There are no sales charges on this transaction. The shares of the ARK Funds
portfolio that you receive will have an aggregate net asset value equal to the
net asset value of the Marketvest Fund shares you held immediately before
the transaction.
Q. WILL THE REORGANIZATIONS RESULT IN ANY TAXES?
A. The Marketvest Funds or their shareholders will not incur any federal
income tax as a result of the reorganizations.
Q. WHAT FUND(S) WILL I HOLD FOLLOWING THE REORGANIZATIONS?
A. Marketvest Fund shareholders will receive shares of the following
corresponding ARK portfolios. Unlike Marketvest Funds, each ARK Funds
portfolio currently has two classes of shares outstanding, Retail Class and
Institutional Class. Marketvest Funds shareholders will receive Institutional
Class shares in the reorganizations.
- 3 -
6
Marketvest Funds ARK Funds
---------------- ---------
Marketvest Short-Term Bond Fund ARK Short-Term Bond Portfolio
Marketvest Intermediate U.S. Government ARK U.S. Government Bond Portfolio
Bond Fund
Marketvest Pennsylvania Intermediate ARK Pennsylvania Tax-Free Portfolio
Municipal Bond Fund
Marketvest Equity Fund ARK Value Equity Portfolio
Marketvest International Equity Fund
ARK International Equity Selection Portfolio
Q. WILL THE INVESTMENT ADVISER CHANGE?
A. Yes. Dauphin Deposit Bank and Trust Company currently serves as
investment adviser to the Marketvest Funds. Allied Investment Advisors, Inc.
serves as investment adviser to the ARK Funds and will continue as investment
adviser following these transactions. These two companies are wholly-owned by
First Maryland Bancorp. Following the Reorganizations, several portfolio
managers of Dauphin Deposit Bank and Trust Company will be joining Allied
Investment Advisors, Inc.
Q. HOW DO THE MARKETVEST FUNDS BOARDS RECOMMEND THAT I VOTE?
A. After careful consideration, the boards of the Marketvest Funds
unanimously recommend that you vote "FOR" the proposed reorganizations.
Q. HOW DO I CONTACT YOU?
A. If you have any questions, call the Marketvest Funds toll-free at
1-800-MKT-VEST, Monday through Friday, 8:00 a.m. to 8:00 p.m. (Eastern Time),
or Saturday and Sunday, 9:00 a.m. to 4:00 p.m. (Eastern Time).
PLEASE VOTE.
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN.
- 4 -
7
MARKETVEST FUNDS, INC.
MARKETVEST FUNDS
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
NOTICE IS HEREBY GIVEN that a Joint Special Meeting of the shareholders of
Marketvest Funds, Inc. and Marketvest Funds (collectively, the "Marketvest
Funds") will be held at Federated Investors, 5800 Corporate Drive, 19th Floor,
Pittsburgh, Pennsylvania, on March 4, 1998 at 10 o'clock a.m., Eastern Time,
for the following purposes:
ITEM 1. To consider and act upon a proposal to approve an
Agreement and Plan of Reorganization (the "Reorganization
Agreement"), between the Marketvest Funds and ARK Funds,
and the transactions contemplated thereby, including: (a)
the transfer of all of the assets and stated liabilities
of each portfolio of the Marketvest Funds (collectively,
the "Acquired Funds") to a corresponding portfolio of ARK
Funds (collectively, the "Acquiring Funds") in exchange
for shares of such Acquiring Fund; (b) the distribution of
the Acquiring Fund shares so received by an Acquired Fund
pro rata to shareholders of the Acquired Funds; and (c)
the termination and deregistration of the Acquired Funds
and the Marketvest Funds.
ITEM 2. To transact such other business as may properly come
before the meeting and any adjournment thereof.
The proposed reorganizations and related matters are described in the
attached Prospectus/Proxy Statement. A copy of the Reorganization Agreement is
attached to the Prospectus/Proxy Statement as Appendix A.
Only shareholders of record on February 4, 1998 are entitled to notice of
and to vote at the Joint Special Meeting and any adjournment thereof.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE THE ACCOMPANYING PROXY CARD. THIS IS IMPORTANT TO ENSURE A QUORUM AT
THE MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY
SUBMITTING A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY OR
BY ATTENDING THE MEETING AND VOTING IN PERSON.
VICTOR R. SICLARI
Secretary
February ____, 1998
8
PROSPECTUS/PROXY STATEMENT
Dated February __, 1998
ARK FUNDS
Oaks, Pennsylvania 19456
Telephone 1-800-ARK-FUNDS
MARKETVEST FUND, INC.
MARKETVEST FUNDS
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
Telephone 1-800-MKT-VEST
This Prospectus/Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Marketvest Funds, Inc. and
the Board of Trustees of Marketvest Funds (collectively, the "Marketvest
Funds") in connection with the Joint Special Meeting (the "Meeting") of
shareholders to be held at Federated Investors, Federated Investors Tower, 19th
Floor, Pittsburgh, Pennsylvania, on March 4, 1998 at 10 o'clock a.m., Eastern
Time, at which shareholders will be asked to consider and approve a proposed
Agreement and Plan of Reorganization, dated as of January 15, 1998 (the
"Reorganization Agreement"), by and among the Marketvest Funds and ARK Funds.
The Marketvest Funds and ARK Funds are open-end, series, management
investment companies whose investment advisers are wholly-owned by First
Maryland Bancorp. In reviewing the proposed reorganizations (each such
transaction between a portfolio of the Marketvest Funds and the corresponding
ARK Funds portfolio is referred to individually as a "Reorganization" and
collectively, as the "Reorganizations"), the Marketvest Funds' boards
considered, among other things, that the investment advisers of the Marketvest
Funds and ARK Funds are under common control, that each Reorganization would
constitute a tax-free reorganization and that the interests of shareholders
would not be diluted as a result of the Reorganizations.
This Prospectus/Proxy Statement constitutes the proxy statement of the
Marketvest Funds for the Meeting and the prospectus for the shares of ARK Funds
that have been registered with the Securities and Exchange Commission ("SEC")
and are to be issued in connection with the Reorganization of the Marketvest
Pennsylvania Intermediate Municipal Bond Fund. The investment operations of
Marketvest Short-Term Bond Fund, Marketvest Intermediate U.S. Government Bond
Fund, Marketvest Equity Fund and Marketvest International Equity Fund will be
continued by the ARK Short-Term Bond Portfolio, ARK U.S. Government Bond
Portfolio, ARK Value Equity Portfolio and ARK International Equity Selection
Portfolio, respectively, and this Prospectus/Proxy Statement does not
constitute a prospectus (because none is required) for
9
the shares that will be issued by these ARK Funds portfolios in connection with
the Reorganizations of the corresponding portfolios of the Marketvest Funds.
The Reorganization Agreement provides that each portfolio of the
Marketvest Funds (an "Acquired Fund" and collectively, the "Acquired Funds")
will transfer substantially all of its assets and stated liabilities to the
portfolio of ARK Funds (an "Acquiring Fund" and collectively, the "Acquiring
Funds") identified below:
Acquired Funds Acquiring Funds
-------------- ---------------
Marketvest Short-Term Bond Fund ARK Short-Term Bond Portfolio
Marketvest Intermediate U.S. Government ARK U.S. Government Bond Portfolio
Bond Fund
Marketvest Pennsylvania Intermediate ARK Pennsylvania Tax-Free Portfolio
Municipal Bond Fund
Marketvest Equity Fund ARK Value Equity Portfolio
Marketvest International Equity Fund ARK International Equity Selection
Portfolio
In exchange for the transfer of assets and liabilities, each Acquired Fund
will receive Institutional Class shares of the corresponding Acquiring Fund
identified above. Each Acquired Fund will then make a liquidating distribution
to its shareholders of the Acquiring Fund shares, so that a shareholder of an
Acquired Fund at the time of the Reorganization will receive Institutional
Class shares of the corresponding Acquiring Fund with the same aggregate net
asset value as the shareholder had in the Acquired Fund immediately before the
Reorganization. Following the Reorganizations, the Acquired Funds and the
Marketvest Funds will be terminated and deregistered as described in the
Reorganization Agreement.
ARK Pennsylvania Tax-Free Portfolio is currently conducting investment
operations as described in this Prospectus/Proxy Statement. ARK Short-Term
Bond Portfolio, ARK U.S. Government Bond Portfolio, ARK Value Equity Portfolio
and ARK International Equity Selection Portfolio have recently been organized
for the purpose of continuing the investment operations of Marketvest
Short-Term Bond Fund, Marketvest Intermediate U.S. Government Bond Fund,
Marketvest Equity Fund and Marketvest International Equity Fund, respectively,
and are not expected to commence operations until the consummation of the
Reorganizations.
This Prospectus/Proxy Statement sets forth the information that a
shareholder should know before voting on the Reorganization Agreement (and
related transactions) and should be retained for future reference. The
Prospectus dated February __, 1998 relating to the shares of the Acquiring
Funds, which describes the operations of the Acquiring Funds, is incorporated
herein by reference and accompanies this Prospectus/Proxy Statement.
Additional information is contained in: (i) the Statement of Additional
Information dated February __, 1998, relating to this Prospectus/Proxy
Statement; (ii) the Statement of Additional Information dated February __,
1998, relating to the shares of the
- 2 -
10
Acquiring Funds; (iii) the ARK Funds' Annual Report for the fiscal year ended
April 30, 1997, as supplemented and Semi-Annual Report for the six-months ended
October 31, 1997; (iv) the Combined Prospectus and Combined Statement of
Additional Information, each dated June 30, 1997, as supplemented, relating to
the Acquired Funds; and (v) the Combined Annual Report for the fiscal year
ended February 28, 1997, and Combined Semi-Annual Report for the six-months
ended August 31, 1997, relating to the Acquired Funds. Each of these documents
is incorporated herein by reference and is also enclosed in the materials
accompanying this Prospectus/Proxy Statement. The information contained in the
Combined Prospectus and the Combined Statement of Additional Information, each
dated June 30, 1997, as supplemented, the Combined Annual Report for the fiscal
year ended February 28, 1997, and the Combined Semi-Annual Report for the six
month period ended August 31, 1997, each relating to the Acquired Funds, is
incorporated herein by reference and accompanies this Prospectus/Proxy
Statement.
This Prospectus/Proxy Statement is expected to be first sent to
shareholders no later than February __, 1998.
THE SECURITIES OF ARK FUNDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS/PROXY STATEMENT
AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY MARKETVEST FUNDS OR ARK FUNDS.
SHARES OF ARK FUNDS AND MARKETVEST FUNDS ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED OR ENDORSED BY, THE FIRST NATIONAL BANK OF MARYLAND, DAUPHIN
DEPOSIT BANK AND TRUST COMPANY OR ANY DEPOSITORY INSTITUTION, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENTAL AGENCY. INVESTING IN SHARES OF ARK FUNDS INVOLVES
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
- 3 -
11
TABLE OF CONTENTS
Page
----
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Proposed Reorganizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Reasons for Reorganizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Overview of Marketvest Funds and ARK Funds . . . . . . . . . . . . . . . . . . . . . 2
Marketvest Pennsylvania Intermediate Municipal Bond Fund and
ARK Pennsylvania Tax-Free Portfolio . . . . . . . . . . . . . . . . . . . . . 2
Certain Arrangements with Service Providers -- Marketvest Funds . . . . . . . . 2
Certain Arrangements with Service Providers -- ARK Funds . . . . . . . . . . . . 3
Comparative Fee Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Expense Ratios -- Acquired Funds . . . . . . . . . . . . . . . . . . . . . . . . 10
Expense Ratios -- Acquiring Funds . . . . . . . . . . . . . . . . . . . . . . . 10
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Redemption Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Voting Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . . . . . . . 14
Investment Practices and Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Investment Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Information Relating to the Proposed Reorganizations . . . . . . . . . . . . . . . . . . . 23
Description of the Reorganization Agreement . . . . . . . . . . . . . . . . . . . . . 23
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Information Relating to Voting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 28
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Shareholder and Board Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Additional Information about ARK Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Additional Information about Marketvest Funds . . . . . . . . . . . . . . . . . . . . . . . 32
Management's Discussion of Acquiring Fund Performance . . . . . . . . . . . . . . . . . . . 32
Other Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Shareholder Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
12
SUMMARY
The following is a summary of certain information relating to the proposed
Reorganizations, the parties thereto and the related transactions, and is
qualified by reference to the more complete information contained elsewhere in
this Prospectus/Proxy Statement, the Statement of Additional Information
relating to this Prospectus/Proxy Statement, the Combined Prospectus and
Combined Statement of Additional Information of the Marketvest Funds,
Marketvest Funds' Combined Annual Report and most recent Combined
Semi-Annual Report. The Prospectus and Statement of Additional Information of
ARK Funds, and the Reorganization Agreement attached to this Prospectus/Proxy
Statement as Appendix A.
PROPOSED REORGANIZATIONS. Based upon their evaluation of the relevant
information presented to them, and in light of their fiduciary duties under
federal and state law, the Board of Directors of Marketvest Funds, Inc. and the
Board of Trustees of Marketvest Funds, and the Board of Trustees of ARK Funds,
including in each case the directors/trustees who are not "interested persons"
within the meaning of the Investment Company Act of 1940, as amended (the "1940
Act"), have determined that each of the proposed Reorganizations is in the best
interests of shareholders of each Acquired Fund and each Acquiring Fund,
respectively, and that the interests of existing shareholders of the Acquired
Funds and the Acquiring Funds, respectively, will not be diluted as a result of
such Reorganizations.
REASONS FOR THE REORGANIZATIONS. The primary reasons for each of the
proposed Reorganizations are: (a) the acquisition of Dauphin Deposit
Corporation, the parent company of Dauphin Deposit Bank and Trust Company, the
Acquired Funds' investment adviser, by First Maryland Bancorp, the parent
company of Allied Investment Advisors, Inc., the Acquiring Funds' investment
adviser, (b) the fact that the investment advisers of the Acquired Funds and
the Acquiring Funds are under common control, (c) the fact that shareholder
interests would not be diluted in the proposed Reorganizations, (d) the status
of each Reorganization as a tax-free reorganization, (e) the similarity of the
investment objective and policies of each Acquired Fund and the corresponding
Acquiring Fund, (f) the improved marketing opportunities that could result from
each Reorganization, and (g) the opportunity for the shareholders of each
Acquired Fund to participate in a larger family of mutual funds through the
exchange privilege offered by ARK Funds.
FEDERAL INCOME TAX CONSEQUENCES. Shareholders of each Acquired Fund will
not recognize any gain or loss for federal income tax purposes on the receipt
of shares of the corresponding Acquiring Fund. Neither the Acquired Funds nor
the Acquiring Funds will incur any gain or loss for federal tax purposes as a
result of the Reorganizations. See "Information Relating to the Proposed
Reorganizations - Federal Income Tax Consequences."
- 1 -
13
OVERVIEW OF MARKETVEST FUNDS AND ARK FUNDS. The investment objectives and
policies of Marketvest Short-Term Bond Fund and ARK Short-Term Bond Portfolio,
Marketvest Intermediate U.S. Government Bond Fund and ARK U.S. Government Bond
Portfolio, Marketvest Equity Fund and ARK Value Equity Portfolio, and
Marketvest International Equity Fund and ARK International Equity Selection
Portfolio are substantially similar. However, the ARK Short-Term Bond
Portfolio and ARK U.S. Government Bond Portfolio may each invest up to 5% of
total assets in lower-quality debt securities; the corresponding Marketvest
Funds do not have a similar provision in their investment policies.
The investment objective and policies of the Marketvest Pennsylvania
Intermediate Municipal Bond Fund are similar to those of the ARK Pennsylvania
Tax-Free Portfolio as described below.
Marketvest Pennsylvania Intermediate Municipal Bond Fund and ARK Pennsylvania
Tax-Free Portfolio
Under normal market conditions, the Marketvest Pennsylvania Intermediate
Municipal Bond Fund and the ARK Pennsylvania Tax-Free Portfolio invest at least
80% and 65%, respectively, of their net assets in Pennsylvania municipal
securities. In addition, the Marketvest Pennsylvania Intermediate Municipal
Bond Fund invests its assets so that, under normal circumstances, at least 65%
of the value of its total assets will be invested in securities of Pennsylvania
issuers.
See "Risk Factors" below and in the prospectuses of the Marketvest Funds
and ARK Funds, which are incorporated herein by reference, for a further
description of the similarities and differences between the investment
objectives, policies and limitations of the Acquired Funds and the Acquiring
Funds.
Certain Arrangements with Service Providers -- Marketvest Funds
Pursuant to an investment advisory contract with both Marketvest Funds,
Inc. and Marketvest Funds, investment decisions for the Acquired Funds are made
by Dauphin Deposit Bank and Trust Company ("Dauphin Deposit"), the Acquired
Funds' investment adviser, subject to the direction of the Marketvest Funds'
boards. Dauphin Deposit continually conducts investment research and
supervision for each Acquired Fund and is responsible for the purchase or sale
of portfolio instruments, for which it receives an annual investment advisory
fee from the assets of each Acquired Fund (as described in the comparative fee
tables below). Dauphin Deposit may voluntarily waive some or all of its fee
from time to time in its sole discretion.
Edgewood Services Inc., a subsidiary of Federated Investors, is the
principal distributor for shares of the Acquired Funds.
Pursuant to the provisions of a distribution plan adopted in accordance
with Rule 12b-1 under the 1940 Act, each Acquired Fund may pay the distributor
of its shares an amount computed at an annual rate of up to 0.25% of the
average daily net asset value of that Acquired
- 2 -
14
Fund to finance any activity which is principally intended to result in the
sale of that Acquired Fund's shares. No fees have been paid under the
distribution plan.
Federated Administrative Services ("FAS"), a subsidiary of Federated
Investors, provides the Acquired Funds with administrative personnel and
services necessary to operate each Acquired Fund. Such services include
certain legal and accounting services. FAS receives an annual administrative
fee equal to 0.15% of the Acquired Funds' average aggregate daily net assets.
The administrative fee received during any fiscal year is subject to an
aggregate minimum of at least $75,000 per Acquired Fund. FAS may voluntarily
waive all or a portion of its fee from time to time in its sole discretion.
Dauphin Deposit is custodian for the securities and cash of the Acquired
Funds. Federated Shareholder Services Company ("FSSC") is the transfer
agent and dividend disbursing agent for the Acquired Funds, and Federated
Services Company ("FSCo") provides certain portfolio accounting services to the
Acquired Funds. FSSC and FSCo are subsidiaries of Federated Investors.
Certain Arrangements with Service Providers -- ARK Funds
Allied Investment Advisors, Inc. ("AIA") serves as the investment adviser
to each Acquiring Fund and is entitled to receive investment advisory fees,
which are accrued daily and paid monthly, from each Acquiring Fund (as
described in the comparative fee tables below). AIA may voluntarily waive some
or all of its fee from time to time in its sole discretion. See "Management"
in the Prospectus of ARK Funds accompanying this Prospectus/Proxy Statement,
which is incorporated herein by reference, for additional information on AIA.
SEI Investments Distribution Co., a wholly-owned subsidiary of SEI
Investments Company, serves as the distributor for each Acquiring Fund.
Under a shareholder services plan in effect with respect to the
Institutional Class of each Acquiring Fund, the Acquiring Fund may pay
shareholder services fees to securities dealers and other financial
institutions (including affiliates of First Maryland Bancorp), at an annual
rate of up to 0.15% of the average net assets of the Institutional Class shares
attributable to their customers, for providing ongoing shareholder support
services to customers with accounts in such class. The Board of Trustees
of ARK Funds has approved an annual shareholder services fee rate of 0.06% of
the average net assets of the Institutional Class of each Acquiring Fund.
SEI Investments Fund Resources ("SFR") provides administrative services to
each Acquiring Fund. SEI Investments Management Corporation, a wholly-owned
subsidiary of SEI Co., is the owner of all beneficial interest in SFR. For its
services, SFR receives a fee, which is calculated daily and paid monthly, at
an annual rate of 0.13% of the aggregate average net assets of the
Acquiring Funds. SFR may voluntarily waive all or a portion of its fee from
time to time in its sole discretion. Pursuant to a separate agreement with
SFR, FMB Trust Company, National Association performs sub-administration
services on behalf of each ARK
- 3 -
15
Funds portfolio, for which it receives a fee from SFR at the annual rate of up
to 0.0275% of aggregate average daily net assets of the Acquiring Funds. See
"Management" in the Prospectus of ARK Funds accompanying this Prospectus/Proxy
Statement, which is incorporated herein by reference, for additional
information about SFR.
FMB Trust Company, National Association is custodian for the securities
and cash of ARK Funds. SFR provides transfer agent and related services for
the Acquiring Funds and has subcontracted the transfer agency services to State
Street Bank and Trust Company. State Street Bank and Trust Company maintains
shareholder accounts and records for the Acquiring Funds.
Comparative Fee Tables
The tables set forth below show (a) shareholder transaction expenses and
estimated annual operating expenses for each Acquired Fund (other than the
Marketvest International Equity Fund) for the fiscal year ended February 28,
1997, estimated shareholder transaction expenses and estimated annual operating
expenses for the Marketvest International Equity Fund, for the fiscal year
ending February 28, 1998, and shareholder transaction expenses and estimated
annual operating expenses for the Institutional Class of each Acquiring Fund as
of April 30, 1997 for its fiscal year ended on such date, in each case restated
to reflect expenses the Acquired Funds and the Institutional Class of shares of
the Acquiring Funds, respectively, expect to incur during the current fiscal
year, and (b) pro forma information for each Acquiring Fund assuming the
Reorganization of such Acquiring Fund had taken place on October 31, 1997.
Unless otherwise noted, the information in the expense tables and the
examples reflects voluntary fee waivers and/or reimbursements. The assumption
in the example of a 5% annual return is required by the SEC for all mutual
funds, and is not a prediction of any fund's future performance. THE EXAMPLES
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OF ANY
FUND. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
- 4 -
16
Pro Forma
Marketvest Short-Term ARK Short-Term ARK Short-Term
Bond Fund Bond Portfolio Bond Portfolio
--------- -------------- --------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases and 3.50% None None
reinvested dividends
Deferred sales charges imposed on redemptions None None None
Redemption Fee None None None
Exchange Fee None None None
ANNUAL OPERATING EXPENSES
(expressed as a percentage of average net assets)
Advisory Fee (after waiver)(1) 0.60% 0.70% 0.70%
12b-1 Fee (after waiver)(2) 0.00% N/A N/A
Shareholder Services Fees (after waiver)(3) N/A 0.06% 0.06%
Other Expenses (after waiver)(4) 0.30% 0.18% 0.18%
Total Operating Expenses (after waivers)(5) 0.90% 0.94% 0.94%
EXAMPLE
A shareholder would pay the following expenses on a $1,000 investment,
assuming a 5% annual return, reinvestment of all dividends and redemption of
the shares after the number of years indicated:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Marketvest Short-Term Bond Fund $44 $63 $83 $142
ARK Short-Term Bond Portfolio 10 30 52 115
Pro Forma ARK Short-Term Bond Portfolio 10 30 52 115
- -------------------
(1) Absent fee waivers, advisory fees would be 0.75%.
(2) The Marketvest Short-Term Bond Fund is not currently paying or accruing
12b-1 fees. The Marketvest Short-Term Bond Fund can pay up to 0.25% as a 12b-1
fee to the distributor of the Marketvest Funds.
(3) Absent fee waivers, shareholder services fees for the Institutional Class
of the ARK Short-Term Bond Portfolio would be 0.15%.
(4) Other Expenses for the Marketvest Short-Term Bond Fund have been reduced
to reflect the voluntary waiver of 0.03% of the administrative fee by the
administrator. The administrator can terminate these voluntary waivers and
reimbursements at any time at their sole discretion.
(5) Absent fee waivers, total operating expenses would be 1.08%, 1.13% and
1.13%, respectively.
- 5 -
17
Marketvest
Intermediate Pro Forma
U.S. Government ARK U.S. Government ARK U.S. Government
Bond Fund Bond Portfolio Bond Portfolio
--------- -------------- --------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases and 3.50% None None
reinvested dividends
Deferred sales charges imposed on redemptions None None None
Redemption Fee None None None
Exchange Fee None None None
ANNUAL OPERATING EXPENSES
(expressed as a percentage of average net assets)
Advisory Fee (after waiver)(1) 0.60% 0.65% 0.65%
12b-1 Fee (after waiver)(2) 0.00% N/A N/A
Shareholder Services Fees(3) N/A 0.06% 0.06%
Other Expenses (after waiver)(4) 0.25% 0.19% 0.19%
Total Operating Expenses (after waivers)(5) 0.85% 0.90% 0.90%
EXAMPLE
A shareholder would pay the following expenses on a $1,000 investment,
assuming a 5% annual return, reinvestment of all dividends and redemption of
the shares after the number of years indicated:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Marketvest Intermediate U.S. Government $43 $61 $80 $136
Bond Fund
ARK U.S. Government Bond Portfolio 9 29 50 111
Pro Forma ARK U.S. Government Bond
Portfolio 9 29 50 111
- -------------------
(1) Absent fee waivers, advisory fees would be 0.75%.
(2) The Marketvest Intermediate U.S. Government Bond Fund is not currently
paying or accruing 12b-1 fees. The Marketvest Intermediate U.S. Government
Bond Fund can pay up to 0.25% as a 12b-1 fee to the distributor of the
Marketvest Funds.
(3) Absent fee waivers, shareholder services fees for the Institutional Class
of the ARK U.S. Government Bond Portfolio would be 0.15%
(4) Other Expenses for the Marketvest Intermediate U.S. Government Bond Fund
have been reduced to reflect the voluntary waiver of 0.03% of the
administrative fee by the administrator. The administrator can terminate these
voluntary waivers and reimbursements at any time at their sole discretion.
(5) Absent fee waivers, total operating expenses would be 1.03%, 1.99% and
1.99%, respectively.
- 6 -
18
Marketvest
Pennsylvania Pro Forma
Intermediate Municipal ARK Pennsylvania ARK Pennsylvania
Bond Fund Tax-Free Portfolio Tax-Free Portfolio
--------- ------------------ ------------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases and 3.50% None None
reinvested dividends
Deferred sales charges imposed on redemptions None None None
Redemption Fee None None None
Exchange Fee None None None
ANNUAL OPERATING EXPENSES
(expressed as a percentage of average net assets)
Advisory Fee(1) 0.60% 0.65% 0.65%
12b-1 Fee (after waiver)(2) 0.00% N/A N/A
Shareholder Services Fees(3) N/A 0.06% 0.06%
Other Expenses (after waiver)(4) 0.23% 0.23% 0.18%
Total Operating Expenses (after waivers)(5) 0.83% 0.94% 0.89%
EXAMPLE
A shareholder would pay the following expenses on a $1,000 investment,
assuming a 5% annual return, reinvestment of all dividends and redemption of
the shares after the number of years indicated:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Marketvest Pennsylvania Intermediate $43 $61 $79 $134
Municipal Bond Fund
ARK Pennsylvania Tax-Free Portfolio 10 30 52 115
Pro Forma ARK Pennsylvania Tax-Free
Portfolio 9 28 49 110
- -------------------
(1) Absent fee waiver, the advisory fee for the Marketvest Pennsylvania
Intermediate Municipal Bond Fund would be 0.75%.
(2) The Marketvest Pennsylvania Intermediate Municipal Bond Fund is not
currently paying or accruing 12b-1 fees. The Marketvest Pennsylvania
Intermediate Municipal Bond Fund can pay up to 0.25% as a 12b-1 fee to the
distributor of the Marketvest Funds.
(3) Absent fee waivers, shareholder services fees for the Institutional Class
of the ARK Pennsylvania Tax-Free Portfolio would be 0.15%
(4) Other Expenses for the Marketvest Pennsylvania Intermediate Municipal
Bond Fund have been reduced to reflect the voluntary waiver of 0.04% of the
administrative fee by the administrator. The administrator can terminate this
voluntary waiver at any time at its sole discretion.
(5) Absent fee waivers, total operating expenses would be 1.02%, 1.03% and
0.98%, respectively.
- 7 -
19
Pro Forma
Marketvest Equity ARK Value Equity ARK Value Equity
Fund Portfolio Portfolio
---- --------- ---------
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases and 4.75% None None
reinvested dividends
Deferred sales charges imposed on redemptions None None None
Redemption Fee None None None
Exchange Fee None None None
ANNUAL OPERATING EXPENSES
(expressed as a percentage of average net assets)
Advisory Fee (after waiver)(1) 0.80% 0.87% 0.87%
12b-1 Fee (after waiver)(2) 0.00% N/A N/A
Shareholder Services Fees(3) N/A 0.06% 0.06%
Other Expenses (after waiver)(4) 0.25% 0.13% 0.13%
Total Operating Expenses (after waivers)(5) 1.05% 1.06% 1.06%
EXAMPLE
A shareholder would pay the following expenses on a $1,000 investment,
assuming a 5% annual return, reinvestment of all dividends and redemption of
the shares after the number of years indicated:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Marketvest Equity Fund $58 $79 $103 $170
ARK Value Equity Portfolio 11 34 58 129
Pro Forma ARK Value Equity Portfolio 11 34 58 129
- -------------------
(1) Absent fee waivers, advisory fees would be 1.00%.
(2) The Marketvest Equity Fund is not currently paying or accruing 12b-1
fees. The Marketvest Equity Fund can pay up to 0.25% as a 12b-1 fee to the
distributor of the Marketvest Funds.
(3) Absent fee waivers, shareholder services fees for the Institutional Class
of the ARK Value Equity Portfolio would be 0.15%
(4) Other Expenses for the Marketvest Equity Fund have been reduced to
reflect the voluntary waiver of 0.01% of the administrative fee by the
administrator. The administrator can terminate this voluntary waiver at any
time at its sole discretion.
(5) Absent fee waivers, total operating expenses would be 1.26%, 1.28% and
1.28%, respectively.
- 8 -
20
Pro Forma
Marketvest ARK ARK
International Equity International Equity International Equity
Fund Selection Portfolio Selection Portfolio
---- ------------------- -------------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases and 1.50% None None
reinvested dividends
Deferred sales charges imposed on redemptions None None None
Redemption Fee None None None
Exchange Fee None None None
ANNUAL OPERATING EXPENSES
(expressed as a percentage of average net assets)
Advisory Fee (after waiver)(1) 0.50% 0.55% 0.55%
12b-1 Fee (after waiver)(2) 0.00% N/A N/A
Shareholder Services Fees(3) N/A 0.06% 0.06%
Other Expenses (after waiver)(4) 0.25% 0.26% 0.26%
Total Operating Expenses (after waivers)(5) 0.75% 0.81% 0.81%
EXAMPLE
A shareholder would pay the following expenses on a $1,000 investment,
assuming a 5% annual return, reinvestment of all dividends and redemption of
the shares after the number of years indicated:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Marketvest International Equity Fund $23 $39 --- ---
ARK International Equity Selection
Portfolio 8 26 45 100
Pro Forma ARK International Equity
Selection Portfolio 8 26 45 100
- -------------------
(1) Absent fee waivers, advisory fees would be 0.65%.
(2) The Marketvest International Equity Fund is not currently paying or
accruing 12b-1 fees. The Marketvest International Equity Fund can pay up to
0.25% as a 12b-1 fee to the distributor of the Marketvest Funds.
(3) Absent fee waivers, shareholder services fees for the Institutional Class
of the ARK International Equity Selection Portfolio would be 0.15%
(4) Other Expenses of the Marketvest International Equity Fund have been
reduced to reflect voluntary waiver of 0.17% of the administrative fee by the
administrator and reimbursement of certain expenses by the adviser. The
administrator and adviser can terminate these voluntary waivers and
reimbursements at any time at their sole discretion.
(5) Absent fee waivers, total operating expenses would be 1.07%, 1.06% and
1.06%, respectively.
- 9 -
21
Expense Ratios -- Acquired Funds
The following table sets forth (a) the ratios of operating expenses to
average net assets of each Acquired Fund (other than the Marketvest
International Equity Fund) for the fiscal year ended February 28, 1997, (i)
after fee waivers and expense reimbursements, and (ii) absent fee waivers and
expense reimbursements, and (b) the annualized ratios of operating expenses to
average net assets of each Acquired Fund for the six-months ended August 31,
1997, (i) after fee waivers and expense reimbursements and (ii) absent fee
waivers and expense reimbursements.
FISCAL YEAR ENDED FEBRUARY 28, 1997
Ratio of Operating Expenses Ratio of Operating Expenses
to Average Net Assets to Average Net Assets
After Fee Absent Fee
Waivers and Expense Waivers and Expense
Acquired Fund Reimbursements Reimbursements
- ------------- -------------- --------------
Marketvest Short-Term Bond Fund 0.90% 1.08%
Marketvest Intermediate U.S. Government 0.85% 1.03%
Bond Fund
Marketvest Pennsylvania Intermediate Municipal 0.83% 1.02%
Bond Fund
Marketvest Equity Fund 1.05% 1.26%
SIX-MONTHS ENDED AUGUST 31, 1997
Ratio of Operating Expenses Ratio of Operating Expenses
to Average Net Assets to Average Net Assets
After Fee Absent Fee
Waivers and Expense Waivers and Expense
Acquired Fund Reimbursements Reimbursements
- ------------- -------------- --------------
Marketvest Short-Term Bond Fund 0.83% 1.02%
Marketvest Intermediate U.S. Government 0.80% 0.99%
Bond Fund
Marketvest Pennsylvania Intermediate Municipal 0.81% 1.00%
Bond Fund
Marketvest Equity Fund 1.02% 1.22%
Marketvest International Equity Fund 0.75% 1.16%
Expense Ratios -- Acquiring Funds
The following table sets forth (a) the ratios of operating expenses to
average net assets of the Institutional Class of the ARK Pennsylvania Tax-Free
Portfolio for the fiscal year ended April 30, 1997, (i) after fee waivers and
expense reimbursements and (ii) absent fee waivers and expense reimbursements,
and (b) the annualized ratios of operating expenses to average net assets of
the Institutional Class of the ARK Pennsylvania Tax-Free Portfolio for the
six-months
- 10 -
22
ended October 31, 1997, (i) after fee waivers and expense reimbursements, and
(ii) absent fee waivers and expense reimbursements.
FISCAL YEAR ENDED APRIL 30, 1997
Ratio of Operating Expenses Ratio of Operating Expenses
to Average Net Assets to Average Net Assets
After Fee Absent Fee
Waivers and Expense Waivers and Expense
Acquiring Fund Reimbursements Reimbursements
- -------------- -------------- --------------
ARK Pennsylvania Tax-Free Portfolio 0.63% 0.76%
SIX-MONTHS ENDED OCTOBER 31, 1997
Ratio of Operating Expenses Ratio of Operating Expenses
to Average Net Assets to Average Net Assets
After Fee Absent Fee
Waivers and Expense Waivers and Expense
Acquiring Fund Reimbursements Reimbursements
- -------------- -------------- --------------
ARK Pennsylvania Tax-Free Portfolio 0.60% 0.72%
The ARK Short-Term Bond Portfolio, ARK U.S. Government Bond Portfolio, ARK
Value Equity and ARK International Equity Selection Portfolio have recently
been organized for the purpose of continuing the investment operations of the
Marketvest Short-Term Bond Fund, Marketvest Intermediate U.S. Government Fund,
Marketvest Equity Fund and Marketvest International Equity Fund, respectively,
had not commenced operations as of October 31, 1997, and are not expected to
commence operations until the consummation of the Reorganizations.
Purchases
Except for the shares to be issued in connection with the Reorganizations,
Institutional Class shares of the Acquiring Funds are sold to individuals,
institutions and other entities that have established trust, custodial or money
management relationships with First National Bank of Maryland ("First National")
or its affiliates. Institutional Class shares may be purchased by eligible
investors at their net asset value without a sales charge next calculated after
an investment is received and accepted. Marketvest Fund shareholders may
reinvest their dividends in Institutional Class shares of the Acquiring Funds
but additional share purchases of Institutional Class shares may only be made
by Marketvest Fund shareholders who are otherwise eligible to purchase
Institutional Class shares. Share purchases may be made Monday through Friday,
except on certain holidays. The net asset value of each Acquiring Fund is
calculated as of the close of regular trading (normally 4:00 p.m. Eastern Time)
on the New York Stock Exchange. The following minimum investments apply to
Institutional Class shares of the Acquiring Funds unless they are waived:
- 11 -
23
To open an account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000*
To add to an account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
Minimum account balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000*
__________________________
* The minimum initial investment required to open an account is $100,000.
Within six months, a registered Institutional Class shareholder must reach and
maintain an aggregate balance of $250,000. Both the minimum initial investment
and aggregate balance requirements are being waived for all Marketvest Fund
shareholders in the Reorganizations. However, additional purchases of
Institutional Class shares may be made only if a shareholder is otherwise
eligible to purchase Institutional Class shares.
Shares of the Acquired Funds are sold on a continuous basis at net asset
value plus any applicable sales charge. The maximum sales charge is 4.75% for
the Marketvest Equity Fund; 3.50% for the Marketvest Short-Term Bond Fund,
Marketvest Intermediate U.S. Government Bond Fund and Marketvest Pennsylvania
Intermediate Municipal Bond Fund; and 1.50% for the Marketvest International
Equity Fund. Purchases may be made Monday through Friday, except on certain
holidays. The net asset value of each Acquired Fund is calculated as of the
close of regular trading (normally 4:00 p.m., Eastern Time) on the New York
Stock Exchange. The following minimum investments apply to purchases of shares
of the Acquired Funds unless they are waived:
To open an account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000*
To add to an account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Minimum account balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000
__________________________
* The minimum investment to open an account for the Marketvest
International Equity Fund is $10,000.
Participants in the Acquired Funds' systematic investment program may
direct the deduction of the purchase price for shares of any Acquired Fund from
an eligible deposit account. If the Reorganization of any such Acquired Fund
is approved and consummated as set forth herein, all amounts so deducted will
be automatically invested in the corresponding Acquiring Fund.
Exchanges
All or a portion of shares of any of the Acquiring Funds may be exchanged
on any business day at their net asset value for shares of the same class of
one or more of the other Acquiring Funds or any other ARK Funds portfolio.
Shares of the Acquired Funds may be
- 12 -
24
exchanged at their net asset value plus any sales charge differential for the
shares of any of the other Acquired Funds.
Dividends and Distributions
ARK Short-Term Bond Portfolio, ARK U.S. Government Bond Portfolio and ARK
Pennsylvania Tax-Free Portfolio pay dividends from net investment income
monthly. ARK Value Equity Portfolio pays dividends from net investment income
quarterly. ARK International Equity Selection Portfolio pays dividends from
net investment income annually. Commencing March 1, 1998, income dividends on
all Acquiring Funds will be declared daily and paid monthly, quarterly or
annually, as described above. Each Acquiring Fund distributes net realized
capital gains, if any, at least annually. Holders of shares of the Acquiring
Funds may elect to have their dividends and distributions automatically
reinvested in additional shares at the net asset value next determined after
payment, to receive their dividends and distributions in cash, or to receive a
combination of additional shares and cash. If a shareholder fails to select an
option, all dividends and distributions are reinvested in additional shares.
Marketvest Short-Term Bond Fund, Marketvest Intermediate U.S. Government
Bond Fund, and Marketvest Pennsylvania Intermediate Municipal Bond Fund declare
dividends daily and pay dividends from net investment income monthly.
Marketvest Equity Fund declares and pays dividends from net investment income
monthly. Marketvest International Equity Fund declares and pays dividends from
net investment income annually. Each Acquired Fund distributes net realized
capital gains, if any, at least annually. Dividends and distributions are
automatically reinvested in additional shares on the payment dates at the
ex-dividend date net asset value without a sales charge, unless cash payments
are requested in writing.
Redemption Procedures
The shares of the Acquiring Funds and the Acquired Funds are redeemable on
any business day at a price equal to the net asset value of the shares the next
time it is calculated after receipt of a redemption request in good order.
VOTING INFORMATION. This Prospectus/Proxy Statement is being furnished in
connection with the solicitation of proxies by the Board of Directors of
Marketvest Funds, Inc. and the Board of Trustees of Marketvest Funds in
connection with the Joint Special Meeting of Shareholders to be held at
Federated Investors, 5800 Corporate Drive, Pittsburgh, Pennsylvania, on March
4, 1998, at 10 o'clock a.m., Eastern Time, (such meeting and any adjournment
thereof hereinafter referred to as the "Meeting"). Only shareholders of record
at the close of business on February 4, 1998 will be entitled to notice of and
to vote at the Meeting. Each share or fraction thereof is entitled to one vote
or fraction thereof. Shares of each Acquired Fund will be counted separately.
Shares represented by a properly executed proxy will be voted in accordance
with the instructions thereon, or if no instruction is made, the persons named
as proxies will vote in favor of each proposal set forth in the Notice of
Meeting. Proxies may be revoked at any time before they are exercised by
submitting a written notice of revocation or a subsequently executed proxy or
by attending the Meeting and voting in person. For additional information,
including a
- 13 -
25
description of the shareholder vote required for approval of the Reorganization
Agreement and related transactions contemplated thereby, see "Information
Relating to Voting Matters."
RISK FACTORS
The following discussion summarizes some of the more significant
similarities and differences in the investment objectives, policies, practices
and risk factors of the Acquired Funds and the Acquiring Funds and is qualified
in its entirety by the prospectuses and statements of additional information of
the Acquired Funds and the Acquiring Funds accompanying this Prospectus/Proxy
Statement, which are incorporated herein by reference.
INVESTMENT OBJECTIVES AND POLICIES. The investment objective and policies
of the Marketvest Short-Term Bond Fund and ARK Short-Term Bond Portfolio, of
the Marketvest Intermediate U.S. Government Bond Fund and ARK U.S. Government
Bond Portfolio, of the Marketvest Equity Fund and ARK Value Equity Portfolio,
or of the Marketvest International Equity Fund and ARK International Equity
Selection Portfolio are substantially similar. However, the ARK Short-Term
Bond Portfolio and ARK U.S. Government Bond Portfolio may each invest up to 5%
of total assets in lower-quality debt securities; the corresponding Marketvest
Funds do not have a similar provision in their investment polices. The
investment objective and policies of the Marketvest Pennsylvania Intermediate
Municipal Bond Fund are similar to those of the ARK Pennsylvania Tax-Free
Portfolio. There are, however, certain material differences.
Marketvest Pennsylvania Intermediate Municipal Bond Fund and ARK
Pennsylvania Tax-Free Portfolio. The investment objective of each of the
Marketvest Pennsylvania Intermediate Municipal Bond Fund and the ARK
Pennsylvania Tax-Free Portfolio is to provide current income which is exempt
from federal regular income tax and the state income taxes imposed by the
Commonwealth of Pennsylvania. Each fund pursues its investment objective by
investing primarily in Pennsylvania municipal securities. Under normal market
conditions, the Marketvest Pennsylvania Intermediate Municipal Bond Fund and
the ARK Pennsylvania Tax-Free Portfolio invest at least 80% and 65%,
respectively, of their net assets in Pennsylvania municipal securities. In
addition, the Marketvest Pennsylvania Intermediate Municipal Bond Fund invests
its assets so that, under normal circumstances, at least 65% of the value of
its total assets will be invested in securities of Pennsylvania issuers. Up to
20% of each fund may generate income that is subject to the federal income tax,
including the alternative minimum tax.
See the Combined Prospectus of the Marketvest Funds and the Prospectus of
ARK Funds, which are incorporated herein by reference, for a further
description of the similarities and differences between the investment
objectives and policies of the Acquired Funds and the Acquiring Funds.
INVESTMENT PRACTICES AND RISKS. This section describes certain practices
and risks that are generally common to a number of the Acquired Funds and
Acquiring Funds.
- 14 -
26
Fixed-Income Securities. The market value of fixed-income securities will
change in response to interest rate changes and other factors. During periods
of falling interest rates, the value of outstanding fixed-income securities
generally rises. Conversely, during periods of rising interest rates, the
value of such securities generally declines. Moreover, while securities with
longer maturities tend to produce higher yields, the prices of longer maturity
securities are also subject to greater market fluctuations as a result of
changes in interest rates. Changes by recognized agencies in the credit rating
of any fixed-income security and in the ability of an issuer to make payments
of interest and principal also affect the value of these investments. Changes
in the value of portfolio securities will not necessarily affect cash income
derived from those securities but will affect the net asset value of the fund's
shares. Each of the Acquired Funds and the Acquiring Funds may invest in
fixed-income securities consistent with its investment objective and policies.
Bonds rated Baa by Moody's or BBB by Standard & Poors, or with equivalent
ratings by other nationally recognized statistical rating organizations
("NRSROs"), may have speculative characteristics, and changes in economic
conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case with higher
grade bonds. Debt securities rated lower than Baa by Moody's or BBB by
Standard & Poors, or with equivalent ratings by other NRSROs, (sometimes
referred to as "junk bonds") have poor protection against default in payment of
principal and interest. These securities are often considered to be
speculative and involve greater risk of loss or price changes due to changes in
the issuer's capacity to pay. Market prices of lower-rated debt securities may
fluctuate more often than those of higher-rated securities, and may decline
significantly in periods of general economic difficulty which may follow rising
interest rates. Unrated securities are not necessarily of lower quality than
rated securities, but they may not be attractive to as many buyers. The
Marketvest International Equity Fund and the corresponding Acquiring Fund may
invest up to 35% of their total assets in lower-quality debt securities. The
ARK Short-Term Bond Portfolio and the ARK U.S. Government Bond Portfolio, each
an Acquiring Fund, may invest up to 5% in such securities.
Municipal Obligations. The Marketvest Pennsylvania Intermediate Bond Fund
and the ARK Pennsylvania Tax-Free Portfolio invest primarily in municipal
obligations. The other funds may invest in such obligations to the extent
permitted by their investment policies. Municipal securities are issued to
raise money for various public purposes, including general purpose financing
for state and local governments as well as financing for specific projects or
public facilities. Municipal securities may be backed by the full taxing power
of a municipality or by the revenues from a specific project or by the credit
of a private organization. Some municipal securities are insured by private
insurance companies, while others may be supported by letters of credit
furnished by domestic or foreign banks. Yields on municipal obligations depend
on a variety of factors, including the general conditions of the money markets
and of the municipal bond and municipal note markets, the size of a particular
offering, the maturity of the obligation, and the rating of the issue.
Municipal obligations with longer maturities tend to produce higher yields and
generally are subject to potentially greater price fluctuations than
obligations with shorter maturities.
- 15 -
27
Equity Securities Generally. Investments in equity securities are subject
to market risks which may cause their prices to fluctuate. Accordingly, the
Acquired Funds and the Acquiring Funds investing in equity securities may be
more suitable for long-term investors who can bear the risk of short-term
fluctuations. Changes in the value of portfolio securities will not
necessarily affect income derived from those securities but will affect the net
asset value of the fund's shares. Equity securities held by a fund may not
perform well during certain market cycles and may not respond to general market
movements to the same extent as other securities.
Foreign Securities. Each of the Acquired Funds and Acquiring Funds may
invest in foreign securities to the extent permitted by their investment
policies. The Marketvest International Equity Fund and the corresponding
Acquiring Fund invest primarily in the securities of investment companies
investing in foreign securities. Investing in the securities of foreign
issuers involves special risks not typically associated with investing in U.S.
companies. These risks include differences in accounting, auditing and
financial reporting standards, generally higher commission rates on foreign
portfolio transactions, the possibility of expropriation or confiscatory
taxation, adverse changes in investment or exchange control regulations,
political instability which could affect U.S. investment in foreign countries,
and potential restrictions on the flow of international capital and currencies.
Foreign issuers may also be subject to less government regulation than U.S.
companies. Moreover, the dividends and interest payable on foreign securities
may be subject to foreign withholding taxes, thus reducing the net amount of
income available for distribution to a fund's shareholders. Further, foreign
securities often trade with less frequency and volume than domestic securities
and, therefore, may exhibit greater price volatility. Investing in emerging
markets involves special considerations (in addition to those relating to
foreign investment generally) which include, among others, greater political
uncertainty, an economy's dependence on revenues from particular commodities or
on international aid or development assistance, currency transfer restrictions,
a limited number of potential buyers for securities, and delays and disruptions
in securities settlement procedures. Changes in foreign exchange rates will
affect, favorably or unfavorably, the value of those securities which are
denominated or quoted in currencies other than the U.S. dollar.
Non-Diversification. Investing in the Marketvest Pennsylvania
Intermediate Bond Fund and the ARK Pennsylvania Tax-Free Portfolio, which are
non-diversified funds, may entail greater risk than investing in a diversified
fund because the concentration in securities of relatively-fewer issuers could
result in greater fluctuation in the total market value of the fund's holdings.
Any economic, political or regulatory developments affecting the value of the
securities the fund holds could have a greater impact on the total value of its
holdings than would be the case if the securities were diversified among more
issuers.
Pennsylvania's economy is based on a mixture of manufacturing, mining,
trade, medical and health services, education and financial institutions.
Pennsylvania's continued dependence on manufacturing, mining, steel and coal,
however, has made the state vulnerable to cyclical fluctuations, foreign
imports and environmental concerns. Pennsylvania's population and per capita
income have been increasing slightly over the past five years, and its
employment and unemployment rates have generally not been significantly
different over the past five years from
- 16 -
28
that of the United States. Pennsylvania is engaged in certain litigation
matters which are described in the Statement of Additional Information of the
Acquiring Funds accompanying this Prospectus/Proxy Statement and incorporated
herein by reference.
Delayed Delivery or Purchases on a When-Issued Basis. Delayed delivery or
purchases of securities on a when-issued basis are transactions where the price
of the securities is fixed at the time of commitment and the delivery and
payment ordinarily takes place beyond customary settlement time. The interest
rate to be realized on these securities is fixed as of the purchase date and no
interest accrues to the buyer before settlement. The securities are subject to
market fluctuation due to changes in market interest rates; the securities are
also subject to fluctuation in value pending settlement based upon public
perception of the creditworthiness of the issuer of these securities. Liquid
assets sufficient to make payments for the securities to be purchased are
segregated at the trade date. Each of the Acquired Funds and Acquiring Funds
may purchase securities on a delayed delivery or when-issued basis and may
dispose of the when-issued commitment prior to settlement which may result in
short-term profits or losses.
Repurchase Agreements. A repurchase agreement is an agreement where a
person buys a security and simultaneously commits to sell the security to the
seller at an agreed-upon price (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. A fund which buys
the security bears a risk of loss in the event the other party defaults on its
obligations and the fund is delayed or prevented from exercising its right to
dispose of the collateral securities or if the fund realizes a loss on the sale
of the collateral securities. Each Acquired Fund and Acquiring Fund may enter
into repurchase agreements. Each Acquired Fund and Acquiring Fund will only
enter into repurchase agreements with banks and other recognized financial
institutions which are deemed by its investment adviser to be creditworthy
pursuant to guidelines established by its Board of Directors/Trustees.
Reverse Repurchase Agreements. Each of the Acquired Funds and the
Acquiring Funds may enter into reverse repurchase agreements. Reverse
repurchase agreements involve the sale of securities held by a fund and the
agreement by the fund to repurchase the securities at an agreed-upon price,
date and interest payment. When a fund enters into reverse repurchase
transactions, it will maintain appropriate liquid assets in a segregated
custodial account to cover the value of the securities subject to the
agreement. The segregation of assets could impair the fund's ability to meet
its current obligations or impede investment management if a large portion of
the fund's assets are involved. Reverse repurchase agreements are considered
to be a form of borrowing.
- 17 -
29
Securities Lending. Consistent with applicable regulatory requirements
and in order to generate additional income, each of the Acquired Funds and the
ARK Short-Term Bond Portfolio and ARK U.S. Government Bond Portfolio may lend
portfolio securities to broker-dealers and other institutional borrowers. It
is the current view of the SEC that a fund may engage in loan transactions only
under the following conditions: (1) the fund must receive 100% collateral in
the form of cash or cash equivalents (e.g., U.S. Treasury bills, notes or
other liquid securities) from the borrower; (2) the borrower must increase the
collateral whenever the market value of the securities loaned (determined on a
daily basis) rises above the value of the collateral; (3) after giving notice,
the fund must be able to terminate the loan at any time; (4) the fund must
receive reasonable interest on the loan or a flat fee from the borrower, as
well as amounts equivalent to any dividends, interest, or other distributions
on the securities loaned and to any increase in market value; (5) the fund may
pay only reasonable custodian fees in connection with the loan; and (6) the
Board of Directors/Trustees must be able to vote proxies on the securities
loaned, either by terminating the loan or by entering into an alternative
arrangement with the borrower. Each of the funds will not make loans where the
value of securities loaned by it would exceed 33 1/3% of its total assets. In
the event of the bankruptcy of the other party to a securities loan, a fund
could experience delays in recovering either the securities loaned or cash. To
the extent that, in the meantime, the value of the securities loaned has
increased or the value of the securities purchased has decreased, the fund
could experience a loss.
Options. The Acquiring Funds and the Marketvest Equity Fund and
Marketvest International Equity Fund may engage in options transactions from
time to time. A put option gives a fund, in return for a premium, the right
(but not the obligation) to sell the underlying security to the writer or
seller of the option at a specified price during the term of the option. A
call option gives a fund, in return for a premium, the right (but not the
obligation) to buy the underlying securities from the seller at a specified
price during the term of the option. The Marketvest Equity Fund and Marketvest
International Equity Fund may write covered put and call options on portfolio
securities to attempt to hedge all or a portion of their portfolio investments
or to attempt to increase their current income. Each of these funds may only
write call options either on securities held in its portfolio or on securities
which it has the right to obtain without payment of further consideration (or
has segregated cash in the amount of any additional consideration). In the
case of put options, the eligible Marketvest Funds will segregate cash, U.S.
Treasury obligations or other liquid securities with a value equal to or
greater than the exercise price of the underlying securities. In contrast,
under normal conditions, no Acquiring Fund will hedge more than 25% of its
total assets by engaging in options transactions and futures (see "Futures and
Options on Futures" below). In addition, each Acquiring Fund will not write
puts where the value of the underlying investment exceeds 25% (including the
value of futures held by the fund) of its total assets and will not buy calls
with a value exceeding 5% of its total assets. There are risks associated with
options transactions, including that the success of a hedging strategy will
depend on the ability of the investment adviser to predict movements in the
prices of individual securities, market fluctuations and movements in interest
rates; there may be an imperfect correlation between the movement in
- 18 -
30
prices of securities held by a fund and price movements of the related options;
and there may not be a liquid secondary market for options.
Futures and Options on Futures. Futures contracts provide for the future
sale by one party and purchase by another party of a specified amount of a
specified security at a specified future time and at a specified price. An
option on a futures contract gives the purchaser the right, in exchange for a
premium, to assume a position in a futures contract at a specified exercise
price during the term of the option. Each of the Acquiring Funds and the
Marketvest Equity Fund and Marketvest International Equity Fund may enter into
futures contracts and options on futures contracts, provided that, with respect
to the Marketvest Funds' positions in futures contracts and related options
contracts that are not for "bona fide hedging purposes", the sum of its initial
margin deposits on open futures contracts plus the amount paid for premiums for
unexpired options on futures contracts does not exceed 5% of the liquidation
value of its net assets after taking into account unrealized profits and
unrealized losses on any such contracts and excluding the value of any options
that are "in-the-money" at the time of purchase. In every other instance, each
of the Acquiring Funds and the Marketvest Equity Fund and Marketvest
International Equity Fund use futures contracts and related options, within
their respective investment limitations noted in "Options" above, only for bona
fide hedging purposes, i.e., to offset unfavorable changes in the value of
securities otherwise held or expected to be acquired for investment purposes.
There are risks associated with these hedging activities. See "Options" above.
Other Considerations. Certain other investments and investment techniques
permitted for the Acquired Funds and the Acquiring Funds pose special risks in
addition to those described above. See the Combined Prospectus and Combined
Statement of Additional Information of the Marketvest Funds and the Prospectus
and Statement of Additional Information of ARK Funds for more information. By
itself no fund constitutes a balanced investment plan. There is no assurance
that a fund will achieve its investment objective. Investors should review the
investment objective, policies and practices of a fund and carefully consider
their ability to assume the risks involved.
INVESTMENT LIMITATIONS. None of the Acquiring Funds or the Acquired Funds
may change their fundamental investment limitations without the affirmative
vote of the holders of a majority of the outstanding voting securities (as
defined in the 1940 Act) of such Acquiring Fund or Acquired Fund. However,
investment limitations that are not fundamental policies may be changed by the
appropriate Board of Directors/Trustees without shareholder approval. The
investment limitations of the Acquired Funds and the corresponding Acquiring
Funds are similar, but not identical.
Concentration of Investments. As a fundamental policy, none of the
Acquiring Funds or the Acquired Funds may purchase any securities which would
cause more than 25% of the total assets of such fund to be invested in the
securities of one or more issuers conducting their principal business
activities in the same industry. This limitation does not apply to investments
in obligations issued or guaranteed by the U.S. Government or its agencies and
instrumentalities. The Marketvest International Equity Fund may, however,
invest in investment companies that
- 19 -
31
concentrate their assets within one industry. In addition, the Marketvest
Pennsylvania Intermediate Municipal Bond Fund will not purchase securities if,
as a result of such purchase, 25% or more of the value of its total assets
would be invested in any one industry or in industrial development bonds or
other securities, the interest upon which is paid from revenues of similar
types of projects. However, the funds may invest as temporary investments more
than 25% of the value of its assets in cash or cash items.
Loans. As a fundamental policy, none of the Acquiring Funds or Acquired
Funds may make loans, except that a fund may (a) purchase or hold debt
instruments; (b) enter into repurchase agreements; and (c) engage in securities
lending, in each case where permitted by its investment objective, policies and
limitations.
Diversification of Investments. As a fundamental policy, none of the
Acquiring Funds (other than the ARK Pennsylvania Tax-Free Portfolio) or the
Acquired Funds (other than the Marketvest Pennsylvania Intermediate Municipal
Bond Fund) may acquire more than 10% of the voting securities of any one
issuer, or invest more than 5% of its total assets in the securities of an
issuer; provided that the foregoing limitation does not apply to 25% of the
total assets of any of the Acquired Funds or the Acquiring Funds. For purposes
of the foregoing, with respect to the Acquiring Funds and the Acquired Funds,
securities issued or guaranteed by the United States, its agencies or
instrumentalities, are excluded and with respect to the Acquiring Funds and the
Marketvest International Equity Fund, securities of other investment companies
are excluded.
Issuing Senior Securities or Borrowing Money. As a fundamental policy,
none of the Acquiring Funds or the Acquired Funds may borrow or issue senior
securities, except that (a) an Acquiring Fund may borrow money from banks and
may enter into reverse repurchase agreements and (b) an Acquired Fund may
borrow money in an amount not to exceed 33 1/3% of its total assets as a
temporary measure for extraordinary or emergency purposes (which may include
the need to meet shareholder redemption requests). None of the Acquiring Funds
or the Acquired Funds will purchase any securities for its portfolio at any
time at which its borrowings equal or exceed 5% of its total assets. None of
the Acquiring Funds or the Acquired Funds will borrow for investment purposes.
Pledging Assets. As a fundamental policy, none of the Acquired Funds may
pledge, mortgage, or hypothecate assets except to secure temporary borrowings
permitted in the preceding paragraph. For purposes of this limitation, with
respect to the Acquired Funds, the following will not be deemed to be pledges
(where applicable): margin deposits for the purchase and sale of financial
futures contracts and related options and segregation or collateral
arrangements made in connection with options activities or the purchase of
securities on a when-issued basis. The Acquiring Funds do not have a
fundamental policy regarding the pledging of assets.
Investing in Real Estate and Commodities. As a fundamental policy, none
of the Acquiring Funds or the Acquired Funds may purchase or sell real estate,
including real estate limited partnership interests (except that the Marketvest
International Equity Fund may purchase such limited partnership interests),
commodities and commodities contracts, but excluding
- 20 -
32
interests in a pool of securities that are secured by interests in real estate.
Each of the Acquiring Funds and the Acquired Funds may, however, subject to
compliance with other investment policies, invest in companies which invest in
real estate. Each of the Acquiring Funds and the Marketvest Equity Fund and
Marketvest International Equity Fund may invest in futures contracts and
options thereon to the extent permitted by its investment objective, policies
and limitations.
Selling Short or Buying on Margin. As a non-fundamental policy, none of
the Acquiring Funds or the Acquired Funds may make short sales of securities,
maintain a short position or purchase securities on margin, except that the
Acquiring Funds may sell securities short if they own or have the right to
obtain securities equivalent in kind and amount to the securities sold short.
The Acquired Funds may obtain short-term credits as necessary for the clearance
of purchases and sales of portfolio securities and, with respect to the
Marketvest Equity Fund and Marketvest International Equity Fund, the deposit of
initial and variation margins in futures contracts are not considered
purchasing securities on margin. For both the Acquiring Funds and the Acquired
Funds, transactions in futures contracts and options are not deemed to
constitute selling securities short.
Underwriting. As a fundamental policy, none of the Acquiring Funds or the
Acquired Funds may act as an underwriter of securities of other issuers, except
as it may deemed an underwriter under federal securities laws in selling a
security held by it.
Investing in Securities of Other Investment Companies. As a
non-fundamental policy, none of the Acquiring Funds or the Acquired Funds may
purchase securities of other investment companies except as permitted by the
1940 Act and the rules and regulations thereunder. The Marketvest
International Equity Fund and ARK International Equity Selection Portfolio
invest primarily in other mutual funds. See the Combined Prospectus of the
Marketvest Funds and the Prospectus of ARK Funds, which are incorporated herein
by reference, for a further description of the investment practices and risks
of these funds.
Investment companies typically incur fees that are separate from those
fees incurred directly by the Acquiring Fund or the Acquired Fund. An
Acquiring Fund's or an Acquired Fund's purchase of such investment company
securities results in the layering of expenses, such that shareholders would
indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees.
Puts, Calls or Other Options. The Acquiring Funds and the Marketvest
Equity Fund and Marketvest International Equity Fund may write or purchase
puts, calls or other options or combinations thereof subject to compliance with
other investment policies. The Marketvest Equity and International Equity
Funds may write covered put and call options on portfolio securities held in
its portfolio or on securities which it has the right to obtain without payment
of further consideration (or has segregated cash in the amount of any
additional consideration). In the case of put options, the eligible Marketvest
Funds will segregate cash, U.S. Treasury obligations or other liquid
securities with a value equal to or greater than the exercise price of the
underlying securities. In contrast, under normal conditions no Acquiring Fund
will hedge more
- 21 -
33
than 25% of its total assets by engaging in options transactions and futures.
In addition, each Acquiring Fund will not write puts where the value of the
underlying investment exceeds 25% (including the value of futures held by the
fund) of its total assets and will not buy calls with a value exceeding 5% of
its total assets. See "Risk Factors - Options" and "- Futures and Options on
Futures".
Restricted and Illiquid Securities. As a non-fundamental policy, none of
the Acquiring Funds or Acquired Funds will invest in illiquid securities in an
amount exceeding, in the aggregate, 15% of its net assets. Repurchase
agreements providing for settlement in more than seven days after notice,
over-the-counter options, non-negotiable time deposits with maturities over
seven days, certain holdings of shares of other investment companies owned by
the Marketvest International Equity Fund or the ARK International Equity
Portfolio, and certain restricted securities not determined by the board to be
liquid are also be counted toward such percentage limitation.
The foregoing limitation does not apply to restricted securities held by
any of the Acquiring Funds or the Acquired Funds if it is determined by or
under procedures established by the applicable Board of Trustees/Directors
that, based on trading markets for the specific restricted security in
question, such security is not illiquid.
The absence of a trading market for restricted or illiquid securities can
make it difficult to ascertain a market value for these securities. Disposing
of illiquid securities may involve time-consuming negotiation and legal
expense, and it may be difficult or impossible to sell illiquid securities
promptly at an acceptable price.
OTHER INFORMATION. ARK Funds, Marketvest Funds, Inc. and Marketvest Funds
are registered as open-end management investment companies under the 1940 Act.
Currently ARK Funds offers eighteen investment portfolios, Marketvest Funds,
Inc. offers three investment portfolios and Marketvest Funds offers two
investment portfolios. ARK Short-Term Bond Portfolio, ARK U.S. Government Bond
Portfolio, ARK Value Equity and ARK International Equity Selection Portfolio
will be offered by ARK Funds after their Reorganizations with the corresponding
Acquired Funds.
Marketvest Funds, Inc. is organized as a Maryland corporation and is
subject to the provisions of its charter and bylaws. ARK Funds and Marketvest
Funds are organized as Massachusetts business trusts and are subject to the
provisions of their respective declarations of trust and bylaws.
Shares of ARK Funds, Marketvest Funds, Inc. and Marketvest Funds: (i) are
entitled to one vote for each full share held and a proportionate fractional
vote for each fractional share held; (ii) will vote in the aggregate by fund
and not by class or series except as otherwise expressly required by law or
when class voting is permitted by the respective Board of Directors/Trustees;
and (iii) are entitled to participate equally in the dividends and investment
income and in the net distributable assets of the respective class and series
of such fund on liquidation. In addition, shares of the Acquiring Funds and
Acquired Funds have no preemptive
- 22 -
34
rights and only such conversion and exchange rights as the respective boards of
trustees/directors may grant in their discretion. When issued for payment as
described in their prospectuses, Acquiring Fund shares and Acquired Fund shares
are fully paid and non-assessable by such entities except, in the case of ARK
Funds and Marketvest Funds shares, as required under Massachusetts law.1
Neither Marketvest Funds, Inc., Marketvest Funds nor ARK Funds is required
under applicable law to hold annual shareholder meetings and each intends to do
so only if required by the 1940 Act. Shareholders have the right to remove
trustees or directors. To the extent required by law, Marketvest Funds, Inc.,
Marketvest Funds and ARK Funds will assist in shareholder communications in
such matters.
The foregoing is only a summary. Shareholders may obtain copies of the
charter and bylaws of Marketvest Funds, Inc. and the declaration of trust and
bylaws of ARK Funds and Marketvest Funds upon written request at the addresses
shown on the cover page of this Prospectus/Proxy Statement.
INFORMATION RELATING TO THE PROPOSED REORGANIZATIONS
Marketvest Funds, Inc., Marketvest Funds and ARK Funds have entered into
an Agreement and Plan of Reorganization (the "Reorganization Agreement") which
provides that each Acquired Fund is to be acquired by an Acquiring Fund.
Significant provisions of the Reorganization Agreement are summarized below;
however, this summary is qualified in its entirety by reference to the
Reorganization Agreement, a copy of which is attached as Appendix A to this
Prospectus/Proxy Statement.
DESCRIPTION OF THE REORGANIZATION AGREEMENT. The Reorganization Agreement
provides that at the Closing Date (as defined in the Reorganization Agreement)
of the Reorganization of each Acquired Fund, substantially all of the assets
and stated liabilities of such Acquired Fund will be acquired by the Acquiring
Fund identified in the table below opposite its name and the shareholders of
such Acquired Fund shall receive Institutional Class shares of the Acquiring
Fund identified below opposite the name of such Acquired Fund:
__________________________________
(1)Under Massachusetts law, shareholders of a business trust could, under
certain circumstances, be held personally liable for the obligations of the
business trust. However, each of the declarations of trust of ARK Funds and
Marketvest Funds disclaims shareholder liability for acts or obligations of
the fund and requires that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by the fund or
its trustees. Each of the declarations of trust provide for indemnification
out of the series property for all losses and expenses of any shareholder
held personally liable for the obligations of the series. Thus, the risk of
a shareholder incurring financial loss on account of shareholder liability
is considered remote since it is limited to circumstances in which a
disclaimer is inoperative and the series or the trust itself would be unable
to meet its obligations.
- 23 -
35
Acquired Funds Acquiring Funds
- -------------- ----------------
Marketvest Short-Term Bond Fund ARK Short-Term Bond Portfolio
Marketvest Intermediate U.S. Government ARK U.S. Government Bond Portfolio
Bond Fund
Marketvest Pennsylvania Intermediate ARK Pennsylvania Tax-Free Portfolio
Municipal Bond Fund
Marketvest Equity Fund ARK Value Equity Portfolio
Marketvest International Equity Fund ARK International Equity Selection Portfolio
In exchange for the transfer of the assets of each Acquired Fund and the
assumption of the stated liabilities of each Acquired Fund, ARK Funds will
issue to each Acquired Fund, at the Closing Date of the Reorganization of such
Acquired Fund, a number of full and fractional Institutional Class shares of
the applicable Acquiring Fund. The number of shares of the Acquiring Fund so
issued will have an aggregate net asset value equal to the value of the assets
of the Acquired Fund. In determining the value of the assets of an Acquired
Fund, each security will be priced in accordance with the policies and
procedures of ARK Funds as described in its then current Prospectus and
Statement of Additional Information and in accordance with applicable
provisions of the 1940 Act.
The Reorganization Agreement provides that each Acquired Fund will declare
and pay a dividend on or prior to the Closing Date of the Reorganization of
such Acquired Fund in order to distribute to its shareholders all of its
investment company taxable income and net tax-exempt interest income earned,
and all of its net capital gains realized, up to and including the Closing Date
of the Reorganization of such Acquired Fund.
At the Closing Date each Acquired Fund will liquidate and distribute pro
rata to the record holders of its shares at such Closing Date the Institutional
Class shares of the Acquiring Fund identified in the table above to be received
by the holders of such Acquired Fund. All of the issued and outstanding shares
of each Acquired Fund will be canceled on the books of Marketvest Funds, Inc.
or Marketvest Funds, as the case may be, at the Closing Date of the
Reorganization of that Acquired Fund and will thereafter represent only the
right to receive the Institutional Class shares of the Acquiring Fund
identified in the table above, and the Acquired Fund's transfer book will be
closed permanently. As soon as practicable after the Reorganizations,
Marketvest Funds, Inc. and Marketvest Funds will make all filings and take all
other steps as are necessary and proper to effect their complete dissolution,
and will file an application pursuant to Section 8(f) of the 1940 Act for an
order declaring that they have ceased to be investment companies. After the
Closing Date of the Reorganization of an Acquired Fund, Marketvest Funds, Inc.
or Marketvest Funds will not conduct any business on behalf of that Acquired
Fund, and after all of the Reorganizations have been consummated, Marketvest
Funds,
- 24 -
36
Inc. and Marketvest Funds will not conduct any business, except in connection
with the liquidation of the Acquired Funds, the dissolution of the Marketvest
Funds, Inc. and the termination of the Marketvest Funds, and the deregistration
of Marketvest Funds, Inc. and Marketvest Funds.
The expenses of ARK Funds, Marketvest Funds, Inc. and Marketvest Funds in
connection with the Reorganizations will be borne by First Maryland Bancorp or
its subsidiaries.
The consummation of the Reorganization with respect to each Acquired Fund
is subject to certain conditions. The Reorganization of each Acquired Fund
will be contingent upon the approval of the Reorganization Agreement by the
majority of the shareholders (as described below) of such Acquired Fund. The
Reorganizations are also conditioned upon the issuance of an order by the SEC
permitting the transactions contemplated by the Reorganization Agreement. The
order was requested as a result of the ownership of Dauphin Deposit and First
National Bank of Maryland or their affiliates of 5% or more of the shares of
the Acquired Funds and Acquiring Funds, respectively. In addition, the
Reorganization of each Acquired Fund will be contingent upon: (a) the receipt
of certain legal opinions described in the Reorganization Agreement (see
Appendix A attached hereto), (b) the continuing accuracy of the representations
and warranties in the Reorganization Agreement, and (c) the performance in all
material respects of the agreements in the Reorganization Agreement. If these
conditions are satisfied, the Closing Date of the Reorganization of the
Marketvest Short-Term Bond Fund, Marketvest Intermediate U.S. Government Bond
Fund and Marketvest Pennsylvania Intermediate Municipal Bond Fund is expected
to be March 6, 1998. The Closing Date of the Reorganizations of the Marketvest
Equity Fund and Marketvest International Equity Fund, if these conditions are
met, is expected to be March 13, 1998.
Marketvest Funds, Inc., Marketvest Funds and ARK Funds may mutually agree
to terminate the Reorganization Agreement with respect to a Reorganization at
or prior to the Closing Date of such Reorganization. In addition, either
Marketvest Funds, Inc. or Marketvest Funds, on the one hand, or ARK Funds, on
the other hand, may waive the other party's breach of a provision or failure to
satisfy a condition of the Reorganization Agreement.
At a meeting held on November 11, 1997, the Board of Directors of
Marketvest Funds, Inc. and the Board of Trustees of Marketvest Funds
unanimously approved the Reorganization of each Acquired Fund based upon the
belief that each such Reorganization would be in the best interest of each
Acquired Fund and its shareholders. In approving the Reorganization Agreement,
the boards considered the following factors, among others: (a) the acquisition
of Dauphin Deposit Corporation by First Maryland Bancorp, (b) the fact that the
investment advisers of the Acquired Funds and the Acquiring Funds are under
common control, (c) the fact that shareholder interests would not be diluted in
the proposed Reorganizations, (d) the status of each Reorganization as a
tax-free reorganization, (e) the similarity of the investment objective and
policies of each Acquired Fund and the corresponding Acquiring Fund, (f) the
improved marketing opportunities that could result from each Reorganization,
and (g) the opportunity for
- 25 -
37
the shareholders of each Acquired Fund to participate in a larger family of
mutual funds through the exchange privilege offered by ARK Funds.
After consideration of the foregoing factors and other relevant
information, the Board of Directors of Marketvest Funds, Inc. and the Board of
Trustees of Marketvest Funds unanimously approved the Reorganization Agreement
and directed that it be submitted to the shareholders of each Acquired Fund for
approval. THE BOARDS RECOMMEND THAT SHAREHOLDERS VOTE IN FAVOR OF THE
REORGANIZATION AGREEMENT.
At a meeting held on November 7, 1997, the Board of Trustees of ARK Funds
also unanimously approved the Reorganization Agreement, finding that each of
the Reorganizations was in the best interests of the Acquiring Fund and the
shareholders of the Acquiring Fund and that the interests of the existing
shareholders of the ARK Funds currently in operation would not be diluted by
the consummation of the Reorganizations.
CAPITALIZATION. Because the Marketvest Pennsylvania Intermediate Bond
Fund will be combined in the Reorganization with the ARK Pennsylvania Tax-Free
Portfolio, the total capitalization after such Reorganization is expected to be
greater than the current capitalization of the Marketvest Pennsylvania
Intermediate Bond Fund. The ARK Short-Term Bond Portfolio, ARK U.S. Government
Bond Portfolio, ARK Value Equity and ARK International Equity Selection
Portfolio will have only nominal assets before their Reorganizations
with the Marketvest Short-Term Bond Fund, Marketvest Intermediate U.S.
Government Bond Fund, Marketvest Equity Fund and Marketvest International
Equity Fund, respectively. After these Reorganizations, these Acquiring Funds
will have the same capitalizations as the corresponding Acquired Funds prior to
the Reorganizations. The following table sets forth as of October 31, 1997:
(a) the capitalization of each Acquired Fund and the Institutional Class of the
corresponding Acquiring Fund, and (b) the pro forma capitalization of the
Institutional Class of each Acquiring Fund as adjusted to give effect to the
Reorganization proposed with respect to such Acquiring Fund. If consummated,
the capitalization of each Acquired Fund and the Institutional Class of the ARK
Pennsylvania Tax-Free Portfolio is likely to be different at the Closing Date
of their Reorganization as a result of daily share purchase and redemption
activity.
- 26 -
38
Pro Forma
Marketvest Short-Term ARK Short-Term ARK Short-Term
Bond Fund Bond Portfolio(1) Bond Portfolio
--------- -------------- --------------
Total Net Assets $136,304,063 $100 $136,304,163
Shares Outstanding 13,680,653 10 13,680,663
Net Asset Value Per Share $9.96 $10 $9.96
Marketvest Intermediate Pro Forma
U.S. Government ARK U.S. Government ARK U.S. Government
Bond Fund Bond Portfolio(1) Bond Portfolio
--------- -------------- --------------
Total Net Assets $263,490,165 $100 $263,490,265
Shares Outstanding 26,693,086 10 26,693,096
Net Asset Value Per Share $9.87 $10 $9.87
Marketvest Pennsylvania Pro Forma
Intermediate ARK Pennsylvania ARK Pennsylvania
Municipal Fund Tax-Free Portfolio(2) Tax-Free Portfolio(2)
-------------- ------------------ ------------------
Total Net Assets $197,619,533 $24,438,038 $222,057,571
Shares Outstanding 19,301,401 2,370,681 21,688,288
Net Asset Value Per Share $10.24 $10.31 $10.24
Pro Forma
Marketvest ARK Value Equity ARK Value Equity
Equity Fund Portfolio(1) Portfolio(3)
----------- --------- ---------
Total Net Assets $568,417,855 $100 $568,417,955
Shares Outstanding 44,036,913 10 44,036,921
Net Asset Value Per Share $12.91 $10 $12.91
Pro Forma
Marketvest International ARK International Equity ARK International Equity
Equity Fund Selection Portfolio(1) Selection Portfolio
----------- ------------------- -------------------
Total Net Assets $34,487,010 $100 $34,487,110
Shares Outstanding 3,416,259 10 3,416,269
Net Asset Value Per Share $10.09 $10 $10.09
(1)The ARK Short-Term Bond Portfolio, U.S. Government Bond Portfolio, Value
Equity Portfolio and International Equity Selection Portfolio were created
for purposes of the Reorganizations. Assets and outstanding shares
shown reflect initial seed money that will be infused prior to the
Reorganizations.
(2)The information shown for the ARK Pennsylvania Tax-Free Portfolio reflects
amounts for the Institutional Class. The net assets, shares outstanding and
net asset value per share for the Retail Class of the ARK Pennsylvania Tax-Free
Portfolio is $2,335,566, 226,719 and $10.30, respectively. This information on
a pro forma basis will not change.
(3)ARK Value Equity Portfolio has entered into an Agreement and Plan of
Reorganization with the ARK Stock Portfolio. The reorganization, which is
subject to certain conditions including shareholder approval, is expected to
close in March 1998. The pro forma total net assets, shares outstanding and
net asset value per share of the ARK Value Equity Portfolio adjusted to reflect
the closing of the aforementioned reorganization would be $610,301,504,
47,282,207 and $12.91, respectively.
FEDERAL INCOME TAX CONSEQUENCES. The consummation of the Reorganization
of each Acquired Fund is conditioned upon the receipt of an opinion of Piper &
Marbury L.L.P. substantially to the effect that for federal income tax
purposes: (a) the transfer of all of the assets
- 27 -
39
of such Acquired Fund, and the assumption by the corresponding Acquiring Fund
of stated liabilities of such Acquired Fund, in exchange for Institutional
Class shares of such Acquiring Fund, and the distribution of said shares to the
shareholders of such Acquired Fund, as provided in the Reorganization
Agreement, will constitute a reorganization within the meaning of Section
368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), and,
with respect to such reorganization, the Acquired Fund and the Acquiring Fund
will each be considered "a party to a reorganization" within the meaning of
Section 368(b) of the Code; (b) in accordance with Sections 361(a), 361(c)(1)
and 357(a) of the Code, no gain or loss will be recognized by such Acquired
Fund as a result of such transactions; (c) in accordance with Section 1032 of
the Code, no gain or loss will be recognized by such Acquiring Fund as a result
of such transactions; (d) in accordance with Section 354(a)(1) of the Code, no
gain or loss will be recognized by the shareholders of such Acquired Fund on
the distribution to them by such Acquired Fund of shares of any class of such
Acquiring Fund in exchange for their shares of such Acquired Fund; (e) in
accordance with Section 358(a)(1) of the Code, the aggregate basis of Acquiring
Fund shares received by each shareholder of such Acquired Fund will be the same
as the aggregate basis of the shareholder's Acquired Fund shares immediately
prior to the transaction; (f) in accordance with Section 362(b) of the Code,
the basis of the assets of the Acquired Fund in the hands of such Acquiring
Fund will be the same as the basis of such assets of the Acquired Fund in the
hands of such Acquired Fund immediately prior to the exchange; (g) in
accordance with Section 1223 of the Code, a shareholder's holding period for
Acquiring Fund shares will be determined by including the period for which the
shareholder held the shares of such Acquired Fund exchanged therefor, provided
that the shareholder held such shares of such Acquired Fund as a capital asset;
and (h) in accordance with Section 1223 of the Code, the holding period of such
Acquiring Fund with respect to the assets of such Acquired Fund will include
the period for which such assets were held by such Acquired Fund.
ARK Funds, Marketvest Funds, Inc. and Marketvest Funds have not sought a
tax ruling from the Internal Revenue Service (the "IRS"), but are acting in
reliance upon the opinion of counsel discussed above. Such opinion of counsel
will rely, as to certain factual matters, on certificates of officers of ARK
Funds, Marketvest Funds, Inc. and Marketvest Funds. That opinion is not
binding on the IRS and does not preclude the IRS from adopting a contrary
position. Shareholders should consult their own advisers concerning the
potential tax consequences to them, including state and local income taxes.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION. This Prospectus/Proxy Statement is being provided in
connection with the solicitation of proxies by the Board of Directors of
Marketvest Funds, Inc. and the Board of Trustees of Marketvest Funds in
connection with the Meeting. Solicitation of proxies will occur principally by
mail, but officers and service contractors of Marketvest Funds, Inc. and
Marketvest Funds may also solicit proxies by telephone, telegraph or personal
interview. Any shareholder giving a proxy may revoke it at any time before it
is exercised by submitting to Marketvest Funds, Inc. or Marketvest Funds, as
appropriate, a written notice of revocation or a subsequently executed proxy or
by attending the Meeting and voting in person.
- 28 -
40
Only shareholders of record at the close of business on February 4, 1998
will be entitled to vote at the Meeting. On that date, there were outstanding
and entitled to be voted: _____ shares of Marketvest Short-Term Bond Fund,
_____ shares of Marketvest Intermediate U.S. Government Bond Fund, _____ shares
of Marketvest Pennsylvania Intermediate Municipal Bond Fund, _____ shares of
Marketvest Equity Fund, and _____ shares of Marketvest International Equity
Fund. Each share or fraction thereof is entitled to one vote or fraction
thereof. Shares of each Acquired Fund will be counted separately.
If the accompanying proxy is executed and returned in time for the
Meeting, the shares covered thereby will be voted in accordance with the proxy
on all matters that may properly come before the Meeting or any adjournment
thereof. For information on adjournments of the Meeting, see "Quorum" below.
SHAREHOLDER AND BOARD APPROVALS. The Reorganization Agreement (and the
transactions contemplated thereby) are being submitted for approval at the
Meeting by the shareholders with respect to each Acquired Fund in accordance
with the provisions of the charter of Marketvest Funds, Inc., the declaration
of trust of Marketvest Funds, and the requirements of the 1940 Act. With
respect to the Marketvest Pennsylvania Intermediate Municipal Bond Fund and
Marketvest International Equity Fund, the Reorganizations must be approved by
the lesser of (a) 67% of the shares of the Acquired Fund present at the
Meeting, if the holders of more than 50% of the outstanding shares of the
Acquired Fund are present in person or by proxy, or (b) more than 50% of the
outstanding shares of such Acquired Fund. With respect to the Marketvest
Short-Term Bond Fund, Marketvest Intermediate U.S. Government Bond Fund and
Marketvest Equity Fund, the Reorganizations must be approved by a majority of
the outstanding shares entitled to vote.
In tallying shareholder votes, abstentions and broker non-votes (i.e.,
proxies sent in by brokers and other nominees that cannot be voted on a
proposal because instructions have not been received from the beneficial
owners) will be counted for purposes of determining whether or not a quorum is
present for purposes of convening the Meeting. With respect to each
Reorganization proposal, abstentions and broker non-votes will have the same
effect as votes cast against such Reorganization proposal.
The vote of the shareholders of the Acquiring Funds is not being solicited
because their approval or consent is not necessary for the Reorganizations to
be consummated.
At February 4, 1998, Dauphin Deposit and its affiliates held of record
___%, ___%, ___%, ___% and ___% of the shares of Marketvest Short-Term Bond
Fund, Marketvest Intermediate U.S. Government Bond Fund, Marketvest
Pennsylvania Intermediate Municipal Bond Fund, Marketvest Equity Fund and
Marketvest International Equity Fund, respectively. As a result Dauphin
Deposit may be deemed to be a "controlling person" of each Acquired Fund under
the 1940 Act.
At February 4, 1998, the name, address and share ownership of the persons
who beneficially owned 5% or more of the shares of any Acquired Fund are as
follows:
- 29 -
41
After giving effect to the Reorganizations, Dauphin Deposit and the above
mentioned 5% shareholders of the Acquired Funds will own of record the
following percentages of the outstanding shares of the following Acquiring
Funds:
At February 4, 1998, the directors, trustees and officers of Marketvest
Funds, Inc. and Marketvest Funds, as a group, owned less than 1% of the
outstanding shares of each Acquired Fund.
At February 4, 1998, First National and its affiliates held of record ___%
of the shares of ARK Pennsylvania Tax-Free Portfolio. As a result First
National may be deemed to be a "controlling person" of this Acquiring Fund
under the 1940 Act.
At February 4, 1998, the name, address, and share ownership of the persons
who beneficially owned 5% or more of the Acquiring Funds' outstanding shares
are as follows:
After giving effect to the Reorganizations, First National and the above
mentioned 5% shareholders will own of record the following percentages of the
outstanding shares of the following Acquiring Funds:
At February 4, 1998, the trustees and officers of ARK Funds owned less
than 1% of the outstanding shares of each Acquiring Fund.
- 30 -
42
QUORUM. In the event that a quorum is not present at the Meeting, or in
the event that a quorum is present at the Meeting but sufficient votes to
approve the Reorganization Agreement and the transactions contemplated thereby
are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any
such adjournment will require the affirmative vote of a majority of those
shares affected by the adjournment that are represented at the Meeting in
person or by proxy. If a quorum is present, the persons named as proxies will
vote in favor of such adjournments if they determine that adjournment and
additional solicitation is reasonable and in the best interest of shareholders
of the Acquired Funds. A shareholder vote may be taken with respect to one or
more Acquired Funds prior to any such adjournment if sufficient votes have been
received for approval with respect to any such Acquired Fund. A quorum is
constituted with respect to an Acquired Fund by the presence in person or by
proxy of the holders of more than 50% of the outstanding shares of the Acquired
Fund entitled to vote at the Meeting. Abstentions and broker non-votes are
not considered votes cast and will have the effect of votes cast against the
proposal. See "Shareholder and Board Approvals" above.
ANNUAL MEETINGS. Marketvest Funds do not presently intend to hold annual
meetings of shareholders for the election of trustees and other business unless
and until such time as less than a majority of the trustees holding office have
been elected by the shareholders, at which time the trustees then in office
will call a shareholders' meeting for the purpose of electing trustees.
Shareholders have the right to call a meeting of shareholders to consider the
removal of one or more trustees or to act on other matters and such meetings
will be called when requested in writing by the holders of record of 10% or
more of Marketvest Funds' outstanding shares. To the extent required by law,
Marketvest Funds will assist in shareholder communications on such matters.
ADDITIONAL INFORMATION ABOUT ARK FUNDS
Additional information about each of the Acquiring Funds is included in
the Prospectus of ARK Funds which accompanies this Prospectus/Proxy Statement
and is incorporated by reference herein. Additional information may also be
obtained from the Statement of Additional Information relating to this
Prospectus/Proxy Statement and the Statement of Additional Information of ARK
Funds and the Annual Report for the fiscal year ended April 30, 1997 and the
Semi-Annual Report for the six-months ended October 31, 1997, which have been
filed with the SEC and accompany this Prospectus/Proxy Statement. ARK Funds is
subject to the informational requirements of the Securities Exchange Act of
1934 and the 1940 Act, as applicable, and in accordance with such requirements
must file reports, proxy statements and other information with the SEC. These
materials can be inspected and copied at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the SEC's Regional Offices at 7 World Trade Center, 13th Floor, New York, New
York 10048 and at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can also be obtained
from the Public Reference Section at 450 Fifth Street, N.W., Washington, D.C.
at rates prescribed by the SEC or from the SEC's Internet web site at
http://www.sec.gov.
- 31 -
43
It is expected that following the closing of the Reorganizations, the
Board of Trustees of ARK Funds will consider increasing the number of trustees
from give to six. It is also expected that Mr. Richard Seidel, who is
currently a Director/Trustee of Marketvest Funds, will be considered as a
candidate to fill the vacancy created on the Board of Trustees.
ADDITIONAL INFORMATION ABOUT MARKETVEST FUNDS
Additional information about each of the Acquired Funds is included in the
Combined Prospectus of Marketvest Funds, Inc. and Marketvest Funds which
accompanies this Prospectus/Proxy Statement and is incorporated by reference
herein. Additional information may also be obtained from the Statement of
Additional Information relating to this Prospectus/Proxy Statement and the
Combined Statement of Additional Information of Marketvest Funds, Inc. and
Marketvest Funds, the Annual Reports for the fiscal year ended February 28,
1997 and the Semi-Annual Reports for the six-months ended August 31, 1997,
which have been filed with the SEC and accompany this Prospectus/Proxy
Statement. Marketvest Funds, Inc. and Marketvest Funds are subject to the
informational requirements of the Securities Exchange Act of 1934 and the 1940
Act, as applicable, and in accordance with such requirements must file reports,
proxy statements and other information with the SEC. These materials can be
inspected and copied at the public reference facilities maintained by the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's Regional
Offices at 7 World Trade Center, 13th Floor, New York, New York 10048 and at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material can also be obtained from the Public
Reference Section at 450 Fifth Street, N.W., Washington, D.C. at rates
prescribed by the SEC or from the SEC's Internet web site at
http://www.sec.gov.
MANAGEMENT'S DISCUSSION OF ACQUIRING FUND PERFORMANCE
As of the date of this Prospectus/Proxy Statement, the ARK Short-Term Bond
Portfolio, ARK U.S. Government Bond Portfolio, ARK Value Equity Portfolio and
ARK International Equity Selection Portfolio had not yet commenced operations.
The following discussion relates to the performance of the ARK Pennsylvania
Tax-Free Portfolio for its fiscal year ended April 30, 1997:
The Institutional Class of the ARK Pennsylvania Tax-Free Portfolio was
established on November 18, 1996 and for its fiscal period ended April 30, 1997
returned 1.32%. The Retail Class of the ARK Pennsylvania Tax-Free Portfolio
was established on January 2, 1997 and for its fiscal period ended April 30,
1997 returned 0.60%.
Over the twelve months ended April 30, 1997, municipal investments only
slightly under-performed their taxable counterparts on an absolute basis;
however, on an after-tax basis they substantially outperformed. Yields on
municipal securities, like taxables, have traded during the same period in a
narrow range, with longer-term rates actually falling approximately 10 basis
points. After the issue of tax reform faded in early 1996, performance of the
municipal market
- 32 -
44
was aided by the narrowing of the trading relationship between municipals and
U.S. Treasuries. The market recovered from trading at close to 90% of the
Treasury market in the first quarter of 1996 to trading its "normal" 75 to 80%
of U.S. Treasuries.
With the back-up in municipal rates due to tax reform concerns early 1996,
the investment advisor of the ARK Pennsylvania Tax-Free Portfolio lengthened
the duration of the Portfolio, taking advantage of the situation on an
after-tax basis. The Portfolio continues to focus on issues specific to
Pennsylvania with little to no exposure to the alternative minimum tax sector.
As the market traded in a narrow range over fiscal 1997 and with the near-term
expectation for higher interest rates, the primary focus in the Portfolio was
to gain call protection where appropriate. This was accomplished by purchasing
high coupon bonds that had a reduced likelihood of being called, and by
purchasing somewhat higher yielding issues with special situations. The
maturity focus of the Portfolio continues to be in the 15 to 20 year sector.
The Portfolio's investment advisor watches the effects that reform will
begin to have on the state and local governments as responsibilities, such as
welfare reform, are shifted away from the federal government. Healthcare
reform, although dead for most of 1996, will most likely come into play again
in the future. The surge in hospital mergers that has occurred over the past
several years should continue to prove positive for some select hospitals and
healthcare organizations. In Pennsylvania, the Portfolio's investment advisor
will be watching to see what the impact on county budgets will be due to recent
court decisions declaring unconstitutional the personal property tax that is
levied by many counties. The Portfolio's investment advisor continues to
expect the municipal market to perform well relative to taxable bonds, as
demand from insurance companies and retail investors alike will most likely
continue to outweigh new issuance supply.
OTHER BUSINESS
The Board of Directors of Marketvest Funds, Inc. and the Board of
Trustees of Marketvest Funds know of no other business to be brought before the
Meeting. However, if any other matters come before the Meeting, it is the
intention that proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Marketvest Group of Funds in
writing at the address on the cover page of this Prospectus/Proxy Statement or
by telephoning 1-800-MKT-VEST.
* * *
- 33 -
45
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED TO
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
- 34 -
46
Appendix A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") made as of
January 15, 1998, by and among Marketvest Funds, Inc. a Maryland corporation,
Marketvest Funds, a Massachusetts business trust (individually, an "Acquired
Company" and collectively, the "Acquired Companies"), and ARK Funds, a
Massachusetts business trust (the "Acquiring Company").
W I T N E S S E T H:
WHEREAS, the parties hereto desire that substantially all of the
assets and stated liabilities of the separately designated series of the
Acquired Companies (individually, an "Acquired Fund" and collectively, the
"Acquired Funds") be transferred to, and be acquired and assumed by, certain of
the separately designated series of the Acquiring Company (individually, an
"Acquiring Fund" and collectively, the "Acquiring Funds") in exchange for
shares of the Acquiring Funds which shall thereafter be distributed by the
Acquired Companies to the shareholders of the Acquired Funds, all upon the
terms and conditions hereinafter set forth (each such transaction of an
Acquired Fund with the corresponding Acquiring Fund, a "Reorganization"); and
WHEREAS, the parties intend that each of ARK Short-Term Bond
Portfolio, ARK U.S. Government Bond Portfolio, ARK Value Equity Portfolio and
ARK International Equity Selection Portfolio will have nominal assets and
liabilities before its Reorganization with Marketvest Short-Term Bond Fund,
Marketvest Intermediate U.S. Government Bond Fund, Marketvest Equity Fund, and
Marketvest International Equity Fund, respectively, and that each such
Acquiring Fund will continue the investment operations of the corresponding
Acquired Fund after its Reorganization; and
WHEREAS, the parties intend that, in connection with the
Reorganizations, the Acquired Funds and the Acquired Companies will be
terminated and the Acquired Companies will be deregistered as described in this
Agreement; and
WHEREAS, the parties wish to enter into a definitive agreement setting
forth the terms and conditions of the foregoing transactions and to adopt this
Agreement as a "plan of reorganization" within the meaning of Section 368(a)(1)
of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein, the parties hereto agree
as follows:
A-1
47
ARTICLE I
TRANSFER OF ASSETS IN EXCHANGE FOR SHARES; ASSUMPTION
OF LIABILITIES; LIQUIDATION OF ACQUIRED FUNDS
Subject to the terms and conditions of this Agreement, the Acquired
Companies and the Acquiring Company agree to effect the following transactions
in respect of the Reorganizations:
1.1 Transfer of Acquired Fund Assets; Issuance of Acquiring Fund
Shares. At the Closing (as defined in Section 1.6) of a Reorganization, an
Acquired Company, on behalf of the Acquired Fund, shall transfer to the
Acquiring Company all of the assets of the Acquired Fund, in exchange for and
against delivery by the Acquiring Company of a number of shares (including
fractional shares) of the Institutional Class of the corresponding Acquiring
Fund specified in Section 1.5 having an aggregate net asset value equal to the
value of the assets of the Acquired Fund so transferred (the "Acquiring Fund
Shares"), in each case determined and adjusted as provided in Section 1.3.
Portfolio securities of an Acquired Fund shall be delivered to FMB Trust
Company, National Association, the custodian for the Acquiring Company (the
"Custodian"), to be held for the account of such Acquired Fund, on the Closing
Date (as defined in Section 1.6) for the Reorganization of such Acquired Fund,
duly endorsed in proper form for transfer and in such condition as to
constitute good delivery thereof, in accordance with the custom of brokers, and
shall be accompanied by all necessary stock transfer stamps, if any, or a check
for the appropriate purchase price thereof. If an Acquired Company shall be
unable to make timely delivery of any portfolio securities of an Acquired Fund
as herein required, the Acquiring Company may, in the exercise of its
reasonable discretion, waive such delivery, provided that the Acquired Company
has timely delivered such documents, including assignment and escrow
agreements, due bills, confirmation slips and the like, as may reasonably be
requested by the Acquiring Company and the Custodian. Cash of an Acquired Fund
shall be delivered by an Acquired Company on the Closing Date for the
Reorganization of such Acquired Fund and shall be in the form of currency or a
wire transfer in federal funds, payable to the order of "FMB Trust Company,
National Association, as custodian for ARK Funds" and indicating the
appropriate Acquired Fund to which it relates. At the Closing of a
Reorganization of an Acquired Fund, the Acquiring Company shall issue and
deliver to the Acquired Company a confirmation evidencing the Acquiring Fund
Shares credited to the account of the Acquired Fund, or provide evidence
satisfactory to the Acquired Company that the Acquiring Fund Shares have been
credited to the Acquired Fund's account on the books of the Acquiring Company.
It is expressly agreed that no sales charge will be imposed upon issuance of
the Acquiring Fund Shares or their distribution to shareholders of the Acquired
Funds as provided in Section 1.7.
1.2 Acquired Fund Assets. The assets of an Acquired Fund to be
acquired by the Acquiring Company on behalf of an Acquiring Fund hereunder
shall consist of all property of such Acquired Fund, including, without
limitation, all cash, securities, commodities and futures
A-2
48
interests, dividends or interest receivable, and any deferred or prepaid
expenses shown as an asset on the statement of assets and liabilities of the
Acquired Fund delivered pursuant to Section 2.5.
1.3 Valuation. The value of the assets of an Acquired Fund to be
acquired by the Acquiring Company shall be computed by the Acquiring Company as
of the close of regular trading on the New York Stock Exchange, Inc. (the
"Exchange") on the Closing Date for the Reorganization of such Acquired Fund,
using the valuation policies and procedures set forth in the then-current
prospectus and statement of additional information of the Acquiring Company.
The valuation of such assets by the Acquiring Company shall be subject to
review by the Acquired Company and to such adjustments, if any, as may be
agreed to by the Acquiring Company. The aggregate net asset value of the
Acquiring Fund Shares shall be computed by the Acquiring Company using the net
asset value per share of the Acquiring Fund as of the close of regular trading
on the Exchange on such Closing Date. The share transfer books of the Acquired
Company in respect of the Acquired Fund shall be permanently closed as of the
close of business on the business day immediately preceding the Closing Date
and no transfer of shares of the Acquired Fund shall thereafter be made on such
books. An Acquired Company shall only accept purchase orders or redemption
requests for shares of an Acquired Fund received prior to the close of regular
trading on the Exchange on the business day immediately preceding the Closing
Date for its Reorganization; purchase orders or redemption requests received
thereafter shall be deemed to be orders to purchase or requests for redemption
of shares of the corresponding Acquiring Fund, as the case may be, and shall be
executed at the net asset value per share determined as set forth in the
then-current prospectus and statement of additional information of the
Acquiring Company, provided that the Reorganization of the Acquired Fund is
consummated.
1.4 Acquired Fund Liabilities. At the Closing of the Reorganization
of an Acquired Fund, the Acquiring Fund shall assume all liabilities, expenses,
costs, charges and reserves of the Acquired Fund reflected on the statement of
assets and liabilities of the Acquired Fund delivered pursuant to Section 2.5.
Each Acquiring Fund shall assume only such liabilities of the corresponding
Acquired Fund and shall not assume any other liabilities, whether absolute or
contingent, known or unknown, accrued or unaccrued.
1.5 Acquired Funds; Corresponding Acquiring Funds. The assets of
each Acquired Fund shall be acquired by the Acquiring Fund identified opposite
its name in Schedule 1.5 attached hereto.
1.6 Closings; Closing Dates. The closing of the Reorganizations of
Marketvest Short-Term Bond Fund, Marketvest Intermediate U.S. Government Bond
Fund and Marketvest Pennsylvania Intermediate Municipal Bond Fund shall take
place beginning after the close of business on March 6, 1998, and the closing
of the Reorganizations of Marketvest Equity Fund and Marketvest International
Equity Fund shall take place beginning after the close of business on March 13,
1998, at the offices of Piper & Marbury L.L.P., 36 South Charles Street,
Baltimore, Maryland, or at such other time and place as may be agreed upon by
the parties. In the event that
A-3
49
on such date (i) the Exchange is closed or trading thereon is restricted, or
(ii) trading or the reporting of trading on the Exchange or elsewhere is
disrupted so that accurate appraisal of the value of the assets of the Acquired
Fund or the aggregate net asset value of the Acquiring Fund Shares is
impractical, the Reorganization shall be postponed until the business day next
following the day on which trading shall have been fully resumed and reporting
shall have been restored, or such other day as may be agreed upon by the
parties. The closing of a Reorganization is referred to herein as a "Closing"
and the date on which the Closing shall take place is referred to herein as a
"Closing Date."
1.7 Distribution of Acquiring Fund Shares. As soon after the Closing
of the Reorganization of an Acquired Fund as is conveniently practicable, and
in any event within two business days after the Closing, the Acquired Company
shall distribute pro rata to the shareholders of the Acquired Fund of record as
of the close of business on the Closing Date for such Reorganization (the
"Acquired Fund Shareholders"), the Acquiring Fund Shares received by the
Acquired Fund hereunder. The Acquired Company shall accomplish such
distribution by delivering a written instruction, signed by the principal
executive officer of the Acquired Company and certified by an authorized
signatory of Federated Shareholder Services Company, the transfer agent of the
Acquired Companies, to State Street Bank and Trust Company, the transfer agent
for the Acquiring Company (the "Transfer Agent"), directing the Transfer Agent
to open accounts on the books of the Acquiring Company in the names of the
Acquired Fund Shareholders and transfer to such accounts the respective pro
rata interest, in full and fractional (to three decimal places) shares, of each
such shareholder in the Acquiring Fund Shares then credited to the account of
the Acquired Fund on the books of the Acquiring Company. The Acquiring Company
agrees to instruct the Transfer Agent to comply with such instructions. All
issued and outstanding shares of the Acquired Fund and all certificates, if
any, indicating ownership of such shares shall simultaneously be canceled on
the books of the Acquired Company, although from and after the Closing of the
Reorganization of an Acquired Fund each certificate which theretofore
represented shares of such Acquired Fund shall evidence ownership of the
corresponding Acquiring Fund Shares on the basis hereinabove set forth. No
redemption or repurchase of any Acquiring Fund Shares credited to Acquired Fund
Shareholders and represented by unsurrendered certificates shall be permitted
until such certificates have been surrendered for cancellation. The Acquiring
Company shall not issue certificates representing Acquiring Fund Shares in
connection with such distributions. Promptly after the distribution described
above, the Acquiring Company shall cause appropriate notification to be mailed
to the Acquired Fund Shareholders informing each such shareholder of the number
of Acquiring Fund Shares credited to his account and confirming the
registration thereof in his name. All distributions on the Acquiring Fund
Shares shall be paid to the Acquired Fund Shareholders in cash or invested in
additional shares of the Acquiring Fund at the net asset thereof on the
respective payment dates in accordance with instructions previously given by
such shareholders to the transfer agent of the Acquired Company.
1.8 Payment of Transfer Taxes. Any transfer taxes payable upon
issuance of Acquiring Fund Shares in a name other than the name of an Acquired
Fund Shareholder shall, as a
A-4
50
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.9 Liquidation of Acquired Funds. (a) As soon as conveniently
practicable after the distribution required pursuant to Section 1.7 has been
made in respect of an Acquired Fund, an Acquired Company shall take, in
accordance with applicable law, all such action as may be necessary to effect a
complete liquidation of the Acquired Fund.
(b) As soon as conveniently practicable after consummation of the
Reorganizations provided for herein, the Acquired Companies shall, in
accordance with applicable law, make all filings and take all such action as
may be necessary to effect their dissolution or termination, and shall file an
application for an order of the Securities and Exchange Commission (the
"Commission") pursuant to Section 8(f) of the Investment Company Act of 1940,
as amended (the "1940 Act"), declaring that the Acquired Companies have ceased
to be investment companies, and shall take all such other action as may be
necessary to deregister under the 1940 Act. The Acquiring Company shall
provide assistance to the Acquired Company in order to effect the
above-mentioned actions.
1.10 Reporting. Any reporting obligation of an Acquired Company in
respect of an Acquired Fund is and shall remain the responsibility of the
Acquired Company until the Acquired Company is deregistered under the 1940 Act.
The Acquiring Company shall provide assistance to the Acquired Company to the
extent any such reporting obligations relate to the Reorganizations and shall
provide all information regarding the Acquiring Company and the Reorganizations
as may be necessary in order for the Acquired Companies to comply with their
reporting obligations.
ARTICLE II
COVENANTS AND AGREEMENTS
2.1 Conduct of Business. After the date of this Agreement and on or
prior to the Closing Date of the Reorganization of an Acquired Fund, an
Acquired Company and the Acquiring Company will conduct the businesses of the
Acquired Fund and the Acquiring Fund, respectively, only in the ordinary
course, it being understood that such ordinary course of business shall include
the declaration and payment of customary dividends and distributions.
2.2 Shareholders' Meeting. The Acquired Companies shall call,
convene and hold a meeting of shareholders of the Acquired Funds as soon as
practicable in accordance with applicable law, for the purpose of approving
this Agreement and the transactions herein contemplated, and for such other
purposes as may be necessary or desirable, and the directors/trustees of the
Acquired Companies shall, subject to the exercise of their fiduciary
A-5
51
duties, recommend a favorable vote thereon. The Acquired Companies shall
solicit the proxies of shareholders of the Acquired Funds to vote on the
matters to be acted upon at such meeting.
2.3 Registration Statement; Combined Prospectus/Proxy Statement. The
Acquired Companies shall prepare preliminary proxy materials to be filed with
the Commission under the Securities Exchange Act of 1934, as amended (the "1934
Act"), relating to the meeting of shareholders referred to in Section 2.2, in
the form of a combined prospectus/proxy statement and related statement of
additional information included in the registration statement on Form N-14 of
the Acquiring Company filed with the Commission under the Securities Act of
1933, as amended (the "1933 Act"), in connection with this Agreement. Such
registration statement in the form in which it shall become effective and, in
the event any post-effective amendment thereto becomes effective prior to the
Closing Date, such registration statement as amended, is referred to herein as
the "Registration Statement." The combined prospectus/proxy statement and
related statement of additional information in the form first filed with the
Commission pursuant to Rule 497(c) under the 1933 Act is referred to herein as
the "Prospectus/Proxy Statement." The Acquired Companies and the Acquiring
Company will each use its best efforts to cause the Registration Statement to
become effective under the 1933 Act as soon as practicable and agree to
cooperate in such efforts. Upon effectiveness of the Registration Statement,
the Acquired Companies will cause the Prospectus/Proxy Statement to be
delivered to shareholders of the Acquired Funds entitled to vote on this
Agreement and the transactions herein contemplated in accordance with
applicable law.
2.4 Information. Throughout the period prior to the Closing, the
Acquired Companies and the Acquiring Company shall furnish to one another, and
the other's accountants, legal counsel and other representatives, all such
information concerning the Acquiring Funds or the Acquired Funds and their
businesses and properties as may reasonably be requested by the other, or by
such representatives.
2.5 Financial Statements. At the Closing of the Reorganization of an
Acquired Fund, an Acquired Company shall deliver to the Acquiring Company a
statement of assets and liabilities of the Acquired Fund, together with a
schedule of portfolio investments as at the close of business on the Closing
Date. These financial statements shall be prepared in accordance with
generally accepted accounting principles and shall be unaudited. The Acquired
Company shall also deliver to the Acquiring Company on or before such Closing
Date the detailed tax-basis accounting records for each security to be
transferred to the Acquiring Fund hereunder, which shall be prepared in
accordance with the requirements for specific identification tax-lot accounting
and clearly reflect the bases used for determination of gain and loss realized
on the partial sale of any security to be transferred to the Acquiring Fund.
As promptly as practicable thereafter, the Acquired Company shall furnish the
Acquiring Company, in such form as is reasonably satisfactory to the Acquiring
Company, a statement of the earnings and profits of the Acquired Fund for
federal income tax purposes, which statement shall be certified by the
treasurer of the Acquired Company.
A-6
52
2.6 Final Dividend. On or before the Closing Date of the
Reorganization of an Acquired Fund, the Acquired Company shall declare and pay
a dividend or dividends on the shares of the Acquired Fund which, together with
all previous dividends, shall have the effect of distributing to the
shareholders of the Acquired Fund all of the Acquired Fund's investment company
taxable income and net tax-exempt interest income for the final taxable period
of the Acquired Fund (computed without regard to any deduction for dividends
paid) and all of its net capital gains realized in the final taxable period of
the Acquired Fund (after reduction for any capital loss carry-forward).
2.7 Other Necessary Action. The Acquired Companies and the Acquiring
Company shall each take all necessary corporate or other action and use its
best efforts to complete all filings (including articles of transfer to be
filed as contemplated in Section 4.3(d) herein) and obtain all governmental and
other consents and approvals required for consummation of the transactions
contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Acquired Companies. Each
Acquired Company hereby represents and warrants to the Acquiring Company as
follows:
(a) The Acquired Company is a corporation or business trust duly
organized and validly existing in good standing under the laws of its state of
organization and has full corporate power to conduct its business as it is now
being conducted and to own the properties and assets it now owns. The Acquired
Company is qualified to transact business as a foreign corporation in all
jurisdictions in which it conducts any business or owns any properties or
assets, except where the failure to be so qualified does not cause a material
adverse effect on the Acquired Funds.
(b) The Acquired Company is registered with the Commission pursuant
to Section 8 of the 1940 Act as an open-end management investment company.
(c) The audited financial statements for the fiscal year ended
February 28, 1997, and unaudited financial statements for the six-months ended
August 31, 1997, of the Acquired Funds delivered to the Acquiring Company by
the Acquired Company have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the periods covered by
such statements, and fairly present the financial position and results of
operations of the Acquired Funds at the dates of such statements and for the
periods covered thereby.
A-7
53
(d) Since August 31, 1997, the Acquired Company on behalf of the
Acquired Funds has not incurred any material liabilities or obligations, direct
or contingent, or entered into any material transactions, not in the ordinary
course of business, and there has not been any material adverse change, or any
development involving a prospective material adverse change, in the condition
(financial or other), earnings, business or properties of the Acquired Funds
(other than changes in the ordinary course of business, including, without
limitation, dividends and distributions in the ordinary course and changes in
net asset value per share).
(e) There is no litigation, proceeding or governmental investigation
pending or, to the knowledge of the Acquired Company, threatened or in prospect
against or relating to the Acquired Funds, the properties or business of the
Acquired Funds, or this Agreement.
(f) Each Acquired Fund has qualified and elected to be treated as a
regulated investment company under Subchapter M of the Code for each of its
taxable years. All federal and other tax returns and reports of the Acquired
Funds required by law to have been filed have been filed, and all federal and
other taxes payable pursuant to such returns and reports have been paid so far
as due, or provision has been made for the payment thereof, and, to the
Acquired Company's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to any such return.
(g) The Prospectus/Proxy Statement complies in all material respects
with the applicable requirements of the 1933 Act, the 1934 Act and the 1940 Act
and the applicable rules and regulations of the Commission thereunder; and the
Prospectus/Proxy Statement (and any supplement thereto) does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the Acquired
Companies make no representations or warranties as to the information contained
in or omitted from the Prospectus/Proxy Statement (or any supplement thereto)
in reliance upon and in conformity with information relating to the Acquiring
Company or the Acquiring Funds and furnished to the Acquired Company by the
Acquiring Companies specifically for use in connection with the
Prospectus/Proxy Statement (or any supplement thereto).
(h) Ernst & Young LLP, who have certified the financial statements of
the Acquired Funds filed with the Commission as part of the Registration
Statement, are, to the knowledge of the Acquired Funds, independent public
accountants as required by the 1933 Act and the rules and regulations of the
Commission thereunder.
(i) The execution, delivery and performance of this Agreement by the
Acquired Company have been duly authorized by its board of directors/trustees,
and this Agreement constitutes a valid and legally binding obligation of the
Acquired Company, enforceable against the Acquired Company in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the rights of creditors generally and the
exercise of judicial discretion in accordance with general principles of
equity.
A-8
54
(j) The Acquired Company is not in default under any agreement,
lease, contract, indenture, or other instrument or obligation to which it is a
party or by which it or any of its properties or assets are bound and which
default is of material significance in respect of the business or financial
condition of the Acquired Funds. The consummation of the transactions herein
contemplated and the fulfillment of the terms hereof will not conflict with or
violate or result in a breach of any of the terms or provisions of, or
constitute a default under, any agreement or other instrument to which the
Acquired Company is a party, or the charter or bylaws of the Acquired Company,
or any order, rule or regulation applicable to the Acquired Company of any
court or of any governmental or other regulatory body having jurisdiction.
(k) The Acquired Company has good and marketable title to the assets
of the Acquired Funds to be transferred to the Acquiring Funds pursuant to this
Agreement, and, subject to the approval of shareholders of the Acquired
Company, has full right, power and authority to sell, assign, transfer and
deliver such assets hereunder, and upon delivery and payment for such assets,
the Acquiring Funds will acquire good and marketable title thereto, free and
clear of all liens, mortgages, pledges, encumbrances, charges, claims and
equities, and subject to no restrictions on the transfer thereof, except as
disclosed to and accepted by the Acquiring Company.
3.2 Representations and Warranties of Acquiring Company. The
Acquiring Company hereby represents and warrants to each of the Acquired
Companies as follows:
(a) The Acquiring Company is a business trust duly organized and
validly existing in good standing under the laws of the Commonwealth of
Massachusetts and has corporate power to conduct its business as it is now
being conducted and to own the properties and assets it now owns. The
Acquiring Company is qualified to transact business in all jurisdictions in
which it conducts any business or owns any properties or assets, except where
the failure to be so qualified does not cause a material adverse effect on the
Acquiring Funds.
(b) The Acquiring Company is registered with the Commission pursuant
to Section 8 of the 1940 Act as an open-end management investment company.
(c) The authorized capitalization of the Acquiring Company
representing the beneficial interest in the Acquiring Funds consists of an
unlimited number of shares of beneficial interest, without par value,
designated as Retail Class shares and Institutional Class shares of "ARK
Short-Term-Term Bond Portfolio," "ARK U.S. Government Bond Portfolio," "ARK
Pennsylvania Tax-Free Portfolio," "ARK Value Equity Portfolio" and "ARK
International Equity Selection Portfolio." All of the issued and outstanding
shares of the Acquiring Funds have been duly and validly issued and are fully
paid and non-assessable. The Acquiring Fund Shares to be issued and delivered
by the Acquiring Company pursuant to this Agreement have been duly authorized
for issuance and, when issued and delivered as provided herein, will be validly
issued, fully paid and non-assessable.
A-9
55
(d) The current prospectus and statement of additional information of
the Acquiring Company comply in all material respects with the applicable
requirements of the 1933 Act and the 1940 Act and the applicable rules and
regulations of the Commission thereunder and do not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(e) The audited financial statements for the fiscal year ended April
30, 1997, and unaudited financial statements for the six-months ended October
31, 1997, of the Acquiring Funds delivered to the Acquired Companies by the
Acquiring Company have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the periods covered by
such statements, and fairly present the financial position and results of
operations of the Acquiring Funds at the dates of such statements and for the
periods covered thereby.
(f) Since October 31, 1997, the Acquiring Company on behalf of the
Acquiring Funds has not incurred any material liabilities or obligations,
direct or contingent, or entered into any material transactions, not in the
ordinary course of business, and there has not been any material adverse
change, or any development involving a prospective material adverse change, in
the condition (financial or other), earnings, business or properties of the
Acquiring Funds (other than changes in the ordinary course of business,
including, without limitation, dividends and distributions in the ordinary
course and changes in net asset value per share).
(g) There is no litigation, proceeding or governmental investigation
pending or, to the knowledge of the Acquiring Company, threatened or in
prospect against or relating to the Acquiring Funds, the properties or business
of the Acquiring Funds, or this Agreement.
(h) The ARK Pennsylvania Tax-Free Portfolio has qualified and elected
to be treated as a regulated investment company under Subchapter M of the Code
for each of its taxable years. Each other Acquiring Fund intends to qualify
and elect to be treated as a regulated investment company under Subchapter M of
the Code for each of its taxable years. All federal and other tax returns and
reports of the Acquiring Funds required by law to have been filed have been
filed, and all federal and other taxes payable pursuant to such returns and
reports have been paid so far as due, or provision has been made for the
payment thereof, and, to the Acquiring Company's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to any
such return.
(i) The Registration Statement and Prospectus/Proxy Statement comply
in all material respects with the applicable requirements of the 1933 Act, the
1934 Act and the 1940 Act and the applicable rules and regulations of the
Commission thereunder; and the Prospectus/Proxy Statement (and any supplement
thereto) does not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the
A-10
56
circumstances under which they were made, not misleading; provided, however,
that the Acquiring Company makes no representations or warranties as to the
information contained in or omitted from the Prospectus/Proxy Statement (or any
supplement thereto) in reliance upon and in conformity with information
relating to the Acquired Companies or the Acquired Funds and furnished to the
Acquiring Company by the Acquired Companies specifically for use in connection
with the Prospectus/Proxy Statement (or any supplement thereto).
(j) The execution, delivery and performance of this Agreement by the
Acquiring Company have been duly authorized by its board of trustees, and this
Agreement constitutes a valid and legally binding obligation of the Acquiring
Company, enforceable against the Acquiring Company in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and other laws affecting the rights of creditors generally and the exercise of
judicial discretion in accordance with general principles of equity.
(k) The Acquiring Company is not in default under any agreement,
lease, contract, indenture, or other instrument or obligation to which it is a
party or by which it or any of its properties or assets are bound and which
default is of material significance in respect of the business or financial
condition of the Acquiring Funds. The consummation of the transactions herein
contemplated and the fulfillment of the terms hereof will not conflict with or
violate or result in a breach of any of the terms or provisions of, or
constitute a default under, any agreement or other instrument to which the
Acquiring Company is a party, or the charter or by-laws of the Acquiring
Company, or any order, rule or regulation applicable to the Acquiring Company
of any court or of any governmental or other regulatory body having
jurisdiction.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions Precedent to Obligations of Acquired Companies. The
obligations of an Acquired Company to consummate the Reorganization of an
Acquired Fund shall be subject, at its election, to the performance by the
Acquiring Company of all of the obligations to be performed by it hereunder on
or before the Closing Date for the Reorganization of such Acquired Fund and, in
addition thereto, to the following further conditions:
(a) The transactions contemplated by this Agreement shall have been
duly approved by the requisite affirmative vote of the shareholders of the
Acquired Fund.
(b) The Acquiring Company shall have furnished to the Acquired
Company a certificate of the Acquiring Company, signed by the principal
executive officer and the principal financial officer of the Acquiring Company,
dated such Closing Date, to the effect that the signers of such certificate
have carefully examined the Registration Statement, the Prospectus/Proxy
Statement (and any supplement thereto) and this Agreement and that:
A-11
57
(i) the representations and warranties of the Acquiring
Company in this Agreement are true and correct in all material
respects on and as of such Closing Date with the same effect as if
made on such Closing Date and the Acquiring Company has complied with
all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing of the
Reorganization of the Acquired Fund;
(ii) since the date of the most recent financial statements
of the corresponding Acquiring Fund included in the Registration
Statement and Prospectus/Proxy Statement (or any supplement thereto),
there has been no material adverse change in the condition (financial
or other), earnings, business or properties of such Acquiring Fund
(other than changes in the ordinary course of business, including,
without limitation, dividends and distributions in the ordinary course
and changes in net asset value per share), except as set forth in or
contemplated in the Registration Statement and Prospectus/Proxy
Statement.
(iii) the Registration Statement has become effective under
the 1933 Act and no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Acquiring Company's knowledge,
threatened.
(c) Prior to such the Closing Date, the Acquiring Company shall have
furnished to the Acquired Company such further information, certificates and
documents, including certified copies of the proceedings of its board of
trustees, as the Acquired Company may reasonably request.
4.2 Conditions Precedent to Obligations of Acquiring Companies.
The obligations of the Acquiring Company to consummate the Reorganization of an
Acquired Fund shall be subject, at its election, to the performance by the
Acquired Company of all of the obligations to be performed by it hereunder on
or before the Closing Date for the Reorganization of such Acquired Fund and, in
addition thereto, to the following further conditions:
(a) The Acquired Company shall have furnished to the Acquiring
Company a certificate of the Acquired Company, signed by the principal
financial officer of the Acquired Company, dated such Closing Date, to the
effect that the signer of such certificate has carefully examined the unaudited
financial statements of the Acquired Fund delivered to the Acquiring Company
pursuant to Section 2.5 and that such financial statements have been prepared
in accordance with generally accepted accounting principles consistently
followed throughout the periods covered by such statements and fairly present
the financial position and results of operations of the Acquired Fund at the
dates of such statements and for the periods covered thereby.
(b) The Acquired Company shall have furnished to the Acquiring
Company a certificate of the Acquired Company, signed by the principal
executive officer and the principal financial
A-12
58
officer of the Acquired Company, dated such Closing Date, to the effect that
the signers of such certificate have carefully examined the Registration
Statement, the Prospectus/Proxy Statement (and any supplement thereto) and this
Agreement and that:
(i) the representations and warranties of the Acquired
Company in this Agreement are true and correct in all material
respects on and as of such Closing Date with the same effect as if
made on such Closing Date and the Acquired Company has compiled with
all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing of the
Reorganization of the Acquired Fund; and
(ii) since the date of the most recent financial statements
of the Acquired Fund included in the Registration Statement and
Prospectus/Proxy Statement (or any supplement thereto), there has been
no material adverse change in the condition (financial or other),
earnings, business or properties of the Acquired Fund (other than
changes in the ordinary course of business, including, without
limitation, dividends and distributions in the ordinary course and
changes in net asset value per share), except as set forth in or
contemplated in the Registration Statement and Prospectus/Proxy
Statement (or any supplement thereto).
(c) The Acquiring Company shall have received (i) a certificate of an
authorized signatory of the Custodian stating that the portfolio securities,
cash and other assets of the Acquired Fund have been delivered as provided in
Section 1.1 and (ii) a certificate of an authorized signatory of the Transfer
Agent stating that its records contain the names and addresses of the Acquired
Fund Shareholders and the number and percentage of ownership of the Acquiring
Fund Shares to be transferred to the accounts of such shareholders upon the
consummation of the Reorganization of the Acquired Fund.
(d) Prior to such Closing Date, the Acquired Company shall have
furnished to the Acquiring Company such further information, certificates and
documents, including certified copies of the proceedings of its board of
directors/trustees and shareholders, as the Acquiring Company may reasonably
request.
4.3 Other Conditions Precedent. The obligations of the parties
hereto to consummate the Reorganization of an Acquired Fund shall be subject to
the fulfillment, prior to or at the Closing of the Reorganization of such
Acquired Fund, of each of the following conditions:
(a) The Acquired Companies and the Acquiring Company shall have
received a legal opinion or opinions satisfactory to the parties and their
counsel, to the effect that, if the transactions contemplated by this Agreement
are consummated in accordance with the terms hereof, for federal income tax
purposes:
A-13
59
(i) the transfer by each Acquired Fund of all of its assets
and liabilities to the corresponding Acquiring Fund in exchange for
shares of the corresponding Acquiring Fund, and the distribution of
such shares to the shareholders of the Acquired Fund, as provided in
this Agreement, will constitute a "reorganization" within the meaning
of Section 368(a)(1) of the Code and each such Fund will be a "a party
to the reorganization" within the meaning of Section 368(b) of the
Code;
(ii) no gain or loss will be recognized by the Acquired
Fund on the transfer of its assets to the corresponding Acquiring Fund
in exchange for the Acquiring Fund Shares and the assumption of the
stated liabilities of the Acquired Fund, and no gain or loss will be
recognized by the Acquired Fund on the distribution of the Acquiring
Fund Shares to the Acquired Fund Shareholders;
(iii) no gain or loss will be recognized by the Acquiring
Fund upon the receipt of the assets of the Acquired Fund in exchange
for the Acquiring Fund Shares and the assumption of the stated
liabilities of the Acquired Fund;
(iv) the adjusted basis of each asset of the Acquired Fund
in the hands of the Acquiring Fund will be the same as the adjusted
basis of such asset in the hands of the Acquired Fund immediately
prior to the Reorganization;
(v) the holding period of each asset of the Acquired Fund
in the hands of the Acquiring Fund will include the holding period of
such asset in the hands of the Acquired Fund immediately prior to the
Reorganization;
(vi) no gain or loss will be recognized by the Acquired
Fund Shareholders upon the receipt of the Acquiring Fund Shares
(including fractional shares) solely in exchange for shares of the
Acquired Fund;
(vii) the adjusted basis of the Acquiring Fund Shares
(including fractional shares) received by each Acquired Fund
Shareholder will be the same as the adjusted basis of the shares of
the Acquired Fund surrendered in exchange therefor; and
(viii) the holding period of the Acquiring Fund Shares
(including fractional shares) received by each Acquired Fund
Shareholder will include the holding period of the shares of the
Acquired Fund surrendered in exchange therefor, provided that such
shares were held as a capital asset in the hands of the Acquired Fund
Shareholder on the date of the exchange.
(b) The Acquired Companies and the Acquiring Company shall have
received such legal opinion or opinions, as may be mutually satisfactory to the
parties and their counsel.
A-14
60
(c) The Commission shall have issued an order pursuant to Section
17(b) of the 1940 Act permitting consummation of the transactions contemplated
by this Agreement.
(d) In the case of the Reorganizations of Marketvest Short-Term Bond
Fund, Marketvest Intermediate U.S. Government Fund and Marketvest Equity Fund,
articles of transfer shall have been filed with and accepted for record by the
Maryland State Department of Assessments and Taxation.
(e) All state securities law and all other governmental approvals
necessary or advisable in the opinion of counsel to consummate the transactions
contemplated by this Agreement shall have been received and shall not contain
any provision which is unduly burdensome.
(f) No suit, action or other proceeding against an Acquired Company
or the Acquiring Company or their respective officers or directors/trustees
shall be threatened or pending before any court or governmental agency in which
it will be, or it is, sought to restrain or prohibit any of the transactions
contemplated by this Agreement or to obtain damages or other relief in
connection with this Agreement or the transactions contemplated hereby.
ARTICLE V
TERMINATION
5.1 Termination. This Agreement may be terminated with respect to
the Reorganization of an Acquired Fund and the transactions contemplated hereby
with respect to such Reorganization abandoned any time prior to the Closing of
such Reorganization (notwithstanding any approval of this Agreement and the
transactions herein contemplated by the shareholders of the Acquired Fund):
(i) by mutual written consent of the Acquired Company and the
Acquiring Company duly authorized by or on behalf of their respective
boards of directors/trustees;
(ii) by either party at any time after June 30, 1998, if the
Closing has not occurred on or prior to such date; provided, however,
that the right to terminate under this clause (ii) shall not be
available to a party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of
such Closing to occur on or before such date;
(iii) by either party if there shall be any law or regulation that
makes consummation of the transactions contemplated by this Agreement
illegal or otherwise prohibited or if any judgment, injunction, order
or decree enjoining a party from consummating the transactions herein
contemplated is entered and such judgment, injunction, order or decree
shall become final and nonappealable; or
A-15
61
(iv) by the Acquired Company if the shareholders of the Acquired
Fund shall have voted upon and not approved the transactions
contemplated by this Agreement.
The party desiring to terminate this Agreement pursuant to clause (ii), (iii)
or (iv) shall give notice of such termination to the other party in the manner
specified in Section 6.1.
5.2 Effect of Termination. If this Agreement is validly
terminated as permitted by Section 5.1, this Agreement will forthwith become
null and void and there will be no liability or obligation of either party (or
any shareholder, director/trustee, officer, employee, agent, consultant or
representative thereof) to the other party; provided, however, that nothing
contained in this Section 5.2 shall relieve either party from liability for any
breach of this Agreement, including, but not limited to, any liability of such
party for any and all damages, costs and expenses (including, but not limited
to, reasonable attorneys' fees) sustained or incurred by the other party as a
result of such breach.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices, requests and other communications to a
party hereunder shall be in writing (including facsimile or similar writing),
addressed to such party and given at or sent to the following address:
(a) in the case of the Acquired Companies:
Marketvest Funds, Inc.
Marketvest Funds
Federated Investors Tower
Pittsburgh, PA 15222-3779
Attention: Secretary
Facsimile: (412) 288-8141
with a copy to:
Matthew G. Maloney, Esq.
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, DC 20037-1526
Facsimile: (202) 887-0689
A-16
62
(b) in the case of the Acquiring Company:
ARK Funds
One Freedom Valley Drive
Oaks, PA 19456
Attention: Secretary
Facsimile: (610) 676-1040
with a copy to:
Alan C. Porter, Esq.
Piper & Marbury L.L.P.
1200 Nineteenth Street, N.W.
Washington, DC 20036-2430
Facsimile: (202) 223-2085
or such other address or facsimile number as any party may hereafter specify
for the purpose by notice to the other parties. Each such notice, request or
other communication shall be effective (i) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this Section 6.1
and the appropriate answer back is received, or (ii) if given by any other
means, when delivered at the address specified in this Section 6.1.
6.2 Amendments; Waivers. Any provision of this Agreement may be
amended or waived prior to the Closing of the Reorganization of an Acquired
Fund, if, and only if, such amendment or waiver is in writing and signed, in
the case of an amendment, by each party or, in the case of a waiver, by the
party against which the waiver is to be effective; provided that after the
adoption of this Agreement by the shareholders of such Acquired Fund, no such
amendment or waiver shall, without the further approval of such shareholders,
alter or change any of the terms or conditions of this Agreement if such
alteration or change would adversely affect the shareholders of the Acquired
Fund.
6.3 Successors. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that no party may assign, delegate or
otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other party hereto.
6.4 Broker's or Finder's Fees. The parties represent and warrant
to each other that the transactions contemplated by this Agreement have been
negotiated directly between them, without the intervention of any person as a
result of any action by them in such a manner as to give rise to a valid claim
for a brokerage commission, finder's fee or like payment.
6.5 Expenses. The Acquired Companies and the Acquiring Company
each hereby acknowledge that First Maryland Bancorp will pay all expenses
incurred in connection with
A-17
63
entering into and carrying out the transactions contemplated by this Agreement,
whether or not the transactions contemplated hereby are consummated. Such
expenses include, without limitation, (i) expenses associated with the
preparation and filing of the Registration Statement; (ii) fees and expenses
for registration or qualification of the Acquiring Fund Shares under the 1933
Act and state securities or "blue sky" laws; (iii) fees and disbursements of
legal counsel and accountants; and (iv) postage, printing and proxy
solicitation costs.
6.6 Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Maryland.
6.7 Survival. The covenants, agreements, representations and
warranties of the parties in respect of the Reorganization of an Acquired Fund
contained herein shall not survive, and shall be extinguished by, the Closing
of such Reorganization.
6.8 Counterparts. This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
6.9 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to the subject matter of this
Agreement. No representation, inducement, promise, understanding, condition or
warranty not set forth herein has been made or relied upon by either party
hereto.
6.10 Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
6.11 Parties in Interest. Nothing expressed or implied herein is
intended or shall be construed to confer upon any person, other than the
parties hereto, any rights or remedies under or by reason of this Agreement or
the transactions contemplated hereby.
6.12 Limitation of Liability. (a) A copy of the declaration of
trust of ARK Funds is on file with the Secretary of State of the Commonwealth
of Massachusetts, and it is expressly agreed that this instrument is executed
on behalf of ARK Funds by the trustees or officers thereof in such capacities,
and not individually, and that the obligations of this instrument are not
binding upon any of the trustees, officers or shareholders of ARK Funds
personally, but are binding only upon the assets and property of the Acquiring
Funds.
(b) A copy of the declaration of trust of Marketvest Funds is on
file with the Secretary of State of the Commonwealth of Massachusetts, and it
is expressly agreed that this instrument is executed on behalf of Marketvest
Funds by the trustees or officers thereof in such capacities, and not
individually, and that the obligations of this instrument are not binding upon
any of the
A-18
64
trustees, officers or shareholders of Marketvest Funds personally, but are
binding only upon the assets and property of the Marketvest Funds.
(c) The parties specifically acknowledge and agree that any
liability under this Agreement, or in connection with the transactions herein
contemplated, to the Acquiring Company with respect to an Acquiring Fund, or to
an Acquired Company with respect to an Acquired Fund, shall be discharged only
out of the assets of that Acquiring Fund or Acquired Fund, as the case may be,
and that no other Acquiring Fund, series of the Acquiring Company or Acquired
Fund shall be liable with respect thereto.
* * *
A-19
65
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
MARKETVEST FUNDS, INC.
ATTEST:
By /s/ VICTOR R. SICLARI
----------------------------------
/s/ TIMOTHY S. JOHNSON Victor R. Siclari
- ------------------------- Secretary
MARKETVEST FUNDS
ATTEST:
By /s/ VICTOR R. SICLARI
----------------------------------
/s/ TIMOTHY S. JOHNSON Victor R. Siclari
- ------------------------- Secretary
ARK FUNDS
ATTEST:
By /s/ KATHRYN L. STANTON
----------------------------------
/s/ LESLIE KONDZIELA Kathryn L. Stanton
- ------------------------- Secretary
A-20
66
SCHEDULE 1.5
Marketvest Funds ARK Funds
---------------- ---------
Marketvest Short-Term Bond Fund ARK Short-Term Bond Portfolio
Marketvest Intermediate U.S. Government ARK U.S. Government Bond Portfolio
Bond Fund
Marketvest Pennsylvania Intermediate ARK Pennsylvania Tax-Free Portfolio
Municipal Bond Fund
Marketvest Equity Fund ARK Value Equity Portfolio
Marketvest International Equity Fund ARK International Equity Selection Portfolio
67
ARK FUNDS
CROSS REFERENCE SHEET
PART B
Item No. Heading
- -------- -------
10. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
11. Table of Contents . . . . . . . . . . . . . . . . . . . . . . . Table of Contents
12. Additional Information about the Registrant . . . . . . . . . . Statement of Additional
Information of ARK Funds dated
February ___, 1997
13. Additional Information about the Company
Being Acquired . . . . . . . . . . . . . . . . . . . . . . . . . Combined Statements of
Additional Information of the
Marketvest Funds, Inc. and
Marketvest Funds dated June 30,
1997
14. Financial Statements . . . . . . . . . . . . . . . . . . . . . . Pro Forma Financial Statements:
ARK Pennsylvania Tax-Free
Portfolio and Marketvest
Pennsylvania Intermediate
Municipal Bond Fund.
68
MARKETVEST FUNDS, INC.
MARKETVEST FUNDS
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
ARK FUNDS
Oaks, Pennsylvania 19456
STATEMENT OF ADDITIONAL INFORMATION
(Joint Special Meeting of Shareholders of the Marketvest Group of Funds)
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the Prospectus/Proxy Statement dated February __, 1998
for the Joint Special Meeting of Shareholders of the Marketvest Funds
to be held on March 4, 1998. Copies of the Prospectus/Proxy Statement may be
obtained at no charge by calling the Marketvest Funds at 1-800-MKT-VEST.
Unless otherwise indicated, capitalized terms used herein and not
otherwise defined have the same meanings as are given to them in the
Prospectus/Proxy Statement.
Further information about the Acquiring Funds is contained in and
incorporated herein by reference to the ARK Funds' Statement of Additional
Information dated February __, 1998, a copy of which is included herewith. The
audited financial statements and related independent auditor's report for the
Acquiring Funds contained in the Annual Report for the fiscal year ended April
30, 1997 are hereby incorporated herein by reference and accompany this
Statement of Additional Information. The unaudited financial statements for
the Acquiring Funds contained in the Semi-Annual Report for the six-months
ended October 31, 1997 are hereby incorporated herein by reference and
accompany this Statement of Additional Information. No other parts of the
Annual Report and Semi-Annual Report are incorporated by reference herein.
Further information about the Acquired Funds is contained in and
incorporated by reference to the Marketvest Group of Funds Combined Statement
of Additional Information dated June 30, 1997, copies of which are included
herewith. The audited financial statements and related independent
accountant's report for the Acquired Funds contained in the respective Annual
Reports for the fiscal year ended February 28, 1997 are hereby incorporated
herein by reference and accompany this Statement of Additional Information.
The unaudited financial statements for the Acquired Funds for the six months
ended August 31, 1997 contained in the respective Semi-Annual Reports are
hereby incorporated herein by reference and accompany this Statement of
Additional Information. No other parts of the Semi-Annual Reports are
incorporated by reference herein.
The date of this Statement of Additional Information is February __, 1998.
69
TABLE OF CONTENTS
Page
----
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Pro Forma Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
70
GENERAL INFORMATION
The shareholders of Marketvest Funds, Inc. and Marketvest Funds
(collectively, "Marketvest Funds") are being asked to approve or disapprove an
Agreement and Plan of Reorganization (the "Reorganization Agreement") dated as
of January 15, 1998, among Marketvest Funds, Inc., Marketvest Funds and ARK
Funds, and the transactions contemplated thereby. The Reorganization Agreement
contemplates the transfer of substantially all of the assets and stated
liabilities of Marketvest Short-Term Bond Fund, Marketvest Intermediate U.S.
Government Bond Fund, Marketvest Pennsylvania Intermediate Municipal Bond Fund,
Marketvest Equity Fund and Marketvest International Equity Fund (each, an
"Acquired Fund" and collectively, the "Acquired Funds") to a corresponding
portfolio of ARK Funds (each, an "Acquiring Fund" and collectively, the
"Acquiring Funds") in exchange for full and fractional Institutional Class
shares representing interests in such corresponding Acquiring Funds (each such
transaction, a "Reorganization" and collectively, the "Reorganizations"). The
shares issued by ARK Funds will have an aggregate net asset value equal to the
aggregate net asset value of the shares of the respective Acquired Funds that
are outstanding immediately before the Closing Date (as defined in the
Reorganization Agreement) of the Reorganization.
Following the exchange, each of the Acquired Funds will make a liquidating
distribution of the corresponding Acquiring Fund shares to its shareholders.
Each shareholder owning shares of a particular Acquired Fund at the Closing
Date will receive Institutional Class shares of the corresponding Acquiring
Fund of equal value, plus the right to receive any unpaid dividends and
distributions that were declared before the Closing Date on shares in such
Acquired Fund. Upon completion of the Reorganizations, the Marketvest Group of
Funds will be terminated or dissolved under state law and deregistered under
the Investment Company Act of 1940.
The Joint Special Meeting of Shareholders of the Marketvest Group of Funds
to consider the Reorganization Agreement and the related transactions will be
held at 10 o'clock a.m., Eastern Time, on March 4, 1998, at Federated
Investors, Federated Investors Tower, 19th Floor, Pittsburgh, Pennsylvania. For
further information about the transaction, see the Prospectus/Proxy Statement.
Banking laws and regulations generally permit a bank or bank affiliate to
act as an investment adviser and to purchase shares of an investment company as
agent for and upon the order of a customer. However, banking laws and
regulations, including the Glass-Steagall Act as currently interpreted by the
Board of Governors of the Federal Reserve System, prohibit a bank holding
company registered under the Bank Holding Company Act of 1956, as amended, or
any affiliate thereof from sponsoring, organizing, controlling, or distributing
the shares of a registered, open-end investment company continuously engaged in
the issuance of its shares, and prohibit banks generally from issuing,
underwriting, selling or distributing securities such as shares of the
Acquiring Funds. Judicial or administrative decisions or interpretations of,
as well as changes in, either federal or state statutes or regulations relating
to the activities of banks and their affiliates could prevent First National
Bank of Maryland or its affiliates from continuing to perform all or a part of
the activities described above. If banks or bank affiliates were prohibited
from so acting,
71
changes in the operation of the ARK Funds might occur. It is not anticipated,
however, that any such change would affect the net asset value of the Acquiring
Funds' shares or result in any financial loss to any shareholder.
- 2 -
72
ARK PENNSYLVANIA TAX FREE PORTFOLIO
Introduction To Pro Forma Combining Statements
April 30, 1997 and October 31, 1997
The accompanying unaudited Pro Forma Combining Statements of Assets and
Liabilities, Pro Forma Combining Statements of Operations and Pro Forma
Combining Schedules of Investments reflect the accounts of the ARK PENNSYLVANIA
TAX FREE PORTFOLIO (the Ark Fund) and the MARKETVEST PENNSYLVANIA INTERMEDIATE
MUNICIPAL BOND FUND (the Marketvest Fund).
These statements have been derived from the underlying accounting records of the
Ark Fund and the Marketvest Fund that were used in calculating net asset values
for the twelve-month period ended April 30, 1997(or since inception) and the six
months ended October 31, 1997. The Pro forma Combining Statements of Operations
have been prepared based upon the fee and expense structure of the Ark Fund.
Under the proposed merger agreement and plan of reorganization, all outstanding
shares of the Marketvest Fund will be issued in exchange for shares of the
Institutional Class of the Ark Fund.
73
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997
(UNAUDITED)
---------------------------------- -----------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
---------------------------------- -----------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------- -----------------------------
MUNICIPAL BONDS AND NOTES 97.36% 96.78%
PENNSYLVANIA 97.36% 94.50%
Allegheny County, PA HDA, Refunding
Revenue Bonds, 5.70% (Magee Womens
Hospital)/(Original Issue Yield: 5.85%),
10/1/2001 1,790 $ 1,856
Allegheny County, PA HDA, Revenue
Bonds, 4.80% (University of Pittsburgh
Medical Center)/(MBIA Insurance
Corporation INS)/(Original Issue Yield:
4.85%),12/1/2005 2,000 1,960
Allegheny County, PA HDA, Revenue
Bonds, 5.20% (Magee Womens
Hospital)/(FGIC INS)/(Original Issue
Yield:5.30%), 10/1/2005 1,000 1,009
Allegheny County, Hospital
Development Authority,
Pittsburgh Mercy Health
System Project, Callable
8/15/06 @ 102 (RB) (AMBAC)
5.625%, 08/15/18 500 486
Allegheny County, Hospital
Development Authority,
Presbyterian Health Center
Project, Series C
(RB) (MBIA) (A)
4.600%, 05/01/97 500 500
Allegheny County, PA HDA, Revenue
Bonds, 5.375% (Children's Hospital of
Pittsburgh)/(Original Issue Yield:5.641%),
7/1/2017 2,800 2,651
Allegheny County, PA Institution District,
GO UT Refunding Bonds (Series 18),
6.70% (MBIA Insurance Corporation
INS), 4/1/1999 1,000 1,044
Allegheny County, PA GO UT Bonds
(Series C-45), 5.10% (FGIC INS),
10/1/2007 5,000 4,964
Allegheny County, Series C-39,
Callable 05/01/02 @ 102
------------------------------
PROFORMA COMBINED
------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- -----------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES 97.30%
PENNSYLVANIA 97.07%
Allegheny County, PA HDA, Refunding
Revenue Bonds, 5.70% (Magee Womens
Hospital)/(Original Issue Yield: 5.85%),
10/1/2001 1,790 $ 1,856
Allegheny County, PA HDA, Revenue
Bonds, 4.80% (University of Pittsburgh
Medical Center)/(MBIA Insurance
Corporation INS)/(Original Issue Yield:
4.85%),12/1/2005 2,000 1,960
Allegheny County, PA HDA, Revenue
Bonds, 5.20% (Magee Womens
Hospital)/(FGIC INS)/(Original Issue
Yield:5.30%), 10/1/2005 1,000 1,009
Allegheny County, Hospital
Development Authority,
Pittsburgh Mercy Health
System Project, Callable
8/15/06 @ 102 (RB) (AMBAC)
5.625%, 08/15/18 500 486
Allegheny County, Hospital
Development Authority,
Presbyterian Health Center
Project, Series C
(RB) (MBIA) (A)
4.600%, 05/01/97 500 500
Allegheny County, PA HDA, Revenue
Bonds, 5.375% (Children's Hospital of
Pittsburgh)/(Original Issue Yield:5.641%),
7/1/2017 2,800 2,651
Allegheny County, PA Institution District,
GO UT Refunding Bonds (Series 18),
6.70% (MBIA Insurance Corporation
INS), 4/1/1999 1,000 1,044
Allegheny County, PA GO UT Bonds
(Series C-45), 5.10% (FGIC INS),
10/1/2007 5,000 4,964
Allegheny County, Series C-39,
Callable 05/01/02 @ 102
Page 1 of 17
74
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997
(UNAUDITED)
---------------------------------- -----------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
---------------------------------- -----------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------- -----------------------------
(GO) (AMBAC)
5.600%, 05/01/04 300 311
Allentown, Callable 07/15/03
@ 100 (GO) (AMBAC)
5.650%, 07/15/08 500 511
Allentown, Callable 07/15/09
@ 100 (GO) (AMBAC)
5.650%, 07/15/10 250 254
Allentown, Sewer Systems,
Callable 07/15/09 @ 100
(RB) (AMBAC)
5.650%, 07/15/10 250 254
Bensalem Township, PA, GO UT Bonds,
5.55% (FGIC INS) 12/1/2010 1,390 1,397
Bensalem Township, PA, GO UT Bonds,
5.70% (FGIC INS) 12/1/2012 1,015 1,024
Bethehem, PA Area School District, GO
UT Bonds, 5.70% (MBIA Insurance
Corporation INS), 3/1/2009 1,000 1,029
Bethehem, PA Area School District, GO
UT Bonds, 5.75% (MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.80%), 3/1/2010 1,000 1,021
Bethehem, PA Area School District, GO
UT Bonds, 5.80% (MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.80%), 3/1/2011 1,545 1,578
Bethehem, PA Area School District, GO
UT Bonds, 5.85% (MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.90%), 3/1/2012 1,635 1,670
Bethehem, PA Area School District, GO
UT Bonds, 6.35% (United States Treasury
COL)/(AMBAC INS), 9/1/1999 1,000 1,046
Bucks County, PA, GO UT, 5.375%
(Original Issue Yield: 5.45%), 5/1/2006 1,030 1,047
------------------------------
PROFORMA COMBINED
------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- -----------------------------------------------------------------------------------------
(GO) (AMBAC)
5.600%, 05/01/04 300 311
Allentown, Callable 07/15/03
@ 100 (GO) (AMBAC)
5.650%, 07/15/08 500 511
Allentown, Callable 07/15/09
@ 100 (GO) (AMBAC)
5.650%, 07/15/10 250 254
Allentown, Sewer Systems,
Callable 07/15/09 @ 100
(RB) (AMBAC)
5.650%, 07/15/10 250 254
Bensalem Township, PA, GO UT Bonds,
5.55% (FGIC INS) 12/1/2010 1,390 1,397
Bensalem Township, PA, GO UT Bonds,
5.70% (FGIC INS) 12/1/2012 1,015 1,024
Bethehem, PA Area School District, GO
UT Bonds, 5.70% (MBIA Insurance
Corporation INS), 3/1/2009 1,000 1,029
Bethehem, PA Area School District, GO
UT Bonds, 5.75% (MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.80%), 3/1/2010 1,000 1,021
Bethehem, PA Area School District, GO
UT Bonds, 5.80% (MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.80%), 3/1/2011 1,545 1,578
Bethehem, PA Area School District, GO
UT Bonds, 5.85% (MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.90%), 3/1/2012 1,635 1,670
Bethehem, PA Area School District, GO
UT Bonds, 6.35% (United States Treasury
COL)/(AMBAC INS), 9/1/1999 1,000 1,046
Bucks County, PA, GO UT, 5.375%
(Original Issue Yield: 5.45%), 5/1/2006 1,030 1,047
Page 2 of 17
75
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997
(UNAUDITED)
---------------------------------- -----------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
---------------------------------- -----------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------- -----------------------------
Bucks County, PA, GO UT, 5.15%
(Original Issue Yield: 5.20%), 5/1/2004 1,000 1,014
Bucks County, Community
College Project, Callable
6/15/07 @ 100 (RB)
5.500%, 06/15/17 500 482
Bucks County, PA Community College
Authority, Revenue Bonds, 5.50%
(Original Issue Yield: 5.60%),6/15/2014 1,500 1,480
Burrell, PA School District, GO UT
School Improvements, 5.25% (Original
Issue Yield: 5.45%),11/15/2010 4,000 3,928
Central Bucks, PA School District, GO
UT Refunding Bonds, 6.30%, 2/1/2000 1,000 1,047
Chester County, Callable
12/15/03 @ 100 (GO)
5.300%, 12/15/05 500 506
Chester County, PA HEFA, Refunding
Revenue Bonds, 5.30% (Main Line Health
Systems)/(MBIA Insurance Corporation
INS)/(Original Issue Yield: 5.40%),
5/15/2007 3,045 3,031
Chester County, PA HEFA, Refunding
Revenue Bonds, 5.50% (Chester County
Hospital, PA)/(MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.70%), 7/1/2007 965 985
Chester County, PA HEFA, Refunding
Revenue Bonds, 5.625% (Chester County
Hospital, PA)/(MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.90%), 7/1/2010 1,675 1,683
Chester County, PA HEFA, Refunding
Revenue Bonds, 5.625% (MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.85%), 7/1/2009 1,985 2,009
------------------------------
PROFORMA COMBINED
------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- -----------------------------------------------------------------------------------------
Bucks County, PA, GO UT, 5.15%
(Original Issue Yield: 5.20%), 5/1/2004 1,000 1,014
Bucks County, Community
College Project, Callable
6/15/07 @ 100 (RB)
5.500%, 06/15/17 500 482
Bucks County, PA Community College
Authority, Revenue Bonds, 5.50%
(Original Issue Yield: 5.60%),6/15/2014 1,500 1,480
Burrell, PA School District, GO UT
School Improvements, 5.25% (Original
Issue Yield: 5.45%),11/15/2010 4,000 3,928
Central Bucks, PA School District, GO
UT Refunding Bonds, 6.30%, 2/1/2000 1,000 1,047
Chester County, Callable
12/15/03 @ 100 (GO)
5.300%, 12/15/05 500 506
Chester County, PA HEFA, Refunding
Revenue Bonds, 5.30% (Main Line Health
Systems)/(MBIA Insurance Corporation
INS)/(Original Issue Yield: 5.40%),
5/15/2007 3,045 3,031
Chester County, PA HEFA, Refunding
Revenue Bonds, 5.50% (Chester County
Hospital, PA)/(MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.70%), 7/1/2007 965 985
Chester County, PA HEFA, Refunding
Revenue Bonds, 5.625% (Chester County
Hospital, PA)/(MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.90%), 7/1/2010 1,675 1,683
Chester County, PA HEFA, Refunding
Revenue Bonds, 5.625% (MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.85%), 7/1/2009 1,985 2,009
Page 3 of 17
76
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997
(UNAUDITED)
---------------------------------- -----------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
---------------------------------- -----------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------- -----------------------------
Clinton County, PA Solid Waste
Authority, Revenue Bonds, 6.45% (Clinton
County, PA Solid Waste Authority
GTD)/(AMBAC INS)/(Original Issue
Yield: 6.50%),11/1/2001 1,000 1,037
Coatesville, PA School District, GO UT,
5.40% (FSA INS), 4/1/2013 2,000 1,960
Commonwealth of Pennsylvania, GO UT,
5.375% (FGIC INS), 5/15/2005 3,000 3,075
Commonwealth of Pennsylvania, GO UT
Bonds (Second Series A), 6.875% (United
States Treasury PRF), 11/1/1999(@101.5) 1,000 1,070
Commonwealth of Pennsylvania, GO UT
Bonds (Second Series A), 6.875% (United
States Treasury PRF), 11/1/1999(@101.5) 1,000 1,069
Commonwealth of Pennsylvania, GO UT
Bonds, 5.375% (FGIC INS), 5/15/2004 4,000 4,101
Commonwealth of Pennsylvania, GO UT
Refunding Bonds, (First Series A), 6.60%,
6/1/1999 1,000 1,043
Commonwealth of Pennsylvania, GO UT
Refunding Bonds, (First Series A), 4.80%,
(Original Issue Yield: 4.85%),4/15/2001 3,000 3,011
Commonwealth of Pennsylvania, GO UT
Refunding Bonds, (First Series A), 5.00%,
(Original Issue Yield: 5.10%),5/1/2003 2,250 2,267
Commonwealth of Pennsylvania, GO UT
Refunding Bonds, (Second Series), 4.75%,
(MBIA Insurance Corporation INS), 6/15/1999 2,500 2,524
Commonwealth of Pennsylvania, GO UT
Refunding Bonds, (Second Series), 5.30%,
(Original Issue Yield: 5.40%),7/1/1999 2,000 2,037
------------------------------
PROFORMA COMBINED
------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- -----------------------------------------------------------------------------------------
Clinton County, PA Solid Waste
Authority, Revenue Bonds, 6.45% (Clinton
County, PA Solid Waste Authority
GTD)/(AMBAC INS)/(Original Issue
Yield: 6.50%),11/1/2001 1,000 1,037
Coatesville, PA School District, GO UT,
5.40% (FSA INS), 4/1/2013 2,000 1,960
Commonwealth of Pennsylvania, GO UT,
5.375% (FGIC INS), 5/15/2005 3,000 3,075
Commonwealth of Pennsylvania, GO UT
Bonds (Second Series A), 6.875% (United
States Treasury PRF), 11/1/1999(@101.5) 1,000 1,070
Commonwealth of Pennsylvania, GO UT
Bonds (Second Series A), 6.875% (United
States Treasury PRF), 11/1/1999(@101.5) 1,000 1,069
Commonwealth of Pennsylvania, GO UT
Bonds, 5.375% (FGIC INS), 5/15/2004 4,000 4,101
Commonwealth of Pennsylvania, GO UT
Refunding Bonds, (First Series A), 6.60%,
6/1/1999 1,000 1,043
Commonwealth of Pennsylvania, GO UT
Refunding Bonds, (First Series A), 4.80%,
(Original Issue Yield: 4.85%),4/15/2001 3,000 3,011
Commonwealth of Pennsylvania, GO UT
Refunding Bonds, (First Series A), 5.00%,
(Original Issue Yield: 5.10%),5/1/2003 2,250 2,267
Commonwealth of Pennsylvania, GO UT
Refunding Bonds, (Second Series), 4.75%,
(MBIA Insurance Corporation INS), 6/15/1999 2,500 2,524
Commonwealth of Pennsylvania, GO UT
Refunding Bonds, (Second Series), 5.30%,
(Original Issue Yield: 5.40%),7/1/1999 2,000 2,037
Page 4 of 17
77
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997
(UNAUDITED)
---------------------------------- -----------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
---------------------------------- -----------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------- -----------------------------
Commonwealth of Pennsylvania, GO UT
Refunding Bonds, 5.125%, (AMBAC INS),
9/15/2005 5,000 5,010
Commonwealth of Pennsylvania, GO UT
Refunding Bonds, 5.375%, (FGIC INS),
11/15/2007 5,000 5,072
Commonwealth of Pennsylvania, GO UT
Series A, 6.50%, (Original Issue Yield:
6.55%), 1/1/2000 1,000 1,051
Conrad Weiser Area School
District, Pre-refunded @ 100
(GO) (MBIA) (B)
6.700%, 12/15/04 500 551
Cornwall & Lebanon, Suburban
Joint School Authority,
Callable 03/01/04 @ 100
(RB) (FGIC)
5.750%, 03/01/08 500 512
Cumberland County, Messiah
College Project, Callable 10/01/06
@ 100 (RB) (AMBAC)
5.125%, 10/01/15 500 466
Cumberland Valley, School District,
Callable 09/01/03 @ 100
(GO) (FGIC)
5.350%, 09/01/07 500 504
Dauphin County, PA, Revenue Bonds,
5.80%, 6/1/2026 1,000 1,003
Delaware County Authority, PA, Revenue
Refunding Bonds, 5.625%, (Dunwoody
Village, Inc.), 4/1/2009 1,195 1,200
Dauphin County (GO) (MBIA)
4.850%, 08/01/01 500 502
Delaware County, Dunwoody
Village Project (RB) (C)
5.550%, 04/01/06 300 300
Delaware County (GO)
------------------------------
PROFORMA COMBINED
------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- -----------------------------------------------------------------------------------------
Commonwealth of Pennsylvania, GO UT
Refunding Bonds, 5.125%, (AMBAC INS),
9/15/2005 5,000 5,010
Commonwealth of Pennsylvania, GO UT
Refunding Bonds, 5.375%, (FGIC INS),
11/15/2007 5,000 5,072
Commonwealth of Pennsylvania, GO UT
Series A, 6.50%, (Original Issue Yield:
6.55%), 1/1/2000 1,000 1,051
Conrad Weiser Area School
District, Pre-refunded @ 100
(GO) (MBIA) (B)
6.700%, 12/15/04 500 551
Cornwall & Lebanon, Suburban
Joint School Authority,
Callable 03/01/04 @ 100
(RB) (FGIC)
5.750%, 03/01/08 500 512
Cumberland County, Messiah
College Project, Callable 10/01/06
@ 100 (RB) (AMBAC)
5.125%, 10/01/15 500 466
Cumberland Valley, School District,
Callable 09/01/03 @ 100
(GO) (FGIC)
5.350%, 09/01/07 500 504
Dauphin County, PA, Revenue Bonds,
5.80%, 6/1/2026 1,000 1,003
Delaware County Authority, PA, Revenue
Refunding Bonds, 5.625%, (Dunwoody
Village, Inc.), 4/1/2009 1,195 1,200
Dauphin County (GO) (MBIA)
4.850%, 08/01/01 500 502
Delaware County, Dunwoody
Village Project (RB) (C)
5.550%, 04/01/06 300 300
Delaware County (GO)
Page 5 of 17
78
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997
(UNAUDITED)
---------------------------------- -----------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
---------------------------------- -----------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------- -----------------------------
5.300%, 11/15/01 250 255
Delaware County, Callable
11/15/07 @ 100 (GO)
5.125%, 11/15/16 500 468
Delaware Valley, PA Regional Finance
Authority, Revenue Bonds (Series A),
5.90% (AMBAC INS)/(Original Issue
Yield: 6.00%), 4/15/2016 2,000 2,011
Delaware Valley, PA School District, GO
UT Refunding Bonds (Series A), 6.50%
(MBIA Insurance CorporationINS), 4/1/2001 1,000 1,066
Erie County, PA Prison Authority Lease,
Revenue Bonds, 6.30% (United States
Treasury COL)/(MBIA Insurance
Corporation INS), 11/1/1999 1,500 1,566
Franklin, PA Regional School District, GO
UT Refunding Bonds (Series I), 6.25%
(FGIC INS), 10/1/2001 1,000 1,006
Geisinger Authority, PA Health System,
Refunding Revenue Bonds, 5.70%
(Original Issue Yield: 5.75%),7/1/2002 1,000 1,037
Fox Chapel, Sanitation Sewer
Authority, Callable 05/01/97
@ 100 (RB)
5.900%, 05/01/05 440 440
Geisinger Authority, PA Health System,
Revenue Bonds, 6.50% (Original Issue
Yield: 7.591%), 7/1/2007 3,000 3,127
Harrisburg, PA Lease Authority, Revenue
Bonds, 5.90% (CGIC INS)/(Original Issue
Yield: 6.001%), 6/1/1998 1,600 1,633
Harrisburg, School District
Authority, Series B, Callable
09/01/02 @ 100 (RB) (AMBAC)
5.650%, 09/01/05 250 253
------------------------------
PROFORMA COMBINED
------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- -----------------------------------------------------------------------------------------
5.300%, 11/15/01 250 255
Delaware County, Callable
11/15/07 @ 100 (GO)
5.125%, 11/15/16 500 468
Delaware Valley, PA Regional Finance
Authority, Revenue Bonds (Series A),
5.90% (AMBAC INS)/(Original Issue
Yield: 6.00%), 4/15/2016 2,000 2,011
Delaware Valley, PA School District, GO
UT Refunding Bonds (Series A), 6.50%
(MBIA Insurance CorporationINS), 4/1/2001 1,000 1,066
Erie County, PA Prison Authority Lease,
Revenue Bonds, 6.30% (United States
Treasury COL)/(MBIA Insurance
Corporation INS), 11/1/1999 1,500 1,566
Franklin, PA Regional School District, GO
UT Refunding Bonds (Series I), 6.25%
(FGIC INS), 10/1/2001 1,000 1,006
Geisinger Authority, PA Health System,
Refunding Revenue Bonds, 5.70%
(Original Issue Yield: 5.75%),7/1/2002 1,000 1,037
Fox Chapel, Sanitation Sewer
Authority, Callable 05/01/97
@ 100 (RB)
5.900%, 05/01/05 440 440
Geisinger Authority, PA Health System,
Revenue Bonds, 6.50% (Original Issue
Yield: 7.591%), 7/1/2007 3,000 3,127
Harrisburg, PA Lease Authority, Revenue
Bonds, 5.90% (CGIC INS)/(Original Issue
Yield: 6.001%), 6/1/1998 1,600 1,633
Harrisburg, School District
Authority, Series B, Callable
09/01/02 @ 100 (RB) (AMBAC)
5.650%, 09/01/05 250 253
- -
Page 6 of 17
79
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997
(UNAUDITED)
---------------------------------- -----------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
---------------------------------- -----------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------- -----------------------------
Johnstown, PA, GO UT Refunding Bonds,
4.875% (FGIC INS)/(Original Issue Yield:
4.90%), 10/1/1999 1,170 1,186
Lancaster County, PA Hospital Authority,
Health Center Refunding Revenue Bonds,
4.75% (Masonic Homes),11/15/2002 1,000 991
Lancaster County, Lancaster
General Hospital Project
(RB) (AMBAC)
5.800%, 07/01/01 500 518
Lancaster, Franklin & Marshall
College Project, Callable 04/15/02
@ 100 (RB) (MBIA)
6.500%, 04/15/06 250 267
Lansdale, Callable 06/01/02 @ 100
(GO) (AMBAC)
6.400%, 06/01/05 150 159
6.500%, 06/01/06 100 106
Lehigh County, PA General Purpose
Authority, GO UT Refunding Bonds
(Series A), 6.60% (AMBAC INS)/(United
States Treasurty PRF), 10/15/1999
(@100) 1,000 1,049
Lehigh County, PA General Purpose
Authority, Hospital Refunding Revenue
Bonds (Series 1996A), 5.75% (Muhlenberg
Hospital Center)/(Original Issue Yield:
5.85%),7/15/2010 1,270 1,261
Lehigh County, PA General Purpose
Authority, Revenue Bonds, 5.75%
(Muhlenberg Hospital Center)/(Original
Issue Yield: 5.85%), 7/15/2010 1,730 1,717
Lehigh County, PA GO UT Bonds (Series A),
5.55% (Original Issue Yield: 5.60%),
11/15/2011 2,000 1,998
Lehigh County, PA GO UT Bonds (Series
A), 5.55% (Original Issue Yield: 5.65%),
11/15/2012 2,100 2,098
------------------------------
PROFORMA COMBINED
------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- -----------------------------------------------------------------------------------------
Johnstown, PA, GO UT Refunding Bonds,
4.875% (FGIC INS)/(Original Issue Yield:
4.90%), 10/1/1999 1,170 1,186
Lancaster County, PA Hospital Authority,
Health Center Refunding Revenue Bonds,
4.75% (Masonic Homes),11/15/2002 1,000 991
Lancaster County, Lancaster
General Hospital Project
(RB) (AMBAC)
5.800%, 07/01/01 500 518
Lancaster, Franklin & Marshall
College Project, Callable 04/15/02
@ 100 (RB) (MBIA)
6.500%, 04/15/06 250 267
Lansdale, Callable 06/01/02 @ 100
(GO) (AMBAC)
6.400%, 06/01/05 150 159
6.500%, 06/01/06 100 106
Lehigh County, PA General Purpose
Authority, GO UT Refunding Bonds
(Series A), 6.60% (AMBAC INS)/(United
States Treasurty PRF), 10/15/1999
(@100) 1,000 1,049
Lehigh County, PA General Purpose
Authority, Hospital Refunding Revenue
Bonds (Series 1996A), 5.75% (Muhlenberg
Hospital Center)/(Original Issue Yield:
5.85%),7/15/2010 1,270 1,261
- -
Lehigh County, PA General Purpose
Authority, Revenue Bonds, 5.75%
(Muhlenberg Hospital Center)/(Original
Issue Yield: 5.85%), 7/15/2010 1,730 1,717
Lehigh County, PA GO UT Bonds (Series A),
5.55% (Original Issue Yield: 5.60%),
11/15/2011 2,000 1,998
Lehigh County, PA GO UT Bonds (Series
A), 5.55% (Original Issue Yield: 5.65%),
11/15/2012 2,100 2,098
Page 7 of 17
80
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997
(UNAUDITED)
---------------------------------- -----------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
---------------------------------- -----------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------- -----------------------------
Lehigh County, PA GO UT Bonds,
5.125% (FGIC INS)/(Original Issue Yield:
5.25%), 11/15/2008 4,000 3,942
Luzerne County, Callable 12/15/07
@ 100 (GO) (FGIC)
5.600%, 12/15/16 500 492
Montgomery County, Callable
10/15/01 @ 102 (GO)
5.200%, 10/15/02 300 307
Montgomery County, Health &
Higher Education Authority,
Abington Memorial Hospital
Project, Series A, Callable 06/01/04
@ 102 (RB) (AMBAC)
5.125%, 06/01/14 500 464
Montgomery County, Health &
Higher Education Authority,
Beaver College Project, Callable
04/01/06 @ 102 (RB) (Connie Lee)
5.700%, 04/01/10 500 506
Montgomery County, Callable
10/15/01 @ 102 (GO)
5.750%, 10/15/10 500 514
Montgomery County, Sewer
Authority, Callable 08/01/97
@ 100 (RB) (FGIC)
5.850%, 08/01/06 500 502
North Allegheny, PA School District,
Series A GO UT Refunding Bonds, 6.35%
(AMBAC INS)/(Original Issue Yield:
6.498%), 11/1/2012 1,045 1,083
Northampton County, PA, GO UT Bonds,
5.10% (AMBAC INS), 8/1/2005 1,000 992
Northampton County, PA Higher
Education Authority, Refunding Revenue
Bonds, 6.75% (Lehigh University)/(MBIA
Insurance Corporation INS),11/15/1999 1,550 1,634
------------------------------
PROFORMA COMBINED
------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- -----------------------------------------------------------------------------------------
Lehigh County, PA GO UT Bonds,
5.125% (FGIC INS)/(Original Issue Yield:
5.25%), 11/15/2008 4,000 3,942
Luzerne County, Callable 12/15/07
@ 100 (GO) (FGIC)
5.600%, 12/15/16 500 492
Montgomery County, Callable
10/15/01 @ 102 (GO)
5.200%, 10/15/02 300 307
Montgomery County, Health &
Higher Education Authority,
Abington Memorial Hospital
Project, Series A, Callable 06/01/04
@ 102 (RB) (AMBAC)
5.125%, 06/01/14 500 464
Montgomery County, Health &
Higher Education Authority,
Beaver College Project, Callable
04/01/06 @ 102 (RB) (Connie Lee)
5.700%, 04/01/10 500 506
Montgomery County, Callable
10/15/01 @ 102 (GO)
5.750%, 10/15/10 500 514
Montgomery County, Sewer
Authority, Callable 08/01/97
@ 100 (RB) (FGIC)
5.850%, 08/01/06 500 502
North Allegheny, PA School District,
Series A GO UT Refunding Bonds, 6.35%
(AMBAC INS)/(Original Issue Yield:
6.498%), 11/1/2012 1,045 1,083
Northampton County, PA, GO UT Bonds,
5.10% (AMBAC INS), 8/1/2005 1,000 992
Northampton County, PA Higher
Education Authority, Refunding Revenue
Bonds, 6.75% (Lehigh University)/(MBIA
Insurance Corporation INS),11/15/1999 1,550 1,634
Page 8 of 17
81
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997
(UNAUDITED)
---------------------------------- -----------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
---------------------------------- -----------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------- -----------------------------
Norristown, School District
Authority, Callable 03/01/07
@ 100 (GO) (FGIC)
5.500%, 09/01/14 500 490
Northampton County, PA Higher
Education Authority, Revenue Bonds,
5.375% (Lehigh University)/(Original
Issue Yield: 5.55%), 11/15/2016 3,975 3,817
Northampton County, PA Higher
Education Authority, Revenue Bonds,
5.75% (Lehigh University)/(MBIA
Insurance Corporation INS), 8/15/2003 2,710 2,824
Northampton County, Pennsylvania
Higher Education Authority,
Lehigh University, Callable
10/15/01 @ 102 (RB) (MBIA)
6.900%, 10/15/06 500 547
Northumberland County, PA
Commonwealth Lease Authority, Revenue
Bonds, 6.25% (MBIA Insurance
Corporation INS)/(Original Issue Yield:
6.932%),10/15/2009 1,000 1,058
North Hills, School District
Authority, Callable 11/15/07
@ 100 (GO) (FGIC)
5.625%, 11/15/14 500 495
North Huntingdon Township,
Escrowed To Maturity (GO)
5.750%, 04/01/08 305 311
North Wales, Water Authority,
Callable 11/01/05 @ 100
(RB) (FGIC)
5.600%, 11/01/16 500 490
Norwin, PA School District, GO UT
Refunding Bonds, 6.00% (AMBAC INS),
8/1/1998 1,200 1,230
Parkland, School District
Improvements, Callable
------------------------------
PROFORMA COMBINED
------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- -----------------------------------------------------------------------------------------
Norristown, School District
Authority, Callable 03/01/07
@ 100 (GO) (FGIC)
5.500%, 09/01/14 500 490
Northampton County, PA Higher
Education Authority, Revenue Bonds,
5.375% (Lehigh University)/(Original
Issue Yield: 5.55%), 11/15/2016 3,975 3,817
Northampton County, PA Higher
Education Authority, Revenue Bonds,
5.75% (Lehigh University)/(MBIA
Insurance Corporation INS), 8/15/2003 2,710 2,824
Northampton County, Pennsylvania
Higher Education Authority,
Lehigh University, Callable
10/15/01 @ 102 (RB) (MBIA)
6.900%, 10/15/06 500 547
- -
Northumberland County, PA
Commonwealth Lease Authority, Revenue
Bonds, 6.25% (MBIA Insurance
Corporation INS)/(Original Issue Yield:
6.932%),10/15/2009 1,000 1,058
North Hills, School District
Authority, Callable 11/15/07
@ 100 (GO) (FGIC)
5.625%, 11/15/14 500 495
North Huntingdon Township,
Escrowed To Maturity (GO)
5.750%, 04/01/08 305 311
North Wales, Water Authority,
Callable 11/01/05 @ 100
(RB) (FGIC)
5.600%, 11/01/16 500 490
Norwin, PA School District, GO UT
Refunding Bonds, 6.00% (AMBAC INS),
8/1/1998 1,200 1,230
Parkland, School District
Improvements, Callable
Page 9 of 17
82
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997
(UNAUDITED)
---------------------------------- -----------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
---------------------------------- -----------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------- -----------------------------
03/01/06 @100 (GO) (MBIA)
5.500%, 09/01/09 500 511
Pennridge, PA School District, GO UT
Bonds, 6.40%,3/15/2001 1,000 1,055
Pennsylvania Housing Finance Authority,
Refunding Revenue Bonds,
6.00%,10/1/2013 1,500 1,530
Pennsylvania Infrastructure Investment
Authority, Revenue Bonds, 5.25% (MBIA
Insurance Corporation INS), 9/1/2007 2,720 2,737
Pennsylvania Infrastructure Investment
Authority, Revenue Bonds, 5.30%
(Pennvest)/(MBIA Insurance Corporation
INS), 9/1/2008 1,000 1,003
Pennsylvania Infrastructure Investment
Authority, Revenue Bonds, 6.00% (MBIA
Insurance Corporation INS), 9/1/2006 1,000 1,065
Pennsylvania Intergovernmental Coop
Authority, Refunding Revenue Bonds,
4.85% (FGIC INS), 6/15/2003 2,930 2,924
Pennsylvania Intergovernmental Coop
Authority, Refunding Revenue Bonds,
5.40% (FGIC INS), 6/15/2009 2,145 2,146
Pennsylvania Intergovernmental Coop
Authority, Refunding Revenue Bonds,
5.50% (Philadelphia Funding
Program)/(FGIC INS)/(Original Issue
Yield: 5.82%), 6/15/2016 2,000 1,945
Pennsylvania Intergovernmental Coop
Authority, Revenue Bonds, 4.80%
(Philadelphia, PA)/ (Commonwealth of
Pennsylvania GTD)/(Original Issue Yield:
4.90%), 6/15/2002 4,000 3,998
------------------------------
PROFORMA COMBINED
------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- -----------------------------------------------------------------------------------------
03/01/06 @100 (GO) (MBIA)
5.500%, 09/01/09 500 511
Pennridge, PA School District, GO UT
Bonds, 6.40%,3/15/2001 1,000 1,055
Pennsylvania Housing Finance Authority,
Refunding Revenue Bonds,
6.00%,10/1/2013 1,500 1,530
Pennsylvania Infrastructure Investment
Authority, Revenue Bonds, 5.25% (MBIA
Insurance Corporation INS), 9/1/2007 2,720 2,737
Pennsylvania Infrastructure Investment
Authority, Revenue Bonds, 5.30%
(Pennvest)/(MBIA Insurance Corporation
INS), 9/1/2008 1,000 1,003
Pennsylvania Infrastructure Investment
Authority, Revenue Bonds, 6.00% (MBIA
Insurance Corporation INS), 9/1/2006 1,000 1,065
Pennsylvania Intergovernmental Coop
Authority, Refunding Revenue Bonds,
4.85% (FGIC INS), 6/15/2003 2,930 2,924
Pennsylvania Intergovernmental Coop
Authority, Refunding Revenue Bonds,
5.40% (FGIC INS), 6/15/2009 2,145 2,146
Pennsylvania Intergovernmental Coop
Authority, Refunding Revenue Bonds,
5.50% (Philadelphia Funding
Program)/(FGIC INS)/(Original Issue
Yield: 5.82%), 6/15/2016 2,000 1,945
Pennsylvania Intergovernmental Coop
Authority, Revenue Bonds, 4.80%
(Philadelphia, PA)/ (Commonwealth of
Pennsylvania GTD)/(Original Issue Yield:
4.90%), 6/15/2002 4,000 3,998
Page 10 of 17
83
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997
(UNAUDITED)
---------------------------------- -----------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
---------------------------------- -----------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------- -----------------------------
Pennsylvania Intergovernmental Coop
Authority, Revenue Bonds, 5.50%
(Philadelphia Funding Program)/(FGIC
INS)/(Original Issue Yield: 5.65%),
6/15/2011 3,300 3,302
Pennsylvania State Higher Education
Assistance Agency, Revenue Refunding
Bonds, 6.80% (FGIC INS), 12/1/2000 3,775 3,969
Pennsylvania State Higher Education
Facilities Authority, Refunding Revenue
Bonds (Series A), 5.50% (University of
Pennsylvania)/(Original Issue Yield:
5.55%), 1/1/2009 3,000 3,017
Pennsylvania State Higher Education
Facilities Authority, Revenue Bonds
(Series E), 6.00% (State Systems)/(MBIA
Insurance Corporation INS), 6/15/1997 1,000 1,003
Pennsylvania State Higher Education
Facilities Authority, Revenue Refunding
Bonds, 5.10% (Bryn Mawr
College)/(MBIA Insurance Corporation
INS)/(Original Issue Yield: 5.20%),
12/1/2006 1,000 1,009
Pennsylvania State Higher Education
Facilities Authority, Revenue Refunding
Bonds, 5.75% (Drexel University)/(MBIA
Insurance Corporation INS)/5/1/2003 3,035 3,150 500 519
Pennsylvania State Convention
Center Authority, Series A,
Escrowed To Maturity
(RB) (FGIC)
6.700%, 09/01/16 265 297
Pennsylvania State Higher
Education Facilities Authority,
Series E, Escrowed to Maturity
(RB) (MBIA)
6.450%, 06/15/01 500 531
Pennsylvania State Higher
Education Facilities Authority,
------------------------------
PROFORMA COMBINED
------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- -----------------------------------------------------------------------------------------
Pennsylvania Intergovernmental Coop
Authority, Revenue Bonds, 5.50%
(Philadelphia Funding Program)/(FGIC
INS)/(Original Issue Yield: 5.65%),
6/15/2011 3,300 3,302
Pennsylvania State Higher Education
Assistance Agency, Revenue Refunding
Bonds, 6.80% (FGIC INS), 12/1/2000 3,775 3,969
Pennsylvania State Higher Education
Facilities Authority, Refunding Revenue
Bonds (Series A), 5.50% (University of
Pennsylvania)/(Original Issue Yield:
5.55%), 1/1/2009 3,000 3,017
Pennsylvania State Higher Education
Facilities Authority, Revenue Bonds
(Series E), 6.00% (State Systems)/(MBIA
Insurance Corporation INS), 6/15/1997 1,000 1,003
Pennsylvania State Higher Education
Facilities Authority, Revenue Refunding
Bonds, 5.10% (Bryn Mawr
College)/(MBIA Insurance Corporation
INS)/(Original Issue Yield: 5.20%),
12/1/2006 1,000 1,009
Pennsylvania State Higher Education
Facilities Authority, Revenue Refunding
Bonds, 5.75% (Drexel University)/(MBIA
Insurance Corporation INS)/5/1/2003 3,535 3,669
Pennsylvania State Convention
Center Authority, Series A,
Escrowed To Maturity
(RB) (FGIC)
6.700%, 09/01/16 265 297
Pennsylvania State Higher
Education Facilities Authority,
Series E, Escrowed to Maturity
(RB) (MBIA)
6.450%, 06/15/01 500 531
Pennsylvania State Higher
Education Facilities Authority,
Page 11 of 17
84
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997
(UNAUDITED)
---------------------------------- -----------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
---------------------------------- -----------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------- -----------------------------
University of Pennsylvania
Project, Callable 01/01/06
@ 101 (RB)
5.600%, 01/01/10 500 504
Pennsylvania State Housing
Finance Agency, Callable
07/01/02 @ 102 (RB) (FNMA)
6.400%, 07/01/12 500 512
Pennsylvania State IDA, Refunding
Revenue Bonds, 5.80% (AMBAC INS),
1/1/2008 1,000 1,045
Pennsylvania State IDA, Refunding
Revenue Bonds, 6.00% (AMBAC INS),
7/1/2007 5,000 5,357
Pennsylvania State Turnpike Commission,
Revenue Bonds (Series L), 6.15% (MBIA
Insurance Corporation INS), 6/1/1999 1,000 1,035
Pennsylvania State University, Refunding
Revenue Bonds, 5.30% (Original Issue
Yield: 5.40%), 8/15/2003 5,000 5,101
Pennsylvania State University,
Callable 3/01/02 @ 102 (RB)
5.950%, 03/01/03 500 527
Pennsylvania State Financing
Authority, Callable
11/01/03 @ 102 (RB)
6.600%, 11/01/09 400 424
Pennsylvania State, First Series,
Callable 05/15/06 @ 101.5
(GO) (FGIC)
5.375%, 05/15/14 500 486
Pennsylvania State, Second
Series (GO)
6.000%, 07/01/07 300 322
Pennsylvania State, Third Series,
Callable 09/01/03 @ 101.5 (GO)
------------------------------
PROFORMA COMBINED
------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- -----------------------------------------------------------------------------------------
University of Pennsylvania
Project, Callable 01/01/06
@ 101 (RB)
5.600%, 01/01/10 500 504
Pennsylvania State Housing
Finance Agency, Callable
07/01/02 @ 102 (RB) (FNMA)
6.400%, 07/01/12 500 512
Pennsylvania State IDA, Refunding
Revenue Bonds, 5.80% (AMBAC INS),
1/1/2008 1,000 1,045
Pennsylvania State IDA, Refunding
Revenue Bonds, 6.00% (AMBAC INS),
7/1/2007 5,000 5,357
Pennsylvania State Turnpike Commission,
Revenue Bonds (Series L), 6.15% (MBIA
Insurance Corporation INS), 6/1/1999 1,000 1,035
Pennsylvania State University, Refunding
Revenue Bonds, 5.30% (Original Issue
Yield: 5.40%), 8/15/2003 5,000 5,101
Pennsylvania State University,
Callable 3/01/02 @ 102 (RB)
5.950%, 03/01/03 500 527
Pennsylvania State Financing
Authority, Callable
11/01/03 @ 102 (RB)
6.600%, 11/01/09 400 424
Pennsylvania State, First Series,
Callable 05/15/06 @ 101.5
(GO) (FGIC)
5.375%, 05/15/14 500 486
Pennsylvania State, Second
Series (GO)
6.000%, 07/01/07 300 322
Pennsylvania State, Third Series,
Callable 09/01/03 @ 101.5 (GO)
Page 12 of 17
85
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997
(UNAUDITED)
---------------------------------- -----------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
---------------------------------- -----------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------- -----------------------------
5.000%, 09/01/12 500 471
Pennsylvania State Turnpike
Commission, Callable 12/01/02
@ 102 (RB) (FGIC)
6.000%, 12/01/12 400 412
Philadelphia Airport Parking
Authority, Callable 09/01/07
@ 101 (RB) (AMBAC)
5.500%, 09/01/18 500 481
Philadelphia Authority for Industrial
Development, Revenue Bonds, 5.50%
(Girard Estate Coal Mining
Project)/(Original Issue Yield: 5.75%),
11/15/2016 2,000 1,924
Philadelphia Higher Education
Facilities Authority, Moss
Rehabilitation Hospital Project
(RB) (AMBAC)
6.900%, 07/01/00 295 314
Philadelphia, PA Hospital & Higher
Education Facilities Authority, Refunding
Revenue Bonds (Series A), 5.25%
(Children's Hospital of
Philadelphia)/(Original Issue Yield:
5.55%), 2/15/2007 3,250 3,270
Philadelphia, PA Hospital & Higher
Education Facilities Authority, Revenue
Bonds (Series A), 5.625% (Children's
Hospital of Philadelphia), 2/15/1999 1,500 1,530
Philadelphia, PA Hospital & Higher
Education Facilities Authority, Revenue
Bonds (Series A), 6.50% (Children's
Hospital of Philadelphia)/(United States
Treasury PRF)/(Original Issue Yield:
6.85%), 2/15/2002 (@102) 2,010 2,178
Philadelphia, PA School District, GO UT
Bonds (Series A), 5.35% (MBIA Insurance
Corporation INS), 7/1/2003 5,000 5,121
Philadelphia, PA School District, GO UT
Bonds (Series A), 5.85%, 7/1/2009 2,000 2,071
------------------------------
PROFORMA COMBINED
------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- -----------------------------------------------------------------------------------------
5.000%, 09/01/12 500 471
Pennsylvania State Turnpike
Commission, Callable 12/01/02
@ 102 (RB) (FGIC)
6.000%, 12/01/12 400 412
Philadelphia Airport Parking
Authority, Callable 09/01/07
@ 101 (RB) (AMBAC)
5.500%, 09/01/18 500 481
Philadelphia Authority for Industrial
Development, Revenue Bonds, 5.50%
(Girard Estate Coal Mining
Project)/(Original Issue Yield: 5.75%),
11/15/2016 2,000 1,924
Philadelphia Higher Education
Facilities Authority, Moss
Rehabilitation Hospital Project
(RB) (AMBAC)
6.900%, 07/01/00 295 314
Philadelphia, PA Hospital & Higher
Education Facilities Authority, Refunding
Revenue Bonds (Series A), 5.25%
(Children's Hospital of
Philadelphia)/(Original Issue Yield:
5.55%), 2/15/2007 3,250 3,270
Philadelphia, PA Hospital & Higher
Education Facilities Authority, Revenue
Bonds (Series A), 5.625% (Children's
Hospital of Philadelphia), 2/15/1999 1,500 1,530
Philadelphia, PA Hospital & Higher
Education Facilities Authority, Revenue
Bonds (Series A), 6.50% (Children's
Hospital of Philadelphia)/(United States
Treasury PRF)/(Original Issue Yield:
6.85%), 2/15/2002 (@102) 2,010 2,178
Philadelphia, PA School District, GO UT
Bonds (Series A), 5.35% (MBIA Insurance
Corporation INS), 7/1/2003 5,000 5,121
Philadelphia, PA School District, GO UT
Bonds (Series A), 5.85%, 7/1/2009 2,000 2,071
Page 13 of 17
86
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997
(UNAUDITED)
---------------------------------- -----------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
---------------------------------- -----------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------- -----------------------------
Philadelphia, PA School District, GO UT
Bonds, 5.375% (Original Issue Yield:
5.45%), 7/1/2005 1,000 1,022
Philadelphia, PA School District, GO UT
Refunding Bonds, 5.30% (MBIA
Insurance Corporation INS)/(Original
Issue Yield: 5.40%), 7/1/2004 3,500 3,558
Philadelphia, PA Water & Wastewater
System, Refunding Revenue Bonds, 5.50%
(Original Issue Yield: 5.61%), 6/15/2006 1,000 1,027
Philadelphia, PA Water & Wastewater
System, Refunding Revenue Bonds, 6.25%
(MBIA Insurance Corporation INS), 8/1/2007 3,000 3,268
Pittsburgh, School District, Series B,
Pre-refunded @ 100 (GO)
(FGIC) (B)
5.250%, 08/01/97 250 251
Pittsburgh, PA School District, GO UT
Refunding Bonds (Series C), 5.25%
(United States Treasury COL)/(FGIC
INS), 8/1/1998 1,000 1,004
Pittsburgh, PA Water & Sewer Authority,
Refunding Revenue Bonds (Series A),
4.70% (FGIC INS), 9/1/2004 2,690 2,646
Pittsburgh, PA Water & Sewer Authority,
Refunding Revenue Bonds (Series A),
6.00% (United States Treasury
COL)/(FGIC INS)/(Original Issue Yield:
6.10%), 9/1/1997 1,000 1,007
Pittsburgh, PA GO UT Bonds (Series B),
4.90% (Original Issue Yield: 5.10%),
3/1/2007 5,000 4,889
Pittsburgh, PA GO UT, 5.00% (MBIA
Insurance Corporation INS), 3/1/2000 2,000 2,033
------------------------------
PROFORMA COMBINED
------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- -----------------------------------------------------------------------------------------
Philadelphia, PA School District, GO UT
Bonds, 5.375% (Original Issue Yield:
5.45%), 7/1/2005 1,000 1,022
Philadelphia, PA School District, GO UT
Refunding Bonds, 5.30% (MBIA
Insurance Corporation INS)/(Original
Issue Yield: 5.40%), 7/1/2004 3,500 3,558
Philadelphia, PA Water & Wastewater
System, Refunding Revenue Bonds, 5.50%
(Original Issue Yield: 5.61%), 6/15/2006 1,000 1,027
Philadelphia, PA Water & Wastewater
System, Refunding Revenue Bonds, 6.25%
(MBIA Insurance Corporation INS), 8/1/2007 3,000 3,268
Pittsburgh, School District, Series B,
Pre-refunded @ 100 (GO)
(FGIC) (B)
5.250%, 08/01/97 250 251
Pittsburgh, PA School District, GO UT
Refunding Bonds (Series C), 5.25%
(United States Treasury COL)/(FGIC
INS), 8/1/1998 1,000 1,004
Pittsburgh, PA Water & Sewer Authority,
Refunding Revenue Bonds (Series A),
4.70% (FGIC INS), 9/1/2004 2,690 2,646
Pittsburgh, PA Water & Sewer Authority,
Refunding Revenue Bonds (Series A),
6.00% (United States Treasury
COL)/(FGIC INS)/(Original Issue Yield:
6.10%), 9/1/1997 1,000 1,007
Pittsburgh, PA GO UT Bonds (Series B),
4.90% (Original Issue Yield: 5.10%),
3/1/2007 5,000 4,889
Pittsburgh, PA GO UT, 5.00% (MBIA
Insurance Corporation INS), 3/1/2000 2,000 2,033
Page 14 of 17
87
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997
(UNAUDITED)
---------------------------------- -----------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
---------------------------------- -----------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------- -----------------------------
Pocono Mountain, PA School District,
GO UT Bonds, 6.80% (United States
Treasury COL)/(AMBAC INS),
10/1/2000 1,000 1,011
Pocono Mountain, PA School District,
GO UT Bonds, 6.90% (AMBAC INS),
10/1/2001 1,000 1,012
Punxsutawney Area School District,
Callable 04/15/05 @ 100
(GO) (MBIA)
5.750%, 04/15/10 500 511
Red Lion Area School District,
Callable 04/01/02 @ 100
(GO) (AMBAC)
5.850%, 04/01/05 100 103
Ridley Park, Taylor Hospital
Authority, Series A (RB)
6.000%, 12/01/05 500 501
Riverside, PA Beaver County School
District, GO UT Bonds, 5.50% (FSA
INS), 2/15/2017 3,000 2,926
Scranton-Lackawanna, Health
& Welfare Authority, Mercy
Health Project, Series B
(RB) (MBIA)
5.100%, 01/01/07 500 498
Scranton-Lackawanna, PA Health
& Welfare Authority, Refunding Revenue
Bonds, 5.625% (Mercy Health Care
Systems)/(MBIA Insurance Corporation
INS)/(Original Issue Yield: 5.75%),
1/1/2016 2,000 1,957
South Allegheny School District,
Callable 10/01/05 @ 100
(GO) (MBIA)
5.100%, 10/01/06 500 497
South Western School District, PA York,
GO UT Bonds, 5.00% (FGIC INS),
6/15/1998 1,270 1,285
------------------------------
PROFORMA COMBINED
------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- -----------------------------------------------------------------------------------------
Pocono Mountain, PA School District,
GO UT Bonds, 6.80% (United States
Treasury COL)/(AMBAC INS),
10/1/2000 1,000 1,011
Pocono Mountain, PA School District,
GO UT Bonds, 6.90% (AMBAC INS),
10/1/2001 1,000 1,012
Punxsutawney Area School District,
Callable 04/15/05 @ 100
(GO) (MBIA)
5.750%, 04/15/10 500 511
Red Lion Area School District,
Callable 04/01/02 @ 100
(GO) (AMBAC)
5.850%, 04/01/05 100 103
Ridley Park, Taylor Hospital
Authority, Series A (RB)
6.000%, 12/01/05 500 501
Riverside, PA Beaver County School
District, GO UT Bonds, 5.50% (FSA
INS), 2/15/2017 3,000 2,926
Scranton-Lackawanna, Health
& Welfare Authority, Mercy
Health Project, Series B
(RB) (MBIA)
5.100%, 01/01/07 500 498
Scranton-Lackawanna, PA Health
& Welfare Authority, Refunding Revenue
Bonds, 5.625% (Mercy Health Care
Systems)/(MBIA Insurance Corporation
INS)/(Original Issue Yield: 5.75%),
1/1/2016 2,000 1,957
South Allegheny School District,
Callable 10/01/05 @ 100
(GO) (MBIA)
5.100%, 10/01/06 500 497
- -
South Western School District, PA York,
GO UT Bonds, 5.00% (FGIC INS),
6/15/1998 1,270 1,285
Page 15 of 17
88
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997
(UNAUDITED)
---------------------------------- -----------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
---------------------------------- -----------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------- -----------------------------
State Public School Building Authority, PA
College, Revenue Bonds, 6.10%
(Harrisburg Area Community College-
D)/(MBIA Insurance Corporation INS),
4/1/1999 860 888
University of Pittsburgh, PA Higher
Education, Refunding Revenue Bonds
(Series B), 5.30% (MBIA Insurance
Corporation INS), 6/1/1999 2,000 2,039
University of Pittsburgh, Revenue Bonds,
5.05% (Original Issue Yield: 5.15%),
6/1/2010 1,500 1,448
Upper Merion, Municipal
Utility Authority, Callable
08/15/03 @ 100 (RB)
6.000%, 08/15/12 500 510
Westmoreland County, PA, GO UT
Refunding Bonds, 6.35% (AMBAC INS),
12/1/1999 1,000 1,050
York County (GO) (FGIC), 5.500%,
10/01/01 200 206
------- --------
--------
Total Pennsylvania 209,884 23,111
------- --------
PUERTO RICO - - 2.27%
Commonwealth of Puerto Rico
(GO) (MBIA)
6.500%, 07/01/08 500 556
------- --------
Total Puerto Rico - 556
------- --------
-------
TOTAL MUNICIPAL BONDS AND NOTESS 209,884 23,667
------- --------
CASH EQUIVALENTS 0 - 0
Federated Pennsylvania
Municipal Cash Trust Fund 850 850
PNC Pennsylvania Municipal Money
Market Portfolio 4,099 4,099
------- --------
TOTAL CASH EQUIVALENT 4,099 850
------- --------
99.26% 100.25%
------------------------------
PROFORMA COMBINED
------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- -----------------------------------------------------------------------------------------
State Public School Building Authority, PA
College, Revenue Bonds, 6.10%
(Harrisburg Area Community College-
D)/(MBIA Insurance Corporation INS),
4/1/1999 860 888
University of Pittsburgh, PA Higher
Education, Refunding Revenue Bonds
(Series B), 5.30% (MBIA Insurance
Corporation INS), 6/1/1999 2,000 2,039
University of Pittsburgh, Revenue Bonds,
5.05% (Original Issue Yield: 5.15%),
6/1/2010 1,500 1,448
Upper Merion, Municipal
Utility Authority, Callable
08/15/03 @ 100 (RB)
6.000%, 08/15/12 500 510
Westmoreland County, PA, GO UT
Refunding Bonds, 6.35% (AMBAC INS),
12/1/1999 1,000 1,050
York County (GO) (FGIC), 5.500%,
10/01/01 200 206
---------
Total Pennsylvania 232,995
---------
PUERTO RICO 0.23%
Commonwealth of Puerto Rico
(GO) (MBIA)
6.500%, 07/01/08 500 556
---------
Total Puerto Rico 556
---------
TOTAL MUNICIPAL BONDS AND NOTESS 233,551
---------
CASH EQUIVALENTS 0
Federated Pennsylvania
Municipal Cash Trust Fund 850
PNC Pennsylvania Municipal Money
Market Portfolio 4,099
---------
TOTAL CASH EQUIVALENT 4,949
---------
99.36%
Page 16 of 17
89
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF APRIL 30, 1997
(UNAUDITED)
---------------------------------- -----------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
---------------------------------- -----------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------- -----------------------------
TOTAL INVESTMENTS (cost $212,545) 213,983 (cost $24,311) $ 24,517
======= ========
------------------------------
PROFORMA COMBINED
------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- -----------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $236,856) $ 238,500
=========
NOTE: THE CATEGORIES OF INVESTMENTS ARE SHOWN AS A PERCENTAGE OF NET ASSETS AS
OF APRIL 30, 1997.
The following acronyms are used throughout this portfolio: (A) Variable Rate Security - the rate
AMBAC American Municipal Bond Assurance Corporation reported on the Statement of Net Assets is
CGIC Capital Guaranty Insurance Corporation the rate in effect as of April 30, 1997. The
COL Collateralized date shown is the next scheduled reset date.
FGIC Financial Guaranty Insurance Corporation
FSA Financial Security Assurance (B) The Pre-refunded date is shown as the
GO General Obligation maturity date on the Statement of Net Assets.
GTD Guaranty
H-DA Hospital Development Authority (C) When-issued Security (Total Cost $300,000)
HEFA Health and Education Facilities Authority AMBAC-American Municipal Bond Assurance Company
Connie Lee-College Construction Loan Insurance Association
FGIC-Financial Guaranty Insurance Company
FNMA-Federal National Mortgage Association
GO-General Obligation
MBIA-Municipal Bond Insurance Association
RB-Revenue Bond
Page 17 of 17
90
ARK PENNSYLVANIA TAX-FREE PORTFOLIO
PROFORMA COMBINING STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
AS OF APRIL 30,1997
(000'S)
-------------- ----------------
Marketvest
Pennsylvania ARK
Intermediate Pennsylvania
Municipal Tax-Free
Fund Portfolio
-------------- ----------------
ASSETS:
Investments at market value (cost of $212,545, $24,311 and $236,856, respectively) $ 213,983 $ 24,517
Interest receivable 3,517 357
Receivable for investment securities sold 6,172 497
Receivable for capital shares sold - -
Other assets - 26
-------------- ----------------
Total assets 223,672 25,397
-------------- ----------------
LIABILITIES:
Distribution payable 816 95
Payable for investment securities purchased 7,154 818
Payable for capital shares repurchased - -
Other liabilities 121 29
-------------- ----------------
Total liabilities 8,091 942
-------------- ----------------
NET ASSETS:
Portfolio shares of Institutional Class - ARK Fund (based on 2,345,987 o/s shares) 22,973
Portfolio shares of Institutional Class - Proforma ARK Fund (based on 24,035,914 o/s shares)
Portfolio shares of Institutional Class - Marketvest Fund (based on 21,694,647 o/s shares) 214,622
Portfolio shares, Retail Class - ARK Fund and Proforma ARK Fund (based on 118,730 o/s shares) 0 1,184
Undistributed net investment income 0 0
Accumulated net realized loss on investments (479) 92
Net unrealized appreciation on investments 1,438 206
-------------- ----------------
TOTAL NET ASSETS $ 215,581 $ 24,455
============== ================
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE - INSTITUTIONAL CLASS $9.94 $9.92
============== ================
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE - RETAIL CLASS $9.92
================
MAXIMUM OFFERING PRICE PER SHARE - RETAIL CLASS ($10.22 / 95.50%) $10.39
================
-------------- ----------------
ARK
Pennsylvania
Proforma Tax-Free
Adjustments Portfolio
-------------- ----------------
ASSETS:
Investments at market value (cost of $212,545, $24,311 and $236,856, respectively) $ 238,500
Interest receivable 3,874
Receivable for investment securities sold 6,669
Receivable for capital shares sold -
Other assets 26
----------------
Total assets 249,069
----------------
LIABILITIES:
Distribution payable 911
Payable for investment securities purchased 7,972
Payable for capital shares repurchased -
Other liabilities 150
----------------
Total liabilities 9,033
----------------
NET ASSETS:
Portfolio shares of Institutional Class - ARK Fund (based on 2,345,987 o/s shares) (22,973)(a) 0
Portfolio shares of Institutional Class - Proforma ARK Fund (based on 24,035,914 o/s shares) 237,595 (a) 237,595
Portfolio shares of Institutional Class - Marketvest Fund (based on 21,694,647 o/s shares) (214,622)(a) 0
Portfolio shares, Retail Class - ARK Fund and Proforma ARK Fund (based on 118,730 o/s shares) 1,184
Undistributed net investment income
Accumulated net realized loss on investments (387)
Net unrealized appreciation on investments 1,644
------------- ----------------
TOTAL NET ASSETS $ - $ 240,036
============= ================
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE - INSTITUTIONAL CLASS $9.94
================
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE - RETAIL CLASS $9.92
================
MAXIMUM OFFERING PRICE PER SHARE - RETAIL CLASS ($10.22 / 95.50%) $10.39
================
91
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PRO FORMA COMBINING STATEMENT OF OPERATIONS (000) (Unaudited)
FOR THE PERIOD ENDED APRIL 30, 1997 (1)
---------------- --------------- ------------- --------------
Marketvest
Pennsylvania ARK ARK
Intermediate Pennsylvania Pennsylvania
Municipal Tax-Free Proforma Tax-Free
Fund Portfolio Adjustments Portfolio
---------------- --------------- ------------- --------------
INVESTMENT INCOME:
Interest 11,755 568 12,323
---------------- --------------- --------------
Total Investment Income 11,755 568 12,323
---------------- --------------- --------------
EXPENSES:
Administrator Fees 352 14 (45) (b) 321
Less: Waiver of Administrator Fees (96) - 96 (b) -
Investment Advisory Fees 1,676 53 (123) (b) 1,606
Less: Waiver of Investment Advisory Fees (348) (14) 362 (b) -
Transfer Agency Fees 25 25
Custodian Fees 41 2 43
Professional Fees 6 1 7
Registration Fees 73 7 80
Printing Fees 9 2 (3) (c) 8
Trustee Fees 4 - 4
Amortization of Deferred Organization Costs 1 (1) (d) -
Miscellaneous Fees 99 - (10) (c) 89
---------------- --------------- ------------ --------------
Total Expenses 1,841 66 276 2,183
---------------- --------------- ------------ --------------
Net Investment Income (Loss) 9,914 502 (276) 10,140
---------------- --------------- ------------ --------------
Net realized Gain (Loss) on Investments (511) 92 (419)
Net Change in Unrealized Appreciation
(Depreciation) on Investments (792) (356) (1,148)
---------------- --------------- ------------ --------------
Net Realized and Unrealized Gain (Loss) on Investments (1,303) (264) - (1,567)
---------------- --------------- ------------ --------------
Net Increase (Decrease) in Net Assets Resulting from Operations 8,611 238 (276) 8,573
================ =============== ============ ==============
(1) The Ark Pennssylvana Tax Free Portfolio Commenced operations on November 18,
1996.
92
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF OCTOBER 31, 1997
(UNAUDITED)
-------------------------------------------- ---------------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
-------------------------------------------- ---------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
- ---------------------------------------------------------------------------------------------- ---------------------------------
MUNICIPAL BONDS AND NOTES 96.86% 100.05%
PENNSYLVANIA 96.86% 97.81%
Abington, School District,
Callable 05/15/07 @ 100
(GO) (FGIC)
5.300%, 05/15/21 500 $497
Allegheny County, Series C-39,
Callable 05/01/02 @ 102
(GO) (AMBAC)
5.600%, 05/01/04 300 320
Allegheny County, PA HDA, Refunding
Revenue Bonds, 5.70% (Magee Womens
Hospital)/(Original Issue Yield: 5.85%), 10/1/2001 1,790 1,881
Allegheny County, PA HDA, Revenue Bonds,
5.20% (Magee Womens Hospital)/(FGIC
INS)/(Original Issue Yield: 5.30%), 10/1/2005 1,000 1,037
Allegheny County, PA HDA, Revenue Bonds,
5.375% (Children's Hospital of
Pittsburgh)/(Original Issue Yield: 5.641%),
7/1/2017 2,800 2,790
Allegheny County, Hospital
Development Authority, Pittsburgh
Mercy Health System Project,
Callable 08/15/06 @ 102
(RB) (AMBAC)
5.625%, 08/15/18 500 509
Allegheny County, Hospital
Development Authority,
Presbyterian Health Center
Project, Series C (RB)
(MBIA)
3.600%, 11/06/97 (A) 400 400
Allegheny County, Redevelopment
Authority, Home
Improvement (RB)
6.700%, 02/01/99 500 513
Allegheny County, PA IDA, Refunding
Revenue Bonds, 6.80% (MBIA Insurance
Corporation INS), 3/1/2015 3,500 3,836
----------------------------------------
PROFORMA COMBINED
----------------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
----------------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES 97.21%
PENNSYLVANIA 96.96%
Abington, School District,
Callable 05/15/07 @ 100
(GO) (FGIC)
5.300%, 05/15/21 500 $ 497
Allegheny County, Series C-39,
Callable 05/01/02 @ 102
(GO) (AMBAC)
5.600%, 05/01/04 300 320
Allegheny County, PA HDA, Refunding
Revenue Bonds, 5.70% (Magee Womens
Hospital)/(Original Issue Yield: 5.85%), 10/1/2001 1,790 1,881
Allegheny County, PA HDA, Revenue Bonds,
5.20% (Magee Womens Hospital)/(FGIC
INS)/(Original Issue Yield: 5.30%), 10/1/2005 1,000 1,037
Allegheny County, PA HDA, Revenue Bonds,
5.375% (Children's Hospital of
Pittsburgh)/(Original Issue Yield: 5.641%),
7/1/2017 2,800 2,790
Allegheny County, Hospital
Development Authority, Pittsburgh
Mercy Health System Project,
Callable 08/15/06 @ 102
(RB) (AMBAC)
5.625%, 08/15/18 500 509
Allegheny County, Hospital
Development Authority,
Presbyterian Health Center
Project, Series C (RB)
(MBIA)
3.600%, 11/06/97 (A) 400 400
Allegheny County, Redevelopment
Authority, Home
Improvement (RB)
6.700%, 02/01/99 500 513
Allegheny County, PA IDA, Refunding
Revenue Bonds, 6.80% (MBIA Insurance
Corporation INS), 3/1/2015 3,500 3,836
Page 1 of 15
93
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF OCTOBER 31, 1997
(UNAUDITED)
-------------------------------------------- ---------------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
-------------------------------------------- ---------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
- ---------------------------------------------------------------------------------------------- ---------------------------------
Allegheny County, PA GO UT Bonds (Series C
45), 5.10% (FGIC INS), 10/1/2007 5,000 5,177
Allentown, PA Area Hospital Authority,
Refunding Revenue Bonds, 6.50% (Original
Issue Yield: 6.65%), 11/15/2008 2,665 2,854
Allentown, Callable 07/15/03
@ 100 (GO) (AMBAC)
5.650%, 07/15/08 500 523
Allentown, Callable 07/15/09
@ 100 (GO) (AMBAC)
5.650%, 07/15/10 250 267
Allentown, Sewer Systems,
Callable 07/15/09 @ 100
(RB) (AMBAC)
5.650%, 07/15/10 250 267
Bensalem Township, PA, GO UT Bonds,
5.55% (FGIS INS) 12/1/2010 1,390 1,452
Bensalem Township, PA, GO UT Bonds,
5.70% (FGIS INS) 12/1/2012 1,015 1,062
Bethehem, PA Area School District, GO UT Bonds,
5.70% (MBIA Insurance Corporation
INS), 3/1/2009 1,000 1,080
Bethehem, PA Area School District, GO UT Bonds,
5.75% (MBIA Insurance Corporation
INS)/(Original Issue Yield: 5.80%), 3/1/2010 1,000 1,083
Bethehem, PA Area School District, GO UT
Bonds, 5.50% (FGIC INS), 9/1/2008 3,000 3,160
Bethehem, PA Area School District, GO UT
Bonds, 5.85% (MBIA Insurance Corporation
INS)/(Original Issue Yield: 5.90%), 3/1/2012 1,635 1,782
----------------------------------------
PROFORMA COMBINED
----------------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
----------------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------------------
Allegheny County, PA GO UT Bonds (Series C
45), 5.10% (FGIC INS), 10/1/2007 5,000 5,177
Allentown, PA Area Hospital Authority,
Refunding Revenue Bonds, 6.50% (Original
Issue Yield: 6.65%), 11/15/2008 2,665 2,854
Allentown, Callable 07/15/03
@ 100 (GO) (AMBAC)
5.650%, 07/15/08 500 523
Allentown, Callable 07/15/09
@ 100 (GO) (AMBAC)
5.650%, 07/15/10 250 267
Allentown, Sewer Systems,
Callable 07/15/09 @ 100
(RB) (AMBAC)
5.650%, 07/15/10 250 267
Bensalem Township, PA, GO UT Bonds,
5.55% (FGIS INS) 12/1/2010 1,390 1,452
Bensalem Township, PA, GO UT Bonds,
5.70% (FGIS INS) 12/1/2012 1,015 1,062
Bethehem, PA Area School District, GO UT Bonds,
5.70% (MBIA Insurance Corporation
INS), 3/1/2009 1,000 1,080
Bethehem, PA Area School District, GO UT Bonds,
5.75% (MBIA Insurance Corporation
INS)/(Original Issue Yield: 5.80%), 3/1/2010 1,000 1,083
Bethehem, PA Area School District, GO UT
Bonds, 5.50% (FGIC INS), 9/1/2008 3,000 3,160
Bethehem, PA Area School District, GO UT
Bonds, 5.85% (MBIA Insurance Corporation
INS)/(Original Issue Yield: 5.90%), 3/1/2012 1,635 1,782
Page 2 of 15
94
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF OCTOBER 31, 1997
(UNAUDITED)
-------------------------------------------- ---------------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
-------------------------------------------- ---------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
- ---------------------------------------------------------------------------------------------- ---------------------------------
Bethehem, PA Area School District, GO UT
Bonds, 6.35% (United States Treasury
COL)/(AMBAC INS), 9/1/1999 1,000 1,043
Bucks County, Community
College Project, Callable
6/15/07 @ 100 (RB)
5.500%, 06/15/17 500 510
Burrell, PA School District, GO UT School
Improvements, 5.25% (Original Issue Yield:
5.45%), 11/15/2010 4,000 4,094
Central Bucks, PA School District, GO UT
Refunding Bonds, 6.30%, 2/1/2000 1,000 1,049
Chester County, PA HEFA, Refunding
Revenue Bonds, 5.30% (Main Line Health
Systems)/(MBIA Insurance Corporation
INS)/(Original Issue Yield: 5.40%), 5/15/2007 3,045 3,155
Chester County, PA HEFA, Refunding
Revenue Bonds, 5.50% (Chester County
Hospital, PA)/(MBIA Insurance Corporation
INS)/(Original Issue Yield: 5.70%), 7/1/2007 965 1,027
Chester County, PA HEFA, Refunding
Revenue Bonds, 5.625% (Chester County
Hospital, PA)/(MBIA Insurance Corporation
INS)/(Original Issue Yield: 5.90%), 7/1/2010 1,675 1,749
Chester County, PA HEFA, Refunding
Revenue Bonds, 5.625% (MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.85%), 7/1/2009 1,985 2,093
Chester County, Callable
12/15/03 @ 100 (GO)
5.300%, 12/15/05 500 520
Coatesville, PA School District, GO UT,
5.40% (FSA INS), 4/1/2013 2,000 2,043
Commonwealth of Pennsylvania, GO UT,
5.375% (FGIC INS), 5/15/2005 3,000 3,171
----------------------------------------
PROFORMA COMBINED
----------------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
----------------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------------------
Bethehem, PA Area School District, GO UT
Bonds, 6.35% (United States Treasury
COL)/(AMBAC INS), 9/1/1999 1,000 1,043
Bucks County, Community
College Project, Callable
6/15/07 @ 100 (RB)
5.500%, 06/15/17 500 510
Burrell, PA School District, GO UT School
Improvements, 5.25% (Original Issue Yield:
5.45%), 11/15/2010 4,000 4,094
Central Bucks, PA School District, GO UT
Refunding Bonds, 6.30%, 2/1/2000 1,000 1,049
Chester County, PA HEFA, Refunding
Revenue Bonds, 5.30% (Main Line Health
Systems)/(MBIA Insurance Corporation
INS)/(Original Issue Yield: 5.40%), 5/15/2007 3,045 3,155
Chester County, PA HEFA, Refunding
Revenue Bonds, 5.50% (Chester County
Hospital, PA)/(MBIA Insurance Corporation
INS)/(Original Issue Yield: 5.70%), 7/1/2007 965 1,027
Chester County, PA HEFA, Refunding
Revenue Bonds, 5.625% (Chester County
Hospital, PA)/(MBIA Insurance Corporation
INS)/(Original Issue Yield: 5.90%), 7/1/2010 1,675 1,749
Chester County, PA HEFA, Refunding
Revenue Bonds, 5.625% (MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.85%), 7/1/2009 1,985 2,093
Chester County, Callable
12/15/03 @ 100 (GO)
5.300%, 12/15/05 500 520
Coatesville, PA School District, GO UT,
5.40% (FSA INS), 4/1/2013 2,000 2,043
Commonwealth of Pennsylvania, GO UT,
5.375% (FGIC INS), 5/15/2005 3,000 3,171
Page 3 of 15
95
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF OCTOBER 31, 1997
(UNAUDITED)
-------------------------------------------- ---------------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
-------------------------------------------- ---------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
- ---------------------------------------------------------------------------------------------- ---------------------------------
Commonwealth of Pennsylvania, GO UT Bonds,
5.375% (FGIC INS), 5/15/2004 4,000 4,225
Commonwealth of Pennsylvania, GO UT
Refunding Bonds (Second Series), 5.30%
(Original Issue Yield: 5.40%), 7/1/1999 2,000 2,044
Commonwealth of Pennsylvania, GO UT
Refunding Bonds, 5.125% (AMBAC INS),
9/15/2005 5,000 5,197
Commonwealth of Pennsylvania, GO UT
Refunding Bonds, 5.375%, (FGIC INS)
11/15/2007 5,000 5,303
Conrad Weiser Area School
District, Pre-refunded @ 100
(GO) (MBIA)
6.700%, 12/15/04 (B) 500 568
Cornwall & Lebanon, Suburban
Joint School Authority,
Callable 03/01/04 @ 100
(RB) (FGIC)
5.750%, 03/01/08 500 527
Cumberland County, PA Municipal Authority,
Revenue Bond, 5.125% (Original Issue Yield:
5.50%), 10/1/2015 2,300 2,260
Cumberland County, Messiah
College Project, Callable
10/01/06 @ 100 (RB) (AMBAC)
5.125%, 10/01/15 500 492
Cumberland Valley, School District,
Callable 09/01/03 @ 100
(GO) (FGIC)
5.350%, 09/01/07 500 519
Dauphin County, PA General Authority,
Revenue Bonds, 4.45%, 9/1/2032 2,000 2,003
----------------------------------------
PROFORMA COMBINED
----------------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
----------------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------------------
Commonwealth of Pennsylvania, GO UT Bonds,
5.375% (FGIC INS), 5/15/2004 4,000 4,225
Commonwealth of Pennsylvania, GO UT
Refunding Bonds (Second Series), 5.30%
(Original Issue Yield: 5.40%), 7/1/1999 2,000 2,044
Commonwealth of Pennsylvania, GO UT
Refunding Bonds, 5.125% (AMBAC INS),
9/15/2005 5,000 5,197
Commonwealth of Pennsylvania, GO UT
Refunding Bonds, 5.375%, (FGIC INS)
11/15/2007 5,000 5,303
Conrad Weiser Area School
District, Pre-refunded @ 100
(GO) (MBIA)
6.700%, 12/15/04 (B) 500 568
Cornwall & Lebanon, Suburban
Joint School Authority,
Callable 03/01/04 @ 100
(RB) (FGIC)
5.750%, 03/01/08 500 527
Cumberland County, PA Municipal Authority,
Revenue Bond, 5.125% (Original Issue Yield:
5.50%), 10/1/2015 2,300 2,260
Cumberland County, Messiah
College Project, Callable
10/01/06 @ 100 (RB) (AMBAC)
5.125%, 10/01/15 500 492
Cumberland Valley, School District,
Callable 09/01/03 @ 100
(GO) (FGIC)
5.350%, 09/01/07 500 519
Dauphin County, PA General Authority,
Revenue Bonds, 4.45%, 9/1/2032 2,000 2,003
Page 4 of 15
96
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF OCTOBER 31, 1997
(UNAUDITED)
-------------------------------------------- ---------------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
-------------------------------------------- ---------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
- ---------------------------------------------------------------------------------------------- ---------------------------------
Dauphin County, PA General Authority,
Revenue Bonds, 5.00% TOBs (AMBAC INS),
Mandatory Tender 5,000 5,115
Dauphin County, PA General Authority,
Revenue Refunding Bonds, 5.10% (Pinnacle
Health System)/(MBIA Insurnace Corporation
INS)/(Original Issue Yield: 5.20%), 5/15/2008 830 848
Dauphin County, PA General Authority,
Revenue Refunding Bonds, 5.20% (Pinnacle
Health System)/(MBIA Insurnace Corporation
INS)/(Original Issue Yield: 5.30%), 5/15/2009 910 927
Delaware County, Callable
11/15/07 @ 100 (GO)
5.125%, 11/15/16 500 501
Delaware County, Dunwoody
Village Project (RB)
5.550%, 04/01/06 300 307
Delaware County, PA, Revenue Bonds, 6.00%,
(Original Issue Yield: 6.21%), 12/15/2020 4,000 4,140
Delaware Valley, PA Regional Finance
Authority, Revenue Bonds (Series A), 5.90%
(AMBAC INS)/(Original Issue Yield: 6.00%),
4/15/2016 2,000 2,093
Delaware Valley, PA School District, GO UT
Refunding Bonds (Series A), 6.50% (MBIA
Insurance Corporation INS), 4/1/2001 1,000 1,075
Erie County, PA Prison Authority, Revenue
Bonds, 6.30% (United States Treasury
COL)/(MBIA Insurance Corporation INS),
11/1/1999 1,500 1,565
Franklin, PA Regional School District, GO UT
Refunding Bonds (Series I), 6.25% (FGIC INS),
10/1/2001 1,000 1,009
----------------------------------------
PROFORMA COMBINED
----------------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
----------------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------------------
Dauphin County, PA General Authority,
Revenue Bonds, 5.00% TOBs (AMBAC INS),
Mandatory Tender 5,000 5,115
Dauphin County, PA General Authority,
Revenue Refunding Bonds, 5.10% (Pinnacle
Health System)/(MBIA Insurnace Corporation
INS)/(Original Issue Yield: 5.20%), 5/15/2008 830 848
Dauphin County, PA General Authority,
Revenue Refunding Bonds, 5.20% (Pinnacle
Health System)/(MBIA Insurnace Corporation
INS)/(Original Issue Yield: 5.30%), 5/15/2009 910 927
Delaware County, Callable
11/15/07 @ 100 (GO)
5.125%, 11/15/16 500 501
Delaware County, Dunwoody
Village Project (RB)
5.550%, 04/01/06 300 307
Delaware County, PA, Revenue Bonds, 6.00%,
(Original Issue Yield: 6.21%), 12/15/2020 4,000 4,140
Delaware Valley, PA Regional Finance
Authority, Revenue Bonds (Series A), 5.90%
(AMBAC INS)/(Original Issue Yield: 6.00%),
4/15/2016 2,000 2,093
Delaware Valley, PA School District, GO UT
Refunding Bonds (Series A), 6.50% (MBIA
Insurance Corporation INS), 4/1/2001 1,000 1,075
Erie County, PA Prison Authority, Revenue
Bonds, 6.30% (United States Treasury
COL)/(MBIA Insurance Corporation INS),
11/1/1999 1,500 1,565
Franklin, PA Regional School District, GO UT
Refunding Bonds (Series I), 6.25% (FGIC INS),
10/1/2001 1,000 1,009
Page 5 of 15
97
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF OCTOBER 31, 1997
(UNAUDITED)
-------------------------------------------- ---------------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
-------------------------------------------- ---------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
- ---------------------------------------------------------------------------------------------- ---------------------------------
Geisinger Authority, PA Health System,
Refunding Revenue Bonds, 5.70% (Original
Issue Yield: 5.75%), 7/1/2002 1,000 1,054
Fox Chapel, Sanitation Sewer
Authority, Callable 05/01/97
@ 100 (RB)
5.900%, 05/01/05 420 421
Geisinger Authority, PA Health System,
Revenue Bonds, 6.50% (Original Issue Yield:
7.591%), 7/1/2007 3,000 3,135
Harrisburg, School District
Authority, Series B, Callable
09/01/02 @ 100 (RB) (AMBAC)
5.650%, 09/01/05 250 261
Lancaster, Franklin & Marshall
College Project, Callable 04/15/02
@ 100 (RB) (MBIA)
6.500%, 04/15/06 250 270
Lancaster County, PA Hospital Authority,
Health Center Refunding Revenue Bonds,
4.75% (Masonic Homes), 11/15/2002 1,000 1,012
Lancaster County, Lancaster
General Hospital Project
(RB) (AMBAC)
5.800%, 07/01/01 500 527
Lansdale, Callable 06/01/02 @ 100
(GO) (AMBAC)
6.400%, 06/01/05 150 162
Lansdale, Callable 06/01/02 @ 100
(GO) (AMBAC)
6.500%, 06/01/06 100 108
Lehigh County, PA General Purpose Authority,
GO UT Refunding Bonds (Series A), 6.60%
(AMBAC INS)/(United States Treasurty PRF),
10/15/1999 (@100) 1,000 1,049
----------------------------------------
PROFORMA COMBINED
----------------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
----------------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------------------
Geisinger Authority, PA Health System,
Refunding Revenue Bonds, 5.70% (Original
Issue Yield: 5.75%), 7/1/2002 1,000 1,054
Fox Chapel, Sanitation Sewer
Authority, Callable 05/01/97
@ 100 (RB)
5.900%, 05/01/05 420 421
Geisinger Authority, PA Health System,
Revenue Bonds, 6.50% (Original Issue Yield:
7.591%), 7/1/2007 3,000 3,135
Harrisburg, School District
Authority, Series B, Callable
09/01/02 @ 100 (RB) (AMBAC)
5.650%, 09/01/05 250 261
Lancaster, Franklin & Marshall
College Project, Callable 04/15/02
@ 100 (RB) (MBIA)
6.500%, 04/15/06 250 270
Lancaster County, PA Hospital Authority,
Health Center Refunding Revenue Bonds,
4.75% (Masonic Homes), 11/15/2002 1,000 1,012
Lancaster County, Lancaster
General Hospital Project
(RB) (AMBAC)
5.800%, 07/01/01 500 527
Lansdale, Callable 06/01/02 @ 100
(GO) (AMBAC)
6.400%, 06/01/05 150 162
Lansdale, Callable 06/01/02 @ 100
(GO) (AMBAC)
6.500%, 06/01/06 100 108
Lehigh County, PA General Purpose Authority,
GO UT Refunding Bonds (Series A), 6.60%
(AMBAC INS)/(United States Treasurty PRF),
10/15/1999 (@100) 1,000 1,049
Page 6 of 15
98
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF OCTOBER 31, 1997
(UNAUDITED)
-------------------------------------------- ---------------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
-------------------------------------------- ---------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
- ---------------------------------------------------------------------------------------------- ---------------------------------
Lehigh County, PA General Purpose Authority,
Hospital Refunding Revenue Bonds (Series
1996A), 5.75% (Muhlenberg Hospital
Center)/(Original Issue Yield: 5.85%),
7/15/2010 1,270 1,309
Lehigh County, PA General Purpose Authority,
Revenue Bonds, 5.75% (Muhlenberg Hospital
Center)/(Original Issue Yield: 5.85%),
7/15/2010 1,730 1,783
Lehigh County, PA GO UT Bonds (Series A),
5.50% (Original Issue Yield: 5.60%),
11/15/2011 2,000 2,065
Lehigh County, PA GO UT Bonds (Series A),
5.55% (Original Issue Yield: 5.65%),
11/15/2012 2,100 2,168
Luzerne County, Callable 12/15/07
@ 100 (GO) (FGIC)
5.600%, 12/15/16 500 514
Montgomery County, Callable
10/15/01 @ 102 (GO)
5.200%, 10/15/02 300 314
5.750%, 10/15/10 500 522
Montgomery County, PA Higher Education and
Health Authority, Revenue Refunding Bonds,
5.25% (Holy Redeemer Health Care)/(AMBAC
INS), 10/1/2004 2,000 2,161
Montgomery County, Health &
Higher Education Authority,
Abington Memorial Hospital
Project, Series A, Callable 06/01/04
@ 102 (RB) (AMBAC)
5.125%, 06/01/14 500 491
Montgomery County, Health &
Higher Education Authority,
Beaver College Project, Callable
04/01/06 @ 102 (RB) (Connie Lee)
5.700%, 04/01/10 500 524
----------------------------------------
PROFORMA COMBINED
----------------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
----------------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------------------
Lehigh County, PA General Purpose Authority,
Hospital Refunding Revenue Bonds (Series
1996A), 5.75% (Muhlenberg Hospital
Center)/(Original Issue Yield: 5.85%),
7/15/2010 1,270 1,309
Lehigh County, PA General Purpose Authority,
Revenue Bonds, 5.75% (Muhlenberg Hospital
Center)/(Original Issue Yield: 5.85%),
7/15/2010 1,730 1,783
Lehigh County, PA GO UT Bonds (Series A),
5.50% (Original Issue Yield: 5.60%),
11/15/2011 2,000 2,065
Lehigh County, PA GO UT Bonds (Series A),
5.55% (Original Issue Yield: 5.65%),
11/15/2012 2,100 2,168
Luzerne County, Callable 12/15/07
@ 100 (GO) (FGIC)
5.600%, 12/15/16 500 514
Montgomery County, Callable
10/15/01 @ 102 (GO)
5.200%, 10/15/02 300 314
5.750%, 10/15/10 500 522
Montgomery County, PA Higher Education and
Health Authority, Revenue Refunding Bonds,
5.25% (Holy Redeemer Health Care)/(AMBAC
INS), 10/1/2004 2,000 2,161
Montgomery County, Health &
Higher Education Authority,
Abington Memorial Hospital
Project, Series A, Callable 06/01/04
@ 102 (RB) (AMBAC)
5.125%, 06/01/14 500 491
Montgomery County, Health &
Higher Education Authority,
Beaver College Project, Callable
04/01/06 @ 102 (RB) (Connie Lee)
5.700%, 04/01/10 500 524
Page 7 of 15
99
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF OCTOBER 31, 1997
(UNAUDITED)
-------------------------------------------- ---------------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
-------------------------------------------- ---------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
- ---------------------------------------------------------------------------------------------- ---------------------------------
Montgomery County, PA Higher Education and
Health Authority, Revenue Refunding Bonds,
5.50% (Holy Redeemer Health Care)/(AMBAC
INS), 10/1/2008 1,275 1,355
Montgomery County, Pennsylvania
Hill School Project, Callable
08/15/07 @ 100 (RB) (MBIA)
5.350%, 08/15/27 500 498
Montgomery County, Sewer
Authority, Callable 08/01/97
@ 100 (RB) (FGIC)
5.850%, 08/01/06 500 501
Norristown, School District
Authority, Callable 03/01/07
@ 100 (GO) (FGIC)
5.500%, 09/01/14 500 511
North Allegheny, PA School District, Series A
GO UT Refunding Bonds, 6.35% (AMBAC
INS)/(Original Issue Yield: 6.498%),
11/1/2012 1,045 1,118
Northampton County, Pennsylvania
Higher Education Authority,
Lehigh University, Callable
10/15/01 @ 102 (RB) (MBIA)
6.900%, 10/15/06 500 555
Northampton County, PA Higher Education
Authority, Refunding Revenue Bonds, 6.75% (Lehigh
University)/(MBIA Insurance
Corporation INS), 11/15/1999 1,550 1,635
Northampton County, PA Higher Education
Authority, Revenue Bonds, 5.75% (Lehigh
University)/(MBIA Insurance Corporation
INS), 8/15/2003 2,710 2,898
North Hills, School District
Authority, Callable 11/15/07
@ 100 (GO) (FGIC)
5.625%, 11/15/14 500 516
North Huntingdon Township,
(ETM) (GO)
----------------------------------------
PROFORMA COMBINED
----------------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
----------------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------------------
Montgomery County, PA Higher Education and
Health Authority, Revenue Refunding Bonds,
5.50% (Holy Redeemer Health Care)/(AMBAC
INS), 10/1/2008 1,275 1,355
Montgomery County, Pennsylvania
Hill School Project, Callable
08/15/07 @ 100 (RB) (MBIA)
5.350%, 08/15/27 500 498
Montgomery County, Sewer
Authority, Callable 08/01/97
@ 100 (RB) (FGIC)
5.850%, 08/01/06 500 501
Norristown, School District
Authority, Callable 03/01/07
@ 100 (GO) (FGIC)
5.500%, 09/01/14 500 511
North Allegheny, PA School District, Series A
GO UT Refunding Bonds, 6.35% (AMBAC
INS)/(Original Issue Yield: 6.498%),
11/1/2012 1,045 1,118
Northampton County, Pennsylvania
Higher Education Authority,
Lehigh University, Callable
10/15/01 @ 102 (RB) (MBIA)
6.900%, 10/15/06 500 555
Northampton County, PA Higher Education
Authority, Refunding Revenue Bonds, 6.75% (Lehigh
University)/(MBIA Insurance
Corporation INS), 11/15/1999 1,550 1,635
Northampton County, PA Higher Education
Authority, Revenue Bonds, 5.75% (Lehigh
University)/(MBIA Insurance Corporation
INS), 8/15/2003 2,710 2,898
North Hills, School District
Authority, Callable 11/15/07
@ 100 (GO) (FGIC)
5.625%, 11/15/14 500 516
North Huntingdon Township,
(ETM) (GO)
Page 8 of 15
100
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF OCTOBER 31, 1997
(UNAUDITED)
-------------------------------------------- ---------------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
-------------------------------------------- ---------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
- ---------------------------------------------------------------------------------------------- ---------------------------------
5.750%, 04/01/08 305 323
North Wales, Water Authority,
Callable 11/01/05 @ 100
(RB) (FGIC)
5.600%, 11/01/16 500 507
Parkland, School District
Improvements, Callable 03/01/06
@ 100 (GO) (MBIA)
5.500%, 09/01/09 500 528
Pennridge, PA School District, GO UT Bonds,
6.40%, 3/15/2001 1,000 1,064
Pennsylvania Convention Center Authority,
Revenue Refunding Bonds, 6.75% (MBIA
Insurance Corporation INS)/(Original Issue
Yield: 6.875%), 9/1/2019 1,150 1,297
Pennsylvania Housing Finance Authority,
Refunding Revenue Bonds, 6.00%, 10/1/2013 1,500 1,589
Pennsylvania Infrastructure Investment
Authority, Revenue Bonds, 5.35% (Pennvest)
9/1/2025 1,575 1,646
Pennsylvania Infrastructure Investment
Authority, Revenue Bonds, 5.25% (MBIA
Insurance Corporation INS), 9/1/2007 2,720 2,841
Pennsylvania Infrastructure Investment
Authority, Revenue Bonds, 6.00% (MBIA
Insurance Corporation INS), 9/1/2006 1,000 1,102
Pennsylvania Intergovernmental Coop
Authority, Refunding Revenue Bonds, 4.85%
(FGIC INS), 6/15/2003 2,930 3,007
Pennsylvania Intergovernmental Coop
Authority, Refunding Revenue Bonds, 5.40%
(FGIC INS), 6/15/2009 2,145 2,226
----------------------------------------
PROFORMA COMBINED
----------------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
----------------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------------------
5.750%, 04/01/08 305 323
North Wales, Water Authority,
Callable 11/01/05 @ 100
(RB) (FGIC)
5.600%, 11/01/16 500 507
Parkland, School District
Improvements, Callable 03/01/06
@ 100 (GO) (MBIA)
5.500%, 09/01/09 500 528
Pennridge, PA School District, GO UT Bonds,
6.40%, 3/15/2001 1,000 1,064
Pennsylvania Convention Center Authority,
Revenue Refunding Bonds, 6.75% (MBIA
Insurance Corporation INS)/(Original Issue
Yield: 6.875%), 9/1/2019 1,150 1,297
Pennsylvania Housing Finance Authority,
Refunding Revenue Bonds, 6.00%, 10/1/2013 1,500 1,589
Pennsylvania Infrastructure Investment
Authority, Revenue Bonds, 5.35% (Pennvest)
9/1/2025 1,575 1,646
Pennsylvania Infrastructure Investment
Authority, Revenue Bonds, 5.25% (MBIA
Insurance Corporation INS), 9/1/2007 2,720 2,841
Pennsylvania Infrastructure Investment
Authority, Revenue Bonds, 6.00% (MBIA
Insurance Corporation INS), 9/1/2006 1,000 1,102
Pennsylvania Intergovernmental Coop
Authority, Refunding Revenue Bonds, 4.85%
(FGIC INS), 6/15/2003 2,930 3,007
Pennsylvania Intergovernmental Coop
Authority, Refunding Revenue Bonds, 5.40%
(FGIC INS), 6/15/2009 2,145 2,226
Page 9 of 15
101
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF OCTOBER 31, 1997
(UNAUDITED)
-------------------------------------------- ---------------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
-------------------------------------------- ---------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
- ---------------------------------------------------------------------------------------------- ---------------------------------
Pennsylvania Intergovernmental Coop
Authority, Refunding Revenue Bonds, 5.50%
(Philadelphia Funding Program)/(FGIC
INS)/(Original Issue Yield: 5.65%), 6/15/2011 3,300 3,424
Pennsylvania State Higher Education Assistance
Agency, Revenue Refunding Bonds, 6.80%
(FGIC INS), 12/1/2000 5,020 5,319
Pennsylvania State, First Series,
Callable 05/15/06 @ 101.5
(GO) (FGIC)
5.375%, 05/15/14 500 509
Pennsylvania State, Second
Series (GO)
6.000%, 07/01/07 300 333
Pennsylvania State Convention
Center Authority, Series A,
(ETM) (RB) (FGIC)
6.700%, 09/01/16 265 314
Pennsylvania State Financing
Authority, Callable 11/01/03
@ 102 (RB)
6.600%, 11/01/09 400 435
Pennsylvania State Higher Education Facilities
Authority, Refunding Revenue Bonds (Series
A), 5.50% (University of
Pennsylvania)/(Original Issue Yield: 5.55%),
1/1/2009 3,000 3,125
Pennsylvania State Higher Education Facilities
Authority, Revenue Refunding Bonds, 5.35%
(Presbyterian Medical Center)/(Original Issue
Yield: 5.45%), 1/1/2008 3,750 3,911
Pennsylvania State Higher
Education Facilities Authority,
Series E, (ETM) (RB) (MBIA)
6.450%, 06/15/01 500 538
Pennsylvania State Higher Education Facilities
Authority, Revenue Refunding Bonds, 5.75%
(Drexel University)/(MBIA Insurance
Corporation INS)/5/1/2003 3,035 3,236 * 500 534
----------------------------------------
PROFORMA COMBINED
----------------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
----------------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------------------
Pennsylvania Intergovernmental Coop
Authority, Refunding Revenue Bonds, 5.50%
(Philadelphia Funding Program)/(FGIC
INS)/(Original Issue Yield: 5.65%), 6/15/2011 3,300 3,424
Pennsylvania State Higher Education Assistance
Agency, Revenue Refunding Bonds, 6.80%
(FGIC INS), 12/1/2000 5,020 5,319
Pennsylvania State, First Series,
Callable 05/15/06 @ 101.5
(GO) (FGIC)
5.375%, 05/15/14 500 509
Pennsylvania State, Second
Series (GO)
6.000%, 07/01/07 300 333
Pennsylvania State Convention
Center Authority, Series A,
(ETM) (RB) (FGIC)
6.700%, 09/01/16 265 314
Pennsylvania State Financing
Authority, Callable 11/01/03
@ 102 (RB)
6.600%, 11/01/09 400 435
Pennsylvania State Higher Education Facilities
Authority, Refunding Revenue Bonds (Series
A), 5.50% (University of
Pennsylvania)/(Original Issue Yield: 5.55%),
1/1/2009 3,000 3,125
Pennsylvania State Higher Education Facilities
Authority, Revenue Refunding Bonds, 5.35%
(Presbyterian Medical Center)/(Original Issue
Yield: 5.45%), 1/1/2008 3,750 3,911
Pennsylvania State Higher
Education Facilities Authority,
Series E, (ETM) (RB) (MBIA)
6.450%, 06/15/01 500 538
Pennsylvania State Higher Education Facilities
Authority, Revenue Refunding Bonds, 5.75%
(Drexel University)/(MBIA Insurance
Corporation INS)/5/1/2003 3,535 3,770
Page 10 of 15
102
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF OCTOBER 31, 1997
(UNAUDITED)
-------------------------------------------- ---------------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
-------------------------------------------- ---------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
- ---------------------------------------------------------------------------------------------- ---------------------------------
Pennsylvania State Higher
Education Facilities Authority,
University of Pennsylvania
Project, Callable 01/01/06 @
101 (RB)
5.600%, 01/01/10 500 523
Pennsylvania State Housing
Finance Agency, Callable
07/01/02 @ 102 (RB) (Fannie Mae)
6.400%, 07/01/12 500 526
Pennsylvania State IDA, Refunding Revenue
Bonds, 5.80% (AMBAC INS), 1/1/2008 1,000 1,081
Pennsylvania State IDA, Revenue Bonds, 6.00%
(AMBAC INS), 7/1/2006 3,000 3,311
Pennsylvania State IDA, Revenue Bonds, 6.00%
(AMBAC INS), 7/1/2007 5,000 5,529
Pennsylvania State Turnpike
Commission, Callable 12/01/02
@ 102 (RB) (FGIC)
6.000%, 12/01/12 400 425
Pennsylvania State University, Refunding
Revenue Bonds, 5.30% (Original Issue Yield:
5.40%), 8/15/2003 5,000 5,212
Pennsylvania State University,
Callable 03/01/02 @ 102 (RB)
5.950%, 03/01/03 500 539
Philadelphia Airport Parking
Authority, Callable 09/01/07
@ 101 (RB) (AMBAC)
5.500%, 09/01/18 500 504
Philadelphia Authority for Industrial
Development, Revenue Bonds, 5.50% (Girard
Estate Coal Mining Project)/(Original Issue
Yield: 5.75%), 11/15/2016 2,000 2,033
----------------------------------------
PROFORMA COMBINED
----------------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
----------------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------------------
Pennsylvania State Higher
Education Facilities Authority,
University of Pennsylvania
Project, Callable 01/01/06 @
101 (RB)
5.600%, 01/01/10 500 523
Pennsylvania State Housing
Finance Agency, Callable
07/01/02 @ 102 (RB) (Fannie Mae)
6.400%, 07/01/12 500 526
Pennsylvania State IDA, Refunding Revenue
Bonds, 5.80% (AMBAC INS), 1/1/2008 1,000 1,081
Pennsylvania State IDA, Revenue Bonds, 6.00%
(AMBAC INS), 7/1/2006 3,000 3,311
Pennsylvania State IDA, Revenue Bonds, 6.00%
(AMBAC INS), 7/1/2007 5,000 5,529
Pennsylvania State Turnpike
Commission, Callable 12/01/02
@ 102 (RB) (FGIC)
6.000%, 12/01/12 400 425
Pennsylvania State University, Refunding
Revenue Bonds, 5.30% (Original Issue Yield:
5.40%), 8/15/2003 5,000 5,212
Pennsylvania State University,
Callable 03/01/02 @ 102 (RB)
5.950%, 03/01/03 500 539
Philadelphia Airport Parking
Authority, Callable 09/01/07
@ 101 (RB) (AMBAC)
5.500%, 09/01/18 500 504
Philadelphia Authority for Industrial
Development, Revenue Bonds, 5.50% (Girard
Estate Coal Mining Project)/(Original Issue
Yield: 5.75%), 11/15/2016 2,000 2,033
Page 11 of 15
103
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF OCTOBER 31, 1997
(UNAUDITED)
-------------------------------------------- ---------------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
-------------------------------------------- ---------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
- ---------------------------------------------------------------------------------------------- ---------------------------------
Philadelphia Authority for Industrial
Development, Revenue Bonds, 6.00% (City of
Philadelphia Project)/(MBIA Insurance
Corporation INS), 2/15/2007 1,365 1,504
Philadelphia Higher Education
Facilities Authority, Moss
Rehabilitation Hospital Project
(RB) (AMBAC)
6.900%, 07/01/00 230 246
Philadelphia, PA Hospital & Higher Education
Facilities Authority, Refunding Revenue Bonds
(Series A), 5.25% (Children's Hospital of
Philadelphia)/(Original Issue Yield: 5.55%),
2/15/2007 3,250 3,361
Philadelphia, PA Hospital & Higher Education
Facilities Authority, Revenue Bonds (Series A),
5.625% (Children's Hospital of Philadelphia),
2/15/1999 1,500 1,530
Philadelphia, PA Hospital & Higher Education
Facilities Authority, Revenue Refunding Bonds,
7.00% (Magee Rehabilitation
Hospital)/(AMBAC INS)/(Original Issue Yield:
7.10%), 12/1/2010 1,000 1,108
Philadelphia, PA Hospital & Higher Education
Facilities Authority, Revenue Refunding Bonds,
7.625% (Albert Einstein Medical Center,
PA)/(Original Issue Yield: 7.767%), 4/1/2001 1,350 1,428
Philadelphia Industrial Development,
Callable 07/01/03 @ 102 (RB)
5.250%, 07/01/17 500 489
Philadelphia, PA Municipal Authority, Lease
Revenue Bonds, 7.10% (MBIA Insurance
Corporation INS) 11/15/2006 4,095 4,572
----------------------------------------
PROFORMA COMBINED
----------------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
----------------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------------------
Philadelphia Authority for Industrial
Development, Revenue Bonds, 6.00% (City of
Philadelphia Project)/(MBIA Insurance
Corporation INS), 2/15/2007 1,365 1,504
Philadelphia Higher Education
Facilities Authority, Moss
Rehabilitation Hospital Project
(RB) (AMBAC)
6.900%, 07/01/00 230 246
Philadelphia, PA Hospital & Higher Education
Facilities Authority, Refunding Revenue Bonds
(Series A), 5.25% (Children's Hospital of
Philadelphia)/(Original Issue Yield: 5.55%),
2/15/2007 3,250 3,361
Philadelphia, PA Hospital & Higher Education
Facilities Authority, Revenue Bonds (Series A),
5.625% (Children's Hospital of Philadelphia),
2/15/1999 1,500 1,530
Philadelphia, PA Hospital & Higher Education
Facilities Authority, Revenue Refunding Bonds,
7.00% (Magee Rehabilitation
Hospital)/(AMBAC INS)/(Original Issue Yield:
7.10%), 12/1/2010 1,000 1,108
Philadelphia, PA Hospital & Higher Education
Facilities Authority, Revenue Refunding Bonds,
7.625% (Albert Einstein Medical Center,
PA)/(Original Issue Yield: 7.767%), 4/1/2001 1,350 1,428
Philadelphia Industrial Development,
Callable 07/01/03 @ 102 (RB)
5.250%, 07/01/17 500 489
Philadelphia, PA Municipal Authority, Lease
Revenue Bonds, 7.10% (MBIA Insurance
Corporation INS) 11/15/2006 4,095 4,572
Page 12 of 15
104
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF OCTOBER 31, 1997
(UNAUDITED)
-------------------------------------------- ---------------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
-------------------------------------------- ---------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
- ---------------------------------------------------------------------------------------------- ---------------------------------
Philadelphia, PA School District, GO UT
Bonds (Series A), 5.35% (MBIA Insurance
Corporation INS), 7/1/2003 5,000 5,243
Philadelphia, PA School District, GO UT
Bonds (Series A), 5.85%, 7/1/2009 2,000 2,135
Philadelphia, PA School District, GO UT
Refunding Bonds, 5.30% (MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.40%), 7/1/2004 3,500 3,666
Philadelphia, PA Water & Wastewater System,
Refunding Revenue Bonds, 5.50% (Original
Issue Yield: 5.61%), 6/15/2006 1,000 1,061
Philadelphia Water & Waste
Authority, Callable 08/01/07
@ 102 (RB) (AMBAC)
5.125%, 08/01/27 500 478
Philadelphia, PA Water & Wastewater System,
Refunding Revenue Bonds, 6.25% (MBIA
Insurance Corporation INS), 8/1/2007 3,000 3,378
Philadelphia, PA Water & Wastewater System,
Refunding Revenue Bonds, 6.25% (MBIA
Insurance Corporation INS), 8/1/2008 2,150 2,403
Philadelphia, PA Series A Revenue Bonds,
6.00% (FGIC INS), 6/15/2004 2,000 2,172
Punxsutawney Area School District,
Callable 04/15/05 @ 100
(GO) (MBIA)
5.750%, 04/15/10 500 526
Red Lion Area School District,
Callable 04/01/02 @ 100
(GO) (AMBAC)
5.850%, 04/01/05 100 106
Ridley Park, Taylor Hospital
Authority, Series A (RB)
6.000%, 12/01/05 500 514
----------------------------------------
PROFORMA COMBINED
----------------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
----------------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------------------
Philadelphia, PA School District, GO UT
Bonds (Series A), 5.35% (MBIA Insurance
Corporation INS), 7/1/2003 5,000 5,243
Philadelphia, PA School District, GO UT
Bonds (Series A), 5.85%, 7/1/2009 2,000 2,135
Philadelphia, PA School District, GO UT
Refunding Bonds, 5.30% (MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.40%), 7/1/2004 3,500 3,666
Philadelphia, PA Water & Wastewater System,
Refunding Revenue Bonds, 5.50% (Original
Issue Yield: 5.61%), 6/15/2006 1,000 1,061
Philadelphia Water & Waste
Authority, Callable 08/01/07
@ 102 (RB) (AMBAC)
5.125%, 08/01/27 500 478
Philadelphia, PA Water & Wastewater System,
Refunding Revenue Bonds, 6.25% (MBIA
Insurance Corporation INS), 8/1/2007 3,000 3,378
Philadelphia, PA Water & Wastewater System,
Refunding Revenue Bonds, 6.25% (MBIA
Insurance Corporation INS), 8/1/2008 2,150 2,403
Philadelphia, PA Series A Revenue Bonds,
6.00% (FGIC INS), 6/15/2004 2,000 2,172
Punxsutawney Area School District,
Callable 04/15/05 @ 100
(GO) (MBIA)
5.750%, 04/15/10 500 526
Red Lion Area School District,
Callable 04/01/02 @ 100
(GO) (AMBAC)
5.850%, 04/01/05 100 106
Ridley Park, Taylor Hospital
Authority, Series A (RB)
6.000%, 12/01/05 500 514
Page 13 of 15
105
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF OCTOBER 31, 1997
(UNAUDITED)
-------------------------------------------- ---------------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
-------------------------------------------- ---------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
- ---------------------------------------------------------------------------------------------- ---------------------------------
Scranton-Lackawanna, PA Health & Welfare
Authority, Refunding Revenue Bonds, 5.625%
(Mercy Health Care Systems)/(MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.75%), 1/1/2016 2,000 2,048
Scranton-Lackawanna, PA Health & Welfare
Authority, Revenue Bonds, 5.45% (Moses
Taylor Hospital Project), 7/1/2003 1,350 1,370
Scranton-Lackawanna, Health
& Welfare Authority, Mercy
Health Project, Series B
(RB) (MBIA)
5.100%, 01/01/07 500 515
South Allegheny School District,
Callable 10/01/05 @ 100
(GO) (MBIA)
5.100%, 10/01/06 500 520
South Western School District, PA York, UT
GO Bonds, 5.00% (FGIC INS), 6/15/1998 650 655
University of Pittsburgh, Refunding Revenue
Bonds, 5.50% (MBIA Insurance Corporation
LOC), 6/1/2002 3,440 3,611
Upper Merion, Municipal Utility
Authority, Callable 08/15/03
@ 100 (RB)
6.000%, 08/15/12 500 522
West Shore, Holy Spirit Hospital
Project, Callable 07/01/07 @
100 (RB) (MBIA)
5.600%, 01/01/13 500 510
York County (GO) (FGIC)
5.500%, 10/01/01 200 210
York County, PA Hospital Authority, Revenue
Bonds, 5.25% (York Hospital)/(AMBAC INS),
7/1/2004 1,010 1,051
York County, PA Hospital Authority, Revenue
Bonds, 5.25% (York Hospital)/(AMBAC INS),
7/1/2005 675 703
------------ -------
----------------------------------------
PROFORMA COMBINED
----------------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
----------------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------------------
Scranton-Lackawanna, PA Health & Welfare
Authority, Refunding Revenue Bonds, 5.625%
(Mercy Health Care Systems)/(MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.75%), 1/1/2016 2,000 2,048
Scranton-Lackawanna, PA Health & Welfare
Authority, Revenue Bonds, 5.45% (Moses
Taylor Hospital Project), 7/1/2003 1,350 1,370
Scranton-Lackawanna, Health
& Welfare Authority, Mercy
Health Project, Series B
(RB) (MBIA)
5.100%, 01/01/07 500 515
South Allegheny School District,
Callable 10/01/05 @ 100
(GO) (MBIA)
5.100%, 10/01/06 500 520
South Western School District, PA York, UT
GO Bonds, 5.00% (FGIC INS), 6/15/1998 650 655
University of Pittsburgh, Refunding Revenue
Bonds, 5.50% (MBIA Insurance Corporation
LOC), 6/1/2002 3,440 3,611
Upper Merion, Municipal Utility
Authority, Callable 08/15/03
@ 100 (RB)
6.000%, 08/15/12 500 522
West Shore, Holy Spirit Hospital
Project, Callable 07/01/07 @
100 (RB) (MBIA)
5.600%, 01/01/13 500 510
York County (GO) (FGIC) -
5.500%, 10/01/01 200 210
York County, PA Hospital Authority, Revenue
Bonds, 5.25% (York Hospital)/(AMBAC INS),
7/1/2004 1,010 1,051
York County, PA Hospital Authority, Revenue
Bonds, 5.25% (York Hospital)/(AMBAC INS),
7/1/2005 675 703
------------
Page 14 of 15
106
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PROFORMA COMBINING SCHEDULE OF INVESTMENTS
AS OF OCTOBER 31, 1997
(UNAUDITED)
-------------------------------------------- ---------------------------------
MARKETVEST PA INTERMEDIATE ARK PENNSYLVANIA
MUNICIPAL BOND FUND TAX FREE PORTFOLIO
-------------------------------------------- ---------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000) AMOUNT (000) VALUE (000)
- ---------------------------------------------------------------------------------------------- ---------------------------------
Total Pennstlvania 201,116 25,109
------------- -----------------
COMMONWEALTH OF PUERTO RICO - 0
(GO) (MBIA)
6.500%, 07/01/08 500 576
------------- -----------------
Total Puerto Rico - 576
------------- -----------------
Total Municipal Bonds and Notes - 201,116 25,685
------------- -----------------
CASH EQUIVALENTS 0 0
PNC Pennsylvania Municipal Money
Market Portfolio 4,065 4,065
Federated Pennsylvania Muni
Cash Trust 139 139
------------- -----------------
Total Cash Equivalents 4,065 139
------------- -----------------
98.82% 100.59%
TOTAL INVESTMENTS (cost $199,307) $ 205,181 (cost $24,880) $ 25,824
============= ================
----------------------------------------
PROFORMA COMBINED
----------------------------------------
ARK PENNSYLVANIA
TAX FREE PORTFOLIO
----------------------------------------
PRINCIPAL MARKET
SECURITY DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------------------
Total Pennstlvania 226,225
-------------
COMMONWEALTH OF PUERTO RICO 0
(GO) (MBIA)
6.500%, 07/01/08 500 576
-------------
Total Puerto Rico 576
-------------
Total Municipal Bonds and Notes 226,801
-------------
CASH EQUIVALENTS 0
PNC Pennsylvania Municipal Money
Market Portfolio 4,065 4,065
Federated Pennsylvania Muni
Cash Trust 139 139
-------------
Total Cash Equivalents 4,204
-------------
99.01%
TOTAL INVESTMENTS (cost $224,187) $ 231,005
=============
NOTE: THE CATEGORIES OF INVESTMENTS ARE SHOWN AS A PERCENTAGE OF NET ASSETS AS
OF OCTOBER 31, 1997.
THE FOLLOWING ACRONYMS ARE USED THROUGHOUT THIS PORTFOLIO:
AMBAC American Municipal Bond Assurance Corporation (A) Variable Rate Security - The
COL Collateralized rate reported on the Statement of
FGIC Financial Guaranty Insurance Corporation Net Assets is the rate in effect as
FSA Financial Security Assurance of October 31, 1997. The date
GO General Obligation shown is the next scheduled reset
H-DA Hospital Development Authority date.
HEFA Health and Education Facilities Authority
IDA Industrial Development Authority (B) The Pre-refunded date is shown
INS Insured as the maturity date on the
LOC Letter of Credit Statement of Net Assets.
MBIA Municipal Bond Investors Assurance
PRF Prerefunded AMBAC-American Municipal Bond Assurance Corporation
TOBs Tender Option Bonds ETM-Escrowed To Maturity
UT Unlimited Tax
FGIC-Financial Guaranty Insurance Company
GO-General Obligation
MBIA-Municipal Bond Insurance Association
RB-Revenue Bond
Page 15 of 15
107
ARK PENNSYLVANIA TAX-FREE PORTFOLIO
PROFORMA COMBINING STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
AS OF OCTOBER 31,1997
(000'S)
--------------- -------------------- ----------- ------------------
Marketvest
Pennsylvania ARK
Intermediate Pennsylvanian Tax- Proforma ARK Pennsylvania
Municipal Fund Free Portfolio Ajustments Tax-Free Portfolio
--------------- -------------------- ----------- ------------------
ASSETS:
Investments at market value (cost of 199,307,
$24,880 and $224,187, respectively) $ 205,181 $ 25,824 $ 231,005
Interest receivable 3,343 407 3,750
Receivable for investment securities sold 510 510
Receivable for capital shares sold - -
Other assets 34 34
------------- --------------- ---------------
Total assets 208,524 26,775 235,299
------------- --------------- ---------------
LIABILITIES:
Distribution payable 756 100 856
Payable for investment securities purchased 975 975
Payable for capital shares repurchased - -
Other liabilities 130 28 158
------------- --------------- ---------------
Total liabilities 886 1,103 1,989
------------- --------------- ---------------
NET ASSETS:
Portfolio shares, Institutional Class -
ARK Fund (based on 2,313,338 o/s shares) 22,650 (22,650)(a) -
Portfolio shares, Institutional Class -
Proforma ARK Fund (based on 20,364,999
o/s shares) 223,867 (a) 223,867
Portfolio shares, Institutional Class -
Marketvest Fund (based on 22,685,141 o/s shares) 201,217 (201,217)(a) -
Portfolio shares, Retail Class -
ARK Fund and Proforma ARK Fund (based on 196,794
o/s shares) 1,975 1,975
Undistributed net investment income -
Accumulated net realized gain on investments 547 103 650
Net unrealized appreciation on investments 5,874 944 6,818
------------- --------------- --------------- ---------------
TOTAL NET ASSETS $ 207,638 $ 25,672 $ - $ 233,310
============= =============== =============== ===============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SHARE - INSTITUTIONAL CLASS $10.20 $10.23 $10.20
============= =============== ===============
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE -
RETAIL CLASS $10.22 $10.22
=============== ===============
MAXIMUM OFFERING PRICE PER SHARE - RETAIL CLASS
($10.22 / 95.50%) $10.70 $10.70
=============== ===============
108
ARK PENNSYLVANIA TAX FREE PORTFOLIO
PRO FORMA COMBINING STATEMENT OF OPERATIONS (000) (Unaudited)
FOR THE SIX MONTHS ENDED OCTOBER 31, 1997
--------------- ------------------- ----------- --------------------
Marketvest
Pennsylvania
Intermediate ARK Pennsylvania ARK Pennsylvania
Municipal Tax-Free Proforma Tax-Free
Fund Portfolio Ajustments Portfolio
--------------- ------------------- ------------ --------------------
INVESTMENT INCOME:
Interest 5,475 660 6,135
--------------- ----------------- --------------------
Total Investment Income 5,475 660 6,135
--------------- ----------------- --------------------
EXPENSES:
Administrator Fees 161 16 (23) (b) 154
Less: Waiver of Administrator Fees (49) - 49 (b) -
Investment Advisory Fees 802 63 (94) (b) 771
Less: Waiver of Investment Advisory Fees (160) (15) 175 (b) -
Transfer Agency Fees 11 - 11
Custodian Fees 14 5 19
Professional Fees 10 3 13
Registration Fees 8 1 9
Distribution Fees - Retail Class 3 3
Printing Fees 5 - (1) (c) 4
Trustee Fees 3 - 3
Amortization of Deferred Organization Costs 1 (1) (d) -
Miscellaneous Fees 50 1 (5) (c) 46
Shareholder Servicing Fees - Retail Class 1 1
Less: Waiver of Shareholder Servicing
Fees - Retail Class (1) (1)
--------------- ----------------- -------- --------------------
Total Expenses 855 79 100 1,034
--------------- ----------------- -------- --------------------
Net Investment Income (Loss) 4,620 581 (100) 5,101
--------------- ----------------- -------- --------------------
Net realized Gain (Loss) on Investments 1,027 11 1,038
Net Change in Unrealized Appreciation
(Depreciation) on Investments 4,436 738 5,174
--------------- ----------------- -------- --------------------
Net Realized and Unrealized Gain (Loss)
on Investments 5,463 749 - 6,212
--------------- ----------------- -------- --------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 10,083 1,330 (100) 11,313
=============== ================= ======== ====================
(1) Commenced operations on November 18, 1996.
109
ARK PENNSYLVANIA TAX FREE PORTFOLIO
Notes To Pro Forma Financial Statements
(Unaudited)
1. BASIS OF COMBINATION
The unaudited Pro Forma Combining Statements of Assets and Liabilities, Pro
Forma Combining Statements of Operations and Pro Forma Combining Schedule of
Investments give effect to the proposed acquisition of the MARKETVEST
PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND (the Marketvest Fund) by the ARK
PENNSYLVANIA TAX FREE PORTFOLIO (the Ark Fund). The proposed acquisition will
be accounted for by the method of accounting for tax free mergers of investment
companies (sometimes referred to as the pooling without restatement method).
The acquisition will be accomplished by an exchange of all assets and
liabilities of the Marketvest Fund in exchange for shares of the Institutional
Class of the Ark Fund.
The pro Forma combining statements should be read in conjunction with the
historical financial statements of the constituent funds and the notes thereto
which are incorporated by reference in the Statement of Additional Information.
The ARK PENNSYLVANIA TAX FREE PORTFOLIO is a portfolio offered by ARK Funds, an
open-end, management investment company registered under the investment Company
Act of 1940, as amended. The MARKETVEST PENNSYLVANIA INTERMEDIATE MUNICIPAL
BOND FUND is a portfolio offered by Marketvest Funds an open-end, management
investment company also registered under the investment Company Act of 1940, as
amended.
PRO FORMA ADJUSTMENTS:
a) The pro forma combining statements of assets and liabilities
assumes the issuance of additional shares of the
Institutional Class of the Ark Fund as if the reorganization
were to have taken place on April 30, 1997 and October 31,
1997 and is based on the net asset value of the acquiring
fund. In addition, because the Marketvest Fund is the
surviving fund for accounting purposes, the pro forma
adjustments also reflect a reverse stock split of Ark Fund
shares that will take place simultaneous to the merger so as
to ensure that the NAV per share that carries forward for
historical reporting purposes is the NAV per share of the
Marketvest Fund at the time of the merger.
b) The pro forma adjustments to investment advisory fees
(including waivers) and administrative fees (including
waivers) reflect the difference in fees charged by the Ark
Fund based upon the effective fee schedule.
c) The pro forma adjustments to printing expenses and
miscellaneous expenses reflect the expected savings due to
the combination of the funds.
d) The pro forma adjustments to amortization of deferred
organization costs reflects the effect of the writeoff of
the asset and reimbursement to the Fund by First National
Bank of Maryland.
110
ARK FUNDS
CROSS REFERENCE SHEET
PART C
Item No. Heading
- -------- -------
15. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . Indemnification
16. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibits
17. Undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . Undertakings
111
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
Article VIII of the Agreement and Declaration of Trust filed as Exhibit 1
to the Registration Statement is incorporated herein by reference. The
Registrant participates in a group liability policy under which the Registrant
and its trustees, officers and affiliated persons are insured against certain
liabilities.
ITEM 16. EXHIBITS
(1) (a) Declaration of Trust dated October 22, 1992 is
incorporated by reference to Exhibit 1 to the
Registrant's Registration Statement on Form N-1A
(File No. 33-53690) ("Form N-1A").
(b) Amended and Restated Declaration of Trust dated
March 19, 1993 is incorporated by reference to
Exhibit 1(b) to Form N-1A.
(c) Supplement dated March 23, 1993 to the Amended and
Restated Declaration of Trust dated March 19, 1993
is incorporated by reference to Exhibit 1(c) to
Form N-1A.
(2) By-Laws of the Registrant are incorporated by
reference to Exhibit 1(d) to Form N-1A.
(3) Not applicable.
(4) Agreement and Plan of Reorganization is included in
Part A.
(5) Not applicable.
(6) (a) Investment Advisory Agreement dated July 13, 1995,
between the Registrant and Allied Investment
Advisors, Inc. is incorporated by reference to
Exhibit 1(d) to Form N-1A.
(b) Form of Investment Advisory Agreement between the
Registrant and Allied Investment Advisors, Inc.
(relating to the Acquiring Funds which are shell
portfolios) is incorporated by reference to Exhibit
5 to Form N-1A.
112
(7) Distribution Agreement dated November 1, 1995,
between the Registrant and SEI Financial Services
Company is incorporated herein by reference to
Exhibit 6(a) to Form N-1A.
(8) Not applicable.
(9) Custody Agreement dated as of April 1, 1997,
between the Registrant and FMB Trust Company,
National Association is incorporated herein by
reference to Exhibit 8 to Form N-1A.
(10) (a) Rule 18f-3 Plan is incorporated herein by reference
to Exhibit 18 to Form N-1A.
(b) Shareholder Services Plan for Institutional Class
Shares is incorporated by reference to Exhibit
15(c) to Form N-1A.
(11) Opinion and consent of legal counsel is
incorporated herein by reference to Registrant's
Form 24f-2 Notices filed with the SEC.
(12) Opinion and consent of Piper & Marbury L.L.P. as to
tax matters (to be filed by amendment).
(13) (a) Administration Agreement dated November 1, 1995,
between the Registrant and SEI Financial
Management Corporation is incorporated herein by
reference to Exhibit 6(b) to Form N-1A.
(b) Sub-Administration Agreement dated January 1, 1998,
between SEI Investments Management Corporation and
FMB Trust Company, National Association is
incorporated herein by reference to Exhibit 9 to
Form N-1A.
(c) Transfer Agency and Service Agreement dated
November 1, 1995, between the Registrant and SEI
Financial Management Corporation is incorporated
herein by reference to Exhibit 9 to Form N-1A.
*(14) (a) Consent of KPMG Peat Marwick LLP, independent
auditors of the Registrant.
* (b) Consent of Ernst & Young LLP, independent auditors
of Marketvest Funds.
(15) Not applicable.
(16) Powers of Attorney of Trustees of the Registrant.
- 2 -
113
(17) (a) Prospectus for Registrant is incorporated herein by
reference to Registrant's Post-Effective Amendment
No. 16 to Form N-1A filed with the SEC on November
26, 1997.
(b) Statement of Additional Information of Registrant
is incorporated herein by reference to Registrant's
Post-Effective Amendment No. 16 to Form N-1A filed
with the SEC on November 26, 1997.
(c) Combined Prospectus for the Marketvest Group of
Funds dated June 30, 1997 is incorporated herein by
reference to Marketvest Funds' Post-Effective
Amendment No. 4 to Marketvest Funds' Registration
Statement on form N-1A filed with the SEC on June
26, 1997.
(d) Combined Statement of Additional Information of the
Marketvest Group of Funds dated June 30, 1997 is
incorporated herein by reference to Marketvest
Funds' Post-Effective Amendment No. 4 to Marketvest
Funds' Registration Statement on form N-1A filed
with the SEC on June 26, 1997.
(e) Annual Report to Shareholders of the ARK Funds for
the fiscal year ended April 30, 1997 is
incorporated herein by reference to Registrant's
Rule 30b-2 filing filed with the SEC on June
27, 1997.
(f) Semi-Annual Report to Shareholders of the ARK Funds
for the six-months ending October 31, 1997 is
incorporated herein by reference to Registrant's
Rule 30b-2 filing filed with the SEC on December
29, 1997.
(g) Combined Annual Report to Shareholders of the
Marketvest Group of Funds for the fiscal year ended
February 28, 1997 is incorporated herein by
reference to Marketvest Funds' Rule 30b-2 filing
filed with the SEC on April 21, 1997.
(h) Combined Semi-Annual Report to Shareholders of the
Marketvest Group of Funds for the six-months ended
August 31, 1997 is incorporated herein by reference
to Marketvest Funds' Rule 30b-2 filing filed with
the SEC on October 30, 1997.
* Filed herewith.
- 3 -
114
ITEM 17. UNDERTAKINGS
(1) The undersigned registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a part of
this registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act, the
reoffering prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be
deemed to be the initial bona fide offering of them.
- 4 -
115
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has
been signed on behalf of the Registrant in the City of Baltimore, and State of
Maryland on the 16th day of January, 1998.
ARK FUNDS
By: /s/ DAVID D. DOWNES
-----------------------------------------
David D. Downes, President
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
/s/ DAVID D. DOWNES
- ------------------------------- President (principal executive officer) and
David D. Downes Trustee
/s/ JAMES F. VOLK
- ------------------------------- Treasurer, Controller and Chief Financial Officer
James F. Volk (principal financial and accounting officer)
*
- ------------------------------- Trustee
William H. Cowie, Jr.
*
- ------------------------------- Trustee
Charlotte Kerr
*
- ------------------------------- Trustee
George K. Reynolds, III
*
- ------------------------------- Trustee
Thomas Schweizer
* By: /s/ ALAN C. PORTER January 16, 1998
-------------------------
Alan C. Porter
Attorney-in-Fact
An original power-of-attorney authorizing Alan C. Porter to execute this
Registration Statement for each trustee of the Registrant on whose behalf this
Registration Statement is filed has been executed and filed with the Securities
and Exchange Commission.